Tale of a $550 Million Social Security Fraud Scheme Worthy of Best Seller List
DoJ Press Release August 25, 2017 –
Reading more like pages from a current best seller than reality, Retired Social Security Judge David Black Daugherty, 81, of Myrtle Beach, S.C., was sentenced by U.S. District Judge Danny C. Reeves of the Eastern District of Kentucky, who also ordered Daugherty to pay restitution of over $93 million to the SSA and HHS. Daugherty pleaded guilty in May 2017 to two counts of receiving illegal gratuities.
According to admissions made as part of his guilty plea, beginning in 2004, Daugherty, as an ALJ assigned to the SSA’s Huntington, W. Va., hearing office, sought out pending disability cases in which Kentucky attorney Eric Christopher Conn represented claimants and reassigned those cases to himself. Daugherty then contacted Conn and identified the cases he intended to decide the following month and further solicited Conn to provide medical documentation supporting either physical or mental disability determinations. Without exception, Daugherty awarded disability benefits to individuals represented by Conn – in some instances, without first holding a hearing. As a result of Daugherty’s awarding disability benefits to claimants represented by Conn, Conn paid Daugherty an average of approximately $8,000 per month in cash, until approximately April 2011. All told, Daugherty received more than $609,000 in cash from Conn for deciding approximately 3,149 cases.
As a result of the scheme, Conn, Daugherty, and their co-conspirators obligated the SSA to pay more than $550 million in lifetime benefits to claimants based upon cases Daugherty approved for which he received payment from Conn. Daugherty was indicted last year, along with Conn and Alfred Bradley Adkins, a clinical psychologist. The defendants were charged with conspiracy, fraud, false statements, money laundering and other related offenses in connection with the scheme.
Conn pleaded guilty on March 24, to a two-count information charging him with theft of government money and paying illegal gratuities, and was sentenced in absentia on July 14 to 12 years in prison. Conn absconded from court ordered-electronic monitoring on June 2, and is considered a fugitive. He remains under indictment.
On June 12, Adkins was convicted after a jury trial of one count of conspiracy to commit mail fraud and wire fraud, one count of mail fraud, one count of wire fraud and one count of making false statements. Adkins is scheduled to be sentenced on September 22.
Several articles were written about Conn and his “flight from prosecution”, first because of Conn’s status as a top disability lawyer and second because there are many disability-approved people whose claims are now in the balance.
According to Lexington Herald Leader emails allegedly from Eric Conn were received. In those emails, Conn said he was living in a country that doesn’t have an extradition treaty with the United States . He allegedly got there by using a fake passport and help from someone overseas who gave him a job to support himself.
Adkins allegedly signed forms attesting that Conn clients were mentally disabled even though he hadn’t examined them. Conn said he or his employees filled out forms attesting that clients were disabled and Adkins signed them without changing them. Adkins did that in more than 200 cases, prosecutors said in one motion. Adkins has denied doing anything wrong.
Prosecutors said in a motion that while testifying before a U.S. Senate committee, Adkins said he did not know the forms were to be filled out by a professional who did an evaluation. He also said he was not aware the forms would be used to evaluate the extent of someone’s disability. However, Conn’s statement implicated Adkins. His sentencing hearing comes up in September.
The administration going to be struggling to figure out how to handle the applicants who were approved. Many of the applicants said that even though their applications were falsified, their cases are real and they shouldn’t be punished for having been ensnared by the massive fraud.
Money obviously changed hands in order for this to be a lucrative operation–so are they all innocent of wrongdoing or were they only guilty of trying to get the courts to listen in their cases after years of delays? Mental illness is a risky and I would think very difficult medical label to place on people. In some cases like PTSD or clinically observable instances, how does one draw the line?
In any case, this is another example of incompetence or blindness created by a system designed to help those who truly needed help not those wanting to simply “ride the system”. The scam left the government on the hook for more than $550 million in lifetime benefits of which by October 2016 more than $46 million had been awarded to claimants.
Like I said, what a great FBI crime thriller. It is shameful though that the Social Security Administration and their auditors didn’t catch and stop the loss of the money far earlier. It is kind of suspicious to say the least when the record for a SSA judge shows nearly 100% approval of a particular attorney’s cases and few if any applicants are turned down for enrollment.
It makes one wonder just how many other fraudulent cases and humongous sums of money have been leached out of the system for the last twenty years or more. Added to that, Obama’s absconding with money from SSA to help pay for Obamacare hasn’t helped either.
I know the prediction is in the future that SSA will go broke; but at this point, I am amazed SSA hasn’t already crashed. Lots of elderly people, like myself, could not survive without what is provided to us through SSA. We worked hard and paid in to the system for all our working lives not because we chose to do so but because we had that removed from our checks for us by government.
I don’t know what the answer is honestly; but, if one single federal case could have that much effect on the system, then how much more has been going on? Hopefully those on disability that really need it won’t end up suffering for people’s greed.
It also brings up the question of how many illegal immigrants and refugees have been placed within the system and how much they have also added to the hemorrhaging during the last eight years.