I saw Jazz Shaw at HotAir blogged on the recent press release from my state’s controller: The dead don’t just vote… they collect pension benefits too.
Yes, Jazz links to Fox News, but here’s the original press release:
Comptroller DiNapoli and A.G. Schneiderman Announce Conviction and Sentencing of Florida Man For Theft of Over $180,000 in Nys Pension Benefits
Robert Schusteritsch Stole Pension Benefits Intended For His Deceased Brother For Over 7 Years; Impersonated Deceased Brother In An Effort To Maintain Eligibility for Benefits
New York State Comptroller Thomas P. DiNapoli and Attorney General Eric T. Schneiderman announced today the conviction and sentencing of Robert J. Schusteritsch, 71, a resident of the state of Florida, for the crimes of Grand Larceny in the Second Degree, a class C felony, and Criminal Impersonation in the Second Degree, a class A misdemeanor, in Albany County Court.
Schusteritsch’s conviction comes after a joint investigation by the Office of the Comptroller and the Attorney General’s Office, which revealed that Schusteritsch stole over $180,000 in pension benefits issued by the New York State and Local Employees Retirement System to his deceased brother, Martin Petschauer, between July 2008 and September 2015.
“Today’s sentencing of Mr. Schusteritsch proves once again that stealing from New York State’s pension system is risky business,” said State Comptroller DiNapoli. “My office will continue to thwart pension thieves and protect our New York State & Local Retirement System in partnership with Attorney General Schneiderman.”
“Those who illegally obtain pension funds intended for someone else do so at the expense of hardworking New Yorkers who rely on their pension for a secure retirement,” said Attorney General Schneiderman. “Comptroller DiNapoli and I will continue our joint efforts to root out pension system theft and hold those responsible accountable.”
According to the Comptroller and Attorney General’s offices, Petschauer was a New York State pensioner who retired as Chief of the Pooling and Audit Review Section of the New York Metro Milk Marketing Area in approximately 1986. He passed away on July 9, 2008. At the time of Petschauer’s death, his pension benefits were being direct deposited into a bank account held in a trust for the benefit of Petschauer; Schusteritsch was the sole trustee for his brother and had exclusive access to the bank account.
When Petschauer died, Schusteritsch concealed his brother’s death from the bank and the Retirement System and kept the trust account open to maintain the direct deposits. He then routinely accessed the pension deposits and spent the money for his own benefit. All told, Schusteritsch stole over $180,000 in pension benefits until the Retirement System discovered Petschauer’s death in October 2015. Further, when the Retirement System learned of Petschauer’s death and stopped paying benefits into the trust account, Schusteritsch called the Retirement System’s call center on November 2, 2015, pretended he was Petschauer, and asserted that he was not actually dead, in an effort to maintain eligibility for the pension benefits.
I’ve blogged on this before: Tales of Pension Fraud: Hidden Deaths and Elder Abuse, where I covered a classic tale of a guy who dressed up as his dead mother (who didn’t have direct deposit set up, thus his need for the dress-up) as well as a body found in a fridge, the oldest person in Japan having been dead for 30 years, etc.
Most of these stories aren’t that funny, and usually involve direct deposit… and there’s no particular need for the fraudsters to have to put on an act.
Now, Petschauer’s brother might have gotten away with this fraud if he had not outed himself. Silly man. Heck, he could have tried the “Oh, my brother is dead? My bad. Here’s the money back” move and not have had a criminal complaint against him.
NEW YORK PURSUES PENSION CHEATERS
You’ll notice many of these involve New York pensions — that’s because the NY Comptroller, DiNapoli, has had a really thorough audit program and been making hay out of his wins. He’s got the Open Book New York site, with all sorts of interesting info available.
The pension investigations in part of something called “Operation Integrity“which is a partnership between his office and the Attorney General. A short description from a different press release:
Attorney General Schneiderman has brought more than seventy cases against state and local officials and their cronies, including the conviction of a sitting State Senator and indictments against members of the State Assembly and the New York City Council. Many of these cases resulted from a partnership that Attorney General Schneiderman formed with State Comptroller Tom DiNapoli in 2011. “Operation Integrity,” a first-of-its-kind joint task force, uses the State Comptroller’s power to refer cases involving the abuse of public funds to the Attorney General’s office for prosecution. But despite the efforts of the Attorney General’s Public Integrity Bureau and those of U.S. Attorneys across the State, the cycle of corruption persists, in part due to the negligible impact of marginal reforms previously enacted in the wake of public corruption scandals.
I’m mainly paying attention to the pension-related ones.
New York state cracks down on pension fraud
But just how far-reaching is the problem?
A growing problem
Joseph M. Belth, professor emeritus of insurance at Indiana University, has been dealing with the issue of unclaimed property since 1980. “Over the years,” Belth said, he has seen examples of legal actions against persons who allegedly stole annuity or pension benefits.
