Federal agents this week rounded up key figures from one of the biggest frauds in Social Security history, beginning to close out a scandal that forced the government to confront the extent of problems in its generous disability benefit programs.
The brazen scheme involved a lawyer who recruited bogus applicants and faked their medical forms, crooked doctors who signed off on the false forms and a handpicked administrative judge who would spot the applications in the system, grab them and approve them, according to the federal indictment, unsealed Tuesday.
More than 2,000 applications were filed by Eric C. Conn, the Kentucky lawyer charged with orchestrating the scheme, which spawned a congressional investigation and a dramatic hearing where senators accused Mr. Conn of shredding 26,000 pounds of documents to try to hide his activities from investigators.
Senate investigators said Mr. Conn and David B. Daugherty, the federal administrative law judge who was also indicted this month, even tried to discredit a Social Security employee who blew the whistle on them.
Former Sen. Tom Coburn, who led the congressional investigation that exposed the fraud ring, said the new indictments were a testament to the whistleblowers who helped shed light on it.
“This came about through great investigative work and great courage by Social Security and lawyer employees who actually were willing to risk their jobs to do what’s right for the country,” he told The Washington Times.
Stunningly, many of those whose applications were submitted by the fraud ring are still receiving payments.
Social Security tried to suspend payments, saying applicants would have to go back and prove that they really were disabled and that their applications weren’t bogus. But a powerful Kentucky congressman, Rep. Harold Rogers, chairman of the House Committee on Appropriations, intervened, insisting that people depended on the money.
Social Security backed down and reinstated the benefits — though the agency told Kentucky media last year it is trying to go back and review the cases one by one to try to kick undeserving people off.
The agency didn’t respond to requests for comment Tuesday from The Times.
Mr. Rogers’ office also didn’t respond to repeated requests for comment.
The new indictment was handed up by a grand jury in the eastern district of Kentucky, but the U.S. attorney there is not handling the case. Instead it’s being shepherded out of the main Justice Department headquarters in Washington.
The three men indicted — Mr. Conn, Mr. Daugherty and Alfred Adkins, a board-certified psychologist — earned more than $10 million from their scheme, which the government is trying to recover, the indictment says.
Prosecutors said Mr. Conn would find people to apply for disability and would fake their medical reports, including false X-rays, then have Mr. Adkins or two medical doctors sign off on them. Mr. Conn would submit the bogus applications to the Huntington, West Virginia, office, where Mr. Daugherty would go into the system and assign those files to himself, then approve them.
Sometimes Mr. Daugherty would even suggest to Mr. Conn ways he could alter his reports so the applicants appeared to be even more disabled, the indictment said.
Under Social Security’s rules, Mr. Conn was entitled to some of the beneficiaries’ payments as a fee for helping them apply. He shared that money with his co-conspirators, investigators said.
Mr. Coburn, who retired from the Senate at the end of 2014, said the only way a scam like that goes on so long is because the government — both the executive branch and Congress — aren’t watching closely enough.
The 18-count indictment could earn the three men a lifetime in jail under the maximum penalties.
Mr. Coburn said that is what they deserve.
“I hope these guys rot in jail the rest of their lives, because what they really did is take money from people who really need it,” he said.