Lawmakers from California expressed outrage, including Democratic Sens. Dianne Feinstein and Barbara Boxer; House Majority Leader Kevin McCarthy, a Republican; and House Minority Leader Nancy Pelosi, a Democrat.
Maj. Gen. Matthew Beevers said the California National Guard is working with members of Congress to introduce legislation that, if approved and signed by the president, would order the National Guard Bureau to clear the debts of soldiers who were wrongly told they were eligible for bonuses of $15,000 or more.
The total amount given out in bonuses is not clear, but The Los Angeles Times reported $22 million has been recovered in California so far.
"This is how you destroy all faith in a Pentagon that is supposed to have your back," Brian Duffy, head of the national service organization Veterans of Foreign Wars, said in an emailed statement. "Instead of seeking repayment, the Pentagon owes them a debt of thanks and an apology for insulting their honorable service to our nation."
The Guard offered the bonuses and student loan aid to re-enlist at the height of the two wars in the 2000s.
The Pentagon demanded the money back after audits revealed overpayments by the California Guard under pressure to fill ranks and hit enlistment goals. If soldiers refuse, they could face interest charges, wage garnishments and tax liens, the Times reported .
"We understand other states may have been affected but are pending verification of which ones," National Guard Bureau spokeswoman Laura Ochoa wrote in an email to The Associated Press. "California is where the majority of this occurred."
Soldiers told the newspaper that they feel betrayed by having to repay the money. They can apply for a federal review of their debt, but that appeals process does not guarantee it will be waived.
"Our military heroes should not shoulder the burden of military recruiters' faults from over a decade ago," McCarthy said in an emailed statement.
His statement said the House would investigate the reports, but spokesman Matt Sparks declined to comment on what that would entail.
In California, four people were convicted of fraud over the improper bonuses.
At least 54 members of Congress and the California Legislature sent letters to Secretary of Defense Ashton Carter asking that he halt the collections and provide further information.
Democratic presidential nominee Hillary Clinton also said she was appalled by what she described as a mistreatment of veterans and called for legislation.
Navy Capt. Jeff Davis, a Defense Department spokesman, encouraged service members to appeal the debt and said the department would work with the Army, National Guard Bureau and California Army National Guard to "strengthen efforts to respond to this situation."
"We take doing right by our service members very seriously, and the senior leadership of this department is looking very closely at this matter," Davis said.
A federal investigation in 2010 found thousands of bonuses and student loan payments were improperly doled out to California Guard soldiers. About 9,700 current and retired soldiers received notices to repay some or all of their bonuses with more than $22 million recovered so far, the Times reported.
The California Guard's former Bonus and Incentive Manager, Army Master Sgt. Toni Jaffe, pleaded guilty to fraud for misappropriating the funds and was sentenced to 30 months in prison in 2012. Jaffe gave out $15.2 million in bonuses and loan repayments that she knew soldiers were ineligible to receive, federal prosecutors said at the time.
Three additional officers pleaded guilty to the fraud.
Beevers said the California Guard also fired one general and two colonels. The Guard punished more than 100 other soldiers following the incident; most of them are no longer in the service.
"Folks who are in leadership now are the ones who have spent several years correcting that issue," spokesman Capt. William Martin said.
Associated Press National Security Writer Robert Burns in Washington contributed to this report.
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