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Comptroller DiNapoli’s Fight Against Pension Fraud

Since taking office in 2007, Comptroller Thomas P. DiNapoli has been committed to fighting public corruption and protecting the New York State and Local Retirement System from pension fraud.

fighting pension fraud

Teamwork

Comptroller DiNapoli, through his Division of Investigations, partners with federal, state, and local law enforcement at every level of government. The Division’s pension fraud investigations have resulted in dozens of arrests and convictions and the recovery of nearly $3 million dollars.

The Retirement System’s Pension Integrity Bureau (PIB) is responsible for recovering erroneously paid pension benefits. In many cases, this is due to the survivors’ failure to report the death of a retiree in a timely manner, but some cases involve schemes to conceal the retiree’s death to continue pocketing pension payments. When PIB comes across apparent criminal activity, it refers the case to the Division of Investigations.

Recent Cases

In June 2021, an Ontario County woman pleaded guilty to grand larceny for stealing $2,076 that was intended for a deceased friend. The woman and her friend, who was retired from the Tonawanda Public Works Department, had a joint bank account. After his death, the woman unlawfully withdrew his pension payment and $3,216 in Veterans Affairs benefits and closed the account.

That same month, an Orange County woman was arrested and charged with grand larceny for allegedly stealing her late mother’s pension payments. She attempted to hide her mother’s death from NYSLRS and more than $50,000 in pension payments were deposited into a joint account after her mother’s death. The woman allegedly used the money to pay bills and make personal purchases, including fast food, liquor, clothing, gas and entertainment.

Other Notable Cases

Some people have taken elaborate measures to keep the pension payments coming in. For example, there was the Queens man who left his father’s body in a morgue for more than a year while he siphoned off $7,542 in pension payments and $17,790 in Social Security from his father’s bank account.

In many instances, the pension fraud involves substantial amounts of money which can lead to serious penalties for those who get caught. A few years ago, a Florida woman was sentenced to 2-to-6 years in State prison after she was convicted of stealing more than $120,000 in pension payments after her uncle’s death. She sent false information to his bank indicating he was still alive, then used her power of attorney to withdraw pension payments for several years.

Then there was the man who impersonated his dead brother in order to collect more than $180,000 in pension benefits. The Retirement System learned of the brother’s death and stopped payments to a trust account the man controlled. The man phoned the NYSLRS Call Center pretending to be his deceased brother demanding his money and insisted he was alive. The ploy failed and he was sentenced to 6 months in jail and 5 years probation. He also signed a $180,140 judgment and had to repay NYSLRS.

Your Pension Fund is Secure

The Pension Fund, which provides the money for pension payments and was valued at an estimated $254.8 billion as of March 31, 2021, has long been recognized as one of the best-managed and best-funded public pension funds in the nation. The State Comptroller’s ongoing effort to combat pension fraud and abuse is just one more reason that the Fund remains safe and secure.

New Yorkers can report allegations of fraud involving taxpayer money by calling the toll-free Fraud Hotline at 1-888-672-4555.

Protect Yourself From Scammers

Since taking office in 2007, Comptroller Thomas P. DiNapoli has made fighting fraud one of his top priorities, helping ensure the integrity of the New York State Common Retirement Fund. But have you been as diligent protecting your own money, including your retirement savings?

Most of us are aware of common scams, emails from princes using poor grammar or phone calls about phony sweepstakes prizes. And we’re confident that we would never fall for these schemes. Still, con artists steal billions of dollars every year from sensible, intelligent people. And you’re most likely to encounter a con artist on the phone.

Scammers trying to call you on the phone?

Exploiting your emotions

Con artists work best when their victims are in a heightened emotional state – excited about that prize money or terrified because they owe a large debt. And that emotional state makes it hard to spot the red flags. But if a caller is trying to scare you or manipulate your emotions, that should be a red flag in itself.

Red flags and common ploys

There are other red flags to watch for. Does the caller use high-pressure sales tactics or threatening language? Do they ask for payment in advance for a product or service or require an unorthodox payment method, such as wire-transfer, pre-paid debit card or gift card? Do they insist that you act now?

One common ploy is a call warning that you’ll be locked up if you don’t pay your back taxes right now. But the Internal Revenue Service (IRS) always notifies delinquent taxpayers by mail before they call. The real IRS will not demand immediate payment, ask for your credit card or debit card numbers over the phone, or threaten to arrest you.

Likewise, your bank won’t call and ask for your account information. And a legitimate computer company isn’t going to call because they are getting messages from your computer about a technical problem. There are many variations, but a few basic principles can help you avoid scams.

Generally, NYSLRS will not call you unless we are following up on a contact from you (a phone call, email, online inquiry, form or letter). If you do get a call from us, you can use your NYSLRS ID to identify yourself. If you suspect someone is posing as a Retirement System representative, please notify us using our secure email form at www.emailNYSLRS.com.

