And Now, Dozens of Russian Diplomats Charged with Medicaid Fraud

Let no one say that Russia's foreign service lacks for enterprising diplomats. On Friday, the FBI and the U.S. Attorney for the Southern District of New York announced charges against 49 current or  former Russian diplomats and their spouses for taking part in a scheme to defraud Medicaid. Most of these 49 either are or were posted in New York, with Russia's Mission to the United Nations. The criminal complaint alleges that from 2004-2013 these folks collected "approximately $1,500,000 in fraudulently received medical benefits."

The 62-page complaint is crammed with details that have the makings of a sordid situation comedy -- Medicaid Fraud on the Hudson. According to FBI Assistant Director-in-Charge George Venizelos, the defendants were "motivated by greed and the purchase of high-end luxury items." Among the dodges were the reporting of newborn children of Russian diplomats as U.S. citizens (which they were not); a couple representing themselves as brother and sister rather than husband and wife; and under-reporting of income to apply for Medicaid,  while stating much higher income to apply for credit cards. While receiving Medicaid benefits, the diplomats and their spouses shopped at Tiffany's, Bloomingdale's, Jimmy Choo and other swank outlets. They went in for luxury vacations, spent tens of thousands on electronic merchandise, and -- my favorite -- indulged in buying "robotic cleaning devices."

There's no great surprise in all this. Back in the days of the USSR, Moscow central planning incubated a culture in which Russians, in order to survive, learned to game the system in every possible way. That culture, once established, is hard to shake (and as state planning swallows more and more of the U.S. economy, more and more enterprising Americans will learn to do the same).  In the case of Russian diplomats at the UN, there is the further heady mix of diplomatic immunity, a growing emporium of American welfare benefits to browse through, and the lure of New York shopping.

Actually, given the time span over which this fraud allegedly occurred, 2004-2013, it would have overlapped in its early years with a corruption case involving Russia's then highest-ranking diplomat at the UN, Vladimir Kuznetsov. Kuznetsov served as the head of the UN General Assembly's budget oversight committee. While in that position, he became involved, together with another Russian then working at the UN, Alexander Yakovlev, in crooked deals on UN procurement contracts. When U.S. federal prosecutors twigged to this and brought a case, the UN Secretary-General waived their immunity, Yakovlev turned government witness, and in 2007 Kuznetsov  was convicted in Manhattan federal court of conspiring to launder hundreds of thousands of dollars in kickbacks. The case involved such colorful touches as both Russian officials naming their offshore money-laundering fronts for their children (presumably a sentimental gesture), along with the embarrassment to both the Russian Mission and the UN that the head of the budget oversight committee had been caught bilking the UN -- and ultimately bilking U.S. taxpayers, who bankroll the biggest share of UN procurement deals.

Given the latest news of Russian diplomatic enterprise in the U.S., it now appears that while Kuznetsov and Yakovlev were running a kickback scheme within the UN, some of their comrades over at the Russian Mission were allegedly engaging in Medicaid fraud.