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Pequan Denies Charges

After a Massapequa man was accused of being the mastermind behind a social security scam that bilked taxpayers out of more than $400 million since 1988, his lawyer denied the allegations and vowed to clear his client’s name

The Manhattan District Attorney’s office named Massapequan Raymond Lavallee, 83, and three other Long Islanders, as the four principal defendants among 106 individuals indicted in a massive fraud scheme against the Social Security Disability Insurance Benefits program.

“My client stood up in court and said not guilty,” said Raymond Perini, attorney for Lavallee. “He denies each and every allegation in this indictment. An indictment is proof of nothing. Allegations are easy to make, but hard to prove.”

Perini said his client served as a combat veteran in the Korean War, went to law school on the G.I. Bill, and then fought organized crime as an FBI agent before retiring in rackets bureau at the Nassau County District Attorney’s office and opening a private law practice.

“He had a good reputation in that world,” said Perini, adding that his client is due back in court Feb. 7. “We intend on getting that reputation back in the court room and showing the world that he did not do this.”

Along with Lavallee, Manhattan district attorney Cyrus R. Vance Jr. named Thomas Hale, 89, of Bellmore; Joseph Esposito, 64, of Valley Stream; and John Minerva, 61, of Malverne as ringleaders accused of directing hundreds of SSDI applicants, including many retirees of the NYPD and FDNY, to lie about their psychiatric conditions in order to obtain benefits to which they were not entitled.

Many of the defendants even lied about enduring psychological trauma as a result of September 11, 2001.

“For years, federal taxpayers have unwittingly financed the lifestyles of the defendants charged today,” said Vance. “The Social Security Disability safety net exists to help those who are unable to help themselves. Many participants cynically manufactured claims of mental illness as a result of September 11 , dishonoring the first responders who did serve their City at the expense of their own health and safety. This alleged scam further depleted the already limited resources available for battling the real and complex conditions of PTSD [post traumatic stress disorder] and depression.”

The four alleged ringleaders are charged with first- and second-degree grand larceny and second-degree attempted grand larceny. The remaining 102 defendants, all SSDI recipients, are charged with second-degree grand larceny and second-degree attempted grand larceny.

According to the indictment, the retirees claimed to suffer from severe mental problems that kept them from working, using a computer and even from leaving the house. But Vance said records obtained by investigators showed one defendant piloted a helicopter, another worked at a cannoli stand at Manhattan’s San Gennaro Festival, another rode a jet ski and one defendant taught and performed mixed martial arts.

Lavallee is accused of overseeing the operation to solicit and assist other defendants in falsely claiming disabilities. Prosecutors also allege that Lavallee pocketed $6,000 as attorney fees for every successful fraudulent claim.

According to court papers, applicants were typically brought into the scheme by Esposito, a retired member of the NYPD, or Minerva, a disability consultant for the Detectives’ Endowment Association. They would then refer applicants to Lavallee and Hale, who is alleged to be Lavallee’s right hand man.

Hale, along with Esposito, are also accused of coaching applicants to falsely describe symptoms of depression and anxiety when interviewed by doctors and government workers. Specifically, they instructed applicants on how to fail memory tests with plausibility, how to dress, and on their demeanor.

The scheme began to unravel in 2008, when someone questioned how a retired police officer could be mentally fit to hold a pistol license and be mentally incapacitated enough to qualify for disability benefits, officials said.

Prosecutors said those charged collected an average of $30,000 to $50,000 a year — some collected close to $500,000 because their payments began back in 1988.

After claimants received their disability payments, they paid kickbacks to Esposito or Minerva, who then transferred money to Lavallee and Hale, prosecutors said.

The district attorney’s indictment names 16 individuals from Nassau County; 14 from Suffolk; 17 from Queens; six from Brooklyn; eight from Staten Island; two from Westchester; and others from New Jersey, Florida, Delaware, South Carolina, North Carolina, Arizona, New Hampshire, Virginia, Pennsylvania and Colorado.