80 Former Cops Charged in Retirement Scam

The Indictments involve Social Security Disability fraud that cost taxpayers hundreds of millions….

For Immediate Release

January 07, 2014

Cyrus R. Vance, Jr.

District Attorney, New York County

DA VANCE: 106 DEFENDANTS, INCLUDING 80 NYPD AND FDNY RETIREES, INDICTED IN SOCIAL SECURITY DISABILITY FRAUD COSTING FEDERAL TAXPAYERS HUNDREDS OF MILLIONS

Allegations Include Recipients Coached To Fake Psychiatric Problems; Certain Defendants Accused of Falsely Claiming Disability Caused by September 11th Attacks; Ring Was Managed By Former Rackets Prosecutor

Manhattan District Attorney Cyrus R. Vance, Jr., today announced the indictment of 106 defendants for a massive fraud against the federal Social Security Disability Insurance Benefits (“SSDI”) program that resulted in the loss of hundreds of millions of dollars from federal taxpayers. The four principal defendants, RAYMOND LAVALLEE, 83, THOMAS HALE, 89, JOSEPH ESPOSITO, 64, and JOHN MINERVA, 61, are accused of directing hundreds of SSDI applicants, including many retirees of the NYPD and FDNY, to lie about their psychiatric conditions in order to obtain benefits to which they were not entitled. They are charged with Grand Larceny in the First and Second Degrees, and Attempted Grand Larceny in the Second Degree. The remaining 102 defendants, all SSDI recipients, are charged with Grand Larceny in the Second Degree and Attempted Grand Larceny in the Second Degree.^[1] The investigation is continuing.

“For years, federal taxpayers have unwittingly financed the lifestyles of the defendants charged today,” said District Attorney Vance. “The Social Security Disability safety net exists to help those who are unable to help themselves. Many participants cynically manufactured claims of mental illness as a result of September 11th, dishonoring the first responders who did serve their City at the expense of their own health and safety. This alleged scam further depleted the already limited resources available for battling the real and complex conditions of PTSD and depression. I commend the excellent work of the federal agents from the Social Security Inspector General’s office, who worked with Assistant District Attorneys and detective investigators in my office, as well as seasoned detectives from the NYPD’s Internal Affairs Bureau, to crack this decades-long scam.”

New York City Police Department Commissioner William J. Bratton said: “The retired members of the NYPD indicted in this case have disgraced all first responders who perished during the search and rescue efforts on September 11, 2001, and those who subsequently died from 9/11 related illness, by exploiting their involvements that tragic day for personal gain. I would like to thank members of the NYPD Internal Affairs Bureau, the Manhattan District Attorney’s Office and the United States Social Security Administration Inspector General for working together to uncover this deception and fraud and bring these criminals to justice.”

Special Agent-in-Charge Edward J. Ryan of the United States Social Security Administration, said: “The crimes alleged in this indictment outline a highly organized, far-reaching criminal enterprise that targeted the Social Security Disability Insurance (SSDI) program. These individuals allegedly relied on lies, deceit, and under-the-table payments while they bilked the Social Security Trust Funds of tens of millions of dollars and, in many instances, exploited the tragic events of September 11, 2001 for their own gain. This exploitation, combined with the fact that many of those indicted formerly held positions of public trust, make these crimes all the more egregious, and the Office of the Inspector General is gratified to see them brought to justice. If you have information relating to this investigation or other similar schemes I encourage you to contact us at a special hotline that has been set up at (877) 471-6012 or you can e-mail us at oig.ssa.gov/report.”

James T. Hayes, Jr., Special Agent-in-Charge of Homeland Security Investigations New York said: “Many of the individuals arrested today are alleged to have crafted an insidious scheme to profit off the tragedy of the worst terrorist attack in our nation’s history, one that affected all New Yorkers so very personally. I’m proud that through the work of my office’s El Dorado Task Force, one of the largest and most successful financial investigations task forces in the world, we will chase down every penny that these dishonorable thieves fraudulently pilfered so that the truly heroic firefighters, police officers, medics, and civilians who actually risked their lives on September 11, 2001, and are now suffering because of it, can get the care that they critically need.”

Under the United States Social Security law, individuals are qualified as “disabled” and entitled to SSDI payments if they suffer from a disability that prevents them from assuming any job available to them in the national economy. The payment amount varies per recipient, but the average annual payment is approximately $30,000 to $50,000 for each recipient.

