“It speaks to the nonchalant-ness of the command and its lack of internal controls,” said one person familiar with the investigation, who requested anonymity because the person wasn’t authorized to speak to the media.

Loosening the reins

The Installation Management Command, or IMCOM, with a workforce of more than 50,000 worldwide, is a major subordinate command of the Army’s Materiel Command. Among IMCOM’s missions is to ensure facilities are fit to house and train soldiers and to oversee recreational programs for soldiers and extracurricular activities for their families, such as 4-H.

IMCOM, headquartered at Fort Sam Houston, operates a series of directorates that use the letter G and a number for designations, such as “G-1” for personnel, “G-6” for technology, “G-8” for finance. The directorate where Mello worked, G-9, oversees programs related to family, morale, welfare and recreation initiatives.

Army records show Josh Gwinn has been G-9’s director since April 2023. He was its deputy director from April 2018 to March 2023. 

Under Gwinn are G-9 Branch Chief Kevin Montgomery and Suzanne King, chief of the G-9’s child and youth services. Both have held those positions since at least 2019.

Mello worked for them as a program manager for G-9’s child and youth services section.

The Express-News was unable to reach Gwinn or Montgomery for comment. King referred a reporter to her agency’s public affairs office for answers to his questions. The public affairs office did not answer written questions, instead referring the reporter to Army investigators.

Though court documents allege Mello launched her scheme in 2016 and started receiving 4-H money in January 2017, the theft appeared to accelerate after 2019.

That year, as part of a reform initiative, IMCOM was moved from the direct supervision of the Army’s chief of staff at the Pentagon, and became a subordinate of the Army’s Material Command at Redstone Arsenal in Alabama. In the same period, Mello was given more flexibility in how she did her job, with less supervisory oversight. 

The moves were intended to make the command’s operations more efficient, IMCOM records state.

As part of her duties, Mello helped run the 4-H Military Partnership Grant program. It hires contractors to provide training and curricula to the service branches so that children from military families can participate in 4-H, a network of youth groups that encourages children to undertake hands-on projects in agriculture, health, science and civic leadership.

When Mello created CHYLD in 2016, she said it provided 4-H services to military personnel and their families, but federal authorities say her company never did, that it only received payments.

She allegedly took advantage of the new leeway she had in her job — as well as the trust another federal agency, the Defense Finance and Accounting Service, placed in IMCOM.

Known as DFAS, that agency oversees payments to Department of Defense service members, employees and contractors.

The agency mailed more than 40 payments to CHYLD totaling $103 million, all at Mello’s request.

DFAS sent the money after receiving packets from Mello that included a document known as a standard form 1080, a voucher request for payment  that indicated — though it doesn’t specifically spell out — that IMCOM had vetted and approved CHYLD as a vendor for the 4-H program. That allowed payment to her company to be processed without an invoice.

“According to DFAS, the normal process for the distribution of funds requires Mello’s supervisor to submit a memo to DFAS indicating an entity or potential vendor is approved to receive grant funds and lists the source of those funds,” prosecutor Franco wrote in the forfeiture lawsuit. “On all of the memos submitted by Mello’s supervisor wherein CHYLD was listed as the recipient of the funds, Mello was listed as the person to whom DFAS should direct any questions about payment authorization.”

Instead of having her supervisor, Suzanne King, approve and sign forms that needed her OK, Mello allegedly digitally forged King’s signature, according to court records.

“They stove-piped the process to only one person,” said a source familiar with the investigation, referring to Army leaders. “They gave her complete carte blanche, and she found all the loopholes.”

No supervisor appears to have spot-checked Mello’s work. In December, Assistant U.S. Attorney Justin Simmons said the Army apparently hadn’t conducted an audit of the program.

In his forfeiture lawsuit, Franco included memoranda and other documents that Mello submitted to DFAS in 2017.

One memo, dated Jan. 17, 2017, requested a check for $983,483 to be delivered by FedEx to CHYLD’s purported address in Schertz. Mello was listed as the contact person.

The memo included an email sent by a “Kathy Johnson” to Mello’s work email address; Mello described Johnson as the “financial analyst/reimbursable coordinator” at CHYLD. It also listed a phone number for Johnson. 

“Based on the investigation, Kathy Johnson, the phone number, and email address appear to be fake, as no phone number or email address returns to CHYLD or Kathy Johnson,” the lawsuit said. 

Franco also included Mello’s most recent request for payment, dated Aug. 14 of last year — for a check for more than $4 million, to be sent to an address in the 20700 block of  U.S. 281 in Stone Oak.

The memorandum was digitally signed by the “Chief, CYS, IMCOM,” and gives the person’s full name, though the lawsuit does not name the person. IMCOM records reviewed by the Express-News identify the person as King.

Agents discovered that the company’s Interstate 35 and U.S. 281 addresses were for UPS stores that rent mailboxes. 

“Based on (the) investigation, there is no evidence CHYLD has a physical address out of which it operates,” the lawsuit said.

MORE COVERAGE: Ex-JBSA civilian worker and accused fraudster with a taste for luxury flaunted it for nearly 7 years

The high life

During the investigation, agents also found that Mello picked up the checks at the U.S. 281 address and deposited them at a Bank of America branch office across the highway. The lawsuit said that to conceal the source of the funds, Mello “transferred the fraud proceeds through various bank accounts she controlled.”

The forfeiture lawsuit said no legitimate income appeared to have been deposited into bank accounts tied to Mello’s company. (Her government paycheck went into a USAA bank account, separate from the CHYLD accounts, the lawsuit said.)

Agents found that between March 2022 and April 2023 alone, DFAS issued more than $61 million in payments to CHYLD.  

Investigators allege that Mello spent nearly $43 million between Dec. 17, 2021, and May 31, 2023. That included $24.3 million on “retail,” $10.9 million on jewelry, $8 million on vehicles, $130,150 on airfare and $80,432 on lodging, the lawsuit said.

Prosecutors have not said whether anyone questioned her allegedly lavish spending or took such concerns to federal authorities.

“She’s a textbook example,” said a source familiar with the investigation. “This could have been caught much, much earlier. It didn’t get caught until an outside agency figured it out.”