Manhattan federal prosecutors Tuesday charged 10 more Long Island Rail Road retirees in an alleged $1 billion decade-long scheme to collect phony disability pensions, but offered an unusual stay-out-of-jail immunity deal to hundreds of other potential defendants if they turn themselves in.
Authorities said that in addition to 21 defendants, including two doctors, who have now been charged, as many as 1,500 other former LIRR workers are suspected of scamming millions from the federal Railroad Retirement Board through bogus disability claims, but can escape prosecution if they give up their disability pensions.
In a letter mailed Tuesday to LIRR retirees claiming disabilities, prosecutors said those who come forward and admit by July 6 that they falsified their claims will get to keep all their past benefits, while those who wait for the deadline of Aug. 10 will have to give up half of their past benefits.
"If you are culpable in this fraud, the voluntary disclosure program announced today is certainly a better choice than crossing your fingers and hoping we don't find you," said Janice Fedarcyk, head of the FBI's New York office.
Officials said the massive immunity offer -- which legal experts described as rare, if not unprecedented -- was proposed because of the "sheer scale of the alleged fraud" to save the Railroad Retirement Board tens of millions of dollars, and without the delay and expense of civil litigation and prosecutions.
Lawyers for some defendants have already complained that it is unfair to exclude their clients, while other lawyers said it is an efficient way to dispose of cases but appeared to reward criminality.
"It's saying to someone, 'You're admitting you committed a crime, you can keep all you made up to this day,' " said Richard Klein, a Touro Law school professor. "That's what's occurring here. The excuse is too many individuals, but we're talking about a billion dollars here. . . . It's really rather startling."
In October, prosecutors accused two doctors, two so-called facilitators and seven retirees in the disability scheme, alleging that the doctors had approved more than 90 percent of the LIRR workers they saw for disabilities, and that workers claiming disabilities had been seen shoveling snow, working out at gyms and taking bike tours.
After a series of early morning arrests on Long Island Tuesday, prosecutors said that a similar pattern occurred with the 10 LIRR retirees added to the case in a superseding indictment: Brian DelGiorno, 53; Philip Pulsonetti, 54; Gregory Bianchini, 59; Franklin Plaia, 55; Michael Stavola, 54; Michael Dasaro, 57; Karl Brittell, 62; Kevin Nugent, 57; Gary Supper, 57; and Thomas Delalla, 53.
Those 10 all worked thousands of hours of overtime to boost the amount of their LIRR pensions before claiming a disability, prosecutor Danya Perry said at a bail hearing. Then they saw one of the accused doctors, claimed "crippling and debilitating pain," Perry said, and later engaged in "strenuous and athletic actions" while collecting combined disability and pension payments of more than $10,000 a month.
"This case is essentially about a culture of fraud that affected the Long Island Rail Road," she said.
The 10 retirees are charged with conspiracy to commit mail fraud, wire fraud and health care fraud; conspiracy to commit fraud against the Railroad Retirement Board; false claims; health care fraud; and mail fraud.
Prosecutors did not release detailed allegations about the disability claims of each of the new defendants. Bianchini was arrested in Florida. The other nine all pleaded not guilty and were released on bail or on their own recognizance after appearances in Manhattan federal court, and some lawyers said their clients were being unfairly smeared.
"My client is a 57-year-old man who's never been arrested for anything," said Matthew Mari, the lawyer for Dasaro, of Oakdale. "He's very surprised by this. He had actual medical conditions."
Plaia, of Hicksville, was accused by Perry during a bail argument of leading a "double life" by playing golf and vacationing in Jamaica after winning his disability pension. But his lawyer, Mark Groothuis, said, "He's lived an exemplary life. . . . He's allowed to go on vacation. He's allowed to play golf."
The 21 individuals charged in October and Tuesday are not eligible for the immunity deal, nor are others already under investigation. Law enforcement officials said it is designed for people who come forward voluntarily, not those the government has already spent time building a case on.
To take the immunity deal, former workers must admit that they made false statements in their disability application. Those admissions can't be used against those who apply, even if they are ruled ineligible, but can be used against others who have been criminally charged.
With Alfonso A. Castillo
and William Murphy
Gregory Bianchini, 59, Key Largo, Fla.
Karl Brittell, 62, Long Beach
Michael Dasaro, 57, Oakdale
Thomas Delalla, 53, West Islip
Brian DelGiorno, 53, Howard Beach
Kevin Nugent, 57, Port Jefferson Station
Franklin Plaia, 55, Hicksville
Philip Pulsonetti, 54, Remsenburg
Michael Stavola, 54, Massapequa Park
Gary Supper, 57, Glen Head
The immunity deal unveiled Tuesday offers a way out to LIRR retirees who may have taken part in retirement fraud now under investigation. They would be spared prosecution if they give up their disability pensions.
Officials said letters were mailed Tuesday to all LIRR retirees receiving disability benefits from the federal retirement program, explaining the terms of the immunity offer. They said more than 1,500 recipients may have been part of the fraud.
Those who apply and admit they made false statements will not face prosecution for the admission. But the statements may be used in the prosecution of those who already have been charged.
Those who come forward by July 6 will not have to give up any past benefits and will not be sued civilly.
Those who come forward by Aug. 10 will have to give up half of their past benefits.
None of the 21 people charged in October or Tuesday are eligible for the immunity deal, nor are other individuals already under investigation.