Ten Charged in Long Island Rail Road Pension Fraud

Ten Long Island Rail Road retirees were charged in a probe of pension fraud as the U.S. announced a program offering immunity to hundreds of other former workers at the suburban New York railway if they admit lying on disability applications and disclaim future benefits.

The indictment unsealed today in Manhattan brings to 21 the number of people charged in the case. In October, U.S. prosecutors charged 11, including two doctors and a former union president, with taking part in a scheme in which retired LIRR workers falsely claim disability benefits from the Railroad Retirement Board.

“The LIRR is a commuter railroad, not a gravy train,” U.S. Attorney Preet Bharara in Manhattan said in a statement. “Today we have criminally charged 10 more LIRR workers who planned padded retirements built on lies and greed.”

Under the voluntary disclosure plan, retirees who admit having made false statements to get disability benefits and give up their right to future payments may avoid being prosecuted or sued by the government. The program may save the Railroad Retirement Board tens of millions of dollars, according to the U.S. Attorney’s statement.

The board is an independent federal agency that administers unemployment and retirement benefit programs for U.S. railroad workers. In fiscal 2011, the board paid $10.9 billion in retirement and survivor benefits to about 578,000 people, it said on its website.

Six former LIRR workers were arrested in Queens and Long Island today, said J. Peter Donald, a spokesman for the Federal Bureau of Investigation in New York. One was arrested in Florida. Three others surrendered to authorities.

The case is U.S. v. Ajemian, 11-CR-1091, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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