White Collar Crime and Securities: Federal Authorities Seek Top Russian Mobster on Fraud Charges

Federal investigators are seeking reputed Russian crime boss Semion Mogilevich on a 45 count indictment charging Mogilevich and others with racketeering (RICO), securities fraud, wire fraud, mail fraud, and money laundering.

The charges allege that Mogilevich owned a company called YBM, which purportedly manufactured magnets. YBM was a public company traded on the Ontario, Canada, exchange. Its headquarters was in suburban Philadelphia. Allegedly, the company did not produce magnets or anything else. Instead, it is alleged that the defendants moved large amounts of money through European banks including banks in Budapest, Hungary. According the the U.S., the movements of money were reported as the manufacture and sale of magnets. This made the company appear active and profitable, thus driving up its stock price. Those owning the stock, in short the defendants, were able to realize millions from the fraudulently valued stock. It is alleged that Mogilevich defraud American and Canadian investors out of $150 million.

Mogilevich is currently in Russia where authorities arrested him last year on fraud and tax charges. He is out of custody on bail in the Russian cases. American authorities have not been able to bring Mogilevich under U.S. jurisdiction because this country has neither an extradition treaty nor extradition relations with Russia. Authorities are hoping that Mogilevich travels to a jurisdiction that has either a treaty or extradition relations with the U.S.

This case is an example of organized crime elements becoming more sophisticated in their activities and becoming an international law enforcement group. Combating such crime will increasingly require international law enforcement cooperation.

For more information please see CNN.com, http://www.cnn.com/2009/CRIME/10/21/mogilevich.fbi.most.wanted/

White Collar and Health Care: Medicare Fraud Increasing in Popularity

Federal investigators are finding that Medicare fraud schemes are flourishing throughout the country. The schemers range from small ad hac groups to elaborate networks operated by organized crime groups, including traditional La Cosa Nostra families and Russian mobsters. As more professional crime groups become involved, the stakes rise as do the probabilities of violence to silence witnesses or collect debts.

The typical scheme involves the billing of Medicare for medical equipment and/or drugs that patients never needed and never received. In essence, the scam is the fraudulent billing of Medicare for services. The scams require access to valid Medicare or social security numbers for the purported patients. There are three main methods of obtaining such numbers depending on the sophistication of the scammers. First is the simple extortion of the numbers from elderly people by force or threats. Second is paying homeless people for the use of their Medicare or social security numbers. Third, and most sophisticated, is the theft of numbers. The thefts are accomplished by either breaking into medical facilities to obtain the numbers or by hacking into the computers of such facilities to steal their patients' numbers. Not surprisingly, the organized crime groups are most likely to use the most sophisticated means to steal the identities.

Medicare fraud is growing at such a rate simply because it is so lucrative. The crime pays much better than crimes such as street level drugs sales or car theft. In addition, it is generally much less dangerous than those other types of crimes. Federal authorities estimate that some scams net the criminals tens or hundreds of millions of dollars in fraudulently obtained monies.

While generally safer than traditional street crime, the increased profits and attention paid by law enforcement is probably responsible for an uptick in violence within some schemes. The violence that does occur takes place within the criminal group and rarely touches the general public.

The federal government is focusing law enforcement efforts on Medicare fraud. In his health care address to Congress last month, the President promised hundreds of billions of dollars in health care cost savings from combating fraud and waste. Medicare fraud appears to be one fertile area for such savings.

For more on the subject, please see the following Associated Press article, http://www.google.com/hostednews/ap/article/ALeqM5gkMiV-gKQhCN626RwnoxQKm8eM7AD9B5OKO01