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August
08 Monday
2005

Former U.N. officer pleads guilty to taking bribes

NEW YORK (AP) — A former United Nations procurement officer pleaded guilty Monday to soliciting a bribe under the oil-for-food program, making him the first U.N. official to face criminal charges in connection with the scandal-tainted operation.

Alexander Yakovlev, a Russian, also pleaded guilty in federal court to charges of wire fraud and money laundering for accepting hundreds of thousands of dollars in bribes from U.N. contractors in his work outside oil-for-food. He could face up to 20 years in prison for each of the three counts.

Yakovlev surrendered to FBI agents in Manhattan earlier Monday, as U.N.-backed investigators released a report accusing him and Benon Sevan, the former chief of the $64 billion program, of corruption. Sevan was accused of taking some $147,000 in kickbacks.

The probe, led by former U.S. Federal Reserve Chairman Paul Volcker, had recommended that both men's diplomatic immunity be lifted if asked. Later Monday, U.N. Secretary-General Kofi Annan waived Yakovlev's immunity when he got just such a request from David Kelley, the U.S. attorney for the southern district of New York.

There was no suggestion that the timing of the report and Yakovlev's guilty plea were coordinated. Volcker said Monday that Kelley had not cooperated with his probe.

Yakovlev's decision and the Independent Inquiry Committee's findings, put forward in its third report so far, give new ammunition to critics who have labeled oil-for-food a boondoggle at best and huge swindle at worst.

"Our conclusions are obviously significant and troubling," Volcker said. "What's important is that we contribute effectively to the needed reform of the United Nations administration."

Condemnation from Republicans in the U.S. Congress was swift.

"This report demonstrates the United Nations lacks the institutional red lights and alarms necessary to warn of misconduct," Representative Christopher Shays of Connecticut said in a statement.

Yakovlev, 52, resigned in June over separate allegations that he helped his son get a job with a company that did business with the United Nations.

He was released later Monday on a $400,000 bond, and no new court date was immediately set, said Megan Gaffney, a spokeswoman for Kelley.

"In term of sentencing we expect much better deal if we enter a guilty plea," Yakovlev's lawyer Arkady Bukh told The Associated Press.

Volcker's team said it would release a final report — expected to be up to 700 pages long — in September. Among other things, that report is expected to consider new evidence suggesting Annan knew more about a contract awarded to a Swiss company that employed his son, Kojo. Both have denied any wrongdoing.

The oil-for-food program, launched in December 1996 to help ordinary Iraqis cope with U.N. sanctions imposed after Saddam Hussein's 1990 invasion of Kuwait, was one of the largest humanitarian programs in history. It was a lifeline for 90% of the country's population of 26 million.

Under the program, Saddam's regime could sell oil, provided the proceeds went to buy humanitarian goods or pay war reparations. Saddam allegedly sought to curry favor by giving former government officials, journalists and others vouchers for Iraqi oil that could then be resold at a profit.

The program has become the subject of several congressional investigations, as well as probes by a federal grand jury and the Securities and Exchange Commission.

Mark Malloch Brown, Annan's chief of staff, again defended the United Nations' handling of oil-for-food, saying it was the organization's very willingness to open the books that had attracted so much attention.

"Those who have kind of stayed in the shadows, who have not had a Volcker to investigate their own politicians and diplomats and companies involved in this program, have gotten away a little more lightly," Malloch Brown said. "There's a certain sort of injustice in that."

He said the United Nations had given Kelley's office the results of its internal investigation about Yakovlev last month after finding "prima facie evidence of criminal wrongdoing."

Volcker's latest report said that Sevan, who oversaw the program from its inception in 1996 to its conclusion in 2003, took the $147,000 in kickbacks, apparently because of his "precarious" financial situation at the time.

Volcker's team said he helped steer contracts to a small oil trading company with the help of the brother-in-law of former U.N. Secretary-General Boutros Boutros-Ghali. Sevan's finances were said to be "precarious" shortly beforehand.

