Russian diplomats charged with Medicaid fraud

WASHINGTON – Current and former Russian diplomats in New York routinely claimed poverty to fraudulently collect Medicaid benefits for their pregnant wives and children while shopping for luxury watches, Tiffany’s jewelry and even robotic cleaning devices, the U.S. government charged Thursday.

The Justice Department said 49 Russians or their spouses currently or formerly attached to the Russian Consulate, United Nations or trade missions collected $1.5 million in illegal benefits over a period of about a decade in New York City.

Income levels were falsified in applications signed by unnamed senior Russian officials in what U.S. Atty. Preet Bharara said was “shameful and systemic corruption among Russian diplomats in New York.”

He said that “diplomacy should be about extending hands, not picking pockets in the host country.”

The 18-month investigation by the FBI threatened new tensions to already strained relations between the two countries. Though Russian officials in New York and Washington did not immediately respond to the charges, the State Department went out of its way to minimize the damage.

“We don’t think this should affect our bilateral relationship with Russia,” said State Department deputy spokeswoman Marie Harf. “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.”

The Interfax news agency in Moscow quoted Russian Deputy Foreign Minister Sergei Ryabkov as saying the Russian government was “bewildered” that the State Department had not consulted the Russian government before the charges were filed.

Despite the charges, it is not clear whether any of the Russians will face justice. Most of those charged are not in the U.S., and of those who are still here, many may be eligible to claim diplomatic immunity.

The State Department would not address the immunity issue Thursday.

The Russians allegedly exploited a loophole in Medicaid application procedures that allows pregnant women to receive immediate approval for prenatal care based on a quick assessment of their and their spouses’ income, apparently limited to little more than the applications.

But diplomats and their families are generally not eligible for Medicaid, and while application procedures generally assume that children born in the U.S. are U.S. citizens and therefore eligible for coverage, children born in the U.S. to Russian diplomats generally do not get citizenship, the Justice Department said.

The Justice Department said that from 2004 to 2013, 58 of 63 births to Russian diplomats or their spouses were paid illegally by Medicaid benefits.

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