Analysis: Europe’s ‘spy capital’ struggles to police espionage, terrorism

Vienna, AustriaBy JOSEPH FITSANAKIS | intelNews.org
Throughout the Cold War, Vienna was Europe’s busiest ‘spy hub’ linking East and West. Little has changed today, as the Austrian capital is still believed to feature “the highest density of [foreign spies] in the world”. A recently published book estimated that there are 7,000 spies among the 17,000 accredited diplomats who live and work in Vienna, a city of fewer than 2 million inhabitants. International spies have taken advantage of Austria’s relatively liberal espionage laws and have operated with near-unparalleled ease in the central European country for over 200 years. But now the country’s Ministry of Interior is seeking to terminate Austria’s liberal espionage regime and has initiated a plan to give local authorities more counterintelligence powers. Supporters of the proposal argue that Austria has “the most permissive spying laws in Europe”, which allow foreign agents to operate on Austrian soil with a high degree of impunity. This is because, under Austrian law, intelligence activities are not considered criminal unless they target the host country. For this reason, American, Russian, German, French, and other intelligence agencies have for years used Vienna as a base for recruiting agents and collecting intelligence. Supporters of the Interior Ministry’s proposal argue that the current legal regime has been used to harm the national interests of Austria and the security of the European Union —a reference to recent claims in the Austrian media that the United States National Security Agency has been spying on the United Nations headquarters in Vienna. Additionally, Austrian authorities say they are now worried about local Muslims who have been radicalized and have traveled to Iraq and Syria to join the Islamic State. The government estimates that at least 140 Austrian Muslims have made the trip to the Middle East to join the militant organization. Austria’s counterterrorist agency, the BVT, said in its annual report for 2014 that another 60 radical Muslims had returned to Austria from the Middle East since the outbreak of the Syrian civil war. Interior Ministry spokesman Alexander Marakovits told Bloomberg that Austrian security services are “having a hard time doing their job the way they are expected to do”. Read more of this post

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WWII files reveal ‘glamorous’ female spy used to test trainees

Special Operations Executive plaqueBy IAN ALLEN | intelNews.org
British records from World War II released this week have revealed for the first time the existence of a “glamorous” female intelligence operative who used her good looks to test the ability of spy trainees to keep sensitive information. The agent’s name was Marie Chilver, and she was the daughter of a Latvian mother and an English father. She appears to have drawn the attention of British intelligence in 1941, shortly after she helped a British airman shot down over France return to Britain. Chilver came in contact with the Special Operations Executive, a top-secret organization established in 1940 by the British government in preparation for the war in Europe. Its mission was to organize espionage and sabotage operations in Axis-occupied Europe and to assist underground resistance groups. The documents show that the SOE initially thought Chilver was a German spy. However, once her identity was verified through several background checks, the highly secret agency employed Chilver as a counterintelligence operative. She was given the operational codename “FIFI”. Her duties apparently involved accosting SOE spy trainees at restaurants and bars and trying to entice them into revealing government secrets, in an effort to evaluate whether spies-in-training could “keep their mouths shut”. Utilizing her “glamorous looks”, blonde hair and elegant dresses, Chilver would pose as a French freelance reporter and would approach selected SOE trainees to see “if they had learned how to keep secrets”, according to the wartime documents. But the files reveal that, more often than not, FIFI was able to extract classified information from the trainees. In one case, Chilver reported that a Belgian SOE trainee had told her nearly “all there was to know about him” by the end of a short evening. The SOE proceeded to promptly dismiss the young Belgian a few days later. The declassified documents include a transcribed interview with FIFI, who claimed that her counterintelligence methods were “absolutely fair” and were “mild and innocent” when compared to what the SOE trainees would have to face in the field. Read more of this post

Germany wants foreign embassies to declare their spy employees

German Foreign OfficeBy JOSEPH FITSANAKIS | intelNews.org
German authorities have asked that foreign embassies and consulates on German soil officially disclose the names of their personnel involved in intelligence work. German newsmagazine Der Spiegel said that the German Foreign Office has been systematically contacting consular authorities from every foreign nation located in Germany. In each case, the foreign consular representatives have been issued formal requests to release “through official diplomatic channels” an exhaustive list of names of their intelligence operatives operating in Germany under diplomatic cover. All foreign embassies and consulates had been contacted by last Wednesday, said the report. The requests stipulate that the lists must include all personnel working out of a foreign nation’s embassy or consulate, as well cultural institutes, military installations, commercial entities, or other institutions associated with a foreign country. It is generally assumed that a significant number of employees in embassies and consulates are intelligence personnel, working under diplomatic cover; they invariably hold titles such as “military attaché”, or “political officer”, and are generally protected with diplomatic immunity. A small number of these intelligence officers voluntarily make their presence known to the corresponding intelligence agency of their host country, and are thus officially declared and accredited with the government of the host nation. They typically act as points-of-contact between the embassy and the intelligence agency of the host nation on issues of common concern requiring cross-country collaboration or coordination. But the vast majority of intelligence personnel stationed at a foreign embassy or consulate operate without the official knowledge or consent of the host country. Governments generally accept this as a tacit rule in international intelligence work, which is why Berlin’s move is seen as highly unusual. Der Spiegel described it as an effort “towards more transparency”, aimed at “increasing the pressure on foreign intelligence services to disclose their activities in Germany”. Frank-Walter Steinmeier, Germany’s Minister of Foreign Affairs, described the move as a diplomatic effort to establish trust between Berlin and its foreign partners. Read more of this post

