A federal grand jury has indicted five current or former Long Island Rail Road workers on charges of fraud and conspiracy for stealing tens of thousands of dollars in unearned overtime pay, and then working together to cover it up, court documents show.
The indictment, brought forth by the U.S. attorney’s office for the Southern District of New York, charges that four LIRR employees or retirees arrested last month — and a fifth railroad track worker arrested Thursday — "fraudulently overstated the number of hours that they had worked, and thereby each received over $5,000 in payments for hours that they did not in fact work."
The original defendants in the case are Thomas Caputo, 56, of Holbrook; Joseph Ruzzo, 56, of Levittown; John Nugent, 50, of Rocky Point; and Joseph Balestra, 51, of Blue Point.
Added to the list is Frank Pizzonia, 53, of Howard Beach, Queens, who made $271,913 as an LIRR track worker in 2019. The indictment alleges that, on Sept. 2, 2018, Pizzonia claimed to work a 13-hour overtime shift "when in fact he had not done so." Pizzonia could not be reached for comment.
The indictment similarly alleges that Pizzonia’s co-defendants "falsely reported" hours they did not work.
Nugent, Balestra and Pizzonia have been suspended without pay by the LIRR. Caputo and Ruzzo retired in 2019.
A sixth Metropolitan Transportation Authority employee, subway worker Michael Gunderson, is also charged with fraud. Gundersen, 42, resigned from his job with New York City Transit last month following his arrest.
Pizzonia was released on $100,000 bond, according to a law enforcement source. The six defendants are scheduled to be arraigned on Feb. 10, the source said. If convicted, they face a maximum sentence of 10 years in prison on the fraud charges.
In a statement last month following the original arrests, acting Manhattan U.S. Attorney Audrey Strauss said the defendants "made themselves some of the highest-paid employees at the entire MTA by claiming extraordinary, almost physically impossible amounts of overtime."
In addition to the charges of overtime fraud, the indictment alleges that the five LIRR workers "worked together" on the scheme, including by "repeatedly covering for one another’s absences from work while nonetheless understanding that time sheets including the unworked hours would be submitted."
In a statement, MTA spokesman Tim Minton thanked federal prosecutors and the MTA inspector general’s office for their work in investigating and bringing charges. He noted that the MTA has "substantially improved overtime spending controls" in recent years, and has cut overtime by about $200 million since 2018.
"This alleged conduct — cheating the system and stealing hard-earned taxpayer dollars — is outrageous and goes against the values of the MTA and New York State," Minton said. "We have zero tolerance for waste, fraud and abuse and will continue to cooperate fully with this investigation."
Anthony Simon, general chairman of the International Association of Sheet Metal, Air, Rail and Transportation Workers — the union representing the LIRR workers — declined to comment because the investigation is still ongoing.
Law enforcement authorities, including federal and state prosecutors and the MTA inspector general, began looking into potential time and attendance fraud at the MTA after a 2019 payroll report by the Empire Center for Public Policy revealed alarming overtime rates among the agency’s top earners — particularly at the LIRR. Caputo was the MTA’s top earner that year, making more than $344,000 in overtime, on top of his $117,499 annual salary.
In an interview Thursday, LIRR president Phillip Eng called the accusations against the railroad workers "very disappointing," and said they were not representative of the majority of employees who "are doing the right thing."
In 2019, the MTA established an Overtime Task Force aimed at reducing overtime costs, and preventing fraud and abuse. The task force has adopted several reforms, including by regularly auditing high overtime earners. But it also has been criticized by MTA Inspector General Carolyn Pokorny for being slow to implement other reforms, including a plan to have all employees use biometric time clocks to verify their time and attendance.
With Robert E. Kessler