Russian diplomats charged in $1.5M Medicaid fraud

The Russian flag flies outside the country's consulate in New York.

The feds on Thursday announced they've charged dozens of Russian diplomats and their spouses with defrauding the Medicaid system out of $1.5 million.

Authorities say the fraud aimed at stealing from the government health program to assist the poor was carried out during the past nine years – even while the diplomats and their spouses enjoyed lavish lifestyles that included vacations, expensive clothing and other top-line accessories.

The complaint, unsealed Thursday, names 49 current or former Russian diplomats and spouses who were employed at either the Russian Mission to the United Nations, the Russian Federation Consulate General in New York, or the Big Apple office for the Trade Representation of the Russian Federation in the USA.

The complaint alleges they routinely submitted fake applications for medical benefits for pregnancies, births and care for young children. Federal prosecutors also say the diplomats under-reported their income on applications in order to qualify for the benefits.

The $1.5 million in false benefits was not only awarded to the defendants but also to dozens of co-conspirators not named in the complaint, the feds said.

Messages left with Russian officials at the UN were not immediately returned.

The US Attorney’s office in Manhattan was holding a noon press conference to provide additional details of the alleged fraud.

Source: NYPost.com

Trust Funding: After-Care

While providing your loved ones with a trust is one of the greatest gifts you can offer, navigating the numerous ins and outs of an estate plan necessitates professional legal assistance to ensure that the job is done properly. Every year I advise dozens of clients on how to manage their trusts, but as the end of our working relationship approaches I worry how they will fare during the next, equally important step in their estate planning- funding the trust.

Why is this so important? A trust must be funded to remain valid. If it is not, your trustees will not even be able to access what you have set aside for them. Your hard work and initial investment in the trust will be null.

What you safeguard in your trust can depend on what you want to use the trust for and whether your legal relationship status is single, married, or blended. I recommend that my clients identify which assets they wish to protect from the categories below. 

1. Life Insurance 

2. Personal property 

3. Real property 

4. Personal and recreational vehicles 

5. Watercraft 

6. Stocks and bonds 

7. Bank accounts 

8. Non-retirement Investment Accounts 

9. Business interests 

10. Nobody should have to go through this process alone, so collect advice from financial specialists. 

While a list like this may seem intimidating, the actual process of funding your trust should not take much of your time if you have a good roadmap. Plus, you should only have to transfer your assets once. (Though the 

required course of action may vary depending on the category of assets you wish to protect!) Once you have completed the process, your assets will be secure for your family. Good-bye, Worry and Hello there, Peace of Mind!

Semen Domnitser, Ringleader In $57 Million Holocaust Reparations Fraud Scheme, Sentenced To Eight Years

Honoring real survivors at a Holocaust Memorial Park ceremony. Photo by Erica Sherman

The ringleader of a $57.3 million fraud scheme that siphoned money from of a Holocaust reparations fund was sentenced to eight years behind bars yesterday, announced United States Attorney Preet Bharara.

Semen Domnitser played a pivotal role in the scheme, prosecutors say, having worked as a caseworker and program director that processed the fraudulent applications in return for kickbacks. Domnitser gave his seal of approval to ineligible recipients, many of whom were born after World War II and at least one that was not even Jewish.

In addition to eight years in prison, Domnitser was sentenced to three years of supervised release, ordered to forfeit $59,230 and pay restitution in the amount of $57.3 million.

“As the highest ranking insider to participate in this despicable fraud against the Holocaust Claims Conference, Mr. Domnitser played an integral role in the scheme by processing fraudulent applications to the Conference and turning a profit of thousands of dollars for himself,” said Bharara in a press release. “With today’s sentence, he will be held to account for victimizing Holocaust survivors by diverting funds meant to help them to his own pocket and contributing to this $57 million scheme.”

Authorities busted the ring in November 2010, initially bringing charges against 19 alleged scammers for recruiting applicants and processing fraudulent documents for thousands of applications to the Conference on Jewish Material Claims, which doles out funds on behalf of the German government to survivors of the Nazi Holocaust.

