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Retired NYC cop takes plea in $27M disability-fraud case; ex-prosecutor is a claimed ringleader

A retired New York police officer has taken a plea in a claimed scheme to defraud the federal government of some $27 million in Social Security Disability Insurance benefits over the course of some 25 years.

Joseph Esposito, 70, was one of four alleged ringleaders, including a former prosecutor, in a massive New York disability-fraud case whose claimed participants were largely retired police officers, firefighters and other city workers. He is the 87th defendant in the case to take a plea, but the first of the claimed leaders to do so, reports the New York Times (reg. req.).

In a Wednesday hearing in Manhattan Supreme Court, he pleaded guilty to a single count of grand larceny and agreed to repay $733,000 to the federal government. (Some $62,000 in cash was seized during a search of his home and another $650,000 in cash was found by authorities in a safety deposit box.)

Esposito also agreed to cooperate with the district attorney’s office in testifying against co-defendants.If prosecutors are satisfied he has fulfilled his side of the bargain, he will be allowed to plead guilty to a reduced grand larceny charge and the DA’s office will recommend a prison sentence of between 18 months and 54 months. if he doesn’t cooperate, he faces between eight and 25 years in prison, the Times reports.

The Associated Press, Bloomberg, the New York Daily News and the Wall Street Journal (sub. req.) also have stories.

Most of the other 86 defendants who have taken pleas promised to make restitution of between $100,000 and $400,000 for the benefits they received and got probation. Over 40 more individuals still face charges in the case, the Times reports. The Daily News says charges were dropped last week against eight defendants.

“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,” his lawyer, Brian Griffin, told reporters after the hearing.

According to court filings and a bail letter, Esposito and John Minerva, 62, a retired police officer who served as a disability consultant to a union that represents police detectives, recruited applicants and sent them to two other alleged leaders of the scheme, Raymond Lavallee, 84, a Long Island lawyer who formerly worked for the Nassau County district attorney’s office, and pension consultant Thomas Hale, 90. He, Lavallee and Minerva have pleaded not guilty.

Prosecutors say the four coached participants to fake symptoms of mental conditions such as depression and anxiety, then sent them to psychiatrists to establish a diagnosis and record of treatment. A number of participants claimed to be suffering from post-traumatic stress disorder as a result of the Sept. 11, 2001 terrorist attacks. Once they started receiving disability payments, the ringleaders allegedly were paid substantial cash kickbacks.

Many of the participants in the scheme were already getting partial disability payments from the state. However, they didn’t qualify for Social Security Disability Insurance, which requires an inability to work, the Manhattan District Attorney’s office contends.

See also:

ABAJournal.com: “Lawyer and others face new charges in massive NYC disability fraud case, as dozens more are arrested”