Federal judge orders hearings on LIRR disability sentences

A Manhattan federal judge on Friday indicated he is considering lighter sentences for two of the alleged leaders of a massive disability fraud scheme at the Long Island Rail Road, a doctor and a union leader who each received 8 years in prison.

U.S. District Judge Victor Marrero said that since Dr. Peter Lesniewski and Joseph Rutigliano were sentenced, a new federal review of LIRR disability claims has found 94 percent valid, casting doubt on the loss amount from the fraud that affected the sentences.

“The Court is persuaded that the Defendants’ arguments raise substantial questions that, in light of the alleged newly discovered evidence . . . counsel in favor of conducting a hearing on the amount of loss suffered by the LIRR,” Marrero wrote.

Rutigliano, an LIRR conductor and union leader who got a disability and advised others, and Lesniewski, one of two doctors who provided medical support for hundreds of LIRR claims, were convicted in 2013. The judge set the new sentencing hearing for April 29.

Beginning in 2011, prosecutors charged a total of 33 doctors, retirees and advisers with fraud, alleging a conspiracy at the LIRR to collect on as much as $1 billion in phony retirement disability claims from the federal Railroad Retirement Board.

Most of those charged pleaded guilty. Rutigliano and Lesniewski were two of only five who went to trial, and all were convicted. They got the highest sentences along with Dr. Peter Ajemian, a second orthopedist who pleaded guilty and also got 8 years.

But an independent review conducted by the retirement board of disabilities that Ajemian and Lesniewski vouched for concluded 498 of 530 passed muster under the board’s standard, which requires inability to perform any job task, not total disability.

SEE PHOTOSLIRR trains and commuters through the years

A lawyer for Lesniewski, 65, said in court filings that the $70 million restitution Marrero ordered was insupportable in light of the board findings, and without the massive loss figure his client would have faced only 4 to 10 months in prison under federal guidelines.

“We look forward to the hearing in April,” the lawyer, Tom Durkin, said Friday.

Rutigliano was sentenced based on a loss estimate of more than $80 million, and his lawyer Joseph Ryan said he would now seek to be released with time served. “Mr. Rutigliano looks forward to demonstrating that he should not have been sentenced to 8 years,” said Ryan.

The two also sought new trials based on the new evidence. But prosecutors argued that lies to the retirement board were a sound basis for conviction on whether applicants were in fact disabled or not. Marrero said ample evidence supported the convictions.

Ajemian has filed a similar motion pro se. It is unclear whether the outcome would be affected by his guilty plea. His former lawyer said he was studying Marrero’s opinion. A spokesman for U.S. Attorney Preet Bharara declined to comment.