According to the indictment and documents filed in court, from approximately January 1988 to December 2013, the four principal defendants in this case operated together to direct and assist many hundreds of applicants to falsely claim disabilities in order to collect SSDI payments, in addition to their public pensions. The applicants claimed that they suffered a psychiatric condition that prevented them from working, such as post-traumatic stress disorder, anxiety, or depression. Many of the defendants used their association with the events of September 11, 2001, as the cause of their psychiatric condition. Seventy-two of the defendants are also collecting pensions as retirees of the NYPD, eight from the New York City Fire Department, five from the New York Department of Correction, and one from the Nassau County Police Department. 

As detailed in court papers, applicants were typically brought into the charged scheme by ESPOSITO, a retired member of the NYPD, or MINERVA, a disability consultant for the Detectives’ Endowment Association, the union that represents NYPD detectives. They would then refer applicants to LAVALLEE, an attorney who previously served as Assistant District Attorney and Chief of the Rackets Bureau in the Nassau County District Attorney’s office from 1964 to 1970, and HALE, a key manager of the scheme under LAVALLEE, to submit the SSDI applications.

Although many of the NYPD and FDNY applicants had limited physical disabilities that legitimately entitled them to state disability pensions, these physical conditions did not entitle them to SSDI, which requires a complete inability to work. For that reason, according to the charges, to overcome the SSDI threshold, the applicants, with the help and direction of ESPOSITO, HALE, MINERVA and LAVALLEE, created false psychiatric conditions, typically depression, anxiety, or post-traumatic stress disorder (“PTSD”).

HALE and ESPOSITO are accused of coaching applicants to falsely describe symptoms of depression and anxiety to doctors they had recruited, in order to build a record of psychiatric treatment over the course of approximately one year. Specifically, they instructed applicants on how to fail memory tests with plausibility, how to dress, and on their demeanor. Almost every application included identical descriptions of the applicants’ activities of daily living, such as:

• “I nap on and off during the day.”
• “I have the TV on to keep me company.”
• “I was a healthy, active, productive person.” 
• “I’m up and down all night long.”
• “My [family member] is always after me about my grooming.” 
• “I’m unable to perform any type of work activity in or out of the house.”

Before filing their SSDI applications, according to the charges, none of the defendants had a history of a psychiatric condition that would qualify them for SSDI benefits. While collecting their cash benefits, many of the applicants lived lifestyles that starkly contradicted the representations made on their applications.

For example, defendants often claimed that they rarely left their homes, did not travel, and had almost no social interactions with family and friends. But, according to court documents, applicants were in fact driving, traveling by air, engaging in recreational sports, and lifting heavy objects. Several of the defendants also were gainfully employed, including at energy and investment companies, private security and private eye firms, construction and landscaping, and even baking.

In some particularly striking examples, one defendant piloted a helicopter, another played blackjack in Las Vegas, another worked at a cannoli stand at the San Gennaro Festival in Manhattan, another rode a jet ski, and one defendant taught and performed mixed martial arts. And, notwithstanding that most defendants claimed they could not use a computer, many had Facebook pages, Twitter handles, and YouTube channels.

Applicants were typically awarded SSDI benefits approximately between three and 12 months after submitting their applications. Initial award were paid to the applicants in the form of lump sum payments that included a retroactive award going back up to 12 months from the application filing date. The retroactive portions could be as high as $100,000. The recipients then continue to receive monthly payments. 

According to the indictment, after the retroactive awards were deposited into the applicants’ accounts, ESPOSITO and MINERVA instructed the applicants to withdraw cash from the bank in in increments under $10,000, so that the withdrawals would not raise suspicion or require the filing of currency reports with the federal government. Applicants then made cash payments to ESPOSITO or MINERVA, who in turn transferred the money to HALE and LAVALLEE. These one-time cash payments were based on the applicants’ monthly awards, and ranged from approximately $20,000 to $50,000.

In addition to a portion of the secret kickbacks, LAVALLEE also received $6,000 directly from the government for attorney’s fees for each applicant. Applicants then continue to collect their monthly fraudulent disability payments, which ranged from approximately $2,000 to $5,000 per month, depending on the number of dependents within the beneficiary’s household. 