Soviet documents ‘identify New Zealand diplomat as KGB spy’

Bill SutchBy JOSEPH FITSANAKIS | intelNews.org
A batch of documents from the so-called ‘Mitrokhin archive’, which were made public late last week, have reportedly identified a former New Zealand senior diplomat as a Soviet spy. William Ball Sutch was born in 1907 and received a PhD in economics from Columbia University in the United States in 1932. Shortly afterwards, he returned to his native New Zealand in the midst of the Great Depression. At around that time he traveled to the Soviet Union, but showed no outward interest in communism. He entered government service, working for several departments, including the Ministry of Supply and the Department of Industries and Commerce, where he rose to the post of secretary in 1958. Prior to that, he had represented Wellington at the United Nations headquarters in New York in the early 1950s. He retired in 1965 as head of New Zealand’s Department of Industries and Commerce, and died in 1975. A year before his death, however, Sutch was the main subject in the most sensational spy scandal in New Zealand during the Cold War. He was arrested in a counterintelligence operation in Wellington while secretly meeting Dimitri Razgovorov, an officer of the Soviet KGB. Sutch, who had been monitored by the New Zealand Security Intelligence Service (NZSIS) for quite some time prior to his arrest, was charged under the country’s Official Secrets Act. But eventually he was found not guilty after an eventful five-day trial, which took place amidst a media blitz in the Kiwi capital. Now, however, the Wellington-based Dominion Post newspaper says it has acquired copies of internal KGB documents that identify Sutch as a KGB recruit. The Australian-owned newspaper says the documents are part of the massive archive transported to the United Kingdom in 1992 by the late Vasili Mitrokhin. Mitrokhin was a Soviet archivist for the KGB, who painstakingly copied tens of thousands of pages of the spy agency’s files prior to defecting to Britain following the dissolution of the USSR. The latest batch of papers, which were made public at Cambridge University’s Churchill College, indicate that the New Zealand diplomat worked for the KGB for 24 years prior to his 1974 arrest. Read more of this post

Up to 20 US spies inside German government: media reports

US embassy in BerlinBy JOSEPH FITSANAKIS | intelNews.org
German counterintelligence has intensified its surveillance of “certain employees of the United States embassy” in Berlin, after internal reports suggested that “up to 20” agents of the American government are operating inside the German federal bureaucracy. Citing information “from American security circles”, German newspaper Bild am Sonntag said on Sunday that the agents are German citizens who are secretly employed by a variety of American civilian and military intelligence agencies in return for money. The Berlin-based tabloid noted that at least a dozen such agents have infiltrated four departments of the German federal government, namely the Ministries of Defense, Finance, Interior, as well as the Ministry for Economic Cooperation and Development. The paper said that the latter has been targeted by the US Central Intelligence Agency because it is routinely employed by the BND, Germany’s main external intelligence organization, as a cover for clandestine activities. Last week, Germany ordered the immediate removal from the country of the CIA station chief, after it caught two German citizens, one working for the BND, and one for the country’s Ministry of Defense, secretly spying for Washington. It also instructed its intelligence agencies to limit their cooperation with their American counterparts “to the bare essentials” until further notice. According to Bild am Sonntag, the “growing pressure” against American intelligence operations inside Germany has prompted American spy agencies to transfer their recruitment activities of German citizens to nearby European capitals, such as Prague of Warsaw. Meanwhile, in an interview aired Sunday on Germany’s public-service television broadcaster, ZDF, German Chancellor Angela Merkel appeared pessimistic about the possibility that American intelligence agencies will stop recruiting German citizens. She said that Washington and Berlin had “fundamentally different views” on the nature and operational character of intelligence, and that it would be difficult to bridge the gap of perception between the two countries. The German leader added, however, that she favored continued cooperation between German and American intelligence agencies, as both countries “profit from the cooperation concerning counterterrorism and other things”. Read more of this post

‘Diplomatic earthquake’ as Germany halts spy cooperation with US

Angela Merkel and Barack ObamaBy JOSEPH FITSANAKIS | intelNews.org
The German government has instructed its intelligence agencies to limit their cooperation with their American counterparts “to the bare essentials” until further notice, according to media reports. The move follows news that Berlin requested on Thursday the immediate removal from Germany of the United States Central Intelligence Agency chief of station —essentially the top American official in the country. The request came after two German citizens, one working for the BND, Germany’s main external intelligence organization, and one working for the country’s Federal