VZCZCXRO2787
RR RUEHDBU RUEHIK RUEHLN RUEHPOD RUEHSK RUEHVK RUEHYG
DE RUEHMO #0990/01 1071407
ZNR UUUUU ZZH
R 171407Z APR 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 2916
RUEHPNH/NVC PORTSMOUTH 0004
INFO RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEHFT/AMCONSUL FRANKFURT 4043

UNCLAS SECTION 01 OF 04 MOSCOW 000990 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958:  N/A 
TAGS: KFRD CVIS CPAS CMGT ASEC RU
SUBJECT:  FRAUD SUMMARY - MOSCOW 
 
¶1. (U) 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 continue to increase, although at lower rates than earlier 
in the year.  Estimates for actual unemployment by the end of 2009 
range from ten to twelve million, with significantly higher risk for 
workers in Russia's single company towns.  In addition to currently 
unemployed workers, more than 1.1 million workers are on idle time, 
reduced work schedules, or administrative leave. Russian workers 
also suffer from delayed salaries and falling real incomes.  Wage 
arrears rose 16.1 percent in February to 8.1 billion rubles as of 
March 1, primarily due to the absence of sufficient funds on the 
part of employers.  At the end of February, the Ministry of Economic 
Development predicted real incomes would fall 8.3 percent in 2009. 
 
As the first quarter 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.  The Russian Government forecasts an economic 
contraction of 2.2 percent.  Analysts outside the GOR are more 
divided on the country's economic prospects than they have been in a 
decade.  Economists from academia and the think tank community 
estimate a sharper economic contraction of 5-10 percent, whereas 
investment bankers anticipate a recovery by the end of the year with 
potential growth reaching three percent. 
 
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 next official census is scheduled for October 2010. 
 
 
¶2. (SBU) NIV FRAUD - MOSCOW: 
 
During this reporting period, consular officers referred 282 cases 
to the Fraud Prevention Unit (FPU) for investigation of suspected 
fraud.  We experienced a 19.5 percent increase in fraud referral 
cases over March - August 2008 numbers.   FPU confirmed fraud in 
10.6 percent of the cases referred to FPU.  Most of the referrals to 
FPU during the report timeframe were for employment, educational or 
bank statement verification.  Based on these findings, Moscow is 
currently considered a medium-fraud post. 
 
FPM conducted routine LexisNexis checks and conferred with Embassy 
representatives of U.S. federal agencies including federal law 
enforcement agencies during fraud investigations.  In addition, FPU 
local fraud investigators conducted host country law enforcement 
record checks.   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. 
 
Sixteen out of 282 applicants for B1/B2 visas referred to FPU 
provided fraudulent employment statements.  For example, FPU 
investigation revealed that two applicants presented employment 
letters from a well-known U.S. financial firm.  Further 
investigation revealed that one of the applicants, a Ukrainian 
national, had also presented a fraudulent Russian work permit.  FPU 
coordinated with local authorities and the applicant was deported 
from Russia.  Another case involved an applicant that claimed she 
worked for a reputable local medical provider.  FPU investigation 
revealed that the applicant was a former employee that had obtained 
the company's letterhead prior to her dismissal.  Other cases 
involved fraudulent local registration documents for non-existent 
companies, forged letter head for reputable local companies, or 
forged employment letters containing inflated job positions or 
salaries. 
 
FPU conducted two in-depth investigations on L1 intercompany 
transfer non-immigrant visa cases.  One case involved an applicant 
that claimed that she had been employed for an extended period of 
time at the company.  When FPU contacted the "claimed" employer, 
however, the receptionist said that the applicant was not employed 
by the company but was the president's daughter.  Another case 
involved an applicant that claimed he was traveling to work at the 
U.S. division of the company.  When FPU checked the state's on-line 
business incorporation documents, however, the company had been in 
"inactive/noncompliance" status since March 2007. 
 
 
MOSCOW 00000990  002 OF 004 
 
 
FPU confirmed fraud in three student visa cases.  All of the 
applicants submitted fraudulent bank statements in conjunction with 
their student applications and claimed that they were planning on 
studying English.  Based on these findings, FPU improved its 
contacts at the top local banks and plans to investigate a recent 
rise in ESL applications from non-traditional students. 
 
During this reporting period, FPU investigations revealed that three 
separate applicants legally changed their names in an attempt to 
obtain visas - all cases were caught as facial recognition hits. 
Two cases involved individuals attempting to cover up illegal 
overstays.  Another applicant admitted to legally changing her first 
and patronymic names after three visa denials.  When she was denied 
a fourth time, she decided to change her entire name in an attempt 
"to circumvent the system" - she was quite surprised to receive a 
FPU phone call asking if she had a twin sister.  Our FPU 
investigations have revealed that it is quite easy to officially 
change one's name in Russia and often little reason needs to be 
provided to the local officials for the change. 
 
There is still inconsistent use of NIV "Suspicious Documents 
Function" by NIV line officers.  A standard operating procedure for 
fraud referrals, including the use of suspicious documents, was 
formalized during this reporting period.  FPU continues to work with 
NIV officers to encourage the use of the suspicious document 
function more consistently. 
 
