ABC News: 9/11 Fraud Scandal 'Probably' More Widespread, Top Official Says
By: James Gordon Meek, Maryalice Parks
Lawmakers pressed Social Security Administration officials on Thursday over a massive fraud scandal involving New York City cops and firefighters who allegedly bilked the government out of millions by falsely claiming disability from working at Ground Zero after 9/11.
"While I recognize there will always be bad apples, what's going on today is very different," said Rep. Sam Johnson (R-Texas), chairman of the House's Ways and Means subcommittee that oversees the agency. "This is a program plagued by fraud."
Johnson convened the hearing following the stunning arrests last week of more than 100 in New York from vaunted public safety agencies known in the city as the "Finest" and the "Bravest," who stand accused of filing phony disability claims.
Many allegedly faked mental disabilities they claimed were a result of the al Qaeda attacks that reduced the World Trade Center into a smoldering wasteland of rubble called "The Pile," Manhattan District Attorney Cyrus Vance has charged.
Johnson demanded accountability from the acting chief of the Social Security Administration, Carolyn Colvin and agency Inspector General Patrick O'Carroll.
"Can we expect more cases like this, yes or no?" he pressed.
"Probably," replied O'Carroll, drumming his thumbs anxiously. "If you want a yes -- yes, we have other investigations of that magnitude."
But few are more outrageous than the latest scandal, given the battle New York lawmakers waged for years to win federal aid for those who worked atop The Pile. Workers labored for months to retrieve remains of hundreds who perished in the twin towers on 9/11 and were sickened by toxic air that the feds had said was safe to breathe without respirator masks.
Colvin defended the Social Security Administration's record, which included major fraud cases in Puerto Rico and in West Virginia, Johnson said.
"Are you holding anybody in your agency accountable?" Johnson asked.
Colvin looked around at aides and tried to demur by saying cases are still open, but Johnson demanded an answer.
"We're not making any changes in the administration at all. There is no suggestion, in my understanding, that we need to do that at this time," Colvin insisted.
But GOP lawmakers quickly ran down the other recent fraud scandals.
In August 2013, 75 people were indicted in Puerto Rico following a two-year investigation into the largest Social Security insurance scam at the time. Samuel Torres Crespo, an agency employee, was at the center of the investigation. Three doctors and 71 fraudulent claimants also were indicted over $2.1 million in fraudulent benefits paid out in a criminal case that is ongoing.
Then last October, David Daugherty, a retired Social Security judge, and Eric Conn, a Kentucky-based disability attorney, were identified in a congressional report about Social Security fraud. The report alleged the two men collaborated to approve more than 1,800 cases of fraudulent Social Security disability applications. The report claimed that the Social Security Administration paid Conn $4.5 million in attorney fees from cases heard by Daugherty during this four year period. But, to date the pair have not been indicted.
The alleged New York scam was lucrative for the perpetrators and is estimated to have cost the Social security pension fund at least $22 million so far, with more arrests to come, according to testimony from Edward Ryan, New York SSA IG Special Agent in Charge.
"When we executed search warrants we found large amounts of cash in safes...and gold bars," Ryan testified.
But Democrats such as Rep. Charles Rangel of New York applauded the agency and its independent watchdog for uncovering abuses that have cost taxpayers.
"I listened to the Chairman's opening statement and I akin it to blaming the homeowner when their house is broken into," said another New York Democrat, Rep. Joseph Crowley.
Still, Crowley said the fraud perpetrated allegedly by public servants whose brethren perished by the hundreds in the towers' collapse on 9/11 was appalling.
"Congress will have to bail out the program, with taxpayers coming to the rescue to bear the burden of a crime wave," Johnson said. "It's only two years before Social security pays reduced benefits unless Congress acts."
The Chairman demanded Colvin conduct an internal investigation and report back to the committee within 30 days.
Colvin, who is the acting administrator of the SSA, pledged to move aggressively, noting the New York cases also touched a special nerve within the SSA agency, whose New York offices were located near the twin towers and promised fraudsters will see the maximum penalty under law.
Copyright 2014 ABC News
Read on ABC News: http://abcnews.go.com/Blotter/911-fraud-scandal-widespread-top-official/story?id=21561116