Five current and former MTA employees have been accused of fraud for submitting false reports of overtime work -- collectively earning more than $1 million in fraudulently-obtained overtime pay, according to federal prosecutors.

Thomas Caputo, 56, Joseph Ruzzo, 56, John Nugent, 50, and Joseph Balestra, 51 -- four current and former longtime employees of the Long Island Rail Road who reside throughout New York -- and Michael Gundersen, 42 of Manalapan, New Jersey, a longtime employee of the New York City Transit Authority, were charged with one count federal program fraud for submitting time reports falsely claiming to have worked hundreds of hours of overtime that they did not in fact work, Acting United States Attorney for the Southern District of New York Audrey Strauss, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation William F. Sweeney Jr., and Inspector General of the Metropolitan Transportation Authority Carolyn Pokorny jointly announced Thursday.

Each faces a maximum sentence of 10 years in prison if found guilty. Attorney information for them was not immediately known.

The workers allegedly volunteered for overtime and then claimed to have been working the times when they were in fact at home or at other non-work locations, including bowling alleys and family vacations.

“These employees allegedly worked very hard – to steal MTA time and money, ignoring their duty to keep the tracks and rails safe for their fellow workers and riders," Pokorny said in a statement. "For MTA employees who earn hundreds of thousands of dollars a year, it takes some nerve to steal overtime by only working a fraction of your shift – if at all. The situation underscores what our Office has been saying, again and again – the lack of management systems and controls at the MTA creates an environment where fraud could easily occur undetected – and it did, as alleged in these criminal complaints.  When employees are on the clock, management needs to know that they are actually working, and not – say, enjoying concerts in Atlantic City, vacationing at resorts, or competing in a bowling league.”

According to LIRR and NYC Transit complaints, Caputo, Ruzzo, Nugent, Balestra and Gunderson each schemed to fraudulently receive thousands of dollars in compensation from the MTA each by falsely claiming to have worked hundreds of overtime hours (and in the case of Gunderson some regular time hours also) that they did not work. The alleged overtime pay they claimed claimed resulted in astonishing salary increases making them among the highest-paid MTA employees, and in the case of Caputo, the highest-paid MTA employee in 2018. 

In 2018, Caputo was allegedly paid about $461,000 by the MTA. Of that amount, about $344,000 was paid for overtime he was allegedly to work, according to his complaint. In total, this made Caputo the highest paid employee at the MTA during 2018 – higher than the Chairman of the MTA. Caputo claimed to have worked about 3,864 overtime hours, on top of 1,682 regular hours, according to the complaint filed against him. That alleged amount of overtime would average out to about 10 hours of overtime every single day of the year, including weekends and holidays, on top of his 40-hour work week.   

Similarly, Ruzzo, Nugent, Balestra and Gunderson were paid over $240,000 in overtime each, putting them within the top 12 highest paid employees at the MTA during 2018.  These payments were based on reported amounts of overtime hours ranging from 2,918 to 3,914 for the year.

Caputo was an LIRR employee responsible for track inspection until he retired in 2019.  Ruzzo also retired in 2019, while Nugent and Balestra, who are still employed by LIRR, were all LIRR foremen during the time it is alleged they fraudulently obtained overtime. 

Gunderson is a current NYC Transit Maintenance Supervisor Level II, which requires him to, among other things, provide managerial-level oversight and support of Third Rail Contract Compliance and Circuit Breakers.

“These defendants, senior LIRR and New York City Transit employees, allegedly made themselves some of the highest-paid employees at the entire MTA by claiming extraordinary, almost physically impossible, amounts of overtime," Strauss said in a statement. "As alleged, those almost impossible claims were fueled by brazen, repeated fraud, including falsely claiming to be working overtime hours while the defendants were at their homes or, in some instances, bowling.”

Sweeney, the FBI Assistant Director, shared similar sentiments.

“Today we’ve arrested five individuals, all senior MTA employees, for their role in an incredibly blatant overtime fraud scheme.  In the case of at least one defendant, the excessive compensation he received from the MTA was equivalent to purportedly working 10 additional hours a day, every day, for 365 days,"  The others weren’t far behind, collectively earning more than $1 million in overtime pay.  This type of double-dealing directly contributes to rising MTA fares for the average, hardworking commuter.”

In a statement to News 4 New York, the MTA said in part: "The alleged conduct by these MTA employees is an egregious betrayal of public trust.The MTA has implemented a number of aggressive overtime controls that substantially increase oversight and accountability -- already resulting in a reduction of $105 million in overtime in 2019 alone and the implementation of a five-year plan to cut overtime costs by nearly $1 billion. We will continue to root out waste, fraud and abuse wherever it occurs and will continue cooperating fully with this critically important investigation."

Caputo, Ruzzo and Balestra were each released on $200,000 personal recognizance bond with travel restrictions at a Manhattan federal court hearing held via teleconference, while Nugent and Gundersen were released on $100,000 bonds. Hearings for each of the defendants are scheduled for Jan. 4.