BAH Fraud: What NOT to Do (And the Consequences)
Bottom Line Up Front: BAH fraud = lying about dependents, living arrangements, or marital status to get higher BAH. Consequences: Court-martial, repay ALL fraudulent BAH (often $30,000-$100,000+), dishonorable discharge, federal prison (up to 5 years), loss of all VA benefits. Not worth it. If you make honest mistake, self-report immediately.
What Counts as BAH Fraud
Common BAH Fraud Schemes (All Illegal)
1. Fake Marriage for BAH
- Marry someone to get BAH with-dependents rate
- No actual relationship
- Sometimes called "contract marriage"
- Penalty: Court-martial, repay BAH, dishonorable discharge, possible federal charges
Example:
- E-3 marries friend to get BAH increase
- Gets $800/month more BAH ($9,600/year)
- Caught after 3 years
- Must repay: $28,800
- Court-martial: Reduction to E-1, 60 days confinement, bad conduct discharge
2. Not Reporting Divorce
- Get divorced but don't update DEERS
- Continue receiving BAH with-dependents
- Pocket extra $400-$800/month
- Penalty: Same as above (fraud)
Example:
- E-6 divorces in January
- Doesn't update DEERS for 18 months
- Receives $600/month excess BAH ($10,800 total)
- Finance catches it during audit
- Charged with fraud, must repay + court-martial
3. Fake Dependents
- Claim child that's not yours
- Claim custody of child you don't actually have
- Penalty: Federal fraud charges + military justice
4. False Living Arrangements
- Claim you're living off-base (receiving BAH)
- Actually living in barracks rent-free
- Pocket entire BAH
- Penalty: Court-martial, repayment, discharge
5. Fake Separation for Dual-Military BAH
- Dual-military couple pretends to separate
- Both claim BAH as "single with dependents"
- Actually living together
- Penalty: Both court-martialed, both must repay
Real BAH Fraud Cases
Case #1: Fake Marriage Ring (2022)
Scheme:
- 15 junior enlisted at Fort Hood
- Married each other in fake marriages
- All received BAH increase
- Total fraud: $450,000 over 2 years
Outcome:
- All court-martialed
- Repayment: $30,000-$50,000 each
- Discharges: 12 bad conduct, 3 dishonorable
- 4 went to federal prison (1-3 years)
Case #2: Unreported Divorce (2023)
Scheme:
- E-7 divorced in 2020
- Didn't update DEERS
- Received BAH with-dependents for 3 years
- Fraud total: $21,600
Outcome:
- Court-martial
- Reduced to E-5
- Repay $21,600 + interest
- 45 days confinement
- Bad conduct discharge
- Lost retirement (17 years of service)
Case #3: Fake Custody (2021)
Scheme:
- Service member claimed ex's kids as dependents
- Didn't have custody
- Received BAH increase for 2 years
- Fraud total: $14,400
Outcome:
- Court-martial
- Repayment + $10,000 fine
- Reduction in rank
- 90 days confinement
How BAH Fraud Gets Caught
Audit Triggers
- Random DEERS audits: Finance randomly checks DEERS vs. reality
- Anonymous tips: Jealous co-workers, ex-spouses, neighbors
- Divorce filings: Court notifies military of divorce
- PCS audits: Housing office cross-checks with finance
- Social media: Posts about "roommate" when claiming single-with-dependents
Investigation Process
- Finance flags discrepancy
- Commander opens investigation
- CID/NCIS/OSI interviews you
- DEERS records pulled
- Marriage certificates, divorce decrees, custody agreements verified
- If fraud confirmed → court-martial charges
Honest Mistakes vs. Fraud
Honest Mistakes (Usually Not Prosecuted)
Scenario 1: Delayed DEERS Update
- You get divorced in December
- Plan to update DEERS in January
- Finance processes divorce before you update
- Receive 1 extra month of "with dependents" BAH
What to do:
- Self-report immediately
- Repay excess BAH
- Provide proof you planned to update
- Usually: Counseling, no court-martial
Scenario 2: Custody Change
- You had custody, got "with dependents" BAH
- Ex gets custody back
- You forget to update (honest mistake)
What to do:
- Report as soon as you realize
- Repay from date custody changed
- Show good faith (no intent to defraud)
Fraud (Prosecuted Aggressively)
Intent to deceive = Fraud
- Deliberately not reporting divorce
- Fake marriage
- Lying on DEERS forms
- Collecting excess BAH knowing you're not entitled
Self-Reporting (If You Made Mistake)
When to Self-Report
- ✅ Immediately when you realize mistake
- ✅ BEFORE finance catches it
- ✅ Even if it's embarrassing
How to Self-Report
- Go to finance office
- Say: "I need to report a BAH discrepancy. My DEERS info is incorrect."
