By Basil Katz
NEW YORK (Reuters) - U.S. prosecutors are widening their probe into whether New York City unlawfully reduced pension benefits to retired employees who served in the military since the attacks of September 11, 2001.
The U.S. Attorney's Office in Manhattan said in a statement on Monday that it was broadening an existing investigation into benefits for police officers to include retirees from any city agency who collect a pension from the city.
In August, Preet Bharara, the U.S. attorney for Manhattan, filed a class-action lawsuit in federal court accusing the city of using only police officers' base pay to calculate benefits.
Under a 1994 anti-discrimination law dealing with veterans who return to work, an employer must take into account the compensation that the service member would likely have earned had he or she not performed military service, the lawsuit said.
"We are both surprised with, and disappointed by, the U.S. attorney's announcement today given that we've been in serious, productive discussions with his office as recently as last week to potentially resolve this matter," Kate O'Brien Ahlers, spokeswoman for the New York City law department, said in a statement.
Bharara said in a statement that since August, prosecutors had received "dozens of inquiries" from veterans from different city agencies, and as a result, the office was "broadening the scope of its investigation."
"We are now encouraging any covered city employee who thinks his or her benefits were unlawfully calculated to come forward ... (to) assess whether the unlawful practices identified with respect to the NYPD extend to other city agencies as well," the statement said.
The statement did not say how many additional potential retirees the expanded probe could encompass. A spokeswoman for the U.S. Attorney's Office declined comment.
The lawsuit began in 2010 as a case filed on behalf of three police officers. The U.S. Attorney's Office, through its civil rights unit, joined that lawsuit with its August legal action. The lawsuit was assigned to U.S. District Judge Richard Sullivan in Manhattan.
At a hearing before Sullivan in June, a federal prosecutor estimated that about 2,000 NYPD officers had served in the military between 2001 and 2012.
Net assets of the police fund, one of five New York City pension funds, totaled $24.75 billion in fiscal 2011, a 24 percent increase from the previous year, according to financial statements.
The case is David Goodman et al v. City of New York et al, U.S. District Court for the Southern District of New York, No. 10-cv-5236.
(Editing by Leslie Adler)