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Cablegate: September 2009 Fraud Summary - Moscow

VZCZCXRO4645
RR RUEHIK
DE RUEHMO #2614/01 2931333
ZNR UUUUU ZZH
R 201333Z OCT 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 5154
RUEHPNH/NVC PORTSMOUTH 0008
INFO RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEHFT/AMCONSUL FRANKFURT 4115

UNCLAS SECTION 01 OF 04 MOSCOW 002614

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: KFRD CVIS CPAS CMGT ASEC RU
SUBJECT: SEPTEMBER 2009 FRAUD SUMMARY - MOSCOW

MOSCOW 00002614 001.2 OF 004


1. (U) SUMMARY: This report covers the timeframe of March 1, 2009
to 31 August 2009. Consular officers referred 389 cases of
suspected fraud to the Fraud Prevention Unit (FPU) at Embassy
Moscow. Fraud was confirmed in approximately 12 percent of the
referred cases, mostly for fraudulent employment or financial
documents. FPU assisted the American Citizen Services (ASC) Unit on
welfare and whereabouts cases, a passport fraud case and a suspect
application for a Certificate of Birth Abroad. In addition, the ACS
Unit noted they encountered two additional Certificate of Birth
Abroad applications that were not referred to FPU. Based on these
findings, Moscow is currently considered a low to medium-fraud post.
The FPU enjoys an open and collaborative relationship with the
Assistant Regional Security Officer - Investigator (ARSO-I) as well
as law enforcement agencies at post. The Fraud Prevention Manager
(FPM) participates in monthly meetings of the Moscow Anti-Fraud
Group, which is a group composed of migration and consular officials
from the various diplomatic missions based in Moscow. END SUMMARY.

A. COUNTRY CONDITIONS: Since the financial crisis hit in September
2008, uncertainty about the banking sector, the value of the ruble,
and the price of oil have prompted investors to withdraw significant
amounts of capital from the Russian economy. The higher cost of
credit that ensued, in conjunction with the global downturn in
demand for a broad range of products, forced Russian firms to cut
production, reduce the workweek, decrease salaries, and trim staff.
As a result, since November 2008 incomes have declined, reversing
nearly a decade of real double-digit income growth. Unemployment
and underemployment in Russia increased. Estimates for actual
unemployment range from ten to twelve million with significantly
higher risk for workers in Russia's single company towns and
distressed sectors (e.g., automotives, steel). In addition to
currently unemployed workers, more than 1 million workers are on
idle time, reduced work schedules, or administrative leave. Russian
workers also suffer from falling real incomes and delayed salaries,
although the government has stepped up activities to reduce the
amount of wage arrears to workers. Despite these efforts, wage
arrears remain at around 8 billion rubles, primarily due to the
absence of sufficient funds on the part of employers. The Ministry
of Economic Development predicted real incomes would fall 8.3
percent in 2009, although these estimates are being revised, as
inflation is also slowing due to the overall decline in economic
activity in the country.

As the first half of 2009 draws to a close, the economy appears to
have achieved some stability, thanks to a modest, but steady rise in
the price of oil. The ruble has stabilized, the federal budget was
in surplus (through February), and the stock market has been growing
again. However, the economic outlook for the year has never been
more uncertain, as production continues to contract and banks are
still grappling with large amounts of non-performing loans. The
Russian Government forecasts an economic contraction of 6-8 percent
for the year. Economists from academia and the think tank
community estimate a sharp economic contraction of 5-10 percent,
whereas investment bankers anticipate a recovery by the end of the
year with potential growth reaching three percent in 2010.

According to the last official census in 2002, the population in
Moscow is 10.4 million; however this figure only takes into account
legal residents. Current estimates place Moscow's population at over
13 million. The government recently announced that the next
official census, scheduled for October 2010, may be delayed due to
budget constraints.

B. (SBU) NIV FRAUD Q MOSCOW: During this reporting period (1 March
to 31 August 2009), consular officers referred 325 cases to the
Fraud Prevention Unit (FPU) for investigation of suspected fraud.
FPU confirmed fraud in approximately 12 percent of the cases. Most
of the referrals to FPU during the report timeframe were for
employment or bank statement verification. Based on these findings,
Moscow is currently considered a low to medium-fraud post.

