Former NYC Police Officer Pleads Guilty to Major Role in Widespread Disability Fraud Scheme

Date: 
Wednesday, August 27, 2014
Office Affiliation: 

Article from the New York Times here

A former New York City police officer accused of playing a major role in a scheme to defraud the Social Security Administration pleaded guilty on Wednesday and agreed to testify against his co-defendants.

Prosecutors said that the former officer, Joseph Esposito, was one of four people who concocted a scheme that bilked the federal government out of more than $27 million.

The group allegedly helped scores of police officers, firefighters and other city workers obtain disability benefits by feigning mental illnesses, in some cases by falsely claiming they had been psychologically scarred by the terrorist attacks on the city on Sept. 11, 2001.

Mr. Esposito, 70, a broadly built, graying man from Valley Stream, N.Y., spoke softly as he pleaded guilty to one count of grand larceny before Justice Daniel P. FitzGerald in State Supreme Court in Manhattan and agreed to pay the federal government $733,000 in restitution.

Before entering his plea, Mr. Esposito signed a cooperation agreement with the Manhattan district attorney’s office under which he must testify against the other defendants in the case. Under the terms of the agreement, if his testimony is satisfactory, he will be allowed to plead guilty to a lesser charge of second-degree grand larceny and prosecutors will recommend a sentence of one and a half to four and a half years in prison. Justice FitzGerald warned Mr. Esposito that he would face a much stiffer sentence — eight and one-third to 25 years in prison — if he failed to live up to the agreement.

With his plea, Mr. Esposito, who was a police officer from 1973 to 1990, joined 87 other defendants who have pleaded guilty in the case after being swept up in mass arrests in January and February. Most of the defendants have been sentenced to probation in return for a promise to repay the money they received from Social Security.

Outside court, Mr. Esposito’s lawyer, Brian Griffin, played down his client’s part in the scheme. “Although neither the architect, nor the mastermind, Mr. Esposito acknowledges that, in his role, his actions crossed both an ethical and legal line, and for that he takes responsibility,” Mr. Griffin said.

Court papers, however, described Mr. Esposito’s role as pivotal. He recruited many of the people who applied for the benefits and introduced them to three others accused of helping to run the operation — John Minerva, 62, another former New York City police officer; Thomas Hale, 90, a pension consultant; and Raymond Lavallee, 84, a Long Island lawyer — prosecutors said in a bail letter and other filings. All three have pleaded not guilty and are awaiting trial.

Mr. Esposito and Mr. Hale, court papers say, referred most of the applicants to two psychiatrists for treatment and to establish a year’s worth of medical records. On several telephone calls recorded by the authorities, Mr. Esposito was captured coaching applicants on how to mimic the symptoms of depression and post-traumatic stress when being examined by doctors.

With diagnoses and treatment records from the doctors in hand, Mr. Hale and Mr. Lavallee would complete and submit applications to Social Security, using stock phrases like “I don’t have any interest in anything” and “I am up and down all night long,” according to court papers.

It was also Mr. Esposito’s job, court papers say, to collect a large cash fee from the applicants — usually more than $28,000 per person — after they received the first lump-sum check from the government, prosecutors said. Mr. Esposito would bring the money to Mr. Hale’s house, where it would be split among the four men, according to court papers.

When investigators searched Mr. Esposito’s house in December, they found $62,000 in cash and a ledger book containing the names of applicants. Another $650,000 in cash was seized from Mr. Esposito’s safe deposit box. Under his plea agreement, Mr. Esposito agreed to turn that money over to the district attorney.