Crime Watch

Fraud scheme nets 106 arrests

Manhattan D.A. says Valley Stream man was one of four leaders


A Valley Stream man who is a retired New York City police officer has been charged with joining three others in organizing a Social Security disability scheme that prompted 80 retired city firefighters and police officers to lie about their mental conditions and fake symptoms to obtain benefits to which they were not entitled, Manhattan prosecutors said on Jan 7.

The indictment, brought by the office of Manhattan District Attorney Cyrus Vance Jr., charges a total of 106 people, four of whom are accused of running the scheme.

The Valley Stream resident was identified in court papers as 70-year-old Joseph Esposito. The other three charged with running the scheme are attorney Raymond Lavallee, 83, of Massapequa, a former assistant Nassau County district attorney; pension consultant Thomas Hale, 89, of Bellmore; and retired NYPD detective John Minerva, 61, of Malverne.

Esposito is accused of bringing multiple applicants into the scheme. According to authorities, he and Hale coached applicants into falsely describing symptoms of depressing and anxiety to doctors, in an effort to build a record of psychiatric treatment. The two specifically instructed applicants how to convincingly fail memory tests, how to dress and how to act, according to the report.

Vance says that Esposito himself received disability benefits. He worked for the NYPD from 1973 to 1990, retiring at the age of 46. He was awarded a disability retirement based on claimed line-of-duty injuries resulting from two motor vehicle accidents. In 1991, he filed for and received further benefits based on “mood disorders.”

According to the report, Esposito received almost $300,000 in disability benefits, in addition to more than $13,000 for his wife and nearly $114,000 for his three children.

Esposito pleaded not guilty at his arraignment on Jan. 7. His attorney, Brian Griffin of Garden City, did not return a call for comment.

Raymond Perini, attorney for Lavallee, the alleged ringleader of the fraud scheme, said that his client denies all of the charges and pleaded not guilty at his arraignment.

“Because of these allegations — and allegations are easy to bring and hard to prove — he lost his reputation,” Perini said. “We are going to get his reputation back in the courtroom, in front of a jury of 12 peers, when he’s found not guilty.”

Minerva’s attorney, Glenn Hardy, said his client had a legitimate job helping officers obtain benefits, and denied that Minerva had coached applicants for disabilities.

Prosecutors claim that Minerva obtained cash kickbacks directly from those who were granted the benefits, and that he shared the money with his three co-conspirators. Each of the four leaders was charged with first- and second-degree grand larceny and second-degree attempted grand larceny.

According to the indictment and documents filed in court, from approximately January 1988 to December 2013, the four principal defendants “operated together to direct and assist many hundreds of applicants to falsely claim disabilities in order to collect Social Security disability payments, in addition to their public pensions,” the release said.

Court papers allege that the 106 defendants collected between $30,000 and $50,000 annually after fabricating claims that they were incapacitated by serious psychiatric disorders brought on by their jobs. Many claimed that their conditions — including post-traumatic stress, anxiety and depression — developed after they responded to the Sept. 11, 2001, terrorist attacks.

The remaining 102 defendants, all of whom received Social Security disability payments, are charged with second-degree grand larceny and second-degree attempted grand larceny.

Seventy-two of the defendants also are 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, according to the release.

Investigators said that the ex-officers and other workers collected years’ worth of benefits for claiming mental health problems so severe that they couldn’t work at all. Many of the officers had legitimate physical disabilities that would have entitled them to state disability pensions, but not federal Social Security disability insurance, which requires a complete inability to work.

Court records show that one of the defendants who said he couldn’t work taught martial arts. Another claimed depression so crippling that it kept him house-bound, but was photographed aboard a Sea-Doo watercraft.

“It’s a particularly cynical part of the charged scheme that approximately half the defendants falsely claimed that their psychiatric disabilities were caused by the 9/11 attacks,” Vance said. “This fraud not only forced taxpayers to finance the lifestyles of New York scammers, but it also takes away from the already limited resources we have for people who actually suffer from psychiatric disabilities, and that includes, of course, the brave first responders who ran toward the fires on Sept. 11.”

Esposito posted $500,000 bail and is due back in court on Feb. 7.

Andrew Hackmack, Brian Racow and Howard Schwach contributed to this story.