A retired Myrtle Beach administrative law judge, a lawyer and a psychologist were charged in a federal indictment on Wednesday in a Kentucky courtroom for their involvement a scheme to fraudulently obtain more than $600 million in federal disability payments for thousands of claimants.
David Black Daugherty, 81, of Myrtle Beach, Eric Christopher Conn, 55, and Alfred Bradley Adkins, 44, both of Pikeville, Kentucky, were charged in an 18-count indictment returned Wednesday in the U.S. District Court for the Eastern District of Kentucky.
“The defendants are charged with designing an intricate scheme, using their expertise and positions of authority to fraudulently induce payment of $600 million in federal disability and healthcare benefits,” Assistant Attorney General Caldwell said in a press release. “While Social Security disability programs are designed to support the disabled, the defendants allegedly used it to enrich themselves. Today’s arrests demonstrate, however, that the Criminal Division will root out greed and corruption wherever they may be found.”
The indictment alleges that from October 2004 to Feb. 13, 2012, Conn, Daugherty and Adkins conspired to defraud the government by submitting false and fraudulent medical documentation to the Social Security Administration so as to have the SSA pay claimants’ retroactive disability benefits, continue to pay claimants’ disability benefits in the future, award Medicare and Medicaid benefits to claimants and pay Conn’s attorney fees, officials said.
The conspirators’ intent was to have the SSA disburse more than $600 million in disability benefits in more than 2,000 cases to claimants in Kentucky and elsewhere, irrespective of the claimants’ actual entitlement to benefits. Conn, Adkins and Daugherty allegedly received more than $5 million during the nearly eight year scheme, according to the indictment.
The Social Security Administration Office of the Inspector General is committed to pursuing those who violate the public trust by conspiring to misrepresent disabling conditions to defraud not only Social Security, but all American taxpayers.
Michael McGill, an officer with the Social Security Administration Office
“The Social Security Administration Office of the Inspector General is committed to pursuing those who violate the public trust by conspiring to misrepresent disabling conditions to defraud not only Social Security, but all American taxpayers,” Michael McGill, an officer with the Social Security Administration Office, said.
Daugherty is a former SSA administrative law judge who began working with the SSA in 1990 and was assigned to the Office of Disability and Adjudication Review hearing office in Huntington, West Virginia, which maintained a satellite office in Prestonsburg, Kentucky, and handled the claims of Kentucky claimants who requested hearings. Daugherty, who retired in July 2011, was responsible for deciding whether claimants were disabled and entitled to benefits, according to the indictment.
Conn is an attorney whose firm in Floyd County has focused for the past 20 years primarily on representing individuals seeking social security disability benefits. Adkins is a clinical psychologist who performed medical evaluations for Conn from 2004 through 2011, officials said.
Conn allegedly filed disability applications with the Prestonsburg Field Office, irrespective of the claimants’ residence in an effort to ultimately bring the cases before the Huntington Hearing Office, where Daugherty either self-assigned or directed others to assign those cases to himself, according to the release.
Daugherty allegedly solicited Conn to submit falsified medical evidence so that Daugherty could issue fully favorable decisions. Adkins and others performed pretextual physical and mental evaluations on claimants, the indictment states. They routinely prepared and signed evaluation reports indicating that claimants had limitations considered disabling by the SSA, irrespective of claimants’ actual physical or mental conditions, according to the indictment.
The allegations in this case describe a gross abuse of a system that was established to provide assistance to those truly in need.
IRS agent Tracey Montaño
Conn allegedly threatened to retaliate against another person when that person provided truthful information to a law enforcement officer about the plan. Conn also allegedly destroyed and directed others to destroy evidence, including federal reports, a computer tower and other electronic hardware and media located at his law firm, officials said.
“IRS-Criminal Investigation is committed to unraveling complex fraud and money laundering schemes,” said IRS agent Tracey Montaño. “The allegations in this case describe a gross abuse of a system that was established to provide assistance to those truly in need.”
The indictment charges each defendant with one count of conspiracy to commit mail and wire fraud. Daugherty is also charged with two counts of mail fraud, two counts of wire fraud, and one count of conspiracy to commit money laundering, according to the release.
Conn is also charged with three counts of mail fraud, three counts of wire fraud, two counts of obstruction, two counts of false statements, one count of conspiracy to commit money laundering, four counts of money laundering, and one count of conspiracy to structure payments, according to a press release.
Additionally, Adkins is charged with one count of mail fraud, one count of wire fraud, and one count of false statements, authorities said.