Russian diplomats cheated health care program, U.S. says

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 after lying about their incomes to get the government to pay their health care bills with money meant for the poor, federal prosecutors charged 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. An 18-month FBI investigation into the scheme revealed “the systemic fraudulent submission of falsified applications for Medicaid benefits” by the diplomats and their spouses, costing the health care program for the poor about $1.5 million 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 that “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.

Meanwhile, the diplomats 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, Swarovski and others, 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, robotic cleaning devices and chartered helicopters.

Court papers noted that prior to June 2011 Russian diplomats including some of the defendants received their salaries in cash. The complaint said diplomats underreported their incomes to qualify for Medicaid but gave more accurate descriptions of salaries to qualify for credit cards.

Charges in the criminal complaint included conspiracy to commit health care fraud, conspiracy to steal government funds and make false statements relating to health care matters.

“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. He said 25 current and former diplomats and 24 of their spouses joined with dozens of co-conspirators not identified in court papers to carry out the fraud.

“The defendants selfishly took advantage of a health care system designed to help the unfortunate,” Venizelos said.

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.

Bharara said participation in crimes by diplomats generally leads to expulsion from a country.