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Prosecutors agree to drop case against LIRR employee

State prosecutors agreed to drop their case against a Long Island Rail Road employee who was the only person criminally charged in an ongoing investigation into potential abuses of a federal disability pension by LIRR employees.

Frederick Kreuder, 50, of Bellmore, was accused of operating a side business in which he guided fellow LIRR employees on how to apply for disability benefits from the U.S. Railroad Retirement Board. He was paid up to $1,000 by each employee he helped, prosecutors said.

In exchange for dismissing the three remaining charges, Kreuder agreed to resign from his job as an LIRR budget analyst, pay a $1,500 penalty, file amended tax returns, and never again work in the public sector, officials with the office of Attorney General Andrew Cuomo said Thursday.

Kreuder was arrested in November 2008 on charges of official misconduct and receiving reward for official misconduct, both felonies.

"We agree with the attorney general's decision that this case warrants a dismissal and are pleased that Fred's good name has been restored," said William Petrillo of Rockville Centre, Kreuder's attorney.

A spokesman from Cuomo's office declined to comment.

In December, Nassau County Court Judge John Kase dismissed 48 of the 53 charges in Kreuder's indictment, saying that while Kreuder's moonlighting may have been unethical by the LIRR's standards, it was not illegal.

Kase will dismiss the remaining charges of petty larceny and offering a false instrument in six months if Kreuder abides by the agreement, officials said.

Those charges stemmed from allegations that Kreuder failed to pay taxes on the income he made from his side business.

The LIRR declined to comment on the case. Kreuder has been suspended without pay since his arrest.

Cuomo's office has been investigating the U.S. Railroad Retirement Board since records surfaced last year showing the board approved nearly all applications for disability benefits.

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