It also found that two men helped Sevan: Fred Nadler, an African Middle East Petroleum Co. Ltd. Inc. director and brother-in-law of former U.N. Secretary-General Boutros Boutros-Ghali; and Fakhry Abdelnour, the president of AMEP.

Sevan, a Cypriot citizen, is also under investigation by the Manhattan District Attorney's office. He denies the allegations and accuses Volcker's team of succumbing to pressure from U.N. critics and of scapegoating him.

"The charges are false, and you, who have known me for all these years, should know that they are false," Sevan said in a letter to Annan on Sunday.

As for Yakovlev, the Volcker investigators found that he secretly tried to bribe a company called Societe Generale de Surveillance S.A., which was seeking an oil inspection contract under oil-for-food.

But they also came across more explosive evidence of wrongdoing outside oil-for-food. Investigators said Yakovlev took at least $950,000 in kickbacks from companies that had won some $79 million in separate U.N. contracts.

Kelley's office appeared to have been working along the same lines after getting evidence about Yakovlev from the U.N. itself. Both the report and the counts against Yakovlev mention Moxyco, a company that Yakovlev apparently set up as a conduit for the illegal payments.

And while Kelley doesn't mention Societe Generale de Surveillance, he said Yakovlev faxed a foreign company "information related to that company's bid for an inspection contract under the United Nations Oil-for-Food Program."

January
15 Thursday
2004

Feds crack international child porn ring

NEWARK, N.J. (AP) — Two companies in Belarus and Florida have been charged with laundering profits from child pornography Web sites, and more than 40 people in the United States have been charged with downloading the material.

Regpay Co. Ltd., a credit card processing company in Minsk, Belarus, collected fees for memberships to child pornography Web sites that brought in millions of dollars, the U.S. Attorney's Office said Thursday.

Connections USA, of Fort Lauderdale, is accused of receiving Regpay's membership fees and wiring the money to Latvia as directed by the company. Connections' CEO, Eugene Valentine, 38, pleaded guilty Wednesday to conspiracy to launder money for Regpay and its principals.

Four of Regpay's leaders were indicted, and three were arrested over the summer in France and Spain. U.S. authorities are seeking to have them transferred here for prosecution.

About two dozen New Jersey residents, and 20 other people around the nation, have been charged with downloading child pornography. They allegedly had subscribed to the sites.

Regpay was formerly known as Trustbill, while Connections did business as Iserve. Regpay operated at least four child pornography sites from Minsk and carried advertising for other child pornography Web sites, the indictment said.

"Today's indictment strikes at the heart of the commercial trade of child pornography by attacking the commercial profits derived from such a deplorable venture," Attorney General John Ashcroft said.

July
17 Saturday
2010

94 charged in Medicare scams totaling $251M

MIAMI — Elderly Russian immigrants lined up to take kickbacks from the backroom of a Brooklyn clinic. Claims flooded in from Miami for HIV treatments that never occurred. One professional patient was named in nearly 4,000 false Medicare claims.

Authorities said busts carried out this week in Miami, New York City, Detroit, Houston and Baton Rouge, La., were the largest Medicare fraud takedown in history -- part of a massive overhaul in the way federal officials are preventing and prosecuting the crimes.

In all, 94 people -- including several doctors and nurses -- were charged Friday in scams totaling $251 million. Federal authorities, while touting the operation, cautioned the cases represent only a fraction of the estimated $60 billion to $90 billion in Medicare fraud absorbed by taxpayers each year.

For the first time federal officials have the power to overhaul the system under Obama's Affordable Care Act, which gives them authority to stop paying a provider they suspect is fraudulent. Critics have complained the current process did nothing more than rubber-stamp payments to fraudulent providers.

"That world is coming to an end," Health and Human Services Secretary Kathleen Sebelius told The Associated Press after speaking at a health care fraud prevention summit in Miami. "We've got new ways to go after folks that we've never had before."