FPM conducted routine LexisNexis checks and conferred with U.S. law
enforcement entities at post, including the ARSO-I, the FBI and DEA
during fraud investigations. In addition, FPU local fraud
investigators conducted host country law enforcement record checks
on individuals with suspected links to organized crime or with prior
criminal records. Local investigators also researched host country
tax and business registries; national and local media websites; and
reviewed a variety of Russian newspapers for fraud-related
information during the course of their investigations.

The most common type of FPU referral at U.S. Embassy Moscow involves
B1/B2 applicants with suspect employment claims. Of the 325 cases
referred to FPU during the timeframe covered by this report,
twenty-one cases involved confirmed fraudulent employment
statements; an additional 53 resulted in inconclusive findings
(either because of discrepancies between the applicant's interview
and the employer's description of job duties). We noticed a sharp
rise in Uzbek applicants applying at U.S. Embassy Moscow with

MOSCOW 00002614 002.2 OF 004


entirely fabricated employment documents, including fraudulent
Russian work permits, provided by a known local document vendor,
"Mayak." Line officers noted that frequently these applicants were
non-residents flying in specifically for the purposes of their visa
interview in Moscow. Members of the Anti-Fraud Working Group
(comprised of consular officers from foreign missions in Moscow)
noted similar trends with Uzbek applicants as well.

During this reporting period, the FPM confirmed that five B1/B2
applicants attempted to cover up their prior illegal stay in the
United States. In one case, an applicant went so far as to tear out
the page in his passport to remove his re-entry stamp into Russia.
Another case was detected after a positive IAFIS arrest for shop
lifting revealed that the applicant was present nearly four years
after his claimed departure from the United States. The applicant
refused to admit that he was illegally present and went so far as to
provide a fraudulent employment letter from a Russian employer to
cover the years he was in the United States. All five cases
involved individuals with significant overstays in the United States
of four or more years. Given this new trend in applicants covering
up illegal overstays, officers are consistently referring cases to
FPU for verification of an applicant's prior travel via ADIS. ADIS
is an essential tool used by the FPM on a regular basis. Post
appreciates the additional ADIS account which was added recently to
U.S. Embassy Moscow and would welcome additional accounts for all
line officers.

During this reporting period, FPU investigations revealed that two
separate applicants applied under false names in an attempt to
obtain visas Q both cases were caught as facial recognition hits.
The applicants later admitted that they changed their name
specifically to cover up an ineligibility in order to obtain a visa
to travel to the U.S. Our FPU investigations revealed that it is
quite easy to officially change one's name in Russia and often
little reason needs to be provided to local officials for the
change. One key anti-fraud tool used by line officers when
encountering Russian applicants is their Vnutrenniy (internal)
passport (similar to a national ID card). The internal passport
lists all minor children, marital status, address of current and
prior registrations, military service and current and previous
external passports. Unfortunately, the internal passport does not
list name changes unless the change is as a result of change in
marital status.

The use of Suspicious Documents Function in NIV remains
inconsistent. In addition to FPU referrals, NIV officers designated
only 75 cases associated with suspicious documents. FPU is working
with NIV officers to use the suspicious document function more
consistently.

Post decided to initiate a rolling B1/B2 validation study on a
quarterly basis in order to provide real time feedback to line
officers. During the timeframe covered by this report, Post took a
random sample of B1/B2 visas issued from March 2008 to May 2008.
The sample size used allowed for a margin of error of +/- three
percent. Post, with assistance from CA/FPP and DHS, verified the
applicant's ADIS status and followed up with phone calls to
applicants that either had not used their visas or had no reported
departure from the U.S.

The results from the first tranche of our rolling validation study
revealed that:
- 90.1% of the applicants traveled in status and returned;
- 8.5% of the applicants did not travel to the U.S.;
- 0.4% of the applicants had an adjustment of status pending;
- 1 % of the applicants were determined to be illegally in the U.S.

The results reveal that Russians during timeframe had good travel
patterns. We were surprised by the number of applicants that
applied for a visa stating specific travel plans but that did not
use their visas. This is something we will continue to monitor in
the next tranches of our validation studies.

