Former New York police officers and firefighters were among 106 people charged over a "massive fraud" worth hundreds of millions of dollars, some in connection with the 11 September 2001 attacks.
The accused allegedly collected tens of thousands of dollars a year in social security disability benefits, which are funded by taxpayers.
It is alleged they claimed they were completely incapacitated by serious psychiatric disorders and other ailments.
But, according to court documents, they were in fact living normal lives; one of the accused flew a helicopter, while another played blackjack in Las Vegas.
One of the accused taught and performed mixed martial arts, but was still claiming benefits of typically between $30,000 and $50,000 a year (€22,000-€37,000).
In some instances, the total amount fraudulently obtained was nearly $500,000 (€367,000) per applicant.
Of those indicted in the decades-long scam, 80 were retired New York police officers or firefighters.
"Many participants cynically manufactured claims of mental illness as a result of September 11, dishonouring the first responders who did serve their city at the expense of their own health and safety," Manhattan District Attorney Cyrus Vance said in a statement.
As far back as 1988, the four main defendants - Raymond Lavallee, 83; Thomas Hale, 89; Joseph Esposito, 64; and John Minerva, 61 - conspired to help or make hundreds of applicants falsely claim disabilities in order to collect benefit payments in addition to their public pensions, the indictment and court documents showed.
Prosecutors said the applicants claimed they suffered from a psychiatric condition that prevented them from working, such as post-traumatic stress disorder (PTSD), anxiety or depression.
"This alleged scam further depleted the already limited resources available for battling the real and complex conditions of PTSD and depression," Mr Vance said.
New York Police Commissioner William Bratton said: "The retired members of the NYPD indicted in this case have disgraced all first responders who perished during the search and rescue efforts on September 11, 2001, and those who subsequently died from 9/11 related illness, by exploiting their involvements that tragic day for personal gain."
Mr Hale and Mr Esposito, the latter a retired member of the NYPD, allegedly coached benefit applicants to falsely describe symptoms of depression and anxiety to doctors they had recruited.
They instructed applicants on how to fail memory tests with plausibility, how to dress, and on their demeanour.
For example, almost every claim included phrases such as "I nap on and off during the day" and "I have the TV on to keep me company".