Among the indicted applicants, SSDI awards have been paid since as far back as 1988, and in some instances, the total amount fraudulently obtained was close to $500,000 per applicant. The average SSDI payment to date for charged defendants, which included retroactive lump sum payments, was approximately $210,000.

Assistant District Attorneys Christopher Santora and Bryan Serino are handling the prosecution of this case, under the supervision of Assistant District Attorney Jodie Kane, Principal Deputy Chief of the Rackets Bureau, Assistant District Attorney Daniel Brownell, Chief of the Rackets Bureau, Assistant District Attorney Brenda Fischer, Chief of the Cybercrime and Identity Theft Bureau, and Executive Assistant District Attorney David M. Szuchman, Chief of the Investigation Division. Assistant District Attorney Vimi Bhatia, Deputy Chief of the Asset Forfeiture Unit, is handling the asset forfeiture portion of the case, under the supervision of Assistant District Attorney Duncan Levin, Chief of the Asset Forfeiture Unit. 

The following individuals also assisted in the investigation: Chief Investigator Walter Alexander; Supervisory Rackets Investigator Donato Siciliano; Assistant Chief Rackets Investigator Richard Bellucci; Director of Surveillance Richard Stiansen; as well as Investigative Analysts Michael Taddei, Angela Jenkins, Catherine Marinzel, Diana Goff, Lauren Freeman, Talia Epstein, Bridie Fitzgerald, Chris Matteis, William Burmeister, Brittney Sanders, Sara Dennis, Justine Chiu, and Willa Thompson, and former Trial Preparation Assistants Catherine Chong and Gerard Quinn.

District Attorney Vance thanked the following for their assistance in the investigation: Patrick P. O’Carroll, Jr., Inspector General for the United States Social Security Administration, and the Special Agents of the New York Field Office; Commissioner William Bratton and the New York City Police Department’s Internal Affairs Bureau; Special Agent in Charge Steven G. Hughes and the U.S. Secret Service’s New York Field Office; U.S. Department of Homeland Security Investigations, including Supervisory Special Agents Shawn Polonet and Marcos R. Castro; the U.S. Postal Inspection Service; the NY Regional Office of the U.S. Social Security Administration; the New York State Attorney General’s Office and its Organized Crime Task Force; the New York State Department of Taxation and Finance; New York State Police Superintendent Joseph A. D’Amico; the New York State Division of Criminal Justice Services; Suffolk County Police Department Chief James Burk; and Nassau County Police Department Acting Police Commissioner Victor Politi and Detective Sergeant Patrick Ryder.

^[1] The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

Defendant Information:

RAYMOND LAVALLEE, D.O.B. 7/6/1930
Massapequa, NY

Charges: 

• Grand Larceny in the First Degree, a class B felony, one count
• Grand Larceny in the Second Degree, a class C felony, 101 counts
• Attempted Grand Larceny in the Second Degree, a class D felony, one count

THOMAS HALE, D.O.B. 4/14/1924
Bellmore, NY

Charges:

• Grand Larceny in the First Degree, a class B felony, one count
• Grand Larceny in the Second Degree, a class C felony, 101 counts
• Attempted Grand Larceny in the Second Degree, a class D felony, one count

JOSEPH ESPOSITO, D.O.B. 12/28/1949
Valley Stream, NY

Charges:

• Grand Larceny in the First Degree, a class B felony, one count
• Grand Larceny in the Second Degree, a class C felony, 101 counts
• Attempted Grand Larceny in the Second Degree, a class D felony, one count

JOHN MINERVA, D.O.B. 7/21/1952
Malverne, NY

Charges:

• Grand Larceny in the First Degree, a class B felony, one count
• Grand Larceny in the Second Degree, a class C felony, 101 counts
• Attempted Grand Larceny in the Second Degree, a class D felony, one count

GEORGE BYRNES, 2/22/1955
Nassau, NY

Charges:

• Attempted Grand Larceny in the Second Degree, a class D felony, one count 
• Criminal Facilitation in the Fourth Degree, a class A misdemeanor, one count 

DEFENDANTS 6-106 (Listed below)

Charges:

• Grand Larceny in the Second Degree, a class C felony, one count each
• Criminal Facilitation in the Fourth Degree, a class A misdemeanor, one count each

