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VANCOUVER WOMAN SENTENCED TO THREE YEARS IN PRISON FOR DEFRAUDING SOCIAL SECURITY
Woman had Children Fake Mental Retardation to Collect Disability Payments

FOR IMMEDIATE RELEASE
May 17, 2007

ROSIE COSTELLO, 46, of Vancouver, Washington was sentenced today in U.S. District Court in Tacoma to three years in prison, three years of supervised release, and $287,716 in restitution for Conspiracy to Defraud the Government and Social Security Fraud. COSTELLO admitted that she coached her daughter Marie, from the age of four, to feign mental retardation. She later used the same ruse with her son Pete from the age of eight. Pete Costello continued to act developmentally disabled in front of Social Security evaluators long after he was an adult. COSTELLO collected more than $280,000 in federal and state benefits using this scheme. In imposing a sentence higher than the federal guidelines range, U.S. District Judge Ronald B. Leighton declared COSTELLO “an habitual offender” and said she had “asked her children to do despicable things.”

ROSIE COSTELLO first made an application for her daughter to get Social Security Disability payments in 1985 and for her son to get Social Security Disability benefits in 1987. ROSIE COSTELLO coached both children on how to feign symptoms of mental retardation. Social Security started paying benefits to ROSIE COSTELLO for Marie Costello’s disability in January 1986, and for Pete Costello’s disability in July of 1987.

In August of 1997, as Pete Costello approached his 18th birthday, the Social Security Administration began a benefits review. Pete Costello was evaluated by two psychological professionals. At both evaluations Costello again feigned symptoms of mental retardation. ROSIE COSTELLO claimed her son could not speak, sign his name, drive a vehicle, dress or care for himself. Pete Costello pretended to be unable to even take the test to evaluate his mental capacity. ROSIE COSTELLO and Pete Costello concealed from evaluators that he could do all those things and in fact was licensed to drive. After the first evaluation, the Social Security Administration moved to cancel Pete Costello’s benefits. The Costellos appealed and following the second exam the benefits were reinstated. The benefits were again reviewed in 2005, and in January 2006, Pete Costello again appeared with his mother at the Social Security office in Vancouver, Washington and again feigned mental retardation. As court exhibits demonstrate, the next month, Pete Costello appeared in District Court in Vancouver and represented himself regarding a traffic ticket. The ticket had been issued to Pete Costello as he drove away from the exam at the Social Security Office.

According to her plea agreement, when ROSIE COSTELLO was instructed to bring both Pete and Marie to the Vancouver Social Security Office in January 2006, for a benefits review, COSTELLO did not bring Marie, but a woman who masqueraded as Marie Costello. This woman too had been coached to feign mental disabilities. Marie Costello has not been located. However, between March of 2001 and October 2006, ROSIE COSTELLO claimed more than $52,000 from the Washington State Department of Social and Health Services as the in-home care-giver for her two disabled children. In fact neither child was disabled or living with COSTELLO during that time.

ROSIE COSTELLO and Pete Costello were indicted by a federal grand jury on September 13, 2006. They were arrested in Vancouver, Washington on December 4, 2006. Pete Costello pleaded guilty February 9, 2007. Last week, Pete Costello was sentenced to 13 months in prison.

At sentencing ROSIE COSTELLO told Judge Leighton “I’m sorry for what I did. I had a very hard life. I have grandchildren out there who need me. If I could, I would take it all back.”

Judge Leighton noted that COSTELLO had worked hard at her fraud scheme for more than 20 years. “She has earned her way to federal court”, he said. Judge Leighton was most concerned about the effect of the crime on society as a whole. “When the public learns of this kind of stuff it hardens the hearts of those who would otherwise be inclined to care for those in need.... This conduct poses a real threat to the viability of programs to help the less fortunate.”

The case was investigated by the Social Security Administration Office of Inspector General (SSA-OIG), the Washington State Attorney General’s Office Division of Fraud Investigations and the Vancouver Police Department.

The case was prosecuted by Assistant United States Attorneys Norman Barbosa. For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110.

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