Officials said they chose Miami because it is ground zero for Medicare fraud, generating roughly $3 billion a year. Authorities indicted 33 suspects in the Miami area, accused of charging Medicare for about $140 million in various scams.

Suspects across the country were accused of billing Medicare for unnecessary equipment, physical therapy and other treatments that patients never received. In one $72 million scam at Bay Medical in Brooklyn, clinic owners submitted bogus physical therapy claims for elderly Russian immigrants.

Patients, including undercover agents, were paid $50 to $100 a visit in exchange for using their Medicare numbers and got bonuses for recruiting new patients. Wiretaps captured hundreds of kickback payments doled out in a backroom by a man who did nothing but pay patients all day, authorities said.

The so-called "kickback" room had a Soviet-era propaganda poster on the wall, showing a woman with a finger to her lips and two warnings in Russian: "Don't Gossip" and "Be on the lookout: In these days, the walls talk."

With the surveillance, the walls "had ears and they had eyes," U.S. Attorney Loretta Lynch said at a news conference in Brooklyn.

In a separate Brooklyn case, authorities charged six patients who shopped their Medicare numbers to various clinics. More than 3,744 claims were submitted on behalf of one woman alone, 82-year-old Valentina Mushinskaya, over the past six years.

At a brief appearance in federal court Friday, Mushinskaya was released on $30,000 bond and ordered not to return to the Solstice Wellness Center, scene of an alleged $2.8 million scam.

Authorities called Mushinskaya one of the clinic's "serial beneficiaries," with phony bills totaling $141,161 paid by Medicare.

Her nephew, Vladimir Olshansky, told reporters his Ukrainian-born aunt suffers from diabetes. "She doesn't know what this is about," he said. "She's in the dark."

In Miami, Daniel R. Levinson, inspector general of HHS, which oversees Medicare, said the arrests "illustrate how health care fraud schemes can replicate virally and migrate rapidly across communities."

Cleaning up Medicare fraud will be key to paying for President Barack Obama's proposed health care overhaul. Federal officials have allocated more money and manpower to fight fraud, setting up strike forces in seven cities with a plan to expand to a dozen more. So far, the operations are responsible for more than 720 indictments that collectively billed the Medicare program more than $1.6 billion.

Around the country, the schemes have morphed from the typical medical equipment scam in which clinic owners billed Medicare dozens of times for the same wheelchair. Now, officials say, Medicare fraud involves a sophisticated network of doctors, clinic owners, patients and patient recruiters.

Violent criminals and mobsters are also tapping into the scams, seeing Medicare fraud as more lucrative than dealing drugs and having less severe criminal penalties, officials said.

For decades, Medicare operated under a system that paid providers first and investigated later. That pay and chase method was a boon for crooks, giving them 90 days lag time to milk the system and flee with millions before authorities were aware a crime had been committed.

Sebelius toured vacant storefronts in Miami on Friday where Medicare fraudsters set up shop, including bogus clinics operated by Cuban immigrants Carlos, Luis and Jose Benitez. The brothers are the agency's most-wanted fugitives, charged with bilking $119 million for costly HIV drugs that patients never received -- and buying hotels, helicopters, boats and even a water park with their spoils. They allegedly fled to Cuba, where authorities believe they remain.

A new joint effort by HHS and the Department of Justice enables law enforcement to view Medicare claims in real time and flag suspicious patterns. More stringent screening methods, including more comprehensive background checks, have also been put in place. The agency gets roughly 18,000 applications daily to become a Medicare provider. Now they can put a moratorium on new applications in certain areas, like physical therapy, if they notice a spike in fraudulent activities.

The changes are paying off.

Investigators visited 1,600 providers in Miami in the past few months, making sure legitimate businesses were operating at the addresses. In 2008, authorities required all medical equipment providers in Miami to apply for new certification, hoping the paper hurdle would deter scammers. The number of claims dropped by $1.6 billion.