The low-blow brazen scams

While 9/11 brought out heroic displays from so many of New York's emergency responders, it appears to have brought out the worst in others. More than a hundred cops and firefighters have recently been charged with fraud after making improper use of their disability payments.

On September 11, 2012, 11 years to the day after the attacks on the World Trade Center in New York City, retired NYC cop Richie Cosentino posted a picture of himself on his Facebook page grinning triumphantly as he cradled a large sailfish on his lap on a boat. "It was an awesome day off the coast of Costa Rica," he wrote.

Nothing wrong or unusual about the post. Except for one small issue: at the time of his fishing trip, Cosentino was receiving disability payments, totalling more than US$200,000, as a result of his purported trauma from working on the aftermath of 9/11.

The first week of January 2014, a blown-up version of the picture would be on public display when Cosentino, along with more than 100 others, was charged in what the New York Times described as the largest fraud ever perpetrated against the US Social Security disability system.

Among the 80 retired police officers and firefighters charged that day, about half had made fraudulent claims related to 9/11, according to the Manhattan District Attorney's Office.

Another picture had also been enlarged and was similarly displayed at the news conference announcing the arrests.

It, too, was taken on the water. It showed retired NYC cop Glenn Lieberman on a jet ski as he beamed and thrust two middle fingers at the camera. Lieberman had received more than US$175,000 from Social Security (in addition to his pension) because he was so debilitated from 9/11, he said, that he was unable to do such mundane activities as shop or drive.

In a city that has understandably paid ongoing tribute to those who died or suffered ailments caused by the toxic chemicals on the site or who were genuinely traumatized by 9/11, this type of fraud was as low a blow as could be imagined.

"Many participants cynically manufactured claims of mental illness as a result of September 11, dishonoring the first responders who did serve their city at the expense of their own health and safety," said Cyrus Vance, Manhattan district attorney, in a statement. "The brazenness is shocking."

NYC Police Commissioner William Bratton summed up his reaction in one word: "disgust." Brazen and disgusting, yes. But not completely unexpected — not to fraud investigators.

Disasters such as 9/11 and Hurricane Katrina in 2005 tend to bring out the best in people, as many contribute time, effort and money to help victims. But there are significant numbers of people who take advantage of available funds for their own gain.

Two years after Katrina, the Bush administration was trying to recover nearly US$500 million from people who improperly received federal aid money intended to help victims of two deadly hurricanes, Katrina and Rita, NBC News reported.

The charges announced in January were part of "a scheme stretching back to 1988 in which as many as 1,000 people — many of them officers and firefighters already collecting pensions from the city — were suspected to have bilked the federal government out of an estimated US$400 million," the Times said. It is expected that more arrests, connected to the previous 25 years or so, will ensue. Most of the accused were said to have received benefits to which they were not entitled of between US$30,000 and US$50,000 a year.

An indictment unsealed by the Manhattan DA's office identified four men as key players in the scheme. At the top was Raymond Lavallee, 83, a Long Island lawyer who had once worked for the FBI and had been the head of the Nassau County District Attorney's rackets bureau. Lavallee consorted with pension consultant Thomas Hale, 89, "who investigators say filled out applications," the paper said, "John Minerva, 61, a former police officer who works for the Detectives' Endowment Association" and retired NYC cop Joseph Esposito, 64.

According to prosecutors, the four men received cash kickbacks of more than US$28,000 from each applicant. Lawyers for the four men denied all the accusations.

Commissioner Bratton said the most recent arrests came about after Social Security investigators noticed a red flag: a considerable number of retired police officers who had obtained psychiatric disability awards had also applied for pistol permits. "So we had a discrepancy," Bratton said.

"As the NYPD's Internal Affairs Bureau joined the probe," the dailybeast.com reported, "it was determined that many of these folks had used the same psychiatrists to substantiate their claims and described their symptoms as if from a common script." The website provided a fascinating account of how the claimants had been coached. The script included quotes to weave into discussions with psychiatrists:

"I nap on and off during the day… I have the TV on to keep me company… I was a healthy, active, productive person… I'm up and down all night long… My [fill in the family member] is always after me about my grooming… I'm unable to perform any type of work activity in or out of the house."

Esposito was heard, on an intercepted phone conversation, telling a subject about to be examined by Social Security officials: "When you get there, usually the first question they ask is, 'How did you get here?' You're gonna say, 'My sister drove me.' The next question they generally ask is, 'Who does the cooking, cleaning, shopping in your house?' You're gonna say, 'My mother.'"

Esposito continues: "When you get to see the doctor, he's gonna ask you questions. He's not trying to trick you… . They just want to see if you can concentrate. They'll say, 'But what do you do with yourself all day? How do you spend your day?' You're gonna tell 'em, 'I don't sleep well at night. I'm up three, four times. Usually, I nap on and off during the day. I put the television on, you know, I keep changing channels 'cause I can't concentrate on the television. Just to hear a voice in the house.'"

He adds: "And they're liable to say, 'Spell the word 'world', so you go 'W-R-L-D.' Then they're gonna say, 'Spell it backwards.' You think about it, and you can't spell it backwards. Then they might tell you, 'I'm going to tell you three things to remember: a spoon, a fork and a dish.' They're going to ask you later in the conversation to remember them. You remember one of them."

Not all the fraudsters netted in the 2014 arrests used 9/11 as the reason for their disability claims. Perhaps the most flagrant scammer was former Queens cop Louis Hurtado. The 60-yearold received more than US$470,000 in disability payments over 26 years after he successfully convinced doctors he had a disability that made it impossible for him to work.

Hurtado could have used that money to support a nice lifestyle that likely wouldn't have raised any suspicions. His decision to open and teach at a martial arts studio in Florida, however, was foolish and belied his claim of infirmity.

"Assistant District Attorney Christopher Santora said Hurtado was one of the worst abusers, posting videos of himself performing martial arts on YouTube and travelling on at least 18 flights between 2006 and 2013, all while claiming he was too depressed to leave his house, travel or work," the Daily Mail reported.

It is apparent from the Manhattan DA's investigation that social media can be of tremendous assistance in the investigation of fraud cases, especially those involving people who claim some kind of physical or emotional impairment.

In July 2012, LexisNexis Risk Solutions reported on its survey, involving 1,200 participants, on the impact of social media on law enforcement in criminal investigations. "The survey revealed that currently four out of five respondents use various social media platforms to assist in investigations," LexisNexis said. "The research also found that identifying people and locations; discovering criminal activity and locations; and gathering evidence are the top activities, while Facebook and YouTube are the most widely used platforms."

Interestingly, "87% of the time, search warrants utilizing social media to establish probable cause hold up in court when challenged, according to respondents."

It might be stating the obvious to urge fraud investigators to use social media as much as possible. Despite countless advice in the media about the dangers associated with ill-advised comments and pictures on social media, many people continue to do so — especially those prone to narcissism, a trait shared by many fraudsters.

A 2013 University of Michigan study, Computers in Human Behavior, showed that high numbers of postings on Facebook and Twitter were correlated with higher levels of narcissism in young and middle-aged adults. As stated by a researcher, "Facebook serves narcissistic adults as a mirror."

When the fraudsters who scammed the 9/11 fund look in the mirror, will they see how appalling the average person perceives their crime? Hopefully some will. They might even — foolishly — post their thoughts about it on social media.

About the Author

David Malamed


David Malamed, CPA, CA•IFA, CPA (Ill.), CCF, CFE, CFI, is a partner in forensic accounting at Grant Thornton LLP in Toronto.

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