A career investigator says he was made the scapegoat for a controversial amnesty program that allowed dozens of welfare cheats in Lakewood to repay just a fraction of what they stole, even though prosecutors and the state comptroller promised the public that fraudsters would pay it all back.

A whistleblower lawsuit filed by Andrew Poulos, who spent four years investigating Medicaid fraud by members of Lakewood’s Orthodox Jewish community, reveals details that contradict what authorities told the public and raises questions about the integrity of the program executed by the Office of the State Comptroller.

Among the most damning accusations:

— In addition to walking away from $2.6 million as a result of deals, the state appears to have aborted “hundreds” of cases of fraud perpetrated by Lakewood residents who missed last December’s amnesty deadline.

— The top administrators at the comptroller’s Medicaid Fraud Division not only knew about the deal-making but endorsed the plan and signed off on every individual deal — all while keeping Comptroller Philip Degnan in the dark. The Comptroller's Office has denied anyone in the office other than Poulos knew about the deals.

— Degnan’s predecessor, Matthew Boxer — who lamented, when he served as comptroller, that not enough was being done to fight Medicaid fraud — worked as an attorney for at least one amnesty applicant and represented the Vaad, the politically influential Orthodox Jewish civic council in Lakewood, in backroom negotiations over amnesty.

— Even though authorities told the public that the amnesty program was not meant for people who had already been caught, indicating that it was only for people who came forward, the Comptroller’s Office had “several complete cases” that were not sent to the prosecutor. The subjects of those cases were brought in and encouraged to apply to the program. The office also used the Vaad to send letters to “dozens” more targets of other investigations, threatening them with prosecution if they did not apply.

— The idea for the amnesty was first thought up by then-Ocean County Prosecutor Joseph Coronato in late 2016 — a year before the program was publicly announced. Degnan signed off on the amnesty program in January 2017, five months before dozens of Lakewood residents were arrested. The arrests were meant to be seen as the inspiration for the amnesty program.

— In July 2017, months before the amnesty was announced to the public, Prosecutor Coronato met with the Medicaid Fraud Division and cautioned against granting amnesty to people who stole more than $75,000,  the threshold for a second-degree crime, which carries a prison sentence. Poulos brought up this concern with Deputy Director Kay Ehrenkrantz and Director Joshua Lichtblau, two former deputy attorneys general, who decided that any theft amount more than $75,000 would be reduced for the purpose of amnesty.

— And nearly three months before the general public knew about the amnesty program, the Vaad and Lakewood Mayor Meir Lichtenstein already knew about it, telling comptroller investigators that they had been informed about it by the prosecutor's office.

The amnesty program was announced last year after state and federal authorities arrested 26 township residents for defrauding benefits programs. Earlier this year, the Office of the State Comptroller, which investigates Medicaid fraud, crowed that the program collected $2.2 million from 159 residents.

But this month, an Asbury Park Press report revealed that one of the applicants was a school board member who got a deal that allowed him to repay just half of what he owed.

The report forced Degnan to release a statement the next day revealing for the first time that, contrary to what he had told the public, his office had worked out deals with other applicants. Those deals cost the state $2.6 million.

Degnan — who was nominated in September to be a Superior Court judge — said he was unaware of the deal-making until three days before the Dec. 12, 2017, deadline for applying. He blamed a rogue staffer, whom he did not name, and said that the employee had been removed from duty.

Several days later, New Jersey 101.5 reported that Poulos, the top investigator on the program, had been fired on Dec. 12, 2017.

Poulos’ lawsuit says his termination was retaliation for revealing that Joshua Lichtblau had endorsed and signed off on the negations and that Lichtblau had mislead Degnan, throwing Poulos under the bus to save himself.

“Mr. Poulos worked tirelessly to uncover and to put an end to Medicaid fraud within Lakewood’s Orthodox community," Poulos' attorneys, Matthew A. Luber and Peter M. Draper of the firm McOmber & McOmber said Tuesday. "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. Mr. Poulos looks forward to exposing the lies, to setting the record straight, and to restoring his reputation. The complaint filed today is the first step in that process.”

The Comptroller's Office on Tuesday, citing advice by the Attorney General's Office, declined to respond to the allegations because they were made in a pending lawsuit.

The lawsuit says the office went as far as to mislead New Jersey 101.5 about Poulos’ termination date. The lawsuit says he was removed from the Operation Blue Claw investigation on Dec. 8 and then was hand-delivered a letter by Chief of Staff of Elissa Westbrook-Smith informing him that his employment would end on Dec. 29. He cleared out his desk on Dec. 22.

The lawsuit says the office told the press that Poulos had been fired on Dec. 12 so that the public would surmise that Poulos had been the unnamed rogue operator as part of the office’s “public smear campaign” to “save political face.”

