$1.3m in overtime? Five NYC rail workers charged with fraud

An FBI investigation led yesterday to the arrest of five New York City railway staff accused of fraudulently claiming "extraordinary, almost physically impossible, amounts of overtime".

The long-time employees, four of them foremen, together raked in more than $1.3m in 2018, while phone records, emails and Facebook posts revealed instances of the men being at home, on holiday or bowling during claimed overtime shifts, prosecutors allege.

The Metropolitan Transportation Authority (MTA), which overseas rail transit agencies in New York, has been blamed for a lack of management controls, thus creating "an environment where fraud could easily occur undetected".

One of the charged, Thomas Caputo, claimed $344,000 in overtime in 2018, which, on top of his salary of $117,000, made him the highest paid employee at the MTA that year – higher even than the MTA chairman, say prosecutors.

"League bowling game"

In one instance, Caputo claimed to have worked a regular shift from 7:30am to 3:30pm on 1 October 2018, followed by an overtime shift at the site of a construction project in Manhattan from 4pm to 7am the next morning, when bowling alley records showed him playing a league game that night at 7:30, according to the complaint.

"These defendants … allegedly made themselves some of the highest-paid employees at the entire MTA by claiming extraordinary, almost physically impossible, amounts of overtime," said Audrey Strauss, Acting US Attorney for the Southern District of New York, who lodged the complaint with the FBI and the Office of the MTA Inspector General. 

"As alleged, those almost impossible claims were fuelled by brazen, repeated fraud, including falsely claiming to be working overtime hours while the defendants were at their homes or, in some instances, bowling. All New Yorkers ultimately bear the burden of fraud targeting our mass transit systems, and we will continue to work tirelessly to expose and prosecute those who engage in it. Our investigation remains ongoing."

Maximum 10 years

Charged each with one count of federal program fraud are Caputo, 56, of Holbrook, New York; Joseph Ruzzo, 56, of Levittown, New York; John Nugent, 50, of Rocky Point, New York; Joseph Balestra, 51, of Blue Point, New York; and Michael Gundersen, 42, of Manalapan, New Jersey.

If found guilty, they face a maximum sentence of 10 years in prison. The defendants are presumed innocent unless proven guilty.

Ruzzo, Nugent, Balestra and Gundersen are each accused of claiming more than $240,000 in overtime in 2018, putting each of them within the top 12 highest paid employees at the MTA that year, said the complaint.

They each claimed overtime during the year ranging from 2,918 to 3,914 hours, say prosecutors, who noted that such gruelling shifts would have entailed the defendants working every calendar day between eight and 10 hours on top of their 40-hour work weeks.

"Lack of management controls"

FBI Assistant Director William F. Sweeney Jr. called the alleged scam "an incredibly blatant overtime fraud scheme", adding: "This type of double-dealing directly contributes to rising MTA fares for the average, hardworking commuter."

MTA Inspector General Carolyn Pokorny blamed a lack of management systems and controls at the MTA for creating "an environment where fraud could easily occur undetected", which, she alleged, happened.

"When employees are on the clock, management needs to know that they are actually working, and not, say, enjoying concerts in Atlantic City, vacationing at resorts, or competing in a bowling league," she said, adding that investigators would continue probing "how these defendants allegedly succeeded in stealing so much overtime".

Caputo, Ruzzo, Nugent and Balestra were employed by the Long Island Rail Road (LIRR), an MTA agency, during the period; Caputo and Ruzzo retired last year. During the period, Gundersen was a longtime employee of the New York City Transit Authority, another MTA agency.

Image: MTA New York City Transit workers clearing snow in January 2014. For illustration only; no connection to the alleged fraud is implied (By Marc A. Hermann/MTA New York City Transit/CC BY 2.0) 

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