9/11 Was Their Excuse To Steal Funds
Seventeen Queens residents were among a group of over 100 people indicted for their alleged roles in a massive Social Security Disability Insurance (SSDI) fraud scheme which resulted in the loss of hundreds of millions of dollars from taxpayers, it was announced Tuesday, Jan. 7.
According to the indictment and documents filed in New York County Criminal Court, from approximately January 1988 to December 2013, the four principal defendants in this case operated together to direct and assist many hundreds of applicants to falsely claim disabilities in order to order to collect SSDI payments, in addition to their public pensions.
The applicants-most of whom were former first responders- claimed that they suffered a psychiatric condition that prevented them from working, such as posttraumatic stress disorder, anxiety, or depression.
Many of the defendants used their association with the Sept. 11, 2001 terrorist attacks as the cause of their purported 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.
Manhattan District Attorney Cyrus Vance Jr. identified four principal defendants-Raymond Lavallee, 83; Thomas Hale, 89; Joseph Esposito, 64; and John Minerva, 61-who 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- including the 17 Queens residents-are all SSDI recipients and were charged with grand larceny in the second degree and attempted grand larceny in the second degree.
The Queens defendants were identified as Michael Barton, 55, of Springfield Gardens; Tyrone Breeden, 56, of Corona; John Byrne, 47, of Middle Village; Artrailyes (a.k.a. Denise) Carter, 53, of Fresh Meadows; Jacqueline Connolly, 57, of Rockaway Park; Karen Galimi, 49, of Howard Beach; Kevin Galimi, 50, of Howard Beach; Peter Inzerilla, 40, of Middle Village; Jodi Isolano (a.k.a. Jodi Guidice), 35, of Ozone Park; Helen Krill, 58, of Bayside; Darrin LaMantia, 56, of Rockaway Park; Peter Martin, 49, of Rockaway Park; Kevin McCullagh, 55; John McGarry, 50; Arnold Moskowitz, 66, of Whitestone; Michael Rocco, 54, of Astoria; and Samuel Rushing, 42, of Ridgewood.
The investigation is continuing.
Vance announced the charges Tuesday along with Police Commissioner William Bratton, Special Agent-in-Charge of the U.S. Social Security Administration Edward J. Ryan and Special Agentin Charge of Homeland Security Investigations of New York James T. Hayes Jr.
“For years, federal taxpayers have unwittingly financed the lifestyles of the defendants charged today,” said Vance. “The Social Security Disability safety net exists to help those who are unable to help themselves. Many participants cynically manufactured claims of mental illness as a result of Sept. 11th, dishonoring the first responders who did serve their city at the expense of their own health and safety. This alleged scam further depleted the already limited resources available for battling the real and complex conditions of PTSD and depression. “
“The retired members of the NYPD indicted in this case have disgraced all first responders who perished during the search and rescue efforts on Sept. 11, 2001, and those who subsequently died from 9/11 related illness, by exploiting their involvements that tragic day for personal gain,” Bratton added. “I would like to thank members of the NYPD Internal Affairs Bureau, the Manhattan District Attorney’s Office and the United States Social Security Administration Inspector General for working together to uncover this deception and fraud and bring these criminals to justice.”
“The crimes alleged in this indictment outline a highly organized, far-reaching criminal enterprise that targeted the Social Security Disability Insurance (SSDI) program. These individuals allegedly relied on lies, deceit, and under-thetable payments while they bilked the Social Security Trust Funds of tens of millions of dollars and, in many instances, exploited the tragic events of Sept. 11, 2001 for their own gain,” Ryan said. “This exploitation, combined with the fact that many of those indicted formerly held positions of public trust, make these crimes all the more egregious, and the Office of the Inspector General is gratified to see them brought to justice.”
“Many of the individuals arrested today are alleged to have crafted an insidious scheme to profit off the tragedy of the worst terrorist attack in our nation’s history, one that affected all New Yorkers so very personally,” Hayes said.
Coached into filing
Under the United States Social Security law, individuals are qualified as “disabled” and entitled to SSDI payments if they suffer from a disability that prevents them from assuming any job available to them in the national economy. The payment amount varies per recipient, but the average annual payment is approximately $30,000 to $50,000 for each recipient.
As detailed in court papers, applicants were typically brought into the charged scheme by Esposito, a retired member of the NYPD; or Minerva, a disability consultant for the Detectives’ Endowment Association, the union that represents NYPD detectives.
They would then refer applicants to Lavallee, an attorney who previously served as assistant district attorney and chief of the Rackets Bureau in the Nassau County District Attorney’s office; and Hale, a key manager of the scheme under Lavalee, to submit the SSDI applications.
Although many of the NYPD and FDNY applicants had limited physical disabilities that legitimately entitled them to state disability pensions, these physical conditions did not entitle them to SSDI, which requires a complete inability to work.
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).
Hale and Esposito are accused of coaching applicants to falsely describe symptoms of depression and anxiety to doctors they had recruited, in order to build a record of psychiatric treatment over the course of approximately one year. 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, such as: “I nap on and off during the day.”; “I have the TV on to keep me company.”; “I was a healthy, active, productive person.”; “I’m up and down all night long.”; “My [family member] is always after me about my grooming.”; and “I’m unable to perform any type of work activity in or out of the house.”
No basis for claims
Before filing their SSDI applications, according to the charges, none of the defendants had a history of a psychiatric condition that would qualify them for SSDI benefits. While collecting their cash benefits, many of the applicants lived lifestyles that starkly contradicted the representations made on their applications.
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.
In some particularly striking examples, one defendant piloted a helicopter, another played blackjack in Las Vegas, another worked at a cannoli stand at the San Gennaro Festival in Manhattan, another rode a jet ski, and one defendant taught and performed mixed martial arts.
Though most defendants claimed they could not use a computer, many had Facebook pages, Twitter handles, and YouTube channels.
Applicants were typically awarded SSDI benefits approximately between three and 12 months after submitting their applications. Initial awards were paid to the applicants in the form of lump sum payments that included a retroactive award going back up to 12 months before the date when applicants were approved for benefits. The retroactive portions could be as high as $100,000. The recipients then continue to receive monthly payments.
Getting kickbacks
According 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.
Among the indicted applicants, SSDI awards have been paid since as far back as 1988, and in some instances, the total amount fraudulently obtained was close to $500,000 per applicant. The average SSDI payment to date for charged defendants, which included retroactive lump sum payments, was approximately $210,000.
Vance thanked the following for their assistance in the investigation: Patrick P. O’Carroll, Jr., Inspector General for the United States Social Security Administration, and the Special Agents of the New York Field Office; Commissioner Bratton and the NYPD Internal Affairs Bureau; the U.S. Secret Service’s Technical Security Division and Asset Forfeiture Group; U.S. Department of Homeland Security Investigations, including Supervisory Special Agents Shawn Polonet and Marcos R. Castro; the U.S. Postal Inspection Service; the NY Regional Office of the U.S. Social Security Administration; the New York State Attorney General’s Office and its Organized Crime Task Force; the New York State Department of Taxation and Finance; New York State Police Superintendent Joseph A. D’Amico; the New York State Division of Criminal Justice Services; Suffolk County Police Department Chief James Burk; and Nassau County Police Department Acting Police Commissioner Victor Politi and Detective Sergeant Patrick Ryder.
It was noted that the charges contained in the indictment are merely allegations and the defendants are presumed innocent unless and until proven guilty.
