Two Peas in a Fraud Pod

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Social Security Cards for identification and retirement USA

A man who previously served as a police officer in New York has been convicted of committing Social Security disability fraud and tax evasion. The man from Campbell Hall, New York, who claimed to be disabled, double dipped by collecting $1.6 million from working as a security guard and a host at a Manhattan strip club. (As you might guess, he did not claim the strip club income correctly, thus the tax fraud conviction.) Another co-worker at the strip club carried out a similar scheme. (You could say that these fraudsters are two peas in a fraud pod.)

Let’s start with the former New York Police Department (NYPD) officer. At the age of 32, the man allegedly sustained an injury. The press release states that he was referred to someone who helped him to illegally obtain disability benefits. A falsified application stated that as a result of the injury, the former police officer suffered from severe depression and anxiety, could not do anything around his house, and could not work in any capacity whatsoever. Apparently, the same individual who helped him submit his false application also instructed him to tell the same lies to physicians who examined him. (He told his doctor that he didn’t know where he was, could not remember the last four vice presidents and could not repeat numbers he was instructed to remember.) He was approved to receive disability payments.

Over a decade, the supposedly disabled police officer filled out multiple SSA forms that stated he was not working, even though he was gainfully employed at the strip club. He raked in $1.6 million from the strip club and $638,000 from the SSA. (The press release says his family – wife and kids – also benefited from the illegally gained income.) He got in trouble for tax evasion because he used a nominee company registered to his wife (no surprise there) to report the income he earned while double dipping at the club. He under reported the income by $268,602 over five years.

The other person profiled in this press release happened to be a former NYPD officer and a New York City firefighter. Similarly, this man became “disabled” at the age of 37 and he began receiving disability benefits from the SSA. (He couldn’t work due to back and neck problems.) He failed to report his additional income at the strip club where he worked as a security guard. The former police officer and fire fighter also worked in various positions related to fire safety at the same time. This fraudster received about $364,000 in disability benefits and $450,000 from his multiple jobs at the strip club and from the fire safety industry.

The first man mentioned, now 54, was sentenced to 18 months in prison for Social Security disability fraud and tax fraud. He also received three years of supervised release and was ordered to pay restitution of $726,517. He has to pay back the $638,586 in Social Security disability benefits too. The other defendant, also 54, was sentenced to one year and a day in prison, three years of supervised release and must pay restitution and forfeiture of $364,040. (These two men, who previously shared a comfortable fraud pod with an abundance of government benefits and tax-free compensation, will now be forced to adapt to a cold, hard jail cell that comes with a different set of government benefits such as an orange jump suit and a set of handcuffs and ankle shackles.)

Today’s “Fraud of the Day” is based on Department of Justice Press release, “Second Former NYPD Officer Sentenced to Federal Prison for Social Security Disability Fraud and Tax Evasion,” released on August 9, 2019.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that GERARD SCPARTA, a former New York City Police Department (“NYPD”) officer, was sentenced today to 18 months in prison for fraudulently obtaining over approximately $630,000 in disability benefits from the Social Security Administration (“SSA”) and under reporting income on his taxes by approximately $268,000.  At the same time SCPARTA was fraudulently collecting disability benefits, he earned a total of approximately $1.6 million working as a security guard and host at a strip club (the “Strip Club”) located in Manhattan.  SCPARTA was sentenced by U.S. District Judge Alison J. Nathan, before whom he had previously pled guilty to tax evasion and theft of government property.

Earlier this year, in a related case also involving a former NYPD police officer and New York City Fire Department (“FDNY”) firefighter, SCOTT MARAIO was sentenced to one year and one day in prison on January 23, 2019 by U.S. District Judge Sidney H. Stein for fraudulently collecting over approximately 360,000 in Social Security benefits over a period of ten years by lying repeatedly to the SSA about his purported inability to work due to disability, when he also worked at the Strip Club and in other employment.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.