“However, I have not seen any discussions of the magnitude of the problem,” Belth said. He added that he thinks there “are large numbers of such incidents,” but many thefts may not be large enough to warrant criminal charges. Belth noted that he is not “mentioning this subject to defend life insurance companies who use the Social Security Death Master File (DMF) to try to minimize annuity theft while not using the DMF to try to pay unclaimed death benefits.
“Rather, I am mentioning the subject to point out that the companies may have had — and may still have — a major problem in dealing with the theft of annuity benefit payments,” Belth said.
Since my post in July, I’ve got more stories. Much of this is being driven by the NY pols, but I think there is a real increase in incidence due to direct deposit being used for many of these payments.
PENSION FRAUD MAKES PEOPLE MAGAZINE
A Florida man who admitted to burying his mother in the backyard of her home so he could collect her retirement checks pleaded guilty Monday to federal theft of government property and aggravated identity theft, PEOPLE confirms.
Brian Lee Adams, 56, of Green Cove Springs, Florida, faces up to 12 years in federal prison. His sentencing date hasn’t been scheduled.
Prosecutors say Adams told police his 79-year-old mother, Janell, had died of natural causes in July 2014 but instead of alerting authorities about her death he decided to bury her in her backyard. He admitted he did it because he wanted to collect her monthly Social Security and pension payments.
Adams told police he used his mother’s name on the retirement checks and transferred $35,345 between her accounts, which he then pocketed.
“We prosecuted him for the theft of the checks, so our interest was the financial gain,” William Daniels, a spokesman for the U.S. Attorney’s Office for the Middle District of Florida, tells PEOPLE.
During an interview with the United States Secret Service, Adams said he used his mother’s benefits because he didn’t have a job.
“He explained that if he had reported her death to the police, the benefits would have been discontinued and then he would have had no way to support himself or his son,” according to the plea agreement. “Adams explained, in detail, how he and his son removed his mother’s body from her house after finding her deceased and buried her in the backyard.”
His mom’s remains were found on June 17, 2015. She was allegedly last seen alive by her son on July 3, 2014.
Adams, a registered felon, had previously been arrested in 2011 for possession of cannabis and in 2012 for driving on a suspended license, according to the Clay County Sheriff’s Office in Florida. He was already in custody when he spoke to federal agents.
It’s not clear that deaths are being reported generally to close down benefits/bank accounts. That was the point of the NY story where the guy had been dead for many years, and it wasn’t exactly hidden. But the bank account and benefits persisted.
When it’s something like a private actor, like a life insurance company, you better bet they’re actively looking to see if annuitants are dead. But governments? Pffft. Not paying dead people is not quite a priority for many pols.
GETTING CAUGHT UP IN STUPIDITY
This next story is something else.
A grieving daughter received her mother’s widow’s pensions for 22 years after failing to tell administrators that she had died, a court heard.
Ruth Munro’s mother Margaret McPartlin died in September 1993, aged 73.
A sheriff told Munro that being prosecuted for the two-decade long fraud had been punishment enough.
Alloa Sheriff Court was told that the £18,577 received by Munro had been repaid in full to the pension companies involved.
The court heard that Mrs McPartlin was the beneficiary of two small widow’s pensions.
Between 1993 and May 2015, Munro pretended to administrators of both pension schemes that her mother was still living.
Forms purportedly signed by her mother were returned, and Munro allowed the pensions company to believe Mrs McPartlin was still alive.
Defence solicitor Harry Couchlin said that it had been “a bizarre and peculiar offence”.
He said: “The unusual feature of the situation is that the money wasn’t spent, it was retained and it was returned.”
Daughter who pretended dead mum was alive for 22 YEARS to claim pension walks free from court
Ruth Munro’s mother Margaret McPartlin died in September 1993, aged 73, but she claimed she was so upset she couldn’t bring herself to tell pension administrators paid her £18,000
Ruairidh Ferguson, prosecuting, said: “The offence involved the accused representing to the administrators of her late mothers’ pension that her late mother was still alive and still receiving the pension even though her mother was dead in 1993.
“The amount received was £18,577.81, and that has been repaid in full to the pension companies involved.
“The offence came to light when the pensions company itself made a check on the Register of Deaths and discovered that the intended beneficiary had been deceased for a number of years.”
Munro was interviewed in October 2015 and was “candid throughout the process”, the depute fiscal added.
Munro, of Tullibody, Clackmannanshire, now herself a 67-year-old pensioner but still a carer for a grown up son said to have “severe mental health difficulties”, pleaded guilty to defrauding the pension schemes out of £18,577 by inducing them to continue to make payments in the belief that Mrs McPartlin was still alive.
Defence solicitor Harry Couchlin said that it had been “a bizarre and peculiar offence”.
He said: “These are sums she should never have received, but she caused and allowed them to be received, for reasons she can’t understand, and having started, she couldn’t get herself out of the situation.
“The unusual feature of the situation is that the money wasn’t spent, it was retained and it was returned.
“I realise that in many circumstances given the level of the fraud, custody would be at the forefront of the court’s consideration.”
