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

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.


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.

  • Robert Henke

    They deserved to be locked up, while riders are paying increasing prices trying to get to work, these sc—–s are living the life of luxury off other workers dollars.
    They should get a month in jail for every dollar they ripped off, or even a day for every dollar would do it.

  • Steve

    You all figured this out now?!

  • Rob

    ..I bet there are many Ex LIRR employees who are having trouble sleeping lately..
    Just think, three squares and a cot and plenty of time to catch up on your sleep.. You’ll be fine..

  • Ted

    Lets see if the Feds EVER get the back bone to investigate the NY Fire Department. Some 97%-plus of their 40-year old retirees claim and get disability pensions totaling $100K plus per year for life. Contrary to popular myth, the vast, vast majority of these retirees have never stepped foot in a burning building in 10-plus years. Instead, they became ‘disabled’ basically riding a desk. The problem is that whenever the issue of the NYFD scam pensions get raise, their union response with a single sentence. The sentence is made up of a noun, a verb, a ‘9-11’.
    Case closed.

  • JJ

    I say leave them alone, they gave the best part of their lives to the service of the LIRR and to the public. With the close public scrutiny they may not be able to live out their golden years without worrying about being discovered.


      You got to be kidding, or are you dumb, or some one in your family is a scammer.
      Wake up Betsy

    • flaco


  • rich

    now is the time to go after the abuse of the nassau county cops abuse of the disability program also. it stinks of corruption!

    • flaco

      Right you are. Can you imagine them collecting 3/4 of $200,000, TAX FREE, for LIFE!!!!! That’s $150,000 a yr, based on a pinky injury, from writing too many bogus tickets. Oh, let us not forget about the cost of living $$$$’s they get every yr, on top of that!!!!! ARE WE AWAKE TAXPAYER????

  • Jay

    Hey guys, nice slap in the face to your hard working fellow railroad workers at CSX, Norfolk Southern, Union Pacific & BNSF…etc

  • DoctorBob

    When you finish cleaning up the LIRR pension fraud, perhaps you can go to Chicago and clean up the MASSIVE fraud in that city. We have union mobsters working ONE DAY for the City of Chicago, and that makes them eligible for 20-year pensions. We have city employees drawing disability retirement, yet working other jobs and building a second pension. Those are just two small examples. There are thousands of scams being perpetrated against the taxpayers of Illinois. Yet, nobody does a darned thing to clean any of it up.

  • ann

    I hope they get the monies back and also throw them all in jail. Dr.s and the workers. Jail and maybe the next person that goes to collect will be for real. And I think they should be made public when some is collecting tax money for disability just so they know that people will be watching.

  • Jerry

    Now will they go after those who are receiving the monies??

    The same nonsense happens with SS disability,as the judges claim they approve 99% of the applicants??
    A total disgrace allowed by all our corrupt and do nothing legislators

  • Mike

    Didn’t realize a thousand workers are thought of as a “”few”. Not to mention the hundreds of millions of dollars that went along with it. I bet you don’t ride the lirr and pay their insane prices?

  • Idratherbegolfing

    Time for Chucky Schumer to step in again and get his mug on TV. I’ve never seen this guy ahead of any scam or problem. He always steps in after the fact and proposes some type of legislation to protect the tax payers or his constituents. It would be nice to see our elected officials be more proactive instead of reactive.

  • Gotcha

    These guys would have gotten away with it forever if they weren’t so damn greedy and demanded to play free golf at NYS public courses. NYS Dept of Parks allows for “disabled” people to play for free with a card from their doctor. But when those “disabled” foursomes are all perfectly healthy retirees from the LIRR, all on a db pension taking up the best tee times, some disgruntled golfers finally said enough is enough and alerted the authorities, This goes on everywhere, amongst countless munincipalities across the country. Forget about OWS, this is where the real corruption lies. Now start looking at the federal RR pension board in Chicago. Rife with corruption.

  • Workingformymoney

    Union President, Whay am I not surprised?

  • val

    make them work for nothing until they pay back every cent.

    • Jerry

      No way, take their assets and lock em up for thirty years

  • pete

    There would be no deficit in the LIRR if only a few of these scams were discovered. This is a big Hot-Air balloon now, but are we going to hear the end of it? Now our corrupt judges and politicians will move in, as for sure they will have a party friend or relative entangled in the pension rip-off.

  • Jimmy

    Just realized this is a Federal case. Loving it even more.

  • New.lamby

    Everyone here seems to be jumping on the easy bandwagon. Most LIRR employees are honest and hard working individuals. They take their responsibilities seriously. Let these few individuals have their day in courts and let them be judged fairly and not by a CBS blog

  • Dan Te

    How about investigating the officials that manages this LIRR pension plan?

