NY Man Cleared of Most Disability Wrongdoing Charges

December 15, 2009 (PLANSPONSOR.com) – A side business helping fellow employees apply for federal disability benefits was not illegal, but a budget analyst for the Long Island Rail Road (LIRR) should have paid taxes on his earnings from it, a judge has ruled.

In ruling that the business itself did not break any laws, a Newsday report said Nassau (New York) County Judge John Kase threw out 48 of the 53 charges against Frederick Kreuder filed by state Attorney General Andrew Cuomo’s office. The charges resulted from unusually high disability application rates from LIRR employees.

Newsday said the remaining charges of petty larceny and offering a false instrument for filing have to do with allegations Kreuder only paid $1,000 in taxes; prosecutors alleged Kreuder made about $16,000 over four years.

A spokesman for Cuomo’s office said prosecutors are “reviewing the decision and considering our options.”

Newsday said Kreuder has been suspended without pay since Cuomo’s office arrested him in November 2008 on charges of official misconduct and receiving reward for official misconduct.

Federal records show that LIRR employees have filed for the benefits at a rate nearly 12 times higher than those of other railroads.

Newsday said prosecutors alleged Kreuder received $500 to $1,000 from each LIRR colleague he helped navigate the federal pension system. Kreuder steered LIRR employees to certain doctors, advised them on the best date to retire to maximize their benefits, and helped with paperwork, prosecutors said.