Domnitser is believed to have signed off on more than 4,000 applications.

A home on Brighton 12th Street in Brighton Beach was believed to be the headquarters of the scam, where fake documents from the Russian government were produced, including passports and birth certificates. The forger of those documents, Dora Grande, was sentenced to two years in June. In 2011, Brighton Beach resident Polina Anoshina was sentenced to one year for her role in recruiting applicants. Others have since been sentenced as well.

The ring was operating from as early as 1994, prosecutors say. When members of the ring believed they were being investigated, they allegedly offered bribes to witnesses to prevent them from cooperating.

The scheme involved two funds operated by the Holocaust Claims Conference: the Hardship Fund and the Article 2 Fund.

The Hardship Fund provides one-time payment of $3,500 to victims of Nazi persecution who relocated and became refugees. At least 3,839 fraudulent Hardship Fund applications were processed, costing $12.3 million in losses.

The Article 2 Fund makes monthly payments of $400 to survivors of Nazi persecution who make less than $16,000 a year and were forced to live in hiding, in a Jewish ghetto or in a Nazi forced labor camp. Fraudsters doctored documents to change the applicants’ place and date of birth, as well as documents designed to verify their persecution. At least 1,112 false applicants were approved, resulting in a loss of $45 million.

Domnitser worked as a caseworker with both funds from 1994 to 1999, when he was promoted to director of the funds until his termination a few months before the bust, giving him the necessary clout to push along the applications.

So far, 31 individuals have been charged, and 28 have pleaded guilty. Three, including Domnitser, were convicted after a trial.

Source: Sheepshead Bites

Irina Shelikhova, Medicare Fraud “Mastermind,” Sentenced To 15 Years

Irina Shelikhova

The 50-year-old leader of a massive $77 million Medicare fraud ring in Southern Brooklyn was sentenced to 15 years in prison and ordered to forfeit $36,241,545 to the government on Tuesday, announced United States Attorney Loretta Lynch.

Irina Shelikhova was busted at John F. Kennedy airport in June 2012, where she arrived after living on the lam in the Ukraine for two years. After serving her 15-year sentence, followed by three years of supervised release while excluded from Medicare, Medicaid and all federal health programs, she faces deportation.

The bust was a part of a nationwide sweep that was the biggest Medicare fraud bust in American history. Ninety-four people in total were arrested. One of the top prizes for authorities was thebreak-up of the Shelikhova ring, in which 13 people have been convicted so far.

“Irina Shelikova used fake doctors and forged documents to defraud Medicare out of millions of dollars of very real money. As the owner and operator of three medical clinics, Shelikova engaged in a brazen scheme of fraudulent billing and kickbacks, going so far as to pay kickbacks to elderly patients in exchange for their Medicare numbers and their silence. She relied upon her web of payoffs, kickbacks, and Russian propaganda to support her criminal scheme, but the truth caught up with her and justice has now been served,” said Lynch in a press release.

Shelikhova owned and operated Bay Medical Care, at 8686 Bay Parkway in Bath Beach, which billed Medicare under three different corporate names – Bay Medical Care, Wellcare Medical, and SZS Medical Care.

Patients on Medicare were paid to get bogus and non-existent physical therapy treatments up to three times a week for over a year. The clinic would then bill the treatments to Medicare and give patients a kickback. The scheme bamboozled the taxpayer funded program out of $77 million in services.

“Don’t Gossip” (N.Vatolina, N. Desinov, 1941)

Kickbacks were doled out in a room marked “private,” which included a Soviet-era propaganda poster of a woman with a finger to her lips and the words “Don’t Gossip” in Russian. Using secret devices, investigators recorded approximately $500,000 in cash kickbacks paid out to patients over just six weeks in 2010.

Testimony during the trial of co-defendants painted Shelikhova as the mastermind, prosecutors say, having gone so far as to hire unlicensed professionals to impersonate the clinic’s “no-show” doctor and create fake medical notes in patient files.