  • NJ Public Worker

    Hey! This is a great idea! I’m greeeeen with envy…

  • skd

    To those LIRR employees who have been stealing money from your fellow LIers wallets for decades. Your “entitlement” mentality is deplorable. Your actions are shameful. What makes you think you deserve an easier ride than the rest of us? The MTA has it’s flaws…but you, my fellow Long Island (RR) bothers and sisters, YOU are the crux of the problem.

  • bullett

    We maybe didn’t get you yesterday, but we gotcha today!

  • VY

    Besides making sure that only truly disabled people get disability pensions, there is one other giant pension abuse that needs to be fixed.
    That abuse is stacking overtime into an employee’s final year, then basing their pension on that year’s eranings to figure out their retirement pay, not the average of their overtime throughout their career..
    Right now if someone base pay was $60,000, and on an average year they worked $5,000 overtime, their pension should be based on $65,000.
    But the way the system is now, if that same person works for 40 years, avergaing $65,000 for the first 39 years, but in the final year gets extra overtime and earns $100,000, their entire 40 year career pension will be based on $100,000, not the actual 40 year average of $65,875.
    So they pay into the pension systembased on a 40 year average of $65,875, but they retire based on the last year’s $100,000.
    This means the pension is paying out faster than the employee put in..
    This is a larger pension abuse than the disability pension abuse, and it’s spread throughout all levels of local and state governments in NY.
    This last year overtime pension abuse is where the real money is being lost.

  • joe

    This is going on all over the US. Starting with the US government. Fraud, fraud and more fraud. Power to the 99%.

  • Jim

    Should take a serious look at Metro North as well. My friend George , an office manager, is trying to get a disability pension after damaging his shoulder at home . . . and is being coached by his union how to “win” this false claim.

    • Staten Island Steven

      Next time, when he’s drunk, he should let the transvestite hooker sit on his lap, not his shoulder.

  • FYEW

    Is is any surprise that a former union president was involved?
    Its for reasons such as this that I despise unions. And people wonder why so many people wants to see unions broken up. Unions, politicians, etc…they’re all corrupt and needs a big overhaul.

  • Al

    What is even a bigger problem here is that railroad, state and federal officials have known about this for years. Why has it taken so long for action to be taken. I’ll guess there will be a lot more available tee times at Bethpage & Eisenhower parks.

  • Jimmy

    Maybe if they spent as much time learning how to operate the system rather than scam the system we would all have a better rail road.

  • zigaro

    Maybe the feds can investigate why the ny state attorney generals office sat by and did absolutely nothing while it was quite obvious what was going on. 100% of retirees getting disability in addition to pension – didn’t throw up a red flag- Maybe the feds will look at the pba and the other union crooks. We need the feds to crack down on the unions, the unions own the NY state politicians, maybe the feds can put all of them in jail along with the pols where they belong.

  • akashakespeare

    if i’m not mistaken the RR pension ranks second to the pension our elected politicians would get. greed is so contagous and unneccisary. it’s more that most greedy people can lavishly spend in a life time, what is the logic of lying and cheating for more?

  • Stephen

    These are EXACTLY the issues that the Occupy Wall Street group should be focusing on ! Add the Port Authority and the Board of Education building contracts division too – .

    • IG

      Stephen, believe me, you don’t want the protesters to focus on the miilion dollar issues, these are just small potatoes. You want them to focus on the trillion dollar issues that are killing the country, such as how AIG and Citigroup are so large that they can bend the will of the entire country. They must protest to break up the too big to fail corporations.

      • Stephen

        IG –

        Just FYI, the goverment made $$$hundreds of millions of dollars $$$ on the AIG Bailout – it was a good temporary investment….

  • pugphan

    Wow…will this sheeet never end? And how come the high profile peeps behind it all never get caught, or if they do, they don’t any time, and get to keep the freaking doughs they stole, usually paying an insignificant little fine. smokersodysseycom

  • NYGirl

    Everytime you pick up the paper or listen to the news all you hear is these kinds of stories whether it be LIRR, Medicaid, Welfare, Disability. There is always some disgusting greedy pig that finds a way of ripping off the taxpayer and the system. The fares are ridiculous on the LIRR and now we know why.

  • Bill for NY

    I’m sure this is one of many schemes currently going on in these massive unregulated “Authorities” MTA LIRR , who is responsible for them ,CEO? Mayor? NO ONE!!!!

    • al

      the federal railroad pension board is in control.

