More Convictions In The Long Island Rail Road Disability Pension Scam

Generally at the Manhattan Contrarian we try to limit our focus to the big scams of, say, a trillion dollars and up -- Federal financial statements, the "poverty" rate, and so on.  But if the conduct is egregious enough, we're willing to consider even small ones in the billion or so range.

The New York Post reports this morning on two additional convictions in the Long Island Rail Road disability pension scam.  That brings the total of guilty pleas in the scam to 6.  It's a start, but only a small one.  The number of participants in the scam seems to be well over 1000, and the amount stolen per person around $1 million and up each.  This is not small time.

The basic idea is that if you are honest, you can retire and get your already generous pension, but if you are in the know, you can get a "disability" pension, which means you can retire earlier, get a higher payout formula, and also exemption from at least state and local income taxes.  One small hitch -- you are supposed to be disabled. 

But the most amazing thing is how universal it was.  According to this report from the National Legal and Policy Center, the scam started in the 1990s, and by 2000 and after, the percent of LIRR workers retiring with disability pensions was in the range of 93 - 97%.  Is there any chance that this was not orchestrated by the labor unions?

My big question:  Who are the 3 - 7% who were actually honest?  I guess it's good to know that there are at least a few such people still out there.

According to the Post story, the Federal prosecutors have offered an amnesty program to the estimated 1600 remaining scammers, in which they can avoid prosecution by admitting wrongdoing and foregoing future disability payments.  In other words, even though you have been collecting fraudulently for 5 or 10 years or more, you don't even have to give back a dime.  Way too lenient in my view.  But the Post says that only 44 of the 1600 have taken it so far.