Retiree admits LIRR disability fraud

Steven Gagliano, a retired LIRR employee, leaves federal Steven Gagliano, a retired LIRR employee, leaves federal court in Manhattan. Gagliano was one of 10 people arrested by federal agents in connection with a $300 million scheme to defraud the Long Island Rail Road on disability claims. (Oct. 27, 2011) Photo Credit: Charles Eckert

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A retired Long Island Rail Road employee who prosecutors say collected federal disability benefits even while competing in a grueling bicycle race pleaded guilty to fraud charges Monday.

Appearing in U.S. District Court in Manhattan, Steven Gagliano, 56, of North Babylon, admitted to conspiracy to commit mail or wire fraud, conspiracy to defraud the United States, and health care fraud.

Gagliano, a former LIRR signal operator, agreed to pay back the $242,466 in U.S. Railroad Retirement Board disability annuities he has collected since 2007. He faces a maximum of 55 years in prison when he is sentenced. Gagliano's next court date is Oct. 25.

Gagliano retired claiming debilitating back pain, but went on to compete in a 400-mile bike race around New York State.

In court, Gagliano admitted he lied in documents about being disabled and "obtained medical treatment that was not needed."

Thirty-two doctors, LIRR retirees and so-called facilitators have been charged since 2011 in a decade-long scheme to submit phony disability claims to the federal Railroad Retirement Board to supplement an early-retirement pension offered by the LIRR.

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"And you know what you did was wrong?" U.S. Magistrate Judge Andrew Peck asked Gagliano.

"Absolutely, your honor," replied Gagliano, who was accompanied by his attorney, Susan Scaring Carman of Huntington.

The office of U.S. Attorney Preet Bharara noted in a statement that Gagliano is the 24th defendant to plead guilty in the "massive fraud."

The LIRR in a statement said it is reviewing Gagliano's guilty plea and that he "may be subject to loss" of his LIRR pension, which is separate from his federal disability benefits.

"The Long Island Rail Road condemns any fraudulent activity associated with federal disability pension benefits," the statement said.

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