Ways to protect yourself and spot scammers:

  • Be wary. Sounds too good to be true? It is. If you didn’t enter the sweepstakes, you’re not going to win it.
  • Don’t provide your Social Security number, bank account information or other sensitive personal data to anyone you don’t know.
  • Sleep on it. If the caller is legit, they won’t mind you taking time to think it over.
  • Hang Up. Don’t engage with suspicious callers. They may be able to extract valuable information from innocuous comments. (And never answer with the word “yes.” They can record you and use it in a scam.)
  • If it’s an automated call or a number you don’t recognize, let it go to voicemail.

More Information

Protecting the Pension System

Protecting the Pension SystemSince taking office, New York State Comptroller Thomas P. DiNapoli has fought against the abuse of public funds. One of his top priorities is to protect the New York State and Local Retirement System (NYSLRS) from pension scammers.

To date, DiNapoli’s investigations of retirement fraud have led to 24 arrests and the recovery of nearly $3 million in retirement funds. Here are some cases from earlier this year:

Woman Pleads Guilty to Theft of Dead Mother’s Benefits

A Madison County woman pleaded guilty to a felony grand larceny charge for collecting $67,000 of her dead mother’s NYSLRS pension checks. When her mother died in 2009, Tammy Banack did not inform NYSLRS or her bank, and her mother’s pension checks continued to be deposited in a joint checking account. Banack agreed to repay the stolen pension benefits and received five years’ probation.

Man Pleads Guilty to Stealing Pension Checks

A Brooklyn man was arrested for cashing over $22,000 of his mother’s NYSLRS pension checks after she died. Jimmie Buie pleaded guilty and was sentenced to up to three years in prison. He was also ordered to repay the money. The office of New York State Attorney General Eric T. Schneiderman assisted in this case and the Banack case.

Town Clerk Admits Faking Retirement Benefits

Following a review of monthly retirement reports, the Office of the State Comptroller discovered that a town clerk had been unlawfully using a town computer to inflate her retirement service credit. Springport Town Clerk Deborah Waldron pleaded guilty, resigned and paid fines and surcharges. Her actual hours and benefits were recalculated to ensure she does not receive extra money she did not earn.

Brother Guilty of Bank Larceny in Pension Scheme

Joseph F. Grossmann, a former Albany resident, pled guilty to Bank Larceny after he used fake documents and other schemes to collect $130,624 in his deceased sister’s name. He was sentenced to three years of probation (including one year of home confinement) and ordered to pay back the money.

To learn more about how Comptroller DiNapoli safeguards public funds, and how you can help, visit the Comptroller’s Fighting Public Corruption page. You can also read about past pension fraud investigations.

Stopping Pension Fraud

Stopping Pension Fraud is a top priority of Comptroller Thomas P. DiNapoliSince taking office, New York State Comptroller Thomas P. DiNapoli has battled public corruption. One of his top priorities is to protect the New York State and Local Retirement System (NYSLRS) from pension scammers.

Under the direction of Comptroller DiNapoli, NYSLRS has put in place a system of safeguards designed to prevent and identify potential incidents of pension fraud. One such safeguard uses data analytics to uncover and stop improper payments.

Post-Retirement Employment Violations

Our investigative efforts include a focus on post-retirement employment. New York State law restricts the amount of money public sector retirees can earn if they return to public service employment after retirement. The law permits public sector retirees under the age of 65 to earn up to $30,000 per year from public employment before their pension benefits are suspended.

As of this March, our review of post-retirement employment cases have uncovered more than $700,000 in benefit payments subject to recovery. For example, a former Newburgh City Fire Chief, who double-dipped by collecting $95,000 in pension payments while still working as fire chief, was federally convicted.

The “Muscle” in the Pension Fraud Fight

In some cases, the pension fraud NYSLRS uncovers gets referred to Comptroller DiNapoli’s wider umbrella program to root out public corruption and fraud involving public funds. The Comptroller’s aggressive initiative included partnering with federal, state and local prosecutors and law enforcement statewide, including DiNapoli’s groundbreaking “Operation Integrity” task force with Attorney General Schneiderman. To date, Comptroller DiNapoli’s various partnerships have garnered more than 130 arrests and $30 million in ordered recoveries.

NYSLRS’ partnership with DiNapoli’s “Operation Integrity” has resulted in the investigation, prosecution and recovery of stolen pension payments, exposing $2.75 million in pension fraud in recent years.

Here are some recent cases where pension scammers have been thwarted:

Comptroller DiNapoli and NYSLRS will not tolerate pension fraud. These arrests and convictions serve as warnings to those who might steal pension benefits: if you think you can steal the hard-earned benefits of NYSLRS members and retirees, you are gravely mistaken. When fraud is identified, Comptroller DiNapoli will work with law enforcement to hold the pension scammers accountable. The clear message to anyone who tries to defraud our pension system is that you will be found, and you will pay.

If you suspect someone of pension fraud, call the Comptroller’s toll-free Fraud Hotline at 1-888-672-4555, file a complaint online at investigations@osc.state.ny.us, or mail a complaint to: Office of the State Comptroller, Division of Investigations, 14th Floor, 110 State St., Albany, NY 12236.