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Indictment names 106 defendants, including 80 NYPD and FDNY retirees in 9/11-related Social Security fraud

NEW YORK – a indictment of 106 defendants for a massive fraud against the federal Social Security Disability Insurance Benefits (“SSDI”) program that resulted in the loss of hundreds of millions of dollars from federal taxpayers was announced on Tuesday by Manhattan District Attorney Cyrus Vance, Jr.  

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 investigation is continuing.

“For years, federal taxpayers have unwittingly financed the lifestyles of the defendants charged today,” said District Attorney 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 September 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. I commend the excellent work of the federal agents from the Social Security Inspector General’s office, who worked with Assistant District Attorneys and detective investigators in my office, as well as seasoned detectives from the NYPD’s Internal Affairs Bureau, to crack this decades-long scam.”

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.

According to the indictment and documents filed in 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 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.

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.”
·       “I’m unable to perform any type of work activity in or out of the house.”

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.