New York retirees accused of Social Security fraud

NEW YORK — The retired New York City police officers and firefighters showed up to 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.

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“The brazenness is shocking,” Cyrus R. Vance Jr., the Manhattan district attorney, said 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 — 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 FBI agent and once served as a senior Nassau County prosecutor, court papers said.

The indictment says 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.


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 three men denied the accusations.

Scores of former police officers and firefighters were arrested Tuesday and brought in handcuffs to state Supreme Court in Manhattan, where they were arraigned 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 8 firefighters named in the 205-count indictment had blamed the 9/11 attacks for what they described as mental problems: post-traumatic stress disorder, anxiety, and severe depression.

Prosecutors said another defendant, 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, Esposito told an applicant to misspell words and miscalculate simple arithmetic.

A court document 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, the 102 people accused in the indictment of fraudulently collecting disability payments had received a total of $21 million.