- Provide documentation (divorce decree, custody order, etc.)
- Ask for repayment plan
What happens:
- Finance calculates overpayment
- You repay (usually via paycheck deductions over 6-12 months)
- Counseling from commander (maybe)
- Usually NO court-martial if you self-report quickly
Key: Self-reporting shows good faith. Much better outcome than being caught.
Penalties for BAH Fraud
Military Justice (UCMJ)
Charges:
- Article 107: False Official Statements
- Article 121: Larceny
- Article 132: Fraud Against the United States
Typical punishments:
- Rank reduction (often to E-1)
- Forfeiture of pay
- Confinement (30-180 days)
- Bad conduct discharge or dishonorable discharge
- Repayment of all fraudulent BAH
Federal Charges (Civilian Court)
For large-scale fraud ($50,000+):
- 18 USC § 1001: False Statements
- 18 USC § 287: False Claims
- Up to 5 years federal prison
- Up to $250,000 fine
- Restitution (repay all fraudulent BAH)
Loss of Benefits
Dishonorable discharge = Lose:
- All VA benefits (healthcare, disability, education)
- GI Bill
- VA home loans
- Burial benefits
- Federal employment eligibility
Example:
- Commit $30,000 BAH fraud
- Get dishonorable discharge
- Lose $200,000+ in lifetime VA benefits
- Net loss: $170,000+ (plus criminal record)
Common Questions
Q: What if I marry someone I barely know - is that BAH fraud?
A: If it's a REAL marriage (you actually live together, have relationship), it's legal (even if fast). If it's FAKE (you marry for BAH, don't live together, no real relationship), it's fraud.
Q: What if my ex and I live together but are divorced?
A: You get BAH without dependents. Your ex is NOT your dependent after divorce, even if living together.
Q: Can I get BAH for my girlfriend/boyfriend?
A: NO. Must be legally married. Girlfriend/boyfriend = not a dependent.
Q: What if my spouse deploys and I'm still receiving "with dependents" BAH?
A: That's legal. You're still married. They're still your dependent (even if deployed).
Q: What if I have kids but not custody - can I claim "with dependents"?
A: NO. Must have custody (primary or joint). Paying child support alone doesn't qualify.
How to Stay Legal
Update DEERS Immediately After:
- ✅ Marriage (within 30 days)
- ✅ Divorce (within 30 days)
- ✅ Birth of child (within 30 days)
- ✅ Custody changes (immediately)
- ✅ Death of dependent (immediately)
Review Annually
- Log into DEERS (MilConnect)
- Verify dependent information
- Update if anything changed
Ask If Unsure
- Talk to finance office: "My situation changed. How does this affect BAH?"
- They'll help you determine correct BAH rate
Action Steps
If You Made Honest Mistake:
- ✅ Self-report to finance immediately
- ✅ Provide documentation
- ✅ Arrange repayment plan
- ✅ Update DEERS correctly
If You Committed Fraud (Deliberately):
- ✅ Stop immediately
- ✅ Self-report (reduces punishment)
- ✅ Get lawyer (JAG or civilian)
- ✅ Prepare to repay + face consequences
Self-reporting fraud is still better than being caught. Shows some integrity, reduces punishment.
Verification & Sources
Official Sources:
- UCMJ Articles 107, 121, 132
- DFAS BAH Audit Procedures
- Federal fraud statutes: 18 USC §§ 287, 1001
Last Updated: October 31, 2025
Related Guides
Remember: BAH fraud is not worth it. Ever. The temporary financial gain ($5,000-$30,000) is wiped out by punishment (repayment + court-martial + discharge + loss of VA benefits = $100,000-$300,000 loss). If you made mistake, self-report. If you're considering fraud, DON'T. It always gets caught.