New York prosecutors accuse Russian diplomats of US$1.5m health fraud

Prosecutors in New York allege 49 current and former officials and their wives swindled cash from Medicaid programme and spent it on luxuries

PUBLISHED : Friday, 06 December, 2013, 5:48pm
UPDATED : Saturday, 07 December, 2013, 3:32am


US prosecutors have accused 49 current and former Russian diplomats and their wives of a "shameful" US$1.5 million fraud in which they stole medical benefits intended for the poor.

The alleged scam took place between 2004 and August this year, when the suspects were based at the Russian mission to the United Nations, the Russian consulate and the Russian trade mission, all in New York.

They are accused of lying about their true income to claim the benefits while splashing out tens of thousands of US dollars in designer shops such as Tiffany & Co, Jimmy Choo and Prada.

All the defendants have diplomatic immunity and none has been arrested after an investigation by the FBI.

Prosecutors said the group obtained almost US$500,000 from Medicaid, a federal programme earmarked for low-income families, under provisions that pay out funds for children born in the US.

A total of US$1.5 million in benefits was illegally obtained by the Russians and dozens of other co-conspirators, who were not named in the complaint.

Manhattan US Attorney Preet Bharara denounced the "shameful and systemic corruption". He added: "Diplomacy should be all about extending hands, not picking pockets in the host country."

Medicaid grants prenatal and childbirth care to low-income families, regardless of nationality, on the grounds that the child is born a US citizen. The child is entitled to benefits until its first birthday. Diplomats and their families are not ordinarily entitled to benefits under the programme unless in an emergency.

The defendants' true income was often hundreds, if not thousands of dollars a month more than they falsely reported.

The defendants also lied that their children were US citizens, prosecutors said. Russian government letters signed by officials at the three missions falsely confirmed the families' fake incomes, they added.

One couple allegedly collected almost US$3,000 in benefits by claiming they made only US$3,200 a month, when in fact the husband was paid an average of about US$8,000 a month.

Of the 49 Russian defendants, 25 are or were accredited diplomats and 24 were their wives. Eleven are still living in the US.

Five work at the Russian mission to the UN, five are their spouses and one is employed at the Russian embassy in Washington after serving at the consulate in New York.

The luxury items the Russians are accused of buying despite claiming the illegal benefits include cruises and trips to the Caribbean, watches, shoes and jewellery. In one case a diplomat and his wife applied for Medicaid benefits, claiming that he made only US$21,000 annually, despite that year running up US$42,000 in credit card purchases alone.

The US State Department can request a waiver of immunity or ask individuals to leave the country, but a spokeswoman said on Thursday she had no details of discussions about the case. "We are not yet in a position to speak about the specifics of what might happen," said deputy spokeswoman Marie Harf. But she said the case was unlikely to affect Washington's relationship with Moscow, which can be testy at best.