Russian diplomats charged in alleged Medicaid fraud scheme

Dozens of current and former Russian diplomats and their spouses were charged with participating in a nine-year fraud scheme that allegedly bilked the U.S. government of more than $1.5 million in Medicaid benefits, according to a federal complaint unsealed Thursday.

The 49 defendants -- 25 current and former Russian diplomats and 24 of their spouses -- allegedly exploited their positions by filing fraudulent Medicaid expenses related to prenatal care and childbirth, the complaint said.

The complaint said that of 63 births to Russian diplomats in New York City in the past nine years, the overwhelming majority were paid for by Medicaid benefits.

"A multitude of Russian diplomats and their spouses ran a scam on the health care system designed to help Americans in need," Preet Bharara, U.S. Attorney for the Southern District of New York, said at a news conference.

The defendants allegedly obtained letters from officials at the Russian U.N. Mission as well as from the Russian Federation in New York and the Russian Federation in the USA to prove their false incomes, according to the complaint.

"Being a diplomat does not give you the right to commit health care fraud," George Venizelos, assistant director in charge of the New York FBI office, said at a news conference.

"Some Russian officials based in New York allowed their employees to defraud the American taxpayer and take advantage of a health care program not designed for them," he added. "Each diplomat listed in the complaint submitted an employer verification form from the Russian government misstating their income in an effort to qualify for benefits."

While the defendants were claiming false incomes, they also spent thousands of dollars on luxury items and vacations, the complaint said. They chartered helicopters, rented limousines and purchased jewelry from Tiffany & Co., Bharara said.

He added, "The scam exploited the weakness in the Medicaid system and the charges exposed shameful and systemic corruption among the Russian diplomats in New York."

Authorities said 11 of the 49 defendants still reside in New York but have not been arrested because they have diplomatic immunity. Diplomats cannot be arrested unless immunity is waived from the dissenting country, Bharara said.

The most high-profile figure in the case is Andrey Demin, the current counselor at the Mission of the Russian Federation to the United Nations. The complaint said he allegedly received $22,200 in Medicaid benefits from 2006 to 2008.

CNN's calls to Demin seeking comment were not returned. The Mission of the Russian Federation to the United Nations declined to comment.

According to Bharara, employers are responsible for the diplomat's health care payments.

The defendants have been charged with conspiracy to commit health care fraud, conspiracy to steal government funds and making false statements relating to health care matters, according to the criminal complaint.

"Diplomacy should be about extending hands, not picking pockets in the host country," Bharara said.