While reporting on the previous story about Poulos, New Jersey 101.5 checked Poulos’ employment status with Department of the Treasury, which told a reporter that his last day was Dec. 29. When a reporter asked a Comptroller’s Office spokesman about this discrepancy, he insisted that Poulos was terminated Dec. 12 and that the extra days on the Treasury’s record could have been from accumulated sick or vacation days.

State Comptroller Matt Boxer with Gov. Chris Christie (Tim Larsen, Governor's Office)

Why amnesty?

Authorities had known for years that welfare fraud was pervasive in Lakewood. In 2015, the Ocean County Prosecutor's Office held a public event to warn people against defrauding the government.

A year later, then-Prosecutor Coronato didn't think the people had gotten the message. According to Poulos, Coronato suggested the program to the Comptroller's Office, saying they could announce it after a series of arrests made headlines.

Coronato, who is not named as a defendant in the lawsuit, could not be reached for comment Tuesday morning.

While acknowledging that the deals should not have been made, Degnan this month continued to defend the amnesty program, officially known as the Ocean County Recipient Voluntary Disclosure Program even though, Poulos says, the targets of the investigations were all in Lakewood.

The program gave anybody in Ocean County who had not already been charged with defrauding Medicaid 90 days to voluntarily disclose their wrongdoing. In exchange, the state agreed not to refer them to the county prosecutor for criminal prosecution if they agreed to repay what they owed within six months.

Degnan said even though the deals cost $2.6 million, the state nevertheless collected $2.2 million — an amount they never would have been able to collect if they hadn't offered the program. The number of people who voluntarily left Medicaid also saved the state millions more.

Since 2011, the office had referred 73 fraud cases to prosecutors, resulting in just two convictions and $500,000 recovered.

From the start, many in the public criticized the program, seeing it as rewarding lawbreakers and being biased toward Lakewood's predominantly Orthodox Jewish community.

Degnan this month acknowledged "with the benefit of hindsight that we could have and should have done more to bring other community stakeholders into the discussion."

But Poulos' lawsuit said officials did a lot more to court the Vaad then previously reported. For one, it was Coronato's idea early on to use the Vaad to advertise the program. In August 2017, when the Medicaid Fraud Division sent special letters to investigative targets, they informed the Vaad's attorney to make it "clear — that if a member of the Lakewood community received one of these letters, they needed to apply for the program or potentially face criminal prosecution." At Lichtblau's request in October 2017, Poulos says he drafted a letter — approved by Degnan — that the Vaad could distribute to potential applicants.

Poulos’ complaint, filed in Superior Court in Mercer County, says Boxer represented one of the investigative targets who was brought in for a “show and tell” of the evidence in August 2017, a month before the amnesty program was announced. The idea by Lichtblau and Ehrenkrantz was to encourage these people to apply for the program.

Lichtblau and Ehrenkrantz instructed Poulos, he says, to keep them in the loop about Boxer’s client.

“Said simply, everyone was aware that Plaintiff was communicating with Mr. Boxer and that Mr. Boxer’s client’s matter was settled for less than the full amount identified,” the lawsuit says.

Boxer, who now works for the firm Lowenstein Sandler, did not immediately return a request for comment Tuesday. He is not named as a defendant in the lawsuit.

Why cut deals?

Poulos said that on Nov. 27, 2017, he met with attorneys Yosef Jacobovitch and Moshe Tress, who told him that their clients would be willing to repay everything, but that they could not do it in the six months required.

That same day, Poulos said he took that concern to Lichtblau, telling him that if people signed up for the program and were unable to repay the full amount, they would be in default and face prosecution. As such, few people would want to apply because they could get a better plea agreement through the courts, which would allow them one to three years to repay the money and they could avoid a criminal record in the end.

Poulos said Chief of Investigations Robert Graves was reluctant to support lowering the payment amounts, but Lichtblau authorized it.

The Asbury Park Press last week reported on a contemporaneous memo written by Poulos outlining these conversations. A spokesman for the Comptroller’s Office told the newspaper that “the discussion of whether negotiations were proper, we have denials of that and a lot of evidence that points to one individual actually conducting the negotiations.”

Jacobovitch told the newspaper that the only person he discussed the deals with was Poulos.

Poulos said that former Comptroller Boxer called him on Dec. 1, 2017, to say that his client felt that he was getting a bad deal because other people were getting better deals. Poulos said he told Boxer to contact Lichtblau.

Poulos believes Lichtblau then took Boxer's concern to Degnan, which is when Degnan apparently first heard about the deals, and when Lichtblau lied to cover up his involvement from the start.

The lawsuit seeks unspecified amount of damages under the state's Conscientious Employee Protection Act.

Lichtblau is the only individual named as a defendant in the lawsuit in addition to the Comptroller's Office.