To handle the kickbacks, Shelikhova designed her own money laundering network, recruiting its participants as well, prosecutors say. She issued checks from the clinics to various shell companies managed by the launderers, purportedly for services that were never actually rendered. Those companies then cashed the checks and delivered it back to the clinic, where it was dispersed to the phony patients as kickbacks.

Among those recruited for the scheme was Shelikhova’s own 29-year-old son, Maksim, who pleaded guilty for his role in the ripoff in 2011 and became a government witness while his mother remained on the run.

Max Shelikhov’s taxpayer-funded lifestyle made headlines in May, when it was revealed by the New York Post that he lived a hustler lifestyle, using millions from the scheme to purchase a BMW, a Mercedes-Benz, an Aston Martin, a Range Rover and a $100,000 diamond engagement ring for his then-girlfriend.

The no-show doctor involved in the scheme, Gustave Drivas, received 12 years in prison and was ordered to pay $51 million in restitution in September.

In addition to her 15-year sentence and forfeiture of $36,241,545, the court ordered Shelikhova to pay restitution in the amount of $50,943,386.

Source: Sheepshead Bites

Obama Budget Endangers Some Estate Planning Techniques

Loophole closure would severely reduce wealth planners’ arsenal

The American Taxpayer Relief Act of 2012 left wealth planners’ estate planning tool chest largely intact, but the White House budget for 2013 and comments by congressional leaders strongly suggest their permanence is anything but assured.

In the aftermath of the Jan. 1 passage of ATRA, both Senate and House leaders said that the act was only a first step in righting the country’s fiscal house, intimating that rules made permanent by the act may indeed be temporary.

ATRA left untouched grantor retained annuity trusts, which allow for the transfer of wealth while minimizing the gift tax cost of transfer. The administration’s proposal would impose severe restrictions.Meanwhile, President Barack Obama’s 2013 budget proposal would restrict certain estate planning techniques as a way to close “tax loopholes”; some of these proposals were under discussion long before enactment of ATRA.

In setting up a GRAT, a grantor funds an irrevocable trust with assets likely to appreciate in value, and retains an annuity interest for a number of years—sometimes as few as two years.

After that, if the grantor is still alive, the assets left in the trust are transferred to beneficiaries. The more the value of the assets held by the trust appreciates, the greater the transfer tax benefit the estate can claim.

The White House proposal would impose the requirement that a GRAT have a 10-year minimum term and a maximum term of life expectancy of the annuitant plus 10 years. “The administration’s proposal would require, in effect, some downside risk in the use of this technique,” said Jeff Marshall, a Pennsylvania tax lawyer.

In other words, the likelihood that the grantor could die during the term of the GRAT would increase, thereby undermining the estate and gift tax savings she sought.

The proposal would also eliminate zeroed-out GRATs. Instead, the grantor would have to make a taxable gift when setting up the instrument.

ATRA made no changes in the step-up basis on inherited property. The recipient’s tax basis for inherited property is its fair market value at the date of the decedent’s death rather than the latter’s cost basis.

Under the president’s proposal, the value for estate and income tax purposes would have to be consistent. The property’s basis in the hands of the recipient would be no greater than its value as determined for estate or gift tax purposes.

The proposal would impose a reporting requirement on the estate’s executor and the lifetime gift’s donor to provide both the IRS and the recipient necessary valuation and basis information.

Grantor trusts allow grantors to make gifts to beneficiaries free of gift tax by paying the trust’s income tax liability. Assets placed in the trust are removed from the grantor’s estate. Future appreciation of the assets is not subject to estate or gift tax.

Under the president’s proposal, the benefit of the up-front income tax payment would be eliminated.

Dynasty trusts could also be reined in by the president’s proposal. Some states allow wealth to be transferred through multiple generations for many years or in perpetuity, with no estate, gift or generation-skipping transfer tax effects. These trusts can continue in perpetuity is a small handful of states, making them attractive venues for residents of other states to locate a multigenerational trust.

The president has proposed that the generation-skipping transfer tax exemption terminate at 90 years.

Source: ThinkAdvisor