Dozens of Russian Diplomats Charged With Medicaid Fraud

NEW YORK (AP) -

Dozens of current or former Russian diplomats and their spouses enjoyed luxury vacations and spent tens of thousands of dollars on concert tickets, fine clothing and helicopter rides as they lied about their incomes to get the government to pay their health-care bills with money meant for the poor, federal prosecutors said Thursday.

“Diplomacy should be about extending hands, not picking pockets in the host country,” U.S. Attorney Preet Bharara told a Manhattan news conference. He called it “shameful and systemic corruption.”

The diplomats were among 49 individuals charged in a complaint unsealed in federal court in Manhattan, though no arrests were made and only 11 of the diplomats and their spouses remained in the United States. The complaint said Medicaid, a health-care program for the poor, has lost about $1.5 million in the scheme since 2004.

The case is unlikely to go to trial because the defendants have immunity, Bharara acknowledged.

Russia’s Deputy Foreign Minister Sergei Ryabkov said in remarks carried by the Interfax news agency in Moscow, “We are bewildered” that the U.S. government publicized the charges before speaking to the Russian government.

“It’s not clear why the relevant agencies have considered it possible to make these accusations public before discussing them through diplomatic channels,” he said. He said he could not comment on the case itself “until we receive a clear explanation of the charges against our citizens from the U.S. authorities.”

The complaint alleges that the defendants — current and former diplomats and their spouses at the Russian Mission to the United Nations, the Russian consulate and Russian trade offices — submitted fraudulent applications for medical benefits for pregnancies, births and care for young children. Federal prosecutors said the diplomats qualified for Medicaid benefits by underreporting their income, often by tens of thousands of dollars.

“Being a diplomat does not give you the right to commit health-care fraud,” said George Venizelos, head of the FBI’s New York office. “The defendants selfishly took advantage of a health-care system designed to help the unfortunate.”

Marie Harf, deputy spokeswoman for the U.S. State Department, said at a daily Washington briefing that the charges should not affect relations with Russia.

“Quite frankly, there are too many important issues we have to work on together. The justice system will proceed in the way that it does here in the States, and we don’t think it should impact our relationship,” she said.

In court papers, FBI agent Jeremy Robertson described an 18-month investigation, saying investigators had discovered a pattern of falsified applications. He said 58 of the 63 births attributed to Russian diplomats and their spouses in New York City between 2004 and 2013 were funded through Medicaid.

Meanwhile, the diplomats and their spouses spent tens of thousands of dollars on vacations, fancy watches, expensive jewelry and designer clothing at luxury retail stores including Bloomingdale’s, Tiffany & Co., Jimmy Choo, and Swarovski, the court papers said.

The complaint said they also spent tens of thousands of dollars on electronic merchandise at Apple Inc. stores and elsewhere. Authorities said they also bought concert tickets and robotic cleaning devices, and chartered helicopters.