Janet Yamanaka Mello faces a maximum of 20 years in prison for five of the 10 charges she faces.
Janet Yamanaka Mello, an ex-civilian government employee, pleaded guilty Thursday to stealing $108 million from the Army — money she used to bankroll a life of opulence that lasted nearly seven years. It collapsed in a matter of months, ending in San Antonio federal court when she acknowledged committing crimes that amounted to one of the biggest thefts of public funds in Texas history.
Mello, once the salutatorian of her high school graduating class in Guam, pleaded guilty to five counts of mail fraud and five charges of filing fraudulent tax returns. U.S. Magistrate Judge Richard Farrer asked her a series of yes-or-no questions. 'Are you pleading guilty because you are guilty, and not because any other reason?' 'Yes, your honor,' said Mello, 57, a San Antonio resident. She admitted that she exploited lax controls at the Army’s Installation Management Command to divert $108 million to Child Health and Youth Lifelong Development, or CHYLD, a bogus company she created solely to rake in ill-gotten government payments. “Today was the beginning of the long process where she pled guilty,” Mello's lawyer, Albert Flores, told reporters after Thursday's hearing. “She’s accepting responsibility for her actions. She’s very remorseful for what she’s done.' “She was cooperating with the government from the beginning to recover as much of the assets as possible,' he said. 'In the end, we expect there’s going to be a large number of assets both in number and monetary value that are going to be recovered by the U.S. government.” Lap of luxury Mello worked as a financial program manager in the command's G-9 Branch, which oversees programs related to family, morale, welfare and recreation initiatives. RELATED COVERAGE: IRS flagged San Antonio woman accused of stealing $103 million from Army As part of her duties, she helped run the 4-H Military Partnership Grant program. Her bosses gave her almost complete autonomy, with few checks and balances. The program 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 provided no services — that it served only to receive payments. Prosecutors said she bought more than 30 properties in Texas and four other states, 80 vehicles and numerous purses from luxury brands such as Coach, Louis Vuitton and Gucci. Parcel delivery employees said they delivered so many purses and bags that they called her the 'Gucci Goddess.' Court records said Mello not only took advantage of the leeway she had in her job, but the trust another federal agency, the Defense Finance and Accounting Service, placed in the command by assuming the Army vetted its vendors. Known as DFAS, that agency oversees payments to Defense Department service members, employees and contractors. The agency mailed more than 40 payment checks to CHYLD totaling $108 million, all at Mello’s request. The checks were mailed to mailboxes she rented at UPS stores, which she claimed were CHYLD's addresses. DFAS sent the money after receiving packets from Mello that included fictitious names and emails of people she claimed worked for the government. Mello forged the digital signature of one of her bosses, Suzanne King, chief of G-9's children and youth services, records said. Mello was initially indicted on charges that included one count of aggravated identity theft, which carries a mandatory two years on top of any other sentence she received, but that charge was dismissed as part of the plea deal. RELATED COVERAGE: 'Gucci Goddess' Janet Mello stiffed contractor for luxury home remodel, company claims The mail fraud charges each carry a maximum penalty of 20 years in prison. The tax charges each carry a maximum of three years in prison. Her sentencing is scheduled for May 29 before U.S. District Judge Xavier Rodriguez. Mello is expected to forfeit her interests and ownership in properties allegedly bought with the stolen funds, including expensive purses, jewelry, real estate and vehicles. After agents raided her far North Side home in August, she was allowed to retire and begin collecting benefits. The Army said it was prevented by legal restrictions from allowing her to retire. Federal prosecutors, however, plan to file motions that may prevent her from collecting all of the benefits. She was allowed to remain on bond pending sentencing, which will be scheduled later. Prosecutors have criticized her supervisors, including King, G-9 Branch Chief Kevin Montgomery and G-9 Director Josh Gwinn. The command is led by Army Lt. Gen. Omar J. Jones IV. 'Despite the massive amount of money that went to CHYLD, defendant's supervisors trusted defendant and did no independent verification that CHYLD actually provided services consistent with the purpose of the program, did no review of defendant's relationship to CHYLD, and took no additional steps to confirm the funds defendant authorized and requested were lawfully used consistent with the purpose of the program,' they said in a filing included with Mello's plea documents. In January, Jones said in a statement that said his office takes the case seriously and is making administrative changes in response to Mello's fraud. Those include 'increased control measures to reduce risk of fraudulent payments; increased oversight and separation of duties to reduce risk of improper action; and reduced the number of staff with signature authority to issue payments.' Some command staffers, however, have complained to members of Congress since Jones publicly addressed the scandal. 'The G9 Director Josh Gwinn has taken no responsibility for what happened on his watch and was dismissive of people's concerns at a recent conference,' wrote one insider, who asked to remain anonymous for fear of retaliation. Command spokeswoman Nicole Weidman defended the organization.“The U.S. Army Installation Management Command takes this matter seriously and has taken action to prevent future incidents,' Weidman said in a statement. 'The command is conducting a comprehensive review and analysis of its accounting and agreements processes and procedures to ensure we remain good stewards of government funds.'
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