Janet Mello Convicted of Theft of $108 Million from the Army, Fights to Keep Pension While in Prison

Janet Y Mello Convicted for Stealing $105 Million from Army Fights to Keep Pension While in PrisonPhoto by2nd Life Media Alamogordo Town News

A woman, Janet Yamanaka Mello, was found guilty in July, 2024, for stealing nearly $109 million that was originally intended for children in military families. She was sentenced to 15 years in prison, now she seeks to retain her pension while in prison as reported by the San Antonio Express News.

Janet Yamanaka Mello, the civilian Army employee who stole over $108 million from a grant program designed to provide services to military dependents and their families was sentenced to 180 months in prison for five counts of mail fraud and five counts of filing a false tax return.

According to court documents, Janet Yamanaka Mello, 57, worked as a financial program manager for the U.S. Army, Installation Management Command – G9 (Morale, Welfare and Recreation) Child and Youth Services (CYS) at Fort Sam Houston. In or around December 2016 through at least August 29, 2023, Mello formed a business she called Child Health and Youth Lifelong Development (CHYLD). The sole purpose of CHYLD was to receive grant funds from the 4-H Military Partnership Grant program, which Mello fraudulently secured by way of her position as a CYS financial program manager.

Per the DOJ, Mello received a grant check, she deposited the check into her bank account, spending the money on clothing, jewelry, vehicles and real estate. Court documents indicate that Mello repeated the process 49 times during a six-year period, requesting approximately $117,000,000 in payments, and receiving approximately $108,917,749.

Subsequently, Mello failed to accurately report her income for tax years 2017, 2019, 2020, 2021 and 2022, omitting millions of dollars in income fraudulently received through CHYLD.

Now she is fighting in court to keep her pension funds while in prison rather than them be used to pay her restitution. After now being convicted of defrauding the U.S. Army out of $100 million she has been granted a full civil servant retirement package, the San Antonio Express-News reported.

While former civilian defense employee Janet Yamanaka Mello serves a 15-year prison sentence for stealing nearly $109 million from the Army, she's fighting to hang on to most of her $4,475 monthly government pension.

Janet Yamanaka Mello, 57, a former civilian financial program manager at Joint Base San Antonio-Fort Sam Houston, convicted to 15 years, claims she "earned" her full retirement benefits, despite being convicted from of using funds illegally obtained from the U.S. Army to purchase more than 30 homes, cars and jewelry during a scheme that lasted seven years. An Army spokesperson confirmed that the branch cannot withhold Mello's benefits from her as they are protected under a federal law.

“The command has no authority to impact Ms. Mello’s retirement,” an Army spokesperson told the San Antonio Express-News. “In accordance with 5 U.S. Code Section 8312, an individual may be denied an annuity or retired pay on the basis of the service of the individual, if the individual is convicted of treason, rebellion or insurrection, or other similar offenses. There is no similar statutory authority for denying retired pay based on a conviction of other offenses.”

Albert Flores, an attorney representing Mello, claims his client "earned" her retirement benefits in a statement to the San Antonio Express-News.

“She earned it. I don’t see how one thing is related to the other,” Flores said of the ongoing criminal investigation, which he claims Mello has been "very cooperative" with in turning over assets and predicted would be quickly resolved.

Flores admitted that he expects Mello to sell some of the luxury possessions she purchased through the scheme in order to reimburse officials. The former civilian financial program manager created a business called "Child Health and Youth Lifelong Development" in order to siphon funds received from the Army to her personal account and was flagged by the IRS when it was included on her 2017 personal tax return.

The Department of Justice claims Mello “allegedly stole more than $100 million in Army funds by regularly submitting fraudulent paperwork that indicated an entity she controlled was entitled to receive funds from the Army" in a press release shared in December 2023.

Mello, 58, is opposing efforts by federal prosecutors to seize almost $4,251, or 95%, of her monthly retirement benefits while she's imprisoned. They're trying to collect more than $100 million in restitution.

"Mello unlawfully enriched herself by fraudulently siphoning Army funds intended for meaningful youth development opportunities for military-connected children to her personal accounts," the prosecutors said in a court filing last month. "Accordingly, it is appropriate for the United Sates to offset the monthly annuity it pays her while it also bears the cost of her imprisonment and seeks to recoup its losses."

“Janet Mello betrayed the trust of the government agency she served and repeatedly lied in an effort to enrich herself,” said U.S. Attorney Jaime Esparza for the Western District of Texas. “Rather than $109 million in federal funds going to the care of military children throughout the world, she selfishly stole that money to buy extravagant houses, more than 80 vehicles and over 1,500 pieces of jewelry. Her actions reflect exactly the opposite of what it means to serve your country, and my office will continue to work tirelessly to prosecute those who illegally seek personal gain at the expense of their fellow citizens.”

“Corruption and fraud in U.S. Army programs jeopardize the safety and security of our Soldiers and their families. When discovered, fraudulent activities by Army employees will not be tolerated, and those involved will be brought to justice,” said Special Agent in Charge Maria Thomas for the Department of the Army Criminal Investigation Division, Central Texas Field Office. “The Army community, and the public, can rest assured that we remain committed to aggressively pursuing anyone that uses government programs for their own personal gain.”

"Mello's penchant for extravagance is what brought her down. We identified that her reported income was well below the lavish lifestyle she lived. As we uncovered the details, the criminal scheme grew, the dollar amount grew, and the reach of her spending grew," said Acting Special Agent in Charge Lucy Tan of IRS Criminal Investigation's Houston Field Office. "Financial crimes have victims, and this one took opportunities away from the children and families of our military men and women."

After federal agents raided her far North Side home in August, Mello retired from the military and began collecting benefits. An Army spokesperson said in January the military was bound by federal law to allow her to retire, even though she was the target of a criminal investigation.

the government is paying roughly $50,000 a year for Mello's confinement, prosecutors said there's no need for her to receive 95% of her benefits during her time in prison. They would allow her to keep 5% of the benefits, or about $224 a month, for "her commissary needs."

Mello pleaded guilty on March 7 to mail fraud and tax charges for the scheme, which went undetected by the Army for almost seven years.

She spent much of the stolen money on mansions and prime real estate, high-end and vintage vehicles, expensive jewelry and designer handbags. As part of her plea, she forfeited ownership and interest in more than 30 real estate properties in five states, 80 vehicles and motorcycles, expensive jewelry and $18 million in cash found in six bank accounts.

Prosecutors said if the government is limited to receiving 25% of the retirement payment, Mark Mello, 63, "would reap the benefit of her income" and result in a "legally unjust outcome." The couple has been married seven years.

The judge is expected to rule later this month.