ANN MARIE AGLIALORO, D.O.B. 12/22/1958, Staten Island, NY
CHRISTOPHER AGOGLIA, D.O.B. 9/14/1962, Brooklyn, NY
JOHN AREZZO, D.O.B. 5/28/1946, Staten Island, NY
DONALD AVENOSO, D.O.B. 9/1/1956, Staten Island, NY
MICHAEL BARTON, D.O.B. 8/29/1958, Queens, NY
PHILLIP BLESSINGER, D.O.B. 8/2/1950, Martin, FL
SHELDON BRATTON, D.O.B. 8/26/1956, Brooklyn, NY
TYRONE BREEDEN, D.O.B. 10/4/1957, Queens, NY
DERMOT BRESLIN, D.O.B. 4/23/1954, Westchester, NY
NINFA BRUNETTO, D.O.B. 12/2/1965, Lackawanna, PA
JOHN BYRNE, D.O.B. 8/30/1966, Queens, NY
BRIAN CAREY, D.O.B. 9/27/1965, Orange, NY
ARTRAILYES CARTER, A/K/A DENISE CARTER, D.O.B. 10/26/1960, Queens, NY
JOHN CATUOSCO, D.O.B. 8/13/1969, Suffolk, NY
JOHN CLOSS, D.O.B. 2/9/1969, Monmouth, NJ
JOHN COLOMBI, D.O.B. 7/7/1967, Douglas, CO
EDWIN COLON, D.O.B. 7/26/1962, Orange, FL
DANIEL CONKLIN, D.O.B. 2/21/1967, Orange, NY
JACQUELINE CONNOLLY, D.O.B. 12/23/1956, Queens, NY
RONALD CONNOR, D.O.B. 4/17/1967, Palm Beach, FL
RICHARD COSENTINO, D.O.B. 2/25/1964, Rockingham, NH
EDWARD CURLEY, D.O.B. 1/23/1958, Suffolk, NY
DAVID CZARK, D.O.B. 3/22/1959, Horry, SC
THOMAS DAMON, D.O.B. 7/7/1966, Staten Island, NY
MICHAEL DEMARTINO, D.O.B. 12/7/1963, Brooklyn, NY
THOMAS DINKELACKER, D.O.B. 5/15/1959, Nassau, NY
ROBERT DONALDSON, D.O.B. 9/18/1961, Virginia Beach, VA
MUSTAFA DUFAN, D.O.B. 2/1/1963, Broward, FL
RALPH EHRESMAN, D.O.B. 12/31/1962, Fort Mill, SC
JOHN FAMULARO, D.O.B. 11/29/1955, Nassau, NY
GLENN GALANOS, D.O.B. 12/10/1968, Mecklenburg, NC
KAREN GALIMI, D.O.B. 12/24/1964, Queens, NY
KEVIN GALIMI, D.O.B. 4/14/1963, Queens, NY
THOMAS GALIMI, D.O.B. 5/22/1961, Orange, NY
VINCENT GERGENTI, D.O.B. 6/4/1955, Orange, NY
JACK GIANCASPRO, D.O.B. 1/1/1950, Bronx, NY
DANIEL GONZALEZ, D.O.B. 3/11/1981, Brooklyn, NY
SCOTT GRECO, D.O.B. 2/23/1964, Nassau, NY
WILLIAM GROSS, D.O.B. 10/10/1962, Orange, NY
PAUL HANSEN, D.O.B. 6/19/1978, Suffolk, NY
RAYMOND HERLIHY, D.O.B. 5/23/1948, Westchester, NY
KERAN HOWARD, D.O.B. 8/2/1965, Nassau, NY
DONALD HUNTER, D.O.B. 5/29/1951, Suffolk, NY
KEVIN HURLEY, D.O.B. 2/29/1960, Orange, NY
LOUIS HURTADO, D.O.B. 11/5/1953, Pasco, FL
DARLENE ILCHERT, D.O.B. 11/22/1964, Nassau, NY
PETER INZERILLA, D.O.B. 5/24/1973, Queens, NY
JODI ISOLANO, A/K/A JODI GIUDICE, D.O.B. 6/21/1978, Queens, NY
TRACY JACKSON, D.O.B. 6/9/1964, Union, NC
TERRANCE JOHNSON, D.O.B. 1/20/1962, Orange, NY
