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Long IslandCrime

Disability checks in LIRR fraud case frozen

The federal judge overseeing the prosecution of Long Island Rail Road retirees accused of collecting on fraudulent disability claims has frozen payments to 14 defendants, prompting charges that the government is trying to coerce guilty pleas.

U.S. District Judge Victor Marrero issued the freeze order to the federal Railroad Retirement Board on Oct. 12 without a hearing, after the government said the disability payments will be subject to forfeiture if the defendants are convicted and should be held in escrow by the U.S. Marshal's Service.

Prosecutors said that the payments, between $2,000 and $4,000 a month, would be "dissipated" if paid out, and could not be withheld by the railroad board without a court order.

But Joseph Ryan, the lawyer for defendant Joseph Rutigliano, argued in a motion asking Marrero to reconsider the freeze, that prosecutors had been content allowing the payments to be made since first handing down indictments in the case nearly a year ago, indicating that they aren't really worried the money will disappear.

"In our view, the restraining order is not about money or preserving forfeitable assets," Ryan said. "It is about prosecutorial coercion -- improperly utilizing enormous powers granted to the government by Congress in a desperate effort to induce a guilty plea from Mr. Rutigliano."

Rutigliano, 65, of Holtsville, a former LIRR conductor and union president receiving $2,395 a month for his claimed disability, was one of 32 retirees, doctors and others who have been charged in four waves of prosecutions during the past year with a conspiracy to make up phony disability claims. Four have pleaded guilty.

Prosecutors say they believe that more than 1,000 former LIRR workers made false claims in a sprawling scheme that could have cost the government $1 billion. They have offered amnesty to anyone not yet charged who comes forward by Oct. 26, admits wrongdoing and agrees to give up their disability.

Defense lawyers have challenged the amnesty program as an improper attempt to recruit informants who will testify against those charged.

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