Former ALJ pleads guilty for role in $550 million scam

A former administrative law judge (ALJ) for the Social Security Administration (SSA) pleaded guilty in federal district court in Kentucky on May 12, 2017, for his part in a scheme that defrauded the SSA of over $550 million in federal disability payments for thousands of claimants.

For more than 20 years, the ALJ adjudicated disability claims on behalf of the SSA. As part of his guilty plea, he admitted to accepting over $609,000 in cash payments over some seven years in more than 3,100 cases from a Kentucky Social Security disability lawyer. The former ALJ admittedly divided the cash deposits among various accounts in an attempt to conceal the source of the cash.

In exchange for the illegal gratuities, the ALJ advised the lawyer as to the type of medical evidence to submit for his clients and he awarded disability benefits to thousands of claimants represented by the lawyer without holding hearings. As a result, the lawyer received at least $7.1 million in representative fees from the SSA, and by his misconduct, the ALJ obligated the SSA to pay more than $550 million in lifetime benefits to claimants.

The ALJ was indicted on April 1, 2016, along with the lawyer and a clinical psychologist. They were charged with conspiracy, fraud, false statements, money laundering and other related offenses in connection with the scheme. The lawyer pleaded guilty to the fraud scheme earlier this year; the clinical psychologist is currently awaiting trial; and the ALJ’s sentencing is set for Aug. 25, 2017.