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11 Charged Over Alleged LIRR Pension Scheme That Cost Taxpayers Hundreds Of Millions

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Officials lead suspects in the LIRR pension scam away in handcuffs. (credit: CBS 2)

Officials lead suspects in the LIRR pension scam away in handcuffs. (credit: CBS 2)

NEW YORK (CBSNewYork) -It’s the ultimate slap in the face to Long Island Rail Road riders who’ve put up with constant delays.

Eleven people have been charged with conspiracy following arrests across Long Island Thursday in an alleged fraud scheme involving the Long Island Rail Road‘s pension system.

READ THE CRIMINAL COMPLAINT (PDF)

Two orthopedists are among the suspects, which also includes LIRR retirees, consultants and pension administrators. The defendants faced a judge earlier Thursday.

Orthopedist Maria Rusin fainted during arraignment and an ambulance had to be called, CBS 2’s Jennifer McLogan reported.

The arrests wrap up an investigation that’s been cooking for years. At issue: How – and why – could more than 90 percent of LIRR employees who sought a disability pension get one?

LISTEN: WCBS 880’s Sophia Hall reports

The scam was dubbed “Disability By Appointment” by employees, reported 1010 WINS’ Juliet Papa.

Employees were allowed to choose their own doctors when seeking the pensions. A study showed that LIRR workers received pensions 12 times higher than workers at other railroads, reported WCBS 880’s Sophia Hall.

WCB 880’s Irene Cornell reports

U.S. Attorney Preet Bharara said the hundreds of false disability claims cost the Federal Railroad Retirement Board an estimated $1 billion over the past decade.

“”It is disheartening to think that railroad employees would tell a train of lies, to pad their early retirements, and that a handful of doctors would traffic on the credibility of their profession to promote a culture of fraud,” Bharara said.

The LIRR said in a statement that it “condemns any fraudulent activity associated with federal disability pension benefits.”

“The LIRR has cooperated with the U.S. Attorney’s Office, the New York State Attorney General’s Office, the MTA IG’s Office and the RRB IG’s office in their investigations of fraudulent disability pension applications,” the statement read.

The two doctors charged in the case were collecting up to $1,200 per person in cash to make up disabilities so the workers could retire, Papa reports.

1010 WINS’ Juliet Papa with the details of the alleged scheme

Then, they would allegedly collect hundreds of thousands more from insurance companies when ordering unnecessary tests.

One doctor approved 734 workers for fraudulent pensions, the other approved 222 workers over a 10 year span.

Those facing charges were identified as Peter J. Ajemian, an orthopedist, Peter J. Lesniewski, orthopedist Maria Rusin, an office manager, Maria Baran, an office manager, Joseph Rutigliano, former LIRR conductor and union president, Gregory Noone, Regina Walsh, Sharon Falloon, Gary Satin, Steven Gagliano and Richard Ehrlinger, who are all former LIRR employees.

Some employees were allegedly caught on camera playing golf, walking vigorously and bike riding.

Walsh pulled in $100,000 a year after complaining of shoulder and back pain but was caught shoveling heavy snow, pushing strollers and working out at gyms.

Noone also earned $100,000 saying he couldn’t grip, bend or crouch but was seen playing hundreds of matches of tennis and rounds of golf each year.

Gagliano received $75,000 a year in pension and benefits for severe back pain, yet recently peddled a 400 mile bicycle tour.

The LIRR faulted the Federal Pension Agency saying it acted as a rubber stamp without consulting the railroad. The FBI is urging other alleged fakers to turn themselves in as the investigation continues.

“These arrests continue to show that we have zero tolerance for waste and fraud when it comes to pension systems,” Gov. Andrew Cuomo said in a statement.

LIRR riders were upset about the scheme.

“I’m self employed, so I don’t even have a pension,” said one rider. “I pay taxes. I have to pay into my own pension. Here are people who are not eligible for pension, shouldn’t have pensions, and yet they’re stealing. I hope they throw the book at ‘em.”

“With people working so hard, and everybody trying to make a dollar, it’s really really terrible to see people do that,” Laura Palacios told CBS 2’s Kristin Thorne. “You have people that are honest workers that are trying to do the right thing and it’s horrible to see that.”

“The MTA already has a ton of problems in funding so the fact that these people who claim that they’re injured are just zapping away all this money that could be going to better things,” Melissa Gerson said.

Are you shocked by the size of alleged fraud? Sound off in our comments section.

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