Former NYPD Officer Pleads Guilty to Disability Fraud and Tax Evasion

From the U.S. Attorney’s Office, Southern District of New York:

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John F. Grasso, the Special Agent-in-Charge of the United States Social Security Administration, Office of the Inspector General, New York Field Division (“SSA-OIG”), and Jonathan D. Larsen, the Acting Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (“IRS-CI”), announced that GERARD SCPARTA, a former New York City Police Department (“NYPD”) officer, pled guilty to fraudulently obtaining over approximately $638,000 in disability benefits from the Social Security Administration (“SSA”) and underreporting income on his taxes by approximately $268,000.  SCPARTA lied to the SSA about his disability, falsely represented to the SSA that he could not work due to disability, and failed to report earnings from employment as required.  At the same time SCPARTA was collecting disability benefits, he earned a total of approximately $1.6 million working as a security guard and host at a strip club located in Manhattan.  SCPARTA pled guilty before U.S. District Judge Alison J. Nathan.  

Manhattan U.S. Attorney Geoffrey S. Berman said:  “For two decades, former NYPD officer Gerard Scparta lied about being disabled to obtain over $638,000 in disability benefits through fraud, all while he was earning over $1.6 million as the host of a prominent strip club.  In doing so, he stole money from truly disabled individuals who are dependent on this important source of public support.  Then, not only did Scparta conceal his employment and income from the SSA by hiding behind a corporate entity purportedly owned by his wife, he also underreported his income to cheat on his taxes.  Particularly today, on Tax Day, this case shows that such brazen fraud and tax evasion will be prosecuted to the fullest extent of the law.”  

SSA-OIG Special Agent-in-Charge John F. Grasso said:  “Today’s plea is the latest step in our continued and ongoing effort to bring to justice all individuals who commit Social Security Disability fraud and other crimes that stem from that act.  I am very grateful for the efforts of our law enforcement partners involved in this investigation, to include the Internal Revenue Service Criminal Investigation Division, the New York City Department of Investigation and the continued commitment from the United States Attorney’s Office for the Southern District of New York.  I strongly encourage the public to report suspected instances of Social Security fraud to the OIG’s Fraud Hotline at 1-800-269-0271 or http://oig.ssa.gov/report.”

IRS-CI Acting Special Agent in Charge Jonathan D. Larsen said:  “The Special Agents of IRS-Criminal Investigation Division are sworn to protect the tax system and bring to justice those who would steal from the Treasury.  An oath similar in nature to one Mr. Scparta swore to as a law enforcement officer.”

According to the allegations contained in the Complaint and Information filed in federal court:

The SSA administers Social Security Disability Insurance (“SSD”), a federal benefits program that provides monthly cash benefits to individuals who have worked in the past and paid into Social Security, but who can no longer engage in any substantial gainful activity due to medical disabilities.  SSD is a disability benefit available only to individuals who have a qualifying disability and are unable to work in any profession.  In order to receive SSD, a beneficiary must certify that he or she is incapable of performing any gainful activity due to disability.  In addition, a beneficiary must report to the SSA all sources of income from work activity and any changes in the beneficiary’s medical condition, which are taken into account in determining whether the beneficiary is entitled to payments and the amount of those payments.  

Between in or about 1986 and in or about 1997, SCPARTA worked as a police officer with the NYPD.  In or about 1997, after reportedly sustaining an injury at the age of 32, SCPARTA was referred to an individual (“CC-1”) who helped him fraudulently obtain disability benefits.  Specifically, CC-1 submitted SSD application materials signed by SCPARTA that falsely stated, among other things, that SCPARTA suffered from severe depression and anxiety, could not do anything around his house, and was unable to work in any capacity.  In addition, CC-1 coached SCPARTA to make the same false statements to physicians who examined SCPARTA for the purpose of establishing his disability and submitting reports to the SSA.  Based on these false statements and representations by SCPARTA in documents and reports submitted to the SSA, the SSA approved SCPARTA to receive disability benefits from in or about 1997 onward.

In addition to lying about his disability status and inability to work, SCPARTA falsely claimed on multiple forms submitted to the SSA that he did not work, and failed to report earnings from employment as required.  In fact, from in or about April 2004 up to and including at least in or about December 2017, SCPARTA worked as a security guard and host at a strip club located in New York, New York (the “Strip Club”).  From in or about 1997 up to and including in or about 2017, SCPARTA received a total of over approximately $638,000 in disability benefits for himself, his wife, and his children, during which time SCPARTA earned approximately $1.6 million from his work at the Strip Club. 

Further, from in or about 2012 up to and including in or about 2017, SCPARTA engaged in tax evasion by concealing and attempting to conceal from the IRS the nature and extent of his income.  Specifically, SCARPTA utilized a nominee company registered to his wife to report income that SCPARTA earned from the Strip Club and falsely underreported that income by a total of approximately $268,602 for the tax years 2012 through 2016.

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SCPARTA, 54, of Campbell Hall, New York, pled guilty to one count of theft of government property, which carries a maximum sentence of 10 years in prison, and one count of tax evasion, which carries a maximum sentence of five years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

As part of today’s guilty plea, SCPARTA agreed to forfeit the $638,586 in Social Security disability benefits he obtained fraudulently, file accurate amended personal tax returns, and pay past taxes due and owing to the IRS for tax years 2012 through 2016.  SCPARTA is scheduled to be sentenced before Judge Nathan on July 16, 2019, at 12:45 p.m.

Mr. Berman praised the outstanding investigative work of the SSA-OIG and IRS-CI. Mr. Berman also thanked the Manhattan District Attorney’s Office and the New York City Department of Investigation for their assistance with the investigation.   

