OIG Continues Probe of New York Disability Fraud Scheme

Beyond the Numbers

Friday, March 14, 2014
Posted by: 
The Office of External Relations
(Photo from the Wall Street Journal)

Continuing efforts to pursue what’s believed to be a widespread New York City-based disability fraud scheme, we and other law enforcement agencies recently arrested 28 people as a result of a second wave of indictments connected to the alleged conspiracy.

The arrests began in the pre-dawn hours of Tuesday, February 25, stretching across seven states—New York, New Jersey, Florida, North Carolina, South Carolina, Pennsylvania, and Wisconsin. Homeland Security agents, New York District Attorney’s Office detectives, NYPD officers, and other law enforcement agencies took part in the arrests.

This second surge of arrest activity followed 106 indictments and arrests that began Jan. 7.  The 106 arrested included 102 disability beneficiaries and four scheme facilitators—Raymond Lavallee, 83, an attorney; Thomas Hale, 89, a disability consultant; and Joseph Esposito, 70, and John Minerva, 61, two “recruiters.”   

Among those arrested on February 25 were 48-year-old Saverio “Sam” Esposito and 53-year-old Douglas Hale, both of New York—the sons of Joseph Esposito and Thomas Hale, respectively.  

The younger Esposito and Hale, along with 26 others from the Feb. 25 operation, were charged with grand larceny and criminal facilitation. They’re all Social Security disability beneficiaries suspected of conspiring with the four alleged facilitators to apply for and receive benefits under false pretenses. As a result of the arrests, SSA suspended the benefits of the charged individuals, as well as those of any spouses and children receiving benefits on the fraudulent claims. 

Those arrested in the second operation included:

  • 16 former NYPD employees; 
  • five former FDNY employees; 
  • one New York City Department of Corrections employee; and 
  • six others. 

The scheme allegedly involved Joseph Esposito and Minerva acting as recruiters and coaching disability applicants, many of them retired NYPD or FDNY, on how to act during examinations, and what to include in their disability applications. They then referred the applicants to cooperating facilitators, including Lavallee and Thomas Hale, and one of two doctors.

The total amount of fraudulent benefits allegedly taken from SSA through this scheme by the 130 beneficiaries and four facilitators identified now exceeds $30 million.

Some have already admitted their connection to the scheme. Last month, a retired NYPD officer and a former New York City sanitation worker, both arrested in the Jan. 7 sweep, agreed to plea deals to avoid going to prison, according to the New York Post. The former officer, who now lives in Arizona, agreed to repay more than $192,000, while the ex-city employee agreed to repay almost $166,000. 

As the Inspector General told the House Subcommittee on Social Security in January, this case remains open and active as we continue to seek additional beneficiaries who took part in the scheme.

We have established a special toll-free fraud hotline where anyone can report additional information connected with this indictment. Individuals can call (877) 441-6012. You can also report any Social Security fraud online at the following address: http://oig.ssa.gov/report