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Arrest Made In LIRR Disability Scam Probe

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Nov 17, 2008 7:35 pm US/Eastern

Arrest Made In LIRR Disability Scam Probe

First Of 4 Investigations Leads To Corruption Charges Against Longtime Operations And Analysis Manager

Reporting
John Slattery
NEW YORK (CBS) ― A Long Island Rail Road manager has been arrested on corruption charges as state prosecutors look into disability payments to former railroad employees.

Charged with corruption, Frederick Kreuder had been with the LIRR 23 years. He had been a manager of operations and analysis.

Kreuder, who was suspended from the LIRR last month, on Monday was relieved from duty without pay after pleading not guilty to official misconduct and receiving unlawful gratuities -- in one case $1,000.

According to the attorney general's office, the suspect guided workers in successfully filing disability applications and how to contact cooperating doctors.

"And when the entire story comes out, specifically what happens at the railroad and more importantly what doesn't happen, it will be clear how heartbreaking today is," attorney William Petrillo said.

This is just the first case. Four separate investigations are underway, after it was reported that more than 90 percent of the railroad's retirees applied for disability payments in recent years, and nearly 98 percent were approved by an obscure federal board, the Railroad Retirement Board. Long Island Rail Road retirees averaged $26,000 a year in disability payments.

Railroad officials and union leaders have said the apparent abuse was allowed to flourish because of a lack of oversight as to who was eligible for disability payments.

The attorney general's office says since 2000, some $250 million has been paid out to LIRR retirees seeking disability benefits.

It's not known how many were legitimately injured.


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