Makes me think of the Catholic sacrament of Confession/Reconciliation/Whatever-they’re-calling-it-now (according to my parish, CCD is not the term now, we must say Religious Education. Hmph.) The point is to get you out of a morass, because so many people start with one screw up, and it just accumulates more trouble with it…. but it get tougher and tougher to admit the original fault.
Most of the pension frauds we hear about are not in the situation above.
THE USUAL: GRABBING THE MONEY AND RUNNING
Ms Blacklock moved to Las Vegas from London the mid-2000s, along with her mother who received a monthly state pension as well as a private pension through Pheonix Group insurance company.
After she [the mother] died in June 2011, Ms Blacklock falsified life certificates and carried on withdrawing both of her mother’s pensions illegally.
This amounted to a total of £31,320 in state pension payments and £35,111 in pension payments from Phoenix Group.
Ms Blacklock returned to London in 2013 after her husband fell ill, and she was arrested two years later following a tip-off to police from her former friend.
Investigators found she had made over 100 cash withdrawals from her dead mother’s bank cards in three different Las Vegas casinos.
Large numbers of cash withdrawals had also been made from the cards at ATMs in the Maida Vale area of North London since Ms Blacklock’s return.
Pheonix Group investigators examined recordings of phone calls with a person who they had thought was Ms Blacklock’s mother (as in the video above). It quickly became clear it was Ms Blacklock making the calls.
Financial Investigator Simon Styles, from the Insurance Fraud Enforcement Department said: “In my 30 years as a police officer and investigator I have never come across an act that was as callous and cold-hearted as this. From our enquiries, we saw that at the time immediately prior to and after her mother’s death, Blacklock was at various casinos gambling away her mother’s money.
“Blacklock thought that being in Las Vegas would mean she wouldn’t get caught out, but wherever we find evidence of fraud or wrongdoing, we will do all we can to bring that person to justice and international borders will not prevent us from doing so.”
Again, most of the time, I’m getting these stories from private pension/annuity providers — they have very active claims/fraud units that are there specifically to dig up these problems. I’ve been involved in a claim investigation before — there is definitely a lot of incentive in a private company to find out that they shouldn’t be paying out sums of money.
MORE NEW YORK SHENANIGANS
New York State Comptroller Thomas P. DiNapoli and Attorney General Eric T. Schneiderman today announced the unsealing of an indictment charging John H. Eydeler III, 66, a resident of Glendale, Arizona, with grand larceny in the second degree, a class C felony. Eydeler is alleged to have stolen over $100,000 in pension payments from the New York State and Local Employees Retirement System intended for his deceased mother, Dorothy Eydeler, a retired nurse who died in October of 1998.
“After his mother passed away, Mr. Eydeler hid her death and stole more than $100,000 in pension payments,” said Comptroller DiNapoli. “Through our Operation Integrity partnership with Attorney General Schneiderman, our investigation expanded to three states and led to Mr. Eydeler’s arrest in Arizona.”
“When individuals illegally pocket pension funds that were intended for retirees, it harms all New Yorkers who count on their pension for a secure retirement,” said Attorney General Schneiderman. “Comptroller DiNapoli and I will continue our partnership to protect the state pension system from theft and abuse.”
According to investigators, Eydeler concealed his mother’s death in 1998 from the New York State and Local Employees Retirement System. As a result, between October 1998 and January 2010, over $100,000 in pension benefits were deposited into a bank account in the name of Eydeler’s deceased mother. Eydeler then allegedly diverted these monies to himself by claiming to have power of attorney for his mother and writing checks to himself every month for over a decade. Eydeler allegedly altered his scheme to conceal the theft, and used the monies to prop up a small automotive repair business that he owned in Glendale, Arizona.
Eydeler was arraigned today on the indictment by the Honorable Stephen W. Herrick in Albany Supreme Court, and entered a plea of not guilty. The defendant was released on recognizance. The next court date is scheduled for August 30. If convicted, Eydeler faces up to five to fifteen years in state prison.
As for why these stories are coming from New York, there are several reasons:
- I am a NY resident, and so I have signed up to get all the press releases from the comptroller due to my direct interest
- NY is a huge state. We’re fourth in population, right behind Florida. I’ve noticed a lot of these stories are of NY pensioners having retired to Florida, and the fraudster often lives in Florida as well.
- There is a whole cursus honorum in NY. The Democrats currently have a lock on the state, and you try to get out of AG/Comptroller to Governor by high-profile $$-related stuff (Eliot Spitzer did this, but he is the only most prominent example)
FRAUD ISN’T THE REASON PENSIONS ARE EXPENSIVE
I have no objection to the AG/Comptroller teaming up for this operation. But I want to point this out:
The case is the latest joint investigation under the Operation Integrity partnership of the Comptroller and Attorney General, which to date has resulted in dozens of convictions and more than $11 million in restitution.
Operation Integrity started around 2010, I think.
$11 million ain’t nothing.
Here’s a nice map:
And here is a graph showing that NY takes in $80 billion in taxes:
$11 million is 0.01% of $80 billion.
So it’s great to fight fraud, but it does nothing to combat the real source of pension expense: that pension promises are very expensive inherently, without any fraud or deception at all.
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