An orthopedist and two consultants were convicted Tuesday in the Long Island Rail Road disability-fraud trial in federal court in Manhattan, the first courtroom test of charges that hundreds of LIRR retirees turned a middle-class safety net into a piggy bank by scamming millions from the federal Railroad Retirement Board.
Dr. Peter Lesniewski of Rockville Centre, former LIRR union president Joseph Rutigliano of Holtsville and former retirement board manager Marie Baran of East Meadow were found guilty of conspiracy, fraud and false statements on the third day of jury deliberations. They each face 15 years in prison under sentencing guidelines, prosecutors said, and will be sentenced Dec. 13.
Shocked by ruling
The three, portrayed as law-abiding members of the middle class until the LIRR accusations, were stoic as family and supporters gasped at the verdicts. But as the jury left, they appeared shell-shocked. Baran and her husband cried. Lesniewski slumped in his chair and looked at the ceiling. Rutigliano held his head, chewed gum, and stared at the floor.
Following the convictions, prosecutors asked U.S. District Judge Victor Marrero to ratchet up bail conditions on Lesniewski and Rutigliano and immediately jail Baran, whom they accused of committing perjury when she testified at trial. Marrero ordered a Monday hearing on the request, and it drew a sharp retort from defense lawyers, who all plan appeals.
"If this wasn't so serious, I'd think it was a joke," said Thomas Durkin, Lesniewski's attorney. "I think this is vindictiveness for the exercise of the right to go to trial. It's absolutely unnecessary."
The convictions climaxed a scandal that first broke into public view in 2008. News reports highlighted an extraordinary rate of disability claims among LIRR retirees trying to top off an early retirement pension available at age 50. The spotlight shined on ex-workers who golfed and rode in bike races despite claiming disabilities. Charges were brought in 2011, and 25 defendants have pleaded guilty.
Lesniewski, 62, one of two doctors charged, was accused of "padding files" to provide a false medical basis for claims. Rutigliano, 66, and Baran, 65, were charged with charging fees of $1,000 and more and using insider knowledge of the system to help retirees fill out bogus applications to fool examiners. The three made over $1 million from their roles, the government said.
Officials lauded the verdict. "Lesniewski, Baran and Rutigliano served as engines of this fraud . . . costing the government hundreds of millions of dollars," said Manhattan U.S. Attorney Preet Bharara. "Like the 25 people who previously pled guilty, these defendants now have been brought to justice and will pay for their central roles in this brazen scheme."
Martin Dickman, inspector general at the Chicago-based retirement board, said he hoped the result would prevent future fraud but it wasn't a sure thing in light of the "inconceivable" behavior at the LIRR. "I hope it's a deterrent, but greed takes over a lot of times," he said. "They were just pigs."
The trial began on July 15. Seven retirees who have pleaded guilty appeared as government witnesses in hopes of earning lenient sentences, and said one or more of the defendants had helped them make up fraudulent claims. Experts testified that 21 percent of Metro-North workers claimed disabilities, compared with the LIRR's 79 percent. The government also produced testimony that Lesniewski admitted "exaggerating" in a 2008 interview with federal agents and had Baran's accountant testify that she had excluded more than $50,000 in cash payments from her consulting business from tax returns until she was visited by the FBI. Prosecutors also showed videos of Rutigliano, an ex-conductor who went out on disability in 2000, golfing.
Defense lawyers all claimed retirees who testified had lied to their clients about their physical infirmities, but Baran was the only defendant to testify. Although investigations have found that laxity at the LIRR and retirement board allowed fraud to flourish, Marrero ruled that was irrelevant and barred testimony about it at trial.
'They were all guilty'
The LIRR praised the verdict.
Jurors leaving court for the most part declined to comment. One who declined to give her name, said they had been in agreement on most issues from the start of deliberations. "We just thought they all were guilty," she said.
Lesniewski, convicted of two conspiracy charges and eight counts of health care fraud, mail fraud and wire fraud, faces a maximum of 125 years in prison. Baran, convicted of four conspiracy counts and six fraud charges, faces up to 130 years. Rutigliano, convicted of four conspiracy counts, six fraud counts, and making false statements in a federal filing, faces 175 years.
They all declined to comment leaving court. Despite the maximums, defense lawyers said they believed even the government's estimate of 15 years under federal sentencing guidelines was high. The highest sentence handed down so far in the LIRR case was an 8-year prison term Marrero imposed on Dr. Peter Ajemian of Garden City. Altogether, prosecutors have charged 33 doctors, retirees and so-called facilitators. Charges against five retirees are still pending.
With Alfonso Castillo
and William Murphy