Wednesday, January 8, 2014

Allegations of First Responder Social Security Fraud

Fraud is in the news. There are more than 100 charged with fraud in the news yesterday. That is a significant headline in its own right. That 70 of these are retired police officers would make a compelling headline itself. The remainder of those charged includes firemen. The fact that this alleged fraud netted as much as four hundred million of dollars makes for a catchy headline also. Add in that these individual's disability claims were related to the tragedy of September 11, 2000, and this is a story that would make an editor struggle in selecting the most catchy headline. 

And these potential headlines all ignore the additional announcement yesterday that the investigation remains ongoing and that as many as 1,000 individuals may ultimately be charged. 

The allegations are interesting because they assert that these individuals sought Social Security benefits based upon their faked claims of mental illness. New York Police Commissioner Bratton released a statement in response to yesterday's indictments "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.” 

The story outlines some curious points as well. It is only 13 years since the attack of 9/11, but the story says this is "a scam that spanned 26 years." The story explains that this all allegedly began in January 1988, which long predates 9/11. A CNN story says that only half of those indicted related their claims to 9/11. So this fraud has been going on for some time, was allegedly engaged by some following that tragedy.

The volume of income is also curious, the allegations are that "each beneficiary receiving between about $50,000 to almost $500,000 a year in disability payments." I have been around the disability business for a few years, and have never heard of $500,000 per year benefits.

The allegations are that four individuals played a central role in this alleged fraud, "John Minerva, an official of the union representing New York City police detectives; Raymond Lavalle, a lawyer; Joseph Esposito, a retired police officer; and Thomas Hale, a pension consultant." An attorney for some of these was quoted in the CNN story asserting that 

Mr. Esposito allegedly "“coached” them on how to appear properly mentally unable during interviews with Social Security workers." He is accused of instructing disability applicants on what to say, how to feign lack of knowledge or make intentional errors in interviews. He allegedly told benefit applicants to "claim a fear of “planes and entering large buildings." 

According to CNN, "the applicants were coached to tell Social Security Administration they were unable to perform basic life skills, like cooking for themselves, grooming themselves, paying bills and socializing,"

The police officers and firefighters claimed inability to work. Some claimed to be unable to manage their personal finances or even drive as a result of their debilitating claims. However, the investigation that led to the indictments revealed these "disabled" first responders boasting of their "full lives" on Facebook. Photos were posted of the disabled on jet-skis, motorcycles, and fishing boats. 

According to CNN, pictures included in court documents show "one man smiled behind shades and flipped the bird aboard a Sea-Doo personal watercraft. Another sat at the controls of a helicopter. A mixed martial arts instructor posed with arms crossed. They're seen riding motorcycles, hauling in massive sailfish, slugging softballs for the "NYPD Blues," taking jump shots, running half marathons and golfing, and even giving television news interviews while selling cannoli at Manhattan's famed San Genaro festival."

According to the Social Security Administration they have found multiple instances of inappropriate or even illegal behavior since their "Office of the Inspector General (OIG) was established in 1995." Multiple examples are cited at their website

The news currently affords readers in many instances the opportunity to leave comments. As I read various accounts of these allegations on the web, I read a small sample of those comments. I am left with the impression that many are angered by the allegations of fraud, but there is little expression of surprise. Whether correct or not, there seems to be a population that believes Social Security fraud or abuse are commonplace. 

What will these beliefs mean for the future of Social Security? We have been hearing for years that Social Security will become insolvent. To what extent do fraud and abuse contribute to the demise of the system?  These are questions with which America will struggle. The existence of a valid and healthy safety net for those who legitimately need it may be jeopardized by the impact of others who are allegedly abusing it. 

In all, a troubling story. Time will tell if the indictment brings convictions, and if so whether there will be meaningful punishment and repayment. Time will tell if there is criminal penalty for "coaching" applicants on what to say or not say in order to obtain the Social Security benefits they seek. 

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