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Lawsuit: State Scapegoated Investigator Over Lakewood Welfare Fraud Amnesty ‘Discounts’

Gavel (Credit: Brian Turner/Flickr)

Gavel (Credit: Brian Turner/Flickr)

A former investigator with the state comptroller’s office has filed a whistleblower lawsuit against his former employer, claiming he was made a scapegoat after it became known that the state allowed suspects who fraudulently received government benefits in Lakewood to repay a fraction of what they had taken.

The lengthy legal filing also describes, in detail, investigator Andrew Poulos’ account of behind-the-scenes negotiations between the state, Ocean County Prosecutor’s Office and influential members of Lakewood Orthodox Jewish community in the wake of a number of arrests that rocked the township and led to additional residents admitting they, too, had defrauded the government and wished to participate in an amnesty program to avoid prosecution as long as they repaid what they had received illegally.

“Mr. Poulos worked tirelessly to uncover and put an end to Medicaid fraud within Lakewood’s Orthodox community,” said Matthew A. Luber and Peter M. Draper, Poulos’ attorneys. “As alleged in the complaint, his unlawful termination is just another classic case of retaliation by New Jersey political operatives who, rather than face public scrutiny for their own decisions, terminated our client when he blew the whistle on an attempted cover-up.”

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According to the lawsuit, a copy of which was obtained by Shorebeat, Poulos claims he was terminated after the Asbury Park Press published a story that revealed numerous participants in the amnesty program were allowed to pay far less than they admitted to taking fraudulently. Comptroller Philip James Degnan characterized the allowance of those in the program to pay reduced amounts in restitution as being Poulos’ decision, while in reality the amnesty deals were hatched by his bosses, he alleges.

Degnan’s office would later release a report showing about $2.6 million in repayments were left on the table following the deals that were made. Poulos alleges he was instructed to make the reductions following meetings between law enforcement, state officials and members of the Vaad, a group of influential business and religious leaders in Lakewood’s Orthodox community.

“The plan was to use the Vaad to make the program successful,” the lawsuit states, alleging that former Prosecutor Joseph D. Coronato planned to make a series of arrests, offer amnesty, make “three or four” additional arrests as a deterrent, then offer a second amnesty program.

To help make the amnesty program successful, the lawsuit states, potential fraud suspects represented by an attorney would not have to appear in person to execute settlement agreements. Additionally, at a Nov. 23, 2017 meeting, Yosef Jacobvitch, an attorney from Lakewood, is alleged to have requested relief for his clients who were considering participating in the amnesty program.

“Mr. Jacobovitch conveyed that he had numerous applicants for the program that wanted to pay back the full amount owed, but he explained his clients could not do so within the six-month time frame,” the lawsuit states. “He further explained that, if the [Medicaid Fraud Division] would not permit an extension of time, then his clients requested that the repayment amounts be lowered so payments could be made within the six-month time frame.”

The same day as the meeting with Jacobovitch, Poulos claims that Fraud Division chief Joshua Licthblau authorized lowering the repayment amounts as part of negotiations with amnesty program participants. A Nov. 27 memorandum, the lawsuit states, indicates Licthblau “agreed that reducing the repayment amounts for those with financial hardship would bring more individuals into the program.”

After the newspaper investigation was published, sparking outrage over the fact that those who admitted receiving the benefits did not have to repay their full value, blame was placed on Poulos, the lawsuit alleges.

“On October 19, 2018, in response to the negative news coverage, Mr. Degnan released a public report regarding the Amnesty Program that blamed an ’employee’ who was acting without knowledge of his chain of command, for making deals to repay money less than the full amount, and for communicating directly with attorneys against protocols,” the text of the legal filing states.

That employee was eventually identified as Poulos, who had been terminated in Dec. 17 after first telling others that he did not unilaterally approve the reductions in payment obligations.

“Defendants’ motivation to terminate Plaintiff is clearly based upon their need to save political face with both the public and Mr. Degnan, and to further cover up the fact that Defendants’ failed to keep Mr. Degnan advised of the details of the Amnesty Program settlements,” the allegations in the suit continue.

Degnan remains in the position of comptroller but was nominated by Lt. Gov. Sheila Oliver to become a superior court judge. The lawsuit seeks unspecified damages under the Conscientious Employee Protection Act as well as costs and legal fees. A trial date has not been set.

“Mr. Poulos looks forward to exposing the lies, to setting the record straight, and to restoring his reputation,” Poulos’ attorneys said. “The complaint filed today is the first step in that process.”

The comptroller’s office would not comment on the allegations due to pending litigation.

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