72 Retired NYC Cops Charged With Social Security Fraud

Larger version here.

This is an amazing story. 72 former NYC cops and 8 former fireman are among 106 people charged in New York state court for a massive social security fraud scam that robbed the Government of an estimated $400 million. The amounts paid to these defendants was over $20 million. You can read the Indictment here.

The scheme was allegedly spearheaded by a former FBI agent who is former prosecutor (in the rackets unit, no less, of the Nassau County DA's office.) He and the other three organizers allegedly collected $28,000 per applicant.

Keep in mind, the Indictment is merely a charge, and all of them are presumed innocent. Their lawyers say they did nothing wrong.

The DA says many of the defendants falsely claimed they were disabled due to PTSD from the 9/11 attacks.

What did them in? Their Facebook pages, showing photos of them doing activities they claimed they were too disabled to do. And recorded undercover telephone calls. [More...]

Almost all of the former cops and firefighters were already collecting pensions.

The applicants claimed that they suffered a psychiatric condition that prevented them from working, such as post-traumatic stress disorder, anxiety, or depression. Many of the defendants used their association with the events of September 11, 2001, as the cause of their psychiatric condition. Seventy-two of the defendants are also collecting pensions as retirees of the NYPD, eight from the New York City Fire Department, five from the New York Department of Correction, and one from the Nassau County Police Department.

The men did not need to be completely disabled to receive pensions, but they did to be eligible for social security.

For that reason, according to the charges, to overcome the SSDI threshold, the applicants, with the help and direction of ESPOSITO, HALE, MINERVA and LAVALLEE, created false psychiatric conditions, typically depression, anxiety, or post-traumatic stress disorder (“PTSD”).

.... Specifically, they instructed applicants on how to fail memory tests with plausibility, how to dress, and on their demeanor. Almost every application included identical descriptions of the applicants’ activities of daily living.

But they weren't disabled according to their personal FB pages:

For example, defendants often claimed that they rarely left their homes, did not travel, and had almost no social interactions with family and friends. But, according to court documents, applicants were in fact driving, traveling by air, engaging in recreational sports, and lifting heavy objects. Several of the defendants also were gainfully employed, including at energy and investment companies, private security and private eye firms, construction and landscaping, and even baking.

One rode a jet ski, another taught and performed mixed martial arts, and another piloted planes.

Then there's the kickbacks:

ccording to the indictment, after the retroactive awards were deposited into the applicants’ accounts, ESPOSITO and MINERVA instructed the applicants to withdraw cash from the bank in in increments under $10,000, so that the withdrawals would not raise suspicion or require the filing of currency reports with the federal government. Applicants then made cash payments to ESPOSITO or MINERVA, who in turn transferred the money to HALE and LAVALLEE. These one-time cash payments were based on the applicants’ monthly awards, and ranged from approximately $20,000 to $50,000.

In addition to a portion of the secret kickbacks, LAVALLEE also received $6,000 directly from the government for attorney’s fees for each applicant. Applicants then continue to collect their monthly fraudulent disability payments, which ranged from approximately $2,000 to $5,000 per month, depending on the number of dependents within the beneficiary’s household.

Who were the ringleaders: From the DA's press release:

The four principal defendants, RAYMOND LAVALLEE, 83, THOMAS HALE, 89, JOSEPH ESPOSITO, 64, and JOHN MINERVA, 61, are accused of directing hundreds of SSDI applicants, including many retirees of the NYPD and FDNY, to lie about their psychiatric conditions in order to obtain benefits to which they were not entitled. They are charged with Grand Larceny in the First and Second Degrees, and Attempted Grand Larceny in the Second Degree. The remaining 102 defendants, all SSDI recipients, are charged with Grand Larceny in the Second Degree and Attempted Grand Larceny in the Second Degree.

The average payout amount was $210,000, with some reaching $500,000, for a total of more than $20 million.

The New York Times reports:

The inquiry started in 2008 when Social Security investigators noticed that two retired police officers who had gun permits were also receiving payments for a mental disability. That discovery led to a review of other applications handled by Mr. Lavallee and a multiagency investigation.

The four leaders were granted bail today.

Mr. Lavallee and Mr. Hale were each released on $1 million bail, while Mr. Esposito posted $500,000 and Mr. Minerva put up $250,000.

These defendants are just a part of the overall scheme, which the state alleges began in 1988, involved more than 1,000 people who "were suspected to have bilked the federal government out of an estimated $400 million."

The New York Times, by the way, has had a major site overall. As of now, there are 1,146 comments on the story.

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  • Display: Sort:
    Would that this same level of scrutiny, (5.00 / 2) (#6)
    by Anne on Thu Jan 09, 2014 at 10:34:38 AM EST
    and this same zeal for accountability, had attached itself to the high-rolling mortgage brokers and Wall Streeters who were actively lying and scamming people to the point where the economy nearly collapsed.

    But see, if you have billions of dollars to pay fines and settlements, it's so much easier to get away with that kind of thing.

    Not suggesting it was right for these cops to do what they did - it's not - or that they shouldn't face the consequences of their actions - they should.  But when a JP Morgan can allow a Bernie Madoff to operate for years because they don't want to give up all the money being made off him, and make billions of dollars in profits and pay huge bonuses to reward people for looking the other way, and the government just sends them a bill that won't make a dent in the firm's bottom line, something is terribly wrong with the system.