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Sagar K. Ravi is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John F. Grasso, the Special Agent-in-Charge of the United States Social Security Administration, Office of the Inspector General, New York Field Division (“SSA-OIG”), and Jonathan D. Larsen, the Acting Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (“IRS-CI”), announced that GERARD SCPARTA, a former New York City Police Department (“NYPD”) officer, pled guilty to fraudulently obtaining over approximately $638,000 in disability benefits from the Social Security Administration (“SSA”) and underreporting income on his taxes by approximately $268,000.  SCPARTA lied to the SSA about his disability, falsely represented to the SSA that he could not work due to disability, and failed to report earnings from employment as required.  At the same time SCPARTA was collecting disability benefits, he earned a total of approximately $1.6 million working as a security guard and host at a strip club located in Manhattan.  SCPARTA pled guilty before U.S. District Judge Alison J. Nathan.  

Manhattan U.S. Attorney Geoffrey S. Berman said:  “For two decades, former NYPD officer Gerard Scparta lied about being disabled to obtain over $638,000 in disability benefits through fraud, all while he was earning over $1.6 million as the host of a prominent strip club.  In doing so, he stole money from truly disabled individuals who are dependent on this important source of public support.  Then, not only did Scparta conceal his employment and income from the SSA by hiding behind a corporate entity purportedly owned by his wife, he also underreported his income to cheat on his taxes.  Particularly today, on Tax Day, this case shows that such brazen fraud and tax evasion will be prosecuted to the fullest extent of the law.”  

SSA-OIG Special Agent-in-Charge John F. Grasso said:  “Today’s plea is the latest step in our continued and ongoing effort to bring to justice all individuals who commit Social Security Disability fraud and other crimes that stem from that act.  I am very grateful for the efforts of our law enforcement partners involved in this investigation, to include the Internal Revenue Service Criminal Investigation Division, the New York City Department of Investigation and the continued commitment from the United States Attorney’s Office for the Southern District of New York.  I strongly encourage the public to report suspected instances of Social Security fraud to the OIG’s Fraud Hotline at 1-800-269-0271 or http://oig.ssa.gov/report.”

IRS-CI Acting Special Agent in Charge Jonathan D. Larsen said:  “The Special Agents of IRS-Criminal Investigation Division are sworn to protect the tax system and bring to justice those who would steal from the Treasury.  An oath similar in nature to one Mr. Scparta swore to as a law enforcement officer.”

According to the allegations contained in the Complaint and Information filed in federal court:

The SSA administers Social Security Disability Insurance (“SSD”), a federal benefits program that provides monthly cash benefits to individuals who have worked in the past and paid into Social Security, but who can no longer engage in any substantial gainful activity due to medical disabilities.  SSD is a disability benefit available only to individuals who have a qualifying disability and are unable to work in any profession.  In order to receive SSD, a beneficiary must certify that he or she is incapable of performing any gainful activity due to disability.  In addition, a beneficiary must report to the SSA all sources of income from work activity and any changes in the beneficiary’s medical condition, which are taken into account in determining whether the beneficiary is entitled to payments and the amount of those payments.  

Between in or about 1986 and in or about 1997, SCPARTA worked as a police officer with the NYPD.  In or about 1997, after reportedly sustaining an injury at the age of 32, SCPARTA was referred to an individual (“CC-1”) who helped him fraudulently obtain disability benefits.  Specifically, CC-1 submitted SSD application materials signed by SCPARTA that falsely stated, among other things, that SCPARTA suffered from severe depression and anxiety, could not do anything around his house, and was unable to work in any capacity.  In addition, CC-1 coached SCPARTA to make the same false statements to physicians who examined SCPARTA for the purpose of establishing his disability and submitting reports to the SSA.  Based on these false statements and representations by SCPARTA in documents and reports submitted to the SSA, the SSA approved SCPARTA to receive disability benefits from in or about 1997 onward.

In addition to lying about his disability status and inability to work, SCPARTA falsely claimed on multiple forms submitted to the SSA that he did not work, and failed to report earnings from employment as required.  In fact, from in or about April 2004 up to and including at least in or about December 2017, SCPARTA worked as a security guard and host at a strip club located in New York, New York (the “Strip Club”).  From in or about 1997 up to and including in or about 2017, SCPARTA received a total of over approximately $638,000 in disability benefits for himself, his wife, and his children, during which time SCPARTA earned approximately $1.6 million from his work at the Strip Club. 

Further, from in or about 2012 up to and including in or about 2017, SCPARTA engaged in tax evasion by concealing and attempting to conceal from the IRS the nature and extent of his income.  Specifically, SCARPTA utilized a nominee company registered to his wife to report income that SCPARTA earned from the Strip Club and falsely underreported that income by a total of approximately $268,602 for the tax years 2012 through 2016.

*                      *                      *

SCPARTA, 54, of Campbell Hall, New York, pled guilty to one count of theft of government property, which carries a maximum sentence of 10 years in prison, and one count of tax evasion, which carries a maximum sentence of five years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

As part of today’s guilty plea, SCPARTA agreed to forfeit the $638,586 in Social Security disability benefits he obtained fraudulently, file accurate amended personal tax returns, and pay past taxes due and owing to the IRS for tax years 2012 through 2016.  SCPARTA is scheduled to be sentenced before Judge Nathan on July 16, 2019, at 12:45 p.m.

Mr. Berman praised the outstanding investigative work of the SSA-OIG and IRS-CI. Mr. Berman also thanked the Manhattan District Attorney’s Office and the New York City Department of Investigation for their assistance with the investigation.   

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Sagar K. Ravi is in charge of the prosecution.