updated 9/21/2006 9:01:01 PM ET 2006-09-22T01:01:01

A New Jersey painter was arrested Thursday on charges he pulled off the biggest fraud yet from a Sept. 11 compensation fund — more than $1 million.

Mario Mastellone, of East Windsor, N.J., was accused in an indictment in U.S. District Court in Manhattan of fraudulently obtaining $1.07 million from the September 11 Victim Compensation Fund of 2001.

His lawyer, Andrew Karpf, said his client was being "victimized twice," first by the terrorist attack that downed the twin towers of the World Trade Center and second by federal prosecutors relying on the word of a government witness with a grudge against him.

The government said Mastellone, 39, ripped off the fund by claiming he was permanently disabled by injuries he suffered on Sept. 11 and had not worked since the terrorist attacks.

Prosecutors said he lied to a Department of Justice agent investigating his case and lied to a hearing officer evaluating his claim for compensation.

If convicted of fraud charges, Mastellone, who was released on $600,000 bail, could face up to 40 years in prison.

Karpf, though, said his client did not lie to authorities because he suffered serious physical and mental injuries as a result of being at the World Trade Center on Sept. 11.

'A lot of troubles'
"He was in the buildings when they were hit and suffered disabilities," Karpf said. "He hasn't worked since then. Since then, he's been on medication."

He said the money paid to Mastellone was "well deserved."

"He's a good guy," he added. "He's had a lot of troubles, psychologically and physically."

U.S. Attorney Michael Garcia said in a statement that any attempt to rip off the fund was an effort "to profit from a monumental tragedy" and does a "grave disservice to the thousands of genuine victims of the September 11 attacks."

Besides the Sept. 11 fund, which Congress established to compensate survivors or families of victims of the attacks on the condition they forgo lawsuits against airlines, Mastellone applied for funding from other entities including the state Workers' Compensation Board, according to his indictment.

The government has asked the court to order Mastellone to forfeit more than $1 million.

Emotional pain worse than physical
In an April 2003 story published in the Asbury Park Press in Asbury Park, N.J., Mastellone was described as a painter who worked at the World Trade Center complex.

Mastellone was quoted in the story as saying he was treated for smoke inhalation on Sept. 11 but did not know that he hurt his back, his left arm and his shoulder until he visited a doctor days later. He also told the newspaper that his emotional pain was far worse than his physical pain.

"It has been a nightmare ever since," he told the newspaper. "It is worse now because it is not getting any better."

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