Prosecutors: 5 current, former MTA employees charged in lucrative overtime fraud scheme

Marta Zielinska for WCBS News Radio

December 03, 2020

Originally published in WCBS News Radio on December 03, 2020.

NEW YORK (WCBS 880) — Five current and former senior employees of the MTA are accused of a lucrative overtime scheme that cost the transit agency more than $1 million.

Prosecutors say the Long Island Rail Road and New York City Transit workers falsely claimed to have worked hundreds of hours of overtime while they were instead at home, on family vacation or bowling.

The alleged fraud happened in 2018.

"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 United States Attorney for the Southern District of New York. "As alleged, those almost impossible claims were fueled by brazen, repeated fraud."

Authorities say one of the defendants, identified as 56-year-old Thomas Caputo of Holbrook, claimed to have worked 3,864 overtime hours, on top of 1,682 regular hours, which would have amounted to him working approximately 10 hours of overtime every day, for 365 days, in addition to his regular 40-hour work week.

He was paid about $461,000 by the MTA, making him the highest paid employee at the agency in 2018, earning even more than the chairman of the transit agency.

The other four defendants were each paid over $240,000 in overtime, putting each of them within the top 12 highest paid employees at the MTA during 2018.

"This type of double-dealing directly contributes to rising MTA fares for the average, hardworking commuter," FBI Assistant Director William F. Sweeney Jr. said. "Today these individuals learned the end of this line is the federal courthouse here in Lower Manhattan."

Caputo, and the other defendants who are identified as 56-year-old Joseph Ruzzo of Levittown, 50-year-old John Nugent of Rocky Point, 51-year-old Joseph Balestra of Blue Point and 42-year-old Michael Gundersen of Manalapan, New Jersey, are each charged with one count of federal program fraud, which carries a maximum sentence of 10 years in prison.

The MTA released a statement on the investigation saying, "We thank the FBI, Southern District of New York and MTA Inspector General for their diligent work on this matter. The alleged conduct by these MTA employees is an egregious betrayal of public trust. The MTA has implemented a number of aggressive overtime controls that substantially increase oversight and accountability -- already resulting in a reduction of $105 million in overtime in 2019 alone and the implementation of a five-year plan to cut overtime costs by nearly $1 billion. We will continue to root out waste, fraud and abuse wherever it occurs and will continue cooperating fully with this critically important investigation."

State Sen. Todd Kaminsky said the timekeeping technology needs to be updated.

"Well they clearly have a lax system in place," Kaminsky said. "Days like today really undermine people's confidence that their hardworking fare money is going to go back into making the railroad better as opposed to going into bueracracy or into fraud."

Kaminsky said the MTA's inspector general has made recommendations for how to prevent overtime fraud, but progress has stalled.