NYC Officials Busted for Social Security Fraud… On Facebook!

(Original story at the New York Times here.)

These police officers and firefighters claimed that they suffered post-traumatic stress disorder (PTSD) and couldn’t work, so that they could collect disability payments.

How did Social Security investigators find so many of them committing fraud? The fraudsters posted pictures and details of their of their very carefree and exciting lives — fishing, playing basketball, flying helicopters, teach martial arts, to name a few — on Facebook!

This reminds me of the two cases of robberies where the suspects were caught because of Facebook. So be careful of what you say!

Charges for 106 in Huge Fraud Over Disability

By WILLIAM K. RASHBAUM and JAMES C. McKINLEY Jr. | JAN. 7, 2014

The retired New York City police officers and firefighters showed up for their psychiatric exams disheveled and disoriented, most following a nearly identical script.

They had been coached on how to fail memory tests, feign panic attacks and, if they had worked during the Sept. 11, 2001, terrorist attacks, to talk about their fear of airplanes and entering skyscrapers, prosecutors said. And they were told to make it clear they could not leave the house, much less find a job.

But their Facebook pages told investigators a starkly different story, according to an indictment and other court papers.

Former police officers who had told government doctors they were too mentally scarred to leave home had posted photographs of themselves fishing, riding motorcycles, driving water scooters, flying helicopters and playing basketball.

“The brazenness is shocking,” Cyrus R. Vance Jr., the Manhattan district attorney, said on Tuesday.

The online photos, along with intercepted phone calls and the testimony of undercover officers, were evidence of what officials said was the largest fraud ever perpetrated against the Social Security disability system, a scheme stretching back to 1988 in which as many as 1,000 people — many of them officers and firefighters already collecting pensions from the city — were suspected to have bilked the federal government out of an estimated $400 million.

An indictment unsealed on Monday by the Manhattan district attorney’s office charges 106 people, four of whom are accused of running the scheme. The group was headed by Raymond Lavallee, 83, a Long Island lawyer who started his career as an agent with the Federal Bureau of Investigation and once served as a senior Nassau County prosecutor, court papers said.

Mr. Lavallee worked most closely with two men: Thomas Hale, 89, a pension consultant who investigators say filled out applications, and Joseph Minerva, 61, a former police officer who works for the Detectives’ Endowment Association.

The organizers received cash kickbacks of more than $28,000 from each applicant, money that was taken from the recipients’ first check from the Social Security Administration, prosecutors said.

Lawyers for all four men denied the accusations.

Scores of former police officers and firefighters were arrested on Tuesday and brought in handcuffs to State Supreme Court in Manhattan, where they were arraigned before Acting Justice Daniel Fitzgerald on charges of grand larceny. They are accused of collecting between $30,000 and $50,000 a year.

Many of the 72 city police officers and eight firefighters named in the 205-count indictment had blamed the Sept. 11 attacks for what they described as mental problems: post-traumatic stress disorder, anxiety and severe depression.

“It’s a particularly cynical part of the charged scheme that approximately half the defendants falsely claimed that their psychiatric disabilities were caused by the 9/11 attacks,” Mr. Vance said at a news conference.

Yet investigators said the accused were living full lives and in many cases were holding jobs in private security, construction and landscaping.

Several of the defendants documented their activities on Facebook. The bail letter includes photographs culled from the Internet that show one former officer riding a water scooter and others working at jobs including helicopter pilot and martial arts instructor. One is shown fishing off the coast of Costa Rica and another sitting astride a motorcycle, while another appeared in a television news story selling cannoli at the Feast of San Gennaro in Manhattan.

Prosecutors said Joseph Esposito, 64, who retired from the Police Department in 1990, coached the applicants to act symptomatic during exams conducted by psychiatrists for the Social Security Administration.

In one secretly recorded telephone conversation, Mr. Esposito told an applicant to misspell words and miscalculate simple arithmetic, and to say that she kept the television on at home “just to hear a voice in the house,” but to emphasize that she kept changing channels because she could not focus.

“When you’re talking to the guy, don’t look directly at him,” Mr. Esposito said, according to a transcript of the conversation in the bail letter. “You know, pause for a second. You’re just trying to show that, you know, you’re depressed. You, you can’t, you, you don’t have any desire for anything, and if you can, you pretend you have panic attacks.”

Mr. Vance said one of the defendants, Louis Hurtado, had retired from the Police Department with a disability pension after sustaining a neck injury and then opened and taught at a martial arts studio. Yet he still applied for disability from the Social Security Administration, saying he had post-traumatic stress disorder.

During the bail hearing, Christopher Santora, an assistant district attorney, outlined how the scheme worked. The defendants generally first contacted Mr. Esposito, who was known in law enforcement circles for helping people secure disability benefits. Mr. Esposito would take applicants to Mr. Hale and Mr. Minerva, who referred them to one of two psychiatrists.

With Mr. Esposito’s coaching, the applicants would go to the psychiatrists for a year to build a false record of mental instability before applying for benefits.

Mr. Hale then filled out the applications in cookie-cutter fashion, using the same phrases, like, “I don’t have interest in anything,” and “I am up and down all night long.”

The bail letter traced the scheme’s origins to 1988 and estimated that the retirees collected fraudulent disability awards, over time ranging from approximately $50,000 to $500,000. All told, $21.4 million in disability benefits was paid to people charged in the indictment. Among the others charged were correction officers, Nassau and Suffolk County police officers and civilians.

Lawyers for the men accused of organizing the scheme predicted they would prevail in court. Mr. Lavallee’s lawyer, Raymond Perini, said “a decorated Korean War vet, F.B.I. agent and prosecutor lost his 60-year reputation today and we are going to win that back in the courtroom.”

Mr. Hale’s lawyer, Joseph Conway, said that his client’s consulting business would prove to be legitimate. Mr. Esposito’s lawyer, Brian Griffin, said his client denied the accusations.

Mr. Griffin said most of the people named in the indictment did have a disability of some kind, noting prosecutors appear to be alleging that only the mental disabilities underlying the federal Social Security applications were exaggerated.

Mr. Minerva’s lawyer, Glenn Hardy, said his client had a legitimate job helping officers obtain benefits and denied that Mr. Minerva had told applicants what to say.

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.

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.

Patrick P. O’Carroll Jr., the inspector general for the Social Security Administration, said more arrests were expected.

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Author: Nicholas

Experienced Mortgage Banker at Colorado State Bank and Trust. Effectively bilingual in English and Mandarin Chinese. Expert on real estate market in the Front Range.

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