Belarusian Summer Work & Travel (SWT) Validation Study:  Since March 
2008 when the Government of Belarus mandated staffing reductions at 
Embassy Minsk, Moscow has accepted Belarusian SWT applicants.  FPU 
conducted a 100 percent validation study of the 1,250 Belarusian 
students who were issued by Embassy Moscow.  The study was 
undertaken in an effort to compare our SWT issuances to those of 
Embassy Minsk in prior years. 
 
Moscow utilized the Department of Homeland Security's Arrival and 
Departure System (ADIS) records to confirm the arrivals and 
departures of Belarusian SWT participants.  Those with confirmed 
departures were considered to have completed their summer program 
and were not further examined.  Those with no departure records, 
with pending Adjustments of Status, or who had adjusted to B1 status 
with a departure date before March 1, 2009 were contacted by the 
Fraud Prevention Unit in Minsk. 
 
The results showed that 1,062 students (or 85 percent) had confirmed 
departures from the United States.  Of the remaining 188 students, 
130 (or 10.4 percent) had no departure records, and the remaining 58 
(or 4.6 percent) had either adjusted status or had an adjustment of 
status application pending with DHS.  The non-return rates for males 
and female students were almost equal.  Older applicants (and, thus, 
further along in their university education) were more likely not to 
return to Belarus.  Also, Post's validation study revealed that 
applicants with prior J-1 visas were more likely to legally adjust 
status than first timers.  Post has contacted all Belarusian SWT 
agencies and provided them feedback on the travel patterns of their 
SWT participants. 
 
¶3. (SBU) IV FRAUD - MOSCOW: 
 
Officers within the Immigrant Visa Unit referred sixteen cases for 
FPU investigation, mostly for criminal background checks with local 
law enforcement.  None of the investigations resulted in a permanent 
refusal. 
 
¶4. (U) DV FRAUD - MOSCOW: 
 
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.  We 
have received numerous complaints regarding DV email scams.  Post 
has translated the Department of State's DV Fraud Warning for use on 
its internet site. 
 
¶5. (U) ACS AND U.S. PASSPORT FRAUD - MOSCOW: 
 
During this reporting period, no ACS cases were referred to FPU. 
However, FPU has assisted ACS with Lexis-Nexis checks to assist in 
locating down American Citizens (generally as a result of the 
two-parent signature regulation for minor passports or on emergency 
ACS cases). 
 
¶6. (U) ADOPTION FRAUD:  N/A 
 
¶7. (U) USE OF DNA TESTING:  N/A 
 
¶8. (U) ASYLUM AND OTHER DHS BENEFIT FRAUD 
 
From September 1, 2008 through February 28, 2009 the Moscow U.S. 
Citizenship and Immigration Service (USCIS) field office interviewed 
 
MOSCOW 00000990  003 OF 004 
 
 
184 refugee and asylum cases for applicants from Russia.  Of the 184 
applicants interviewed, 27 of them were denied at least in part 
because of credibility. 
 
The criteria for denying an applicant based on credibility are as 
follows: 
 
"The 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 
officer's satisfaction, it has been determined that your testimony 
lacked credibility on those material facts.  As a result, you are 
not eligible for refugee status." 
 
¶9. (U) ALIEN-SMUGGLING, TRAFFICKING, ORGANIZED CRIME, TERRORIST 
TRAVEL - Moscow: 
 
For the fifth 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.   According to the most recent TIP report, "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."  The report also indicates 
that last year, the GOR "demonstrated progress in its law 
enforcement efforts over the last year.  Article 127 of the criminal 
code prohibits both trafficking for commercial sexual exploitation 
and forced labor."  The TIP report also noted a 10-percent increase 
in the number of investigations in 2006. 
 
Moscow is a massive transit point for human smuggling, specifically 
to and from China, Korea, Japan, Central Asia, and Eastern Europe, 
and remains a primary source of supply of trafficking victims to 
Western Europe.  Organized crime is also considered to be 
widespread, but with a loose structure and intertwined with 
corruption. 
 
¶10. (SBU) DS CRIMINAL FRAUD INVESTIGATIONS - MOSCOW: 
 
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 
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. 
 
¶11. (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 
 
MOSCOW 00000990  004 OF 004 
 
 
fugitives and Chechen fighters, raising concerns of terrorist 
travel. 
 
¶12. (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. 
 
¶13. (U) AREAS OF CONCERN:  None 
 
¶14. (U) STAFFING AND TRAINING - Moscow: 
 
The Fraud Prevention Unit consists of two Consular Officers, the 
Fraud Prevention Manager and an entry-level officer that serves as 
the Deputy Fraud Prevention Manager; an Assistant Regional Security 
Officer-Investigator; and four locally engaged Fraud Investigation 
Specialists.  During the reporting period, FPU and ARSO-I organized 
two training sessions for consular officers.  FPM also provides 
information on fraud trends and other guidance to consular officers 
in Moscow as well as in the consulates on a regular basis. 
 
¶15. (U) EVENTS - Moscow: 
 
The FPM regularly participates in the monthly Anti-Fraud Diplomatic 
Group meetings.  FPM agreed to host the September 2009 Anti-Fraud 
Diplomatic Group meeting. 
 
 
BEYRLE