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Russian Medicare Fraud Charges May Have Roots in Snowden Asylum

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Russia expressed outrage recently as the United States brought charges against 49 former and current Russian diplomats and their spouses regarding a $1.5 million Medicaid fraud which apparently reached deep into Moscow and is seen by many as an American rebuff caused by Russia’s granting of asylum to Edward Snowden.

Dismayed, Russian Deputy Foreign Minister Sergei Ryabkov told Russian news agencies that Moscow has many claims against the behavior of American diplomats in Russia but had preferred not to bring the issues to the public. “"We categorically reject the charges against the staff of Russian diplomatic institutions in the United States," he was quoted as saying by the ITAR-TASS news agency.

"If the American authorities have claims against our citizens... they should have been made first through diplomatic channels. This is no more than cheap PR and an attempt to fulfill an order by Russophobes in the US," he added.

The scandal brings with it the potential of a new crisis in US/Russia diplomacy which has already taken a beating caused by Russia’s decision to give asylum to Snowden the US intelligence leaker.

The Russian diplomats and their families were living lavishly in New York, enjoying exotic vacations, expensive clothing, fine dining, jewelry and electronics while lying about their incomes to defraud the US health-care program which was established to assist the poor. While making Medicare dollars disappear into clothing designed by noted Russian designer, Alexey Sorokin, the diplomats spent tends of thousands of dollars at Tiffany & Co., Prada, Bloomingdales and other upscale New York stores, according to the complaint.

“Diplomacy should be about extending hands, not picking pockets in the host country,” US Attorney Preet Bharara said at a Manhattan press conference.

The scam cost taxpayers $1.5 million in benefits, Bharara said.

“Any other country that has diplomats engaging in this kind of fraud should now be on notice that it will be exposed and the conduct will be charged criminally,” Bharara said.

In one case, former diplomat Timur Salomatin and his wife applied for pregnancy benefits in November 2010 and June 2011. Mikhail Korneev, a counselor at the mission, was complicit in the crime as he signed off on papers that underreported Salomatin’s income. Korneev supported Salomatin’s claim that his (Salomatin) claim of $3,000 a month was accurate. While collecting $36,000 a year in fraudulent benefits, Salomatin, along with his wife spent $50,000 on purchases from high-end retailers.

In February 2011, Salomatin applied for a credit card that said his monthly earnings were $8,333 — about double what he claimed in the Medicaid applications.

Another pair of defendants failed to disclose their marriage on their initial Medicaid application—falsely claiming that they were brother and sister instead of husband and wife. Because of their deception, they were provided $21,000 in Medicaid income.

Three others who have been charged, falsely claimed that their children were citizens of the United States and used their children’s falsified citizenship status to obtain Medicaid benefits.

To support these lies, a United States Social Security card was provided for one application and an American birth certificate, issued by the New York City Department of Mental Health and Hygiene was provided as supporting documentation in another fraudulent claim.

New York criminal attorney Arkady Bukh, of www.NYCCriminalLawyer.com , states that despite crackdown on many of the cybercrime citadels like ShadowCrew, CarderPlanet, and Carder.su, it is still possible to wander through specialized “marketplaces” shopping for a fake ID that averages $200 a piece (volume discount available).

Although denied by American authorities, it is widely believed that the asylum granted NSA leaker Edward Snowden played a part in the decision to charge the Russians. Embarrassed by their impotence in stopping the image tarnishing NSA program of surveillance, US authorities are appearing to be trying to redirect the public’s attention.

When asked about this possibility, spokesmen for Bharara declined to comment, while one Russian diplomat, speaking outside of the Russian mission, said, “It is quite possible this is retaliation for Snowden.”

While Russia and the US exchange accusations and counter-accusations, the European parliament is lining up Snowden to give evidence by video link this month where he is expected to testify before a committee on civil liberties, justice and home affairs, and many feel that the pending testimony of the worlds most infamous leaker has been the trigger for the latest fraud and espionage charges against Russia.

The chairman of the Department for Applied Political Science of the Financial University under the Government of Russia, Konstantin Simonov, told Pravda.Ru:

"It is quite possible that such stories appear in response to Russia's actions. Obviously, such an angry reaction from the United States could come up after Snowden's revelations that continue to shock the both Europe and South America. The United States has found itself in a very silly situation, and Barack Obama was forced to look for embarrassing excuses. However, the response from the Americans pales in comparison, because the affairs of the Russian diplomats do not mean anything when compared to the wiretapping of top politicians in Europe and South America. These are completely different things.”

Additional sources indicate that the fraudsters comprise a Russian spy ring. US Federal counterintelligence investigators told CNN that they believe the participants in the Medicaid fraud scheme were also engaging in espionage. While Federal Bureau of Investigation agents have been on the trail of the spies for some time, the Justice Department decided to bring only the fraud charges.

This wouldn’t be the first time that Russians have been caught spying in the U.S. In 2010, the FBI pulled in a group of Russian agents who were part of what the US has called the “Illegals” program. Ten Russians who posed as business people and students were arrested and the two countries later conducted a spy swap to resolve the issue.

While the Illegals used sophisticated communications methods to stay under the radar of US authorities, the Justice department has chosen to portray the latest spies as committing common fraud. It has not been determined how many of the 49 charged with fraud are also suspected of spying or exactly what type of activity the FBI believe they were involved in. Manhattan federal prosecutors don’t feel they have enough evidence to bring espionage charges, one source told CNN.

In any case, US officials view the fraud charges as more embarrassing to the Russian government. Manhattan U.S. Attorney Preet Bharara accused the 49 charged in the fraud case of "picking pockets" in the U.S. "Here, as alleged, a multitude of Russian diplomats and their spouses ran a scam on a health care system designed to help Americans in need," Bharara said.

Eligible Incomes

One diplomat at the Russian Mission to the United Nations reported his income on his wife’s Medicaid application as $3,000 a month, or $36,000 a year, the U.S. said. He applied for a credit card later, saying his income was $8,333 a month, or almost $100,000 a year, the U.S. said.

The government charged current and ex-diplomats and spouses with conspiring to commit health care fraud, steal government funds and make false statements about health care.

As with many things in the long an twisting history of American/Russian relations, things are not always what they seem and the story is far from over.

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