Four Long Island Railroad Retirees Plead Guilty in Manhattan Federal Court in Connection with Disability Fraud Scheme
|U.S. Attorney’s Office December 05, 2012|
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that former Long Island Railroad (LIRR) employees James Resier, Philip Pulsonetti, Michael Stavola, and Christopher Parlante pled guilty to federal charges in connection with their participation in an alleged massive disability fraud scheme in which LIRR workers claimed to be disabled upon early retirement so that they could receive benefits to which they were not entitled. Resier and Pulsonetti each pled guilty today before U.S. Magistrate Judge Maas, and Stavola and Parlante each pled guilty before U.S. Magistrate Judge James Cott on November 28.
According to the complaint, the superseding indictment, and statements made in other public filings and in court:
The LIRR Disability Fraud Scheme
The Railroad Retirement Board (RRB) is an independent U.S. agency that administers benefit programs, including disability benefits, for the nation’s railroad workers and their families. A unique LIRR contract allowed employees to retire at the relatively young age of 50—the age of eligibility has since changed to 55—if they had been employed by the LIRR for at least 20 years. Eligible employees are entitled to receive an LIRR pension, which is a portion of the full retirement payment for which they are eligible at 65. In addition, at full retirement age—between age 60 and age 65, depending on years of service—they are eligible to receive an RRB retirement pension. For LIRR workers who retired at 50 with only an LIRR pension, they would receive less than their prior salary and substantially lower pension payments than those to which they would be entitled at full retirement age. However, LIRR employees who retired and claimed disability could receive a disability payment from the RRB on top of their LIRR pension, regardless of age. A retiree’s LIRR pension, in combination with RRB disability payments, can be roughly equivalent to the base salary earned during his or her career.
Hundreds of LIRR employees have allegedly exploited the overlap between the LIRR pension and the RRB disability program by pre-planning the date on which they would falsely declare themselves disabled so that it would coincide with their projected retirement date. These false statements, made under oath in disability applications, allowed LIRR employees to retire as early as age 50 with an LIRR pension, supplemented by the fraudulently obtained RRB disability annuity. From 2004 through 2008, 61 percent of LIRR employees who stopped working and began receiving RRB disability benefits were between the ages of 50 and 55. In contrast, only seven percent of employees at Metro-North who stopped working and received disability benefits during the same time period were between the ages of 50 and 55.
During his plea proceeding, Resier admitted to conspiring with others to submit a false disability application to obtain disability benefits from the RRB. Resier admitted that he and his co-conspirators falsely claimed that Resier could no longer perform his regular work as a train conductor because of a medical condition. Resier also stated that, as part of the scheme to defraud the RRB, he and his co-conspirators caused private health care insurers to be billed for medical treatments, tests, and visits that were not medically necessary but were instead designed to enrich certain conspirators and to pad Resier’s file in order to obtain RRB disability benefits.
During his plea proceeding, Pulsonetti admitted to conspiring with others to submit a false disability application in order to obtain disability benefits from the RRB. Pulsonetti stated that his application contained a fraudulent medical assessment prepared by a doctor and admitted that, as part of his fraudulent scheme to obtain disability benefits, he had several unnecessary medical tests and examinations that were paid for by his insurance company.
During his plea proceeding, Stavola admitted to conspiring with others to submit a false disability application to obtain disability benefits from the RRB. Stavola stated that, as part of the scheme to defraud the RRB, he received unnecessary medical treatments to bolster his disability application. Stavola also admitted to providing false testimony to the grand jury investigating the disability fraud.
During his plea proceeding, Parlante admitted that in 2004, he agreed with others to create and submit a disability application to the RRB that was materially false and misleading. Specifically, Parlante admitted that he claimed in his application that he was disabled and unable to work as of his retirement date, which was false. Parlante admitted that he continued to receive disability benefits based on his fraudulent disability application up until 2012. Parlante also admitted that in March 2011, he mailed a disability recertification letter to the RRB office in New York in the Southern District of New York.
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Resier, 59, of Farmingdale, New York, pled guilty to one count of conspiracy to commit mail and health care fraud, one count of conspiracy to defraud the United States, one count of making a false claim to the U.S. RRB, and one count of mail fraud. He faces a maximum term of 50 years in prison. Pulsonetti, 54, of Remsenburg, New York, pled guilty to one count of conspiracy to defraud the United States and one count of health care fraud. He faces a maximum term of 15 years in prison. Stavola, 55, of Farmingdale, New York, pled guilty to one count of conspiracy to commit mail, wire, and health care fraud; one count of conspiracy to defraud the United States; one count of making a false claim to the U.S. RRB; one count of health care fraud; one count of mail fraud; one count of wire fraud; and one count of perjury before the grand jury. He faces a maximum term of 85 years in prison. Parlante, 60 of Oyster Bay, New York, pled guilty to one count of conspiracy to commit mail fraud and health care fraud, one count of conspiracy to defraud the U.S. RRB, one count of making a false claim to the U.S. RRB, and one count of mail fraud. He faces a maximum term of 50 years in prison.
Mr. Bharara praised the RRB-OIG, the FBI, and the MTA-OIG for their outstanding work in the investigation, which he noted is ongoing. He also acknowledged the previous investigation conducted by the New York State Attorney General’s Office into these pension fraud issues.
Thirty-two people have now been charged in connection with the LIRR disability fraud scheme, eight of whom have now pled guilty. The charges against the remaining defendants are allegations and the defendants are all presumed innocent unless and until proven guilty.
The Office’s Complex Frauds Unit is handling the case. Assistant U.S. Attorneys Justin Weddle, Danya Perry, Daniel Tehrani, Nicole Friedlander, Amy Garzon, and Daniel Noble are in charge of the prosecution.