Undercover Investigation into Disability Fraud

Investigators says people filing false disability claims are costing taxpayers billions.
7:47 | 05/10/14

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Transcript for Undercover Investigation into Disability Fraud
The United States gives over $175 billion from social security each year to those on disability. And for certain types of people that means only one thing. Money up for grabs. You are about to meet some fraudsters looking for extra cash by milking the system and the investigators out to stop them. Here's ABC's Neil Karlinsky for "Nightline" investigates. Reporter: You are watching undercover video, a sting by federal agents. Trying to recruit your money from a couple who claim to be so disabled they couldn't work. Or in many cases even stand up very long. Reporter: As if daring some one to come and get them, Ramona and coraly put a sign on themselves, criminal coffee, the place to come when you are on the run. The location, one of the most out of the way corners of the United States, the San Juan islands along the Canadian border deep in the pacific northwest. What were these two like? Neither one could tell you the truth if their life depended on it. Reporter: The property manager had suspicions and he didn't know the feds were investigating the two for a disability scam and new customer, Joe roger was actually part of an undercover team of agents with a hidden camera. Here is the Turkey. Great. Thank you. You almost seemed like buddies, ever feel bad about that? Not really. That's our job. Investigators say the couple, are a perfect example of what they face every day. People freeing to bilk social security out of tens of thousands of dollars. Claiming to be disabled and eligible for benefits set aside for those truly in need. People are brazen. An element looking for any way to defraud the government. They will do it. Reporter: Just look at some of the claims they checked up on. This man driving off on his motorcycle. Investigators tell us he claimed he couldn't drive or even go out alone. And the guy tossing the football, he said he had shoulder problems and needed an electric cart to run errand. This woman lifting the motorized wheelchair claimed she had difficulty with lifting, squatting and bending. All three had their claims denied. Every year, social security pays out more than $175 billion to people on disability. But in the last year alone, nearly 72 allegations of fraud were reported to social security's office of the inspector general. When people who don't need it are abusing it, I think everybody becomes outraged. A big bust of police and firefighters accused of massive fraud. Reporter: The most egregious case in the last year allegedly happened in New York where more than 130 people, many of them police officersed are firemen who worked on 9/11 were indicted for allegedly conspireing to defraud the government out of $29.9 million. And these Numbers onto even include other types of disability fraud. Like workman avenue comp. This woman, Kathy cash? Well was raking in $3,000 a month. Claiming a shoulder injury left her unable to stand, run, reach, or grasp. That didn't slow her down on "The price is right." Look at her spin the wheel. Last year she pleaded guilty to fraud. Agents so most people are like criminal coffee. We joined Joe Rodgers on the way up to the San Juan island. He leads the investigation unit in Washington state. The organized csi unit for seeking out disability fraud. A table, your favorite spot? Over there. Rodgers and fellow investigators, posed as cellular phone company workers. Good, how are you? Stopping in during the course of their workday. Bail money jar was over here, right? Right up here, right there. Weep just recently bought a house. Pretty close. This is Normal behavior. Friendly, personable guy. Tell you his life story in a minute. And he did several times. Where are you guys from originally? Beth were chatawe both were chatty and able-bodied. A fair cry from their application for disability payments She has writ ten I cannot work, there are days when I can't leave my home. Cory is on record in her application to support her claim. I doubt today she could work in a retail store on part time base is. That's pretty extreme. She want cut gas in her car. That's extreme. A huge eagle swooped down in front of us. She received $42,000 in social security and $15,000 from the state of Washington. About $58,000 total. Cory wasn't receiving disability yet. His application is what helped set off the red flag that brought agents to their door. Difficulty, lifting, squatting, bending, sitting, stair climbing, seeing, memory, completing tasks, concentration, understanding, using hands. Getting along with others. Pretty inclusive. More than moving around the tapes reveal a pair who couldn't stop talking about themselves. I didn't know who I was dealing with? We were out at Jackson beach. Cory was like look at the big thing on the tower. I'm driving. Princesses do not walk. Ramona can't even put gas in a car, let alone drive. As if the coffee shop wasn't enough, investigators say Cory walked a full mile to this building end of the pier where he worked a second job at the aquarium. They've found record that he vol unite volunteered and played basketball with the rec league too. Played basketball, four days, same month he amid for disability. Did you ever notice pains or hard time getting around. No, they gave me a pain. I don't tell you where. Reporter: When Joe the customer showed his badge and the charges were filed. Ramona pleaded guilty to mail fraud. Serving 12 months in federal prison. Most everything we bake. Reporter: Cory want to trial where the jury found him guilty of conspiracy to defraud the United States and mail fraud. We fried to talk to him while he is awaiting sentencing and filing for an appeal. Hello. But he was nowhere how to be found. And his lawyer along with Ramona's, decloond to beef interviewed. When it all finally came out. What did you make of that. About the funniest thing I heard in a while. Reporter: These small cases add up. Totaling $340 million in savings just last year. As for the con artists who might think no one is watching. You have of a gents out spying on people right now. They should be. They should be. Thank you, good talking to you. I'm Neil karlinski. Friday harbor, Washington.

This transcript has been automatically generated and may not be 100% accurate.

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