(SBU) IV FRAUD - MOSCOW: Only seven cases of suspect IV fraud were
referred to FPU and most of these were for reviews of hits in the
system and coordination with local law enforcement.
D. (U) DV FRAUD: During the timeframe of this report, Russian
nationals were not eligible to participate in the Diversity visa
(DV) program. Russians will be eligible to participate in the DV
2010 program. Post expects a sharp rise in DV FPU referrals once
Russian DV cases are current.

There was a single DV case dealing with an Azeri national referred
to FPU for verification of his educational qualifications. FPU
confirmed that the educational documents were fraudulent and the
officer refused the applicant under Section 212(a)(6)(c) of the
Immigration and Nationality Act.

E. (U) ACS AND U.S. PASSPORT FRAUD: During the timeframe of this

MOSCOW 00002614 003.2 OF 004


report, FPU assisted ACS on three cases. One case dealt with an
American Citizen that was issued passports in different names and
places of birth. Two other cases involved American Citizens filing
questionable Certificates of Birth Abroad (CRBA) applications. The
FPM questioned both women (separate cases) with the ACS Chief and
explained the consequences of filing fraudulent CRBA applications.
Both women refused to admit that the baby was not their own and the
ACS Chief recommended DNA testing as an option. To date, neither
has proceeded with DNA testing.

In addition, ACS also encountered two additional suspect CRBA cases
that were not referred to FPU. One case involved a woman that
admitted to the ACS officer at the time the oath was administered,
that the baby was not her own. The ACS officer entered a lookout
for this mother in PLOTS. Another ACS officer issued a CRBA only
after subsequent proof of birth (hospital records, ultrasound
photos, etc) was provided by the birth parents. It is too earlier
to determine if this is a new trend in Moscow, however, it is
something we are monitoring.

F. (U) ADOPTION FRAUD: There have been no fraudulent cases on the
part of Americans families adopting Russian children. The press has
reported prosecutions of Russians accepting bribes to represent
children as orphans who are not in fact orphans at all. This is
predominantly found in the provinces and rarely seen in Moscow.

G. (U) USE OF DNA TESTING: IV Unit used DNA testing on a single IR2
case. ACS Unit used DNA testing in two cases.

H. (U) ASYLUM AND OTHER DHS BENEFIT FRAUD: DHS USCIS, Moscow
interviews applicants for refugee status from 15 countries of the
former Soviet Union. During this reporting period, 895 applicants
interviewed were citizens of Russia. Of the 895 applicants
interviewed, 141 were denied refugee status at least in part because
of credibility.

The criteria for denying an applicant based on credibility is as
follows:

QThe USCIS officer informed you of discrepancies concerning material
facts within your testimony during your interview and you were
provided with an opportunity to reconcile those discrepancies.
Because you were unable to reconcile the discrepancies to the
officerQs satisfaction, it has been determined that your testimony
lacked credibility on those material facts. As a result, you are
not eligible for refugee status.

I. (U) ALIEN-SMUGGLING, TRAFFICKING, ORGANIZED CRIME, TERRORIST
TRAVEL: For the sixth consecutive year, Russia has been included as
a "Tier 2 Watch List" in the Trafficking in Persons (TIP) annual
report. Russia is considered to be a source, transit, and
destination country for men, women, and children trafficked for
various forms of exploitation. Article 127 of the criminal code
prohibits both trafficking for commercial sexual exploitation and
forced labor. The Government of the Russian Federation does not
fully comply with the minimum standards for the elimination of
trafficking; however, it is making significant efforts to do so.
Despite these significant efforts, the government over the last
year: decreased the number of reported trafficking investigations,
prosecutions, and convictions; did not vigorously prosecute,
convict, and punish government officials; made no significant
efforts to improve identification of and assistance to victims of
trafficking; and did not make adequate efforts to address labor
trafficking. Organized crime is also considered to be widespread,
but with a loose structure and intertwined with corruption.

