There is more to this story. The "fraud" was the National Guard in that state(and others) was over stating enlistment bonuses. What was going on was they had a referral programs where you got bonus money for getting someone to "reup" or sign up. Kind of like a SPIFF program.
There was a lot of fraud going on and bonus money being paid out that was warranted. They also were paying the money up front and there were false cards turned in and guys not eligible and so on.
The feds caught it during audits. Unfortunately some innocent soldiers got caught up in it. But, there was a lot of money paid out, in the National Guard, that was not legal or justified. Many of the times the soldiers didn't even know it wasn't justified.
This article is not telling the full story of what went on. I feel bad for a lot of the soldiers but some of them were defrauding the government(sometimes known and sometimes not intentional). And, the government was stupid for doing it as well.
Bad situation. I wish they could just relieve them of their debt and call it water under the bridge.