Catching Social Security Disability Fraudsters in the Act

May 9, 2014— -- UPDATE: Since this story first aired on May 9, 2014, Cory Eglash was sentenced to 15 months in prison and three years of supervised release for committing disability fraud. He was also ordered to pay a $10,000 fine to the federal government.

The Social Security disability program is meant to be a lifeline for the severely disabled, but shameless con-artists are increasingly seeing it as a way to make easy money, thinking that no one is watching.

The Office of the Inspector General for Social Security says its investigations uncovered $340 million in savings for the government during the last fiscal year. Meanwhile, new applications for disability are on the rise as the U.S. population ages.

In Washington state, Special Agent Joe Rogers leads the state's "Cooperative Disability Investigations Program," a sort of a CSI unit of the OIG for sniffing out disability fraud. He said he and his team handle a minimum of ten to 12 cases a week, and they rely on surveillance footage and complex paper trails to catch people in the act.

Rogers and his agents recently busted Ramona Hayes, 42, and Cory Eglash, 52. The two of them ran a coffee shop in Friday Harbor, a beautiful tourist town in Washington's San Juan Islands. With the eye-catching name "Criminal Coffee" the two of them boasted their cafe was "The place to come when you're on the run."

But when Eglash filed for disability in 2012, a review of his application turned up the fact that he was working the coffee shop and that Hayes – who also worked in the coffee shop -- was already receiving disability payments.

"The uniqueness of this case shows that the system works," Rogers said. "We get an allegation on him. He's trying to get on social security and when we are looking at him we discover her already on."

In her application, Hayes had written she couldn't work due to "anxiety, severe depression and PTSD." Eglash is on-record in her application to support her claim, writing that her symptoms were so severe that he doubted she could work a part time job or even put gas in her car. The government was paying her more than $1,000 a month in disability based on her application and she ultimately received over $40,000 from Social Security before she was caught.

In his application, Eglash claimed to have difficulty "lifting, squatting, bending, standing, reaching, kneeling, stair climbing, seeing, memory, completing tasks, concentration, understanding, using hands, getting along with others."

But Rogers discovered records that showed Eglash not only worked at the café but had a second job at an aquarium, volunteered at a local senior center and played basketball with the local recreational league.

"He played basketball four days the same month he applied for disability," Rogers said. "We interviewed one of the people who played on the rec league with him [who] actually had complimentary things to say about his basketball abilities."

Investigators say Hayes and Eglash are a perfect example of what they face every day -- people trying 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.

Social Security Inspector General Patrick O'Carroll said these liars can steal millions from the government every year.

"People are brazen," he said. "There's an element that is going to look for any way to defraud the government and they will do it."

Just a few of the claims that investigators checked up on include a man, who investigators said claimed he couldn't drive or even go out alone, but then was caught on surveillance riding his motorcycle. Another man claimed he had shoulder problems and needed an electric cart to run errands, but he was caught on surveillance tossing around a football. One woman claimed to have difficulty with lifting, squatting and bending, but was caught on surveillance lifting a motorized scooter into the back of a van.

All three had their claims denied.

Every year, social security pays out more than $175 billion to people on disability, but in the last fiscal year alone, nearly 72,000 fraud allegation claims were reported to the Social Security's office of the inspector general.

"The whole purpose of the program here is to provide benefits to those who need it and when people who don't need are abusing it, I think everybody becomes outraged," O'Carroll said.

The most egregious case in the last year allegedly happened in New York City, when more than 130 people, many of them police officers and fireman who worked on 9/11 terrorist attack rescues and clean-up, were indicted for allegedly conspiring to defraud the government out of $2.2 million.

But agents say most cases are small, out of the way cases more like Criminal Coffee.

To investigate Hayes and Eglash, Rogers and his team of agents posed as cell phone company workers visiting the area, stopping in for coffee during the course of their day. Wearing hidden cameras the surveillance video they captured, proved that both of them were very social and able-bodied. On the video, Hayes and Eglash bragged about taking long walks, that Eglash had helped paint and wall paper a church over two days, and that Hayes was indeed driving.

After Rogers showed them his badge and charges were filed, Hayes pleaded guilty to mail fraud in August 2013. She is currently serving 12 months in federal prison.

Eglash went to trial in January, where the jury found him guilty of conspiracy to defraud the United States and mail fraud. He is awaiting sentencing and is appealing the judgment against him.

Both Eglash, his lawyer and Hayes' lawyer declined ABC News' request for interviews.