MOSCOW — Last week's U.S. criminal complaint alleging that Russian diplomats in New York systematically defrauded Medicaid reads like a low-down scam at its worse. Moscow, however, is convinced that it is actually the latest geopolitical chess move, the result of deteriorating relations between the two countries.
As the accused diplomats prepare to return to Russia, many sources think that the allegations of Medicaid fraud are politically motivated. The real issue, they suspect, involves the Magnitsky Act, U.S. legislation passed last year to punish Russian officials who were thought responsible for the death of Sergei Magnitsky, a lawyer and auditor who died in a Moscow prison in 2009 after investigating fraud involving Russian tax officials.
The U.S. Attorney’s office claims categorically that Russian diplomats took advantage of a federally funded program for the poor. “A multitude of Russian diplomats and their spouses ran a scam on the health care system designed to help Americans in need,” U.S. Attorney Preet Bharara said at a news conference last week.
Preet Bharara lays out his case (Bryan Smith/ZUMA)
According to the investigation, most of the accused diplomats have already left the United States, and only 11 involved in the complaint remain. Five work at the Russian mission to the United Nations, one works at the Russian embassy in Washington and the rest are spouses. All of them will return to Russia soon. In total, the accusations involved 49 Russian citizens — 25 former and current diplomats and members of their families who are alleged to have bilked Medicaid out of $1.5 million over a nine-year period.
The criminal case was filed after an investigation involving the FBI, the Secret Service and the IRS. The U.S. Attorney’s office explained that they noticed an unusually large number of applications for Medicaid from Russian diplomatic services employees in New York.
The applications all involved services that Medicaid provides for the poor in relation to pregnancy, births and child care. According to the investigation, 63 babies were born to employees at the Russian diplomatic missions in the United States between 2004 and 2013, and the parents of 58 of those babies applied for and received Medicaid benefits.
The primary accusation against the Russian diplomats is that they submitted false income information, substantially misstating their earnings. For example, Vitalii Sagura, an employee of the consulate in New York, claimed in a Medicaid document — provided by the consulate itself, according to the investigation — that he earned $29,000 per year, although his actual salary was $5,160 per month. He received services worth $37,000. Another Russian employee claimed that he and his wife were brother and sister and also received substantial benefits.
In some cases, the employees took no pains to hide their real incomes. Timur Salomatin, for example, a secretary at the UN Mission, submitted an application for a credit card in 2011 that declared his income as $8,333 per month. At the same, according to the investigation, the diplomat’s family was receiving services worth $31,000 from Medicaid.
In Moscow, people see a political motive behind the accusations. According to Russian diplomatic sources, there is an international practice for dealing with questions regarding diplomatic mission employees. If the host country has concerns about particular diplomats, the government will approach the diplomatic mission and ask for an explanation. Sometimes the problems are resolved after the diplomatic mission has an opportunity to provide an explanation, and sometimes law enforcement agencies move to take the appropriate action.
[rebelmouse-image 27087608 alt="""" original_size="500x288" expand=1] Russian embassy in Washington (Kent Wang)
“When the Americans, just like the Russians or any other country, had issues in relation to the actions of diplomatic employees, they contacted representatives of the Russian Federation for an explanation,” one Russian diplomatic source says. “All problems are resolved according to a working protocol. But to wait nine years while a law was being broken and not bring it up once, and then to present a completed investigation — that is politically motivated.
“There seems to have been a need to make a show, which they did. But to complete an investigation into diplomats in violation of the Vienna convention, collect information without verifying them using available and legal means, that is outside of the law.”
Another Russian diplomatic source who is in the United States and is familiar with the situation asserts that the case is a set-up. “The Americans regularly consulted with Russian diplomatic representatives about various issues related to Russian diplomats’ presence in the United States. And this question never came up,” he says. What’s more, he says, the State Department frequently confirmed that foreign diplomats were eligible to participate in Medicaid.
According to Paul MacCready, a former FBI officer, the investigation may reflect conflicts between the U.S. State Department and law enforcement agencies. “Usually, the State Department puts the brakes on these kinds of cases, and often informs the embassy,” he says. “Then the diplomat in question quietly leaves the country. But it looks like that kind of outcome didn’t work for the FBI or for the U.S. Attorney’s office, which had spent a year and a half on the investigation.”
Experts also note the central role of U.S. Attorney Preet Bharara — the highest-placed official on Russia’s “anti-Magnisky list.” Bharara earned that designation because of his key role in the successful extradition to the U.S. of accused Russian weapons dealers Viktor Bout and Konstantin Yaroshenko, a case Russia considered politically motivated.
“Both the moment that the government chose to publicize the accusations and the fact that the primary motor behind the investigation is the same group that acted against Bout and Yaroshenko are important in this story,” says Uri Rogulev, director of the American Studies Institute at Moscow State University. “The investigation took place over the course of more than a year, but was only released publicly now. That is related to the state of current Russian-American relations.”
In addition, Rogulev says that the Russian Ministry of Foreign Affairs recently gave the U.S. notice that it had opened a criminal human trafficking investigation into the U.S. practice of “rehoming” children adopted from Russia. “The scandal regarding the Russian diplomats could seem like a response to the scandal about an American Internet site for trading children,” he says.
The majority of people Kommersant spoke with were convinced that neither the U.S. nor Russia was interested in having the scandal blow up. Marie Harf, the State Department’s spokesperson, acknowledges that foreign diplomats sometimes “can receive medical help that is financed by the federal government.” She also says, “We don't think this should affect our bilateral relationship with Russia. Quite frankly, there are too many important issues we have to work on together.”