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Wednesday, October 22, 2014
Ex-fire dep't leader sentenced to three years in LIRR fraud case
(Page 2 of 2)
Michael Costanza

Costanza retired from the LIRR in December 2003. The jury found that Costanza made false statements in January 2004 to the federal Railroad Retirement Board claiming he had become disabled on the job.

In his disability application, Costanza claimed to have “severe neck, back, carpal tunnel and right knee pain” and “right shoulder and left ankle problems,” according to the affidavit of Adam Suits, a special agent in the RRB’s Office of the Inspector General.

In all, Costanza collected $330,567 in benefits, which he will now have to pay back to the government. Costanza also agreed to forfeit 25 percent of his regular LIRR retirement pension. Prosecutors informed Wood that Costanza would have stolen $549,327 by the time he aged out of benefits, had his fraud not been discovered.

According to the office of Preet Bharara, the U.S. Attorney for the Southern District of New York, Costanza was among hundreds of individuals who participated in a “multi-year, systemic fraud to obtain RRB disability benefits.”

“Hundreds of LIRR retirees received RRB disability benefits to which they were not entitled,” stated a press release from Bharara’s office. “The foreseeable loss to the RRB disability funds — if the scheme had not been uncovered and all fraudulent claims had been paid out in full — would have exceeded approximately $1 billion.”

Costanza’s indictment described 2004, the year he filed his disability application, as the “peak” of the scheme. Eighty-eight percent of LIRR employees retiring that year obtained a RRB disability annuity, the indictment stated.

Many defendants took plea deals, avoiding jail time. Costanza was one of a handful who went to trial, all of whom were convicted and sentenced to multi-year prison sentences. Costanza’s 37-month sentence was considerably lighter than the maximum one he could have received of 55 years.

Costanza is due to begin his prison term in mid-August, according to Bharara’s office.

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