By Victoria Cavaliere

NEW YORK (Reuters) - A second wave of retired New York firefighters and police was arrested on Tuesday on disability fraud charges tied to a September 11 pension fraud, said a source involved in the investigation.

A massive ongoing investigation by Manhattan District Attorney Cyrus Vance's office had, in January, led to disability fraud charges against 106 suspects - 80 of them retired New York cops and firefighters - with some accused of falsely claiming to have been traumatized by the September 11, 2001 attacks on the city.

On Tuesday, authorities rounded up 28 suspects, including 16 more retired police officers, four former firefighters, and a retired New York City Department of Corrections employee, the source told Reuters.

Vance said the total amount stolen from taxpayers could reach $400 million.

New York City Police Commissioner Bill Bratton said last month he was dismayed by the alleged exploitation of such a searing municipal tragedy.

"The idea that many of them chose the events of 9/11 to claim as the basis for their disability brings further dishonor to themselves," Bratton said.

Disability payments, pension liabilities and salary demands are among the financial pressures faced by municipalities that are struggling to balance budgets while maintaining basic services.

New York prosecutors have said many of the suspects in the ongoing investigation claimed U.S. Social Security Disability Insurance (SSDI) benefits of $30,000 to $50,000 a year for psychiatric ailments like anxiety, post-traumatic stress disorder and depression.

The retirees claimed the ailments were so incapacitating they were unable to work, or, in some cases, even to leave their homes.

Attorneys for the suspects arrested on Tuesday could not immediately be reached.

(Writing by Chris Francescani; Editing by Barbara Goldberg and Bernadette Baum)