U.S. News

U.S. ex-administrative law judge gets prison for $550 million scheme

(Reuters) - A retired U.S. Social Security Administration judge was sentenced to four years in prison on Friday for what prosecutors said was his role in a scheme to fraudulently obtain $550 million in federal disability payments for thousands of people.

David Daugherty, 81, a retired administrative law judge, was sentenced by U.S. District Judge Danny Reeves in Lexington, Kentucky, after pleading guilty in May to two counts of receiving illegal gratuities, the U.S. Justice Department said.

Daugherty was also ordered to pay over $93 million in restitution, the Justice Department said.

Patrick Nash, his lawyer, said Daugherty had agreed at the time of his plea that a four-year sentence would be appropriate. “It was the sentence we expected to receive,” he said.

Daugherty, of Myrtle Beach, South Carolina, was charged in April 2016 along with two other men, including a Kentucky attorney who advertised his services through the website and who is now considered a fugitive.

Prosecutors said Daugherty was an administrative law judge for more than two decades at the Social Security hearing office in Huntington, West Virginia, where he made decisions on disability claims.

From 2004 to 2011, Daugherty accepted over $609,000 in cash payments from Social Security disability lawyer Eric Conn of Pikeville, Kentucky, prosecutors said. They said the payments were for awarding benefits to claimants the attorney represented in 3,149 cases.

Daugherty would seek out cases Conn had pending with the Huntington office, tell him what medical evidence to submit and then award benefits to Conn’s clients without holding hearings, the prosecutors said.

They said the scheme resulted in Conn’s earning at least $7.1 million in fees from the agency and caused the government to be obligated to pay more than $550 million in lifetime benefits to claimants.

Conn pleaded guilty in March to one count of theft of government money and one count of payment of gratuities. Conn subsequently fled in June and remains a fugitive. He was sentenced in absentia in July to 12 years in prison.

Alfred Adkins, a psychologist in Kentucky who prosecutors said performed medical evaluations for Conn, was convicted of conspiracy, mail fraud and wire fraud charges by a federal jury in June. He is scheduled to be sentenced on Sept. 22.

Reporting by Nate Raymond in Boston; Editing by Leslie Adler and Tom Brown