Russian Mob’s $1 B Medicare Scam Uncovered
A quiet shop in Brooklyn became the front for a $1 B Medicare fraud run by a Russian crime group, prosecutors say.
The scheme began in 2022 when the gang bought more than 30 U.S. medical‑supply firms that were already registered with Medicare, from California to Texas and Chicago. They then hired young men—mostly Russians and Estonians—to act as paper owners of the companies while the real operators stayed hidden abroad.
How It Worked
| Step | Action | Outcome |
|---|---|---|
| 1 | Acquire firms – Purchased 30+ medical‑supply companies. | Established legitimate Medicare registration. |
| 2 | Appoint “straw” owners – Hired young men as paper owners. | Received tiny salaries ($17 000 for nine months). |
| 3 | Collect Medicare funds – Handled mail‑received payments. | Opened bank accounts and transferred millions to the gang. |
| 4 | Submit false claims – Billed Medicare for unprovided services. | $10.6 billion in false claims, paid $941 million. |
One victim, 26‑year‑old Estonian Aleksandr Lis, admitted in court that he had received over $6 million through his name. He later pleaded guilty to money‑laundering conspiracy and was deported after serving 28 months.
The Scale
- Urinary catheters (2023): $250 million billed—$50 million more than all other U.S. providers combined.
- Total false claims: $10.6 billion.
- Payments received: $941 million, funneled through accounts in China, Israel, Pakistan, Singapore and Turkey.
- Conspirators: 12 from Russia, Czechia, Estonia, plus one U.S. citizen—all wanted by federal authorities.
Medicare’s Response
- April 2024: Issued new ID numbers for 1.3 million recipients with compromised credentials.
- Complaints: Over 400,000 from beneficiaries and providers noticing suspicious billing.
- Examples of impact:
- New Hampshire woman hit with an $1,800 catheter bill from the Brooklyn site.
- Nashville boutique owner found her name on a fraudulent account that had sold a Texas prosthetic business for $50 000.
Expert Insight
“It’s hard to run a $1 B fraud without some level of state approval,” said a criminology professor.
Experts believe the scheme was state‑backed, noting that such large operations would likely need protection from top Russian officials and law enforcement.
Current Status
The case remains in pretrial proceedings. Authorities continue to trace the ultimate leaders behind this transnational criminal organization.