  • Kevlar

    Yes, I agree, let the politicians steal the money. If the pols had known, how could they wait so long for an inquiry? The pols were paid off also. The NY attorney general turned a blind eye to this. Now the pols want all the $$ for themselves/

  • Bman

    PS: Ace F! You the man!

  • Bman

    No wonder we have to pay $25 round trip..Everyone knows the MTA has been scamming everyone for years.. I mean how does the ex head of a public transpotation co, MTA (Peter KAlijkow) own a fleet of fc ki ng Ferrari’s? These guys have been lining their pockets with Taxpayer $ forver…. Sux! They should all be locked up for a long time uncluding the emplyeess who filed the pensions for fake injuries… LAme !

    • Elliot Silber

      Peter Kalikow was wealthy before he ran the MTA! He bought the Ferraris before he was at the MTA.

  • Max

    and the consequences for all those hundreds + collecting fraudulent pensions will be??????

    • Alma

      I was thinking exactly the same thing. Their pensions/disability should be revoked and they should pay back every single penny even if it means taking their homes. Unless something drastic is done, these types of scams will never end and we end up getting screwed.

  • Darius

    11 in custody? Just 11? Shouldln’t they round up more, like all the pensioners? Better yet put a moratorium on all pension payments. Stop payments altogether. Let those who have been receiving pension undergo tests by legitimate doctors!

  • Steve the stud

    This is the real reason why prices at the MTA, LIRR and NJ transit continue to skyrocket. We’re paying people to not work.

    • Peter

      oh so true !!!!!!!!!!!

  • Meme Meyagi

    what is done about 7 million mooslime terrorists living in usa?

  • http://hoopsvader.wordpress.com hoopsvader

    I scammed the LIRR and have been getting paid for years. They never caught me and I am making out.

  • A

    The MTA as a whole is a corrupt orgnaization. Worked for them in the early 1990’s as a consultant for an IT project for 2 years. The circus atmosphere that took place in there techonolgy building on 10 Ave and 34th street was a complete joke for anyone who has to work. To see people who have worked in the IT department there for 20 years not know how to actually do their job I found amazing. Now not all the people there were useless but I would say a good 30% had to go. In fact I always questioned their hiring practices, they start with the bottom of the barrel first.

  • Dan Te

    Long Islanders seem to be involved with collecting fraudulent disability pensions, cheating on SAT exams, serial killings, etc…what’s up with Long Islanders?

    • truth

      most are losers. i lived out in LI for years before i had enough of their selfich scamming ways. now back to queens, what a relief.

    • LI HATER

      From a New Yorker who mistakenly moved to LI, the people suck!!!

  • bday55

    How much do you get on a disability pension?

    • flaco

      3/4 of your last year…TAX FREE. $100,000 = $75,000 a yr, TAX FREE,for life!!!!!!!!!!!!! Metro North, LIRR, Port Authority, PBA, MTA, all have corrupt pension rules, pushed and legislated by the politicians and the Unions. That is WHY they all retire on a disability pension. Much larger pension that is TAX FREE. Are you paying attention NOW?????

  • jim

    OK how about nothing will happen. There will be a ton of hearings and headlines but this sham will continue and there will be little accountability if any. We are as currpt as the Iraqi’s and Afghani’s.

  • Ace Frehley

    Why are taxpayers funding LIRR pensions? Should the LIRR only be funding their own pensions? I’ve said this for years, but the LIRR is a monopoly and takes advantage in every way of being a business with no competition, no oversite, and no one to really answer to [recent weather-related shutdowns]. The LIRR needs a complete top-to-bottom investigation to find out what the hell they’re really doing? They should be and function as a commuter railroad, not a “rolling bank” whose only goal is to make as much money as possible for themselves.

    • lisa

      I didnt know you live on Long Island, Ace…?

      • Ace Frehley

        I’m back, Lisa…back in the New Yawk groove.

    • Jayne

      Taxpayers do not fund LIRR Pensions. Employees do. Disability is also funded by employees, who pay into Railroad Retirement in lieu of Social Security

  • Pi$$ed Off Long Islander

    Go after them, take their money, put it back into the railroad and reduce our fares back to reasonable amounts. Oh, that will never happen.

    • The RRIL

      Another reason to rename to RRIL…America’s backwards commuter rail. Maybe some of this illegal and fraudulent pension money can go and fix this aging signals?

  • iggy

    this has been going on for years and they only charged 10? 90% get 2 pensions and they only charge 10? i guess this 10 didn’t come up with a payment.

  • Kazoo

    Lock them all up and take their pensions. it’s people like this that make it hard for everyone else.

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