A former electrician with the Long Island Railroad admitted to participating in a large fraud scheme where workers claimed to be disabled upon early retirement so they could receive fraudulent disability benefits.
Gary Satin pleaded guilty to federal charges before U.S. Magistrate Judge Henry Pitman, according to the New York Attorney’s Office.
“The money train has come to a halt for Gary Satin, as it will for others,” said Manhattan U.S. Attorney Preet Bharara in a statement. “It was corruption not coincidence that caused Gary Satin’s purportedly disabling condition to align with his early retirement, making him eligible for annual benefit payments that almost matched his salary. As he acknowledged today, his disability and its timing were part of a pre-planned scam designed to game the system. What’s worse, in an effort to cover-up his fraud, he lied to a grand jury. He will now answer for his crimes.”
To circumvent the rules mandating reduced benefits for those who retired under the age of 50, Satin retired and claimed a disability so he could receive a disability payment along with his pension. The disability payment provision did not consider age. A retiree’s pension, in combination with disability payments, can nearly match the base salary earned during his or her career.
Federal officials say hundreds of LIRR employees have exploited the overlap between the LIRR pension and the disability program by pre-planning the date on which they would falsely declare themselves disabled so that it would coincide with their projected retirement date. These false statements, made under oath in disability applications, allowed employees to retire as early as age 50 with a pension, supplemented by the fraudulently obtained disability annuity.
From 2004 through 2008, 61% of LIRR employees who stopped working and began receiving disability benefits were between the ages of 50 and 55. In contrast, only 7% of employees at Metro-North who stopped working and received disability benefits during the same time period were between the ages of 50 and 55.
Satin retired in June 2005 at age 55. In his last year of employment, Satin received about $84,000 in compensation. After retirement, he sought and obtained sickness and disability benefits. In 2010, he received about $32,000 in LIRR pension payments and about $36,000 from his disability annuity, for a total of $68,000 in annual benefits.
He claimed in applying for disability benefits that he was unable to perform his railroad job and that indoor and outdoor chores were “difficult.” In court, he admitted that no medical condition prevented him from performing his railroad job. Instead, he admitted that he had pre-planned his false disability to supplement his retirement income. In fact, in the 18 months prior to his retirement, he did not take a single day of sick leave, and in the five months prior to his retirement, he worked about 154 overtime hours. In the years after his retirement, he performed landscaping, contracting, and electrical work for pay, officials say.
He also exploited his false disability to obtain other benefits to which he was not entitled, including a handicapped parking pass from New York State, claiming that his disability “severely limited” his “ability to walk.”
On April 28, 2011, Satin appeared before a grand jury in the Southern District of New York, where he intentionally provided false and misleading testimony on material matters, including falsely denying that he performed landscaping, contracting, and electrical work post-retirement.
In May, federal prosecutors and the LIRR announced a voluntary disclosure and disposition program, where those admitting to taking part in similar schemes would not be prosecuted and would give up the falsely obtained disability benefits.