J. (SBU) DS CRIMINAL FRAUD INVESTIGATIONS: The Consular Section
enjoys an open, strong working relationship with its ARSO-I. During
the timeframe of this report, ARSO-I worked on a joint investigation
with DHS and FBI regarding a Eurasian Organized Crime group
operating in Colorado and Nevada that is suspected of using 28
Summer Work and Travel (SWT) exchange program students including two
female students from Russia to participate in financial fraud
schemes to obtain money or goods.

ARSO-I successfully documented visa fraud committed by a Russian
government official accused of the theft of billions of dollars
worth of land and money. When the suspect fled to the United
States, ARSO-I Moscow determined the suspect had made material false
statements on the most recent visa application. After DHS was
notified, the suspect was detained on his next entry into the United
States, and confessed to having made false statements. Due to the
extremely high value of money allegedly stolen, DS, DHS, DOJ, and
the FBI are working closely with Russian officials on pursuing the
case and proceeds from the theft and subsequent money laundering.

ARSO-I and the DS New York Field office jointly investigated visa
fraud committed by a fugitive from Kazakhstan who initially obtained
a Russian passport and fled to Moscow, before going to the United

MOSCOW 00002614 004.2 OF 004


States. Based upon the concealment of his prior arrest and criminal
charges, the suspect was charged with fraud and arrested. The U.S.
Marshal Service initially brought the case to the attention of DS
due to the Interpol warrant issued by Kazakhstan for the suspect's
alleged murder of four people.

K. (SBU) HOST-COUNTRY PASSPORT, IDENTITY DOCUMENTS, AND CIVIL
REGISTRY: ARSO-I Moscow is leading a joint criminal investigation
into the sale of counterfeit and altered documents by a crime ring
based in Moscow. The overall investigation encompasses more than 34
DS criminal cases, touching on 46 countries. The vendors are
suspected of having produced counterfeit supporting documents for
visa applications, counterfeit and altered passports, and
counterfeit visas from the United States, Russia, Schengen
countries, Canada, and several other nations. Over the past 11
years, the group has sold an estimated 1000-3000 U.S. visas.
Several key members of the organization have been identified and
indicted in the United States; however the suspects remain at large
in Moscow. A recent success in the case was the arrest of suspects
in Ghana and Belarus after at least eight of the counterfeit U.S.
visas were sold through that portion of the distribution network.
To date, approximately 21 members of the organization have been
arrested, however Russian officials have to date refrained from
pursuing the highest level suspects. The vendor ring has also sold
documents to criminal fugitives and Chechen fighters, raising
concerns of terrorist travel.

L. (SBU) COOPERATION WITH HOST COUNTRY AUTHORITIES: Official
requests for verification of documents and information must be
conducted using the format of Diplomatic Notes to the Ministry of
Foreign Affairs for dissemination to the respective federal or
regional government office. FPU relies on contacts in various
ministries to provide verification and/or confirmation of requests
on an unofficial basis. In September 2008, the Ministry of Internal
Affairs disbanded the anti-organized crime unit following
allegations of extortion of wealthy business men by members of the
unit.

ARSO-I has had limited cooperation and slow response from host
country law enforcement units. Despite the willingness of some host
country officers to discuss criminal cases, the endless layers of
bureaucracy, corruption, and apathy lead to limited success in
responding to criminal acts. Transparency International has rated
the perceived level of corruption in Russia as having risen steadily
over the past eight years, and have noted the judicial system as a
particular concern.

M. (U) AREAS OF CONCERN: Summer Work & Travel and the impact of the
economic crisis on the quality of visa applications and the growing
number of illegal overstays are all areas of concerns.

N. (U) STAFFING AND TRAINING: The Fraud Prevention Unit consists of
two Consular Officers, the Fraud Prevention Manager and a Rotating
FSO; an Assistant Regional Security Officer; and four locally
engaged Fraud Investigation Specialists. All FSNI have taken the
on-line FSI courses for Detecting Imposters and How to Detect Human
Trafficking Victims. A newly hired FSNI is scheduled to take the
Fraud Prevention Course at FSI in November 2009. The Deputy FPM is
scheduled to take the Fraud Prevention course at FSI in October
2009.

O. (U) EVENTS: None at this time.

BEYRLE

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