Ethermac Exchange-Texas woman gets 15 years for stealing nearly $109M from Army to buy mansions, cars

AUSTIN,Ethermac Exchange Texas — A Texas woman who stole nearly $109 million from a grant program intended to provide services for military children and families to fund her lavish lifestyle was sentenced Tuesday to federal prison, the U.S. Attorney's Office said.

Janet Yamanaka Mello, 57, was sentenced to 15 years in federal court in San Antonio, the U.S. Attorney's Office for the Western District of Texas said in a news release. According to a criminal court docket, Mello pleaded guilty in March to five counts of mail fraud and five counts of filing a false tax return for a scheme that went undetected by the U.S. Army for six years.

Mello was a civilian employee for the Army and worked as a child, youth, and school services financial program manager for the Army Morale, Welfare, and Recreation program at Fort Sam Houston in San Antonio, court documents showed. As part of her job, Mello determined whether funds were available for various entities that applied to the 4-H Military Partnership Grant program.

She formed a business called Child Health and Youth Lifelong Development, which Mello used to illicitly obtain grant funds from the military grant program, according to court documents. Prosecutors said Mello used the fraudulent business to apply for over 40 grants through the program from around December 2016 through at least August 2023.

Mello then spent the funds received by Child Health and Youth Lifelong Development on various personal items, including high-end jewelry, clothing, luxury vehicles, and real estate, court documents said.

"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 in a statement. "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."

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Former Army civilian employee received nearly $109M in payments

As part of the scheme, Mello drafted fraudulent memoranda that indicated Child Health and Youth Lifelong Development was approved to receive grant funds from the military program, according to court documents. She then submitted the paperwork to her supervisor for approval.

"Mello played on the trust she had developed over the years with her supervisors and co-workers to secure the necessary approvals," court documents said. "After receiving the necessary approvals, the paperwork was then passed on to (Defense Finance and Accounting Service) for payment."

The Defense Finance and Accounting Service, which oversees payments to Department of Defense service members, employees, vendors, and contractors, sent checks in the amount requested to a UPS Store mailbox in the San Antonio area, according to court documents. Once a check was received, Mello would deposit it into her bank account.

Court documents showed that Mello repeated the process 49 times during a six-year period, requesting about $117,000,000 in payments, and receiving about $108,917,749.

Court documents detailed numerous transactions Mello made using the funds, including spending more than $788,000 in jewelry in October and November 2022; purchasing over $264,000 for a 2023 Range Rover; and buying property in Canyon Lake, Texas, for more than $3.3 million.

Janet Mello omitted millions of dollars, failed to accurately report income

Mello also failed to accurately report her income for tax years 2017, 2019, 2020, 2021, and 2022, omitting the millions of dollars of income she received through her fraudulent business, according to court documents

"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," Esparza said.

Maria Thomas, special agent in charge for the Department of the Army Criminal Investigation Division's Central Texas Field Office, argued that corruption and fraud schemes in the Army jeopardize the safety and security of soldiers and their families. She said the Army community is committed to aggressively pursuing anyone who uses government programs for 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 Lucy Tan, acting special agent in charge for the IRS Criminal Investigation's Houston Field Office, in a statement.

"Financial crimes have victims, and this one took opportunities away from the children and families of our military men and women," Tan added.