Bandon Man Sentenced for Disability Fraud

EUGENE, Ore - Calling the defendant’s conduct “huge criminal thinking,” a Bandon man was sentenced on Wednesday to eight months’ confinement at the Residential Reentry Center in Medford and ordered to pay more than $169,000 in restitution for disability and medical benefits he fraudulently received.  Daniel Stadelman, 55, pleaded guilty in October to theft of government funds based on his concealment of work activity from the Social Security Administration (SSA) for more than ten years.

According to Stadelman’s admissions and court records, Stadelman applied for disability benefits in 2001, claiming he was unable to work due to an illness that left him severely fatigued.  SSA initially denied his application, but Stadelman appealed and eventually an Administrative Law Judge (ALJ) approved his claim in 2004.  Despite the ALJ’s admonition to Stadelman that he be aware of the reporting requirements if he returned to work, Stadelman failed to advise SSA that he was working for himself and for his family’s business, Bandon Supply, where investigators – prompted by an anonymous complaint - observed him working lengthy hours, lifting heavy objects, and operating large machinery.  When SSA asked Stadelman if he had returned to work, Stadelman repeatedly denied work of any kind.  After federal investigators served a search warrant on Bandon Supply and defendant’s residence in June 2014, Stadelman retained counsel and contacted the government to negotiate a plea resolution.

During the sentencing hearing, U.S. Chief District Court Judge Ann Aiken called Stadelman’s crime a “significant violation of public trust” telling Stadelman that people should know that “just doing the right thing is what is expected,” and that although he may have initially been eligible for the benefits, he “should have been proud to say ‘I don’t need them anymore’” when he returned to work.  She also ordered him to perform 225 hours of community service.  Stadelman has already remitted more than $150,000 to the government for his court-ordered restitution obligation.

Stadelman’s case was investigated by the Social Security Administration Office of Investigations in Salem and was prosecuted by Special Assistant U.S. Attorney Helen Cooper as part of a partnership venture between the Seattle Region, SSA Office of the General Counsel and the U.S. Attorney’s Office in Portland, Oregon.