JOHN KELLETT, D.O.B. 12/9/1961, Nassau, NY
HELEN KRILL, D.O.B. 3/18/1955, Queens, NY
MICHAEL KULL, D.O.B. 8/5/1967, Orange, NY
DARRIN LAMANTIA, D.O.B. 6/22/1957, Queens, NY
VINCENT LAMANTIA, D.O.B. 10/8/1970, Staten Island, NY
THOMAS LAROSA, D.O.B. 5/26/1951, Brooklyn, NY
GLENN LIEBERMAN, D.O.B. 9/21/1965, Palm Beach, FL
CHRISTOPHER LISANTI, D.O.B. 12/1/1970, Suffolk, NY
DAVID LOPEZ, D.O.B. 1/18/1966, New York, NY
TERRANCE MAGANOS, D.O.B. 4/17/1963, Nassau, NY
ANTHONY MAHER, D.O.B. 5/19/1970, Pima, AZ
EDWARD MAHONEY, D.O.B. 11/9/1947, Nassau, NY
DANIEL MALLO, D.O.B. 7/26/1965, Fort Mill, SC
FRANCIS MARINO, D.O.B. 1/4/1971, Suffolk, NY
PETER MARTIN, D.O.B. 8/3/1964, Queens, NY
JOHN MASSONI, D.O.B. 10/13/1964, Staten Island, NY
JAMES MATAMOROS, D.O.B. 6/28/1958, Hillsborough, FL
LAUREN MAZZA, D.O.B. 8/20/1968, Staten Island, NY
GERARD MCCARTHY, D.O.B. 8/13/1966, Suffolk, NY
KEVIN MCCULLAGH, D.O.B. 11/24/1958, Queens, NY
JOHN MCGARRY, D.O.B. 7/2/1963, Queens, NY
ARLENE MELLETT, D.O.B. 2/18/1960, Nassau, NY
SALVATORE MORIELLO, D.O.B. 5/10/1962, Nassau, NY
ROBERT MORRISSEY, D.O.B. 7/25/1954, Suffolk, NY
JOSEPH MORRONE, D.O.B. 5/24/1953, New York, NY
ARNOLD MOSKOWITZ, D.O.B. 2/22/1947, Queens, NY
JERIMIAH MOYNIHAN, D.O.B. 12/3/1968, Suffolk, NY
LEONARD NARDUCCI, D.O.B. 5/14/1960, Ocean, NJ
MERGIN NESIMI, D.O.B. 12/30/1971, Brooklyn, NY
MICHAEL NUZZI, D.O.B. 11/26/1961, Nassau, NY
TERRANCE O'HARA, D.O.B. 8/1/1976, Suffolk, NY
JOHN OROSZ, D.O.B. 3/10/1971, Staten Island, NY
FRANK PALMERI, D.O.B. 9/1/1960, Nassau, NY
JAMES PATE, D.O.B. 10/1/1971, St. Johns, FL
JOSEPH POLITE, D.O.B. 5/29/1964, Suffolk, NY
DANIEL POLLICINO, D.O.B. 12/31/1965, Suffolk, NY
THOMAS PONZO, D.O.B. 6/5/1963, Nassau, NY
JOHN QUINN, D.O.B. 10/23/1963, Broward, FL
LIANA RIVERA, A/K/A LIANA BENITEZ-RIVERA, D.O.B. 2/15/1970, Martin, FL
MICHAEL ROCCO, D.O.B. 9/10/1959, Queens, NY
SAMUEL RUSHING, D.O.B. 6/23/1971, Queens, NY
MATTHEW SALMON, D.O.B. 9/16/1961, Suffolk, NY
JOHN SALVATO, D.O.B. 4/28/1962, Nassau, NY
MICHAEL SCIALABBA, D.O.B. 7/19/1970, Suffolk, NY
NICHOLAS SECCHI, D.O.B. 10/10/1963, Nassau, NY
JOHN SENESE, D.O.B. 2/28/1967, Georgetown, SC
JOHN STEFANOWSKI, D.O.B. 9/8/1963, Nassau, NY
ANDRE STENNETT, D.O.B. 4/30/1962, Lexington and Richland, SC
SHANNON TUMMINELLO, D.O.B. 10/20/1972, Lee, FL
LARRY WILTBANK, D.O.B. 5/28/1958, Ocean, NJ
SIDNEY YOUNG, D.O.B. 4/3/1959, Castle, DE