10 Face Federal Fraud Charges in Ongoing LIRR Disability Pension Scandal Probe

The arrests are the latest development in an investigation into a massive fraud scheme dating back to 1998 in which nearly every LIRR worker who claimed to be disabled upon early retirement received a disability pension

By Joe Valiquette, Jonathan Dienst and Shimon Prokupecz
|  Wednesday, May 23, 2012  |  Updated 6:30 AM EDT
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Long Island Rail Road workers who lied about disabilities to collect big pensions with taxpayer money may be getting a

NBC New York

Long Island Rail Road workers who lied about disabilities to collect big pensions with taxpayer money may be getting a "get out of jail free" card: the feds are offering an amnesty deal to hundreds of LIRR retirees believed to have taken part in a massive disability scam. Jonathan Dienst reports.

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LIRR Workers Bilked $1 Billion by Faking Disabilities

Investigators busted 11 LIRR workers Thursday for bilking the railroad and taxpayers out of a staggering $1 billion by faking disabilities. Jonathan Dienst reports.
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Ten Long Island Rail Road workers collecting disability pensions are facing federal charges as part of the government's ongoing investigation into an alleged fraud of the LIRR's pension system that may have cost taxpayers hundreds of millions of dollars.

NBC 4 New York first reported that FBI agents and state investigators began arresting nine of the defendants at their homes on Long Island early Tuesday. The 10th defendant will be taken into custody in Florida on federal fraud charges, law enforcement sources said.

The arrests are the latest development in an investigation into a massive fraud scheme dating back to 1998 in which nearly every LIRR worker who claimed to be disabled upon early retirement received a disability pension.  

Federal prosecutors have said the scheme could cause the federal Railroad Retirement Board, a federal agency that administers benefit programs for railroad workers and their families, to pay more than $1 billion in unwarranted disability payments if disbursed in full.

A study by the General Accounting Office in 2010 showed that LIRR workers received disability pensions at a rate 12 times higher than workers at any other railroad.

Last October, 11 people were charged by federal prosecutors with participating in the scheme to defraud the Railroad Retirement Board. Two doctors who allegedly falsely diagnosed retiring LIRR workers as disabled were among those charged.

The defendants arrested Tuesday in New York will be brought to the FBI's offices in lower Manhattan for processing and will appear in federal court.

U.S. attorney Preet Bharara said prosecutors will not criminally charge those who admit to the alleged scam and agree to give up their pensions, which could save the state hundreds of millions.

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