    Please Post Source For: (5.00 / 3) (#8)
    by ScottW714 on Thu Jan 09, 2014 at 11:46:05 AM EST
    Hundreds of thousands of people are gaming the social security system with similar false or exaggerated psychiatric ailments to get benefits.

    Facts?!?! (5.00 / 2) (#10)
    by Yman on Thu Jan 09, 2014 at 08:40:10 PM EST

    That's crazy talk!


    Well, plus the fact that it is allegedly a well (5.00 / 1) (#9)
    by ruffian on Thu Jan 09, 2014 at 07:34:22 PM EST
    organized ring of scammers, and not random independent people doing it, that is what makes it a story.

    To be expected (none / 0) (#1)
    by Abdul Abulbul Amir on Thu Jan 09, 2014 at 08:35:52 AM EST

    When you have loosey goosey standards for what it takes to start raking in a nice disability check, you are going to attract scammers.  Plus with vague standards it easier for an administrator to grant payment than hassle with rejection appeals while being accused of discrimination.

    BTW, there was an ad on TV last night by some law firm stating you may be missing disability payments you are entitled to for a disability you may not even be aware of.  The firm will investigate your case, and no fee unless you get benefits.


    Loosey Goosey... (5.00 / 3) (#3)
    by ScottW714 on Thu Jan 09, 2014 at 09:45:04 AM EST
    You have obviously never dealt with that system.  I have a friend going through it who is damn near bed ridden, it's been 4 years since she worked and still having issues.   She made a very nice salary and had paid in for years and she would do anything to go back to work and earn a real wage, but she's stuck dealing with a system that has become a republican bugaboo, making it very hard for legitimate people to get a fraction of what they used to make because they are physically unable to work.

    Please do not speak of things you do not know of and understand that the system was rigged by the very folks republican praise day in and day out, cops, fire fighters, an FBI agent, and doctors.

    If you want to bad mouth it, start with the actually people ripping off the government, not the system they rigged for profit.

    If only you held the same believe for the system that allows folks to own machines meant to kill, which is infinite loser than the disability system.  Or held the any portion of the military and their contractors to the same degree of scrutiny, who have wasted $400M in the time it took me to write this reply.  

    And I forget, how much did the republicans cost taxpayers trying to shut down legislation that was upheld by the SCOTUS ?  Right, bugaboo indeed.

    And FYI, if Corporations didn't purposely rig the insurance industry, my friend would be collecting LT disability from her former job, and would not have to join the ranks of the folks republicans despise.  Which IMO is one of the main factors as to why the rates for disability have skyrocketed, because Corporate America decided that expense wasn't their to bare anymore.

    Also noted, no mention of the police and firefighters pensions, how odd, I guess that bugaboo is for teachers only.


    They should change... (none / 0) (#2)
    by kdog on Thu Jan 09, 2014 at 09:24:32 AM EST
    the name of Facebook to "Facebooked" with all the people who get themselves collared using that stupid website.  Stupid, stupid, stupid.

    If the allegations are true, greed killed another golden goose for these fools.  NYC Police and Fire are among the last workers in the country still getting great pensions and retirement benefits.  No need to run a disability scam.  Who do they think they are, 1%ers?  That's the only group who has no worry of getting caught scamming since laws don't apply to them, as we all well know.

    It's such a shame too, because scams like this gives ammo to those who would love to see the concept of disability benefits be eliminated all together. Eventually the burden falls on those who truly need and rely on disability.  

    Dude, Can You Imagine... (none / 0) (#4)
    by ScottW714 on Thu Jan 09, 2014 at 09:48:15 AM EST
    ...the folks and organizers who kept low profiles waking up to see the idiots on the TV holding a marlin or teaching karate and knowing you are going down because their self images are so low they had to show the world just how cool they are and...

    Loose pics sink ships... (none / 0) (#5)
    by kdog on Thu Jan 09, 2014 at 10:08:47 AM EST
    Sh*t my buddy who used to work for the Sanitation Dept. and is out on 3/4's pay because he lost half a finger on the job was so afraid of city fraud inspectors he quit the rec league football team. Even though he could still play with 9 1/2 digits.

    While I hate to see (none / 0) (#14)
    by fishcamp on Sun Jan 12, 2014 at 08:26:28 AM EST
    any billfish killed smoked marlin is delicious...just hard to roll.  lotta fishing jokes down here in the fabulous florida keys.

    Everybody I've known personally on (none / 0) (#11)
    by Mikado Cat on Fri Jan 10, 2014 at 03:27:16 AM EST
    disability was paranoid about losing it. Its typical of all entitlement programs, you get addicted to the check and afraid of work or anything that risks the "check".

    Attempting to put partisan political views as the cause by the other team, isn't opening your eyes very much.

    Or, they were "paranoid" ... (5.00 / 2) (#12)
    by Yman on Fri Jan 10, 2014 at 06:23:49 AM EST
    Everybody I've known personally on disability was paranoid about losing it. Its typical of all entitlement programs, you get addicted to the check and afraid of work or anything that risks the "check".

    ... because they are actually disabled and like to ... you know ...

    ... eat.


    How Many Is Everybody You Know ? (5.00 / 1) (#13)
    by ScottW714 on Fri Jan 10, 2014 at 09:08:21 AM EST
    And are these folks legitimately disabled ?

    Seems very odd that people you aren't close to would tell you this and if they are close, it's even odder that you would speak of them in such a dismissive way.

    Put me in the +1 about being paranoid about losing my main source of income, that is fairly common trait in us humans.