Former SSA Judge David Daugherty going to prison for 4 years
LEXINGTON, KY — David Black Daugherty, the
former Social Security administrative law judge who was based in
Huntington, was sentenced Friday to spend four years in federal prison
for his role in a multi-million dollar fraud scheme.
Retired Social Security Administrative Law Judge
David Daugherty was sentenced to 4 years in prison Friday August 25, 2017.
Daugherty, 81, approved more than 3,000 Social Security disability
cases submitted by a now convicted Kentucky lawyer in exchange for
money. He pleaded guilty earlier to two counts of receiving illegal
payments.
Daugherty’s attorney asked the federal judge at Friday’s sentencing
in Lexington, Kentucky, to allow his client to self-report to prison in
order to give him time to help his wife adjust to the change but the
judge denied the request saying Daugherty, who now lives in Myrtle
Beach, had all summer to get his wife ready. The judge also said
Daugherty needs to be in custody immediately because he previously
attempted suicide.
Daugherty was part of the scheme with Pikeville, Kentucky lawyer Eric
Conn and Dr. Alfred Bradley Adkins, a clinical psychologist from
Pikeville.
Conn would send the cases of his clients seeking Social Security
disability to Daugherty who then would approve them for the benefits.
.Adkins would back the appeals with bogus medical evidence. Daugherty
admitted he received $609,000 in payments as part of the scheme.
The original indictments alleged the trio conspired to seek $600
million from the Social Security Disability Fund, regardless of whether
applicants involved were qualified to receive the benefits.
Attorney Eric Conn remains on the loose on the lam somewhere in the world.
Conn wasn’t shy about recruiting clients. He was all over southern
West Virginia and Eastern Kentucky billboards with a mannequin sitting
atop the sign. He billed himself as “Mr. Social Security” and wore his
position as a badge of honor in fighting for workers hurt on the job.
Prosecutors said Conn was drawing out nearly $10,000 a month from his
bank account and giving it to Daugherty to rule in favor of his
clients.
Conn, who would file all of his clients disability applications in
Prestonsburg, Kentucky office to make sure Daugherty received the cases,
took off before he sentenced and remains on the run. A judge still
sentenced him to 12 years in prison.
Adkins, who was convicted on several charges in June, is scheduled to be sentenced Sept. 22.
Daugherty, who was allowed to retire when the scheme originally was
discovered a few years ago, wasn’t fined Friday but ordered to pay
nearly $94 million in restitution. The judge admitted he doubted any of
the money would ever be collected.
By
Jeff Jenkins in
News | August 26, 2017
Former Social Security Administrative Law Judge
Sentenced to Four Years in Prison for Role in $550 Million Social
Security Fraud Scheme
A
former social security administrative law judge (ALJ) was sentenced
today to four years in prison for his role in a scheme to fraudulently
obtain more than $550 million in federal disability payments from the
Social Security Administration (SSA) for thousands of claimants.
Acting
Assistant Attorney General Kenneth A. Blanco of the Justice
Department’s Criminal Division, Special Agent in Charge Michael McGill
of the Social Security Administration-Office of Inspector General’s
(SSA-OIG) Philadelphia Field Division, Special Agent in Charge Amy S.
Hess of the FBI’s Louisville Field Division, Special Agent in Charge
Tracey D. Montaño of the IRS Criminal Investigation (IRS-CI) Nashville
Field Office and Special Agent in Charge Derrick L. Jackson of the U.S.
Department of Health and Human Services-Office of the Inspector General
(HHS-OIG) Atlanta Regional Office made the announcement.
David
Black Daugherty, 81, of Myrtle Beach, S.C., was sentenced by U.S.
District Judge Danny C. Reeves of the Eastern District of Kentucky, who
also ordered Daugherty to pay restitution of over $93 million to the SSA
and HHS. Daugherty pleaded guilty in May 2017 to two counts of
receiving illegal gratuities.
According
to admissions made as part of his guilty plea, beginning in 2004,
Daugherty, as an ALJ assigned to the SSA’s Huntington, W. Va., hearing
office, sought out pending disability cases in which Kentucky attorney
Eric Christopher Conn represented claimants and reassigned those cases
to himself. Daugherty then contacted Conn and identified the cases he
intended to decide the following month and further solicited Conn to
provide medical documentation supporting either physical or mental
disability determinations. Without exception, Daugherty awarded
disability benefits to individuals represented by Conn – in some
instances, without first holding a hearing. As a result of Daugherty’s
awarding disability benefits to claimants represented by Conn, Conn paid
Daugherty an average of approximately $8,000 per month in cash, until
approximately April 2011. All told, Daugherty received more than
$609,000 in cash from Conn for deciding approximately 3,149 cases.
As
a result of the scheme, Conn, Daugherty, and their co-conspirators
obligated the SSA to pay more than $550 million in lifetime benefits to
claimants based upon cases Daugherty approved for which he received
payment from Conn.
Daugherty
was indicted last year, along with Conn and Alfred Bradley Adkins, a
clinical psychologist. The defendants were charged with conspiracy,
fraud, false statements, money laundering and other related offenses in
connection with the scheme.
Conn
pleaded guilty on March 24, to a two-count information charging him
with theft of government money and paying illegal gratuities, and was
sentenced in absentia on July 14 to 12 years in prison. Conn absconded
from court ordered-electronic monitoring on June 2, and is considered a
fugitive. He remains under indictment. On June 12, Adkins was convicted
after a jury trial of one count of conspiracy to commit mail fraud and
wire fraud, one count of mail fraud, one count of wire fraud and one
count of making false statements. Adkins is scheduled to be sentenced on
September 22.
The
SSA-OIG, FBI, IRS-CI and HHS-OIG investigated the case. Trial Attorney
Dustin M. Davis of the Criminal Division’s Fraud Section and Trial
Attorney Elizabeth G. Wright of the Criminal Division’s Money Laundering
and Asset Recovery Section are prosecuting the case, with previous
co-counsel including Assistant U.S. Attorney Trey Alford of the Western
District of Missouri and Investigative Counsel Kristen M. Warden of the
Justice Department’s Office of the Inspector
