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Prosecutors: LIRR retirees engaged in massive, brazen fraud

Joseph Rutigliano, a former United Transportation Union local

Joseph Rutigliano, a former United Transportation Union local president, exits Federal Court in Manhattan. (July 16, 2013) Photo Credit: Charles Eckert

Two Long Island Rail Road retirees testified that an accused disability doctor helped them establish a "paper trail" to make phony claims for government benefits as the first trial over a long-simmering scandal that prosecutors called a "massive and brazen fraud" began Thursday in federal court in Manhattan.

Steven Gagliano, a former signalman who pleaded guilty in the case, said he preplanned an early retirement with a generous LIRR pension topped off by federal disability benefits, and then visited Dr. Peter Lesniewski for more than a year to "pad files" for the claim until the doctor gave him the go-ahead in 2006.

"He said, 'You have enough,' " said Gagliano, who received a disability payment of more than $35,000 a year from the federal Railroad Retirement Board. "I understood that to mean that I had enough things that he would write me a narrative."

Lesniewski, 62, former LIRR union president Joseph Rutigliano, 66, of Holtsville, and former retirement board Long Island district manager Marie Baran, 65, of East Meadow, are on trial accused of conspiracy and fraud in an alleged decade-long scam used by hundreds of LIRR retirees to collect on bogus claims. So far, 25 defendants have pleaded guilty.

In opening statements Thursday, prosecutor Daniel Tehrani called Lesniewski a "corrupt doctor" who demanded $1,000 for his disability narratives, and said Baran and Rutigliano worked as consultants who used their "insider" knowledge to pass on the "right lies" to help retirees who wanted to exploit the system. "They wanted to retire early," Tehrani told jurors, "but they didn't want to make less money."

Defense lawyers, however, said their clients didn't participate knowingly in any fraud, and were misled by applicants who came to them for help. They said the disability system was designed to make sure injured workers didn't create dangers by continuing to work after they were hurt, and blamed the prosecution on news reports about a high rate of disabilities at the LIRR.

"Hindsight is 20/20," said Lesniewski's lawyer, Joshua Dratel. "That's what this case is all about."

Gagliano and Gary Supper, a former LIRR locomotive engineer who pleaded guilty and also testified for the government in hopes of a lenient sentence, told jurors about a "culture" in which workers constantly discussed disability and other ways to sweeten their retirement, and traded the names of helpful application consultants and doctors.

After reaching 50 and working 20 years, Supper said, the disability option made an early retirement pension from the LIRR almost irresistible. "We were working for hardly anything if we stayed on," he said. "With the pension and getting the disability, you got almost the same amount of money."

Both men said they were aided by consultants -- one a former LIRR employee, the other a former LIRR union leader, neither of them charged -- who filled out applications that exaggerated their job demands and made up nonexistent physical limitations.

Gagliano, who rode a 400-mile bike race after receiving his disability, said he only read his application after he was charged and found descriptions that sounded like he was "in a wheelchair."

Neither Gagliano nor Supper said they ever explicitly told Lesniewski they were still able to work. But they said that after initial visits complaining of pain, he did little in the way of treatment and gradually created a file that invented problems.

Nearing retirement, Supper testified, he wrote Lesniewski a note that said, "I need something besides shoulder. Once I get shoulder fixed, Railroad Retirement may withdraw disability benefits." He suggested "back, knees, ankle."

Lesniewski's medical notes for his next appointment, displayed by prosecutors, said Supper "has back pain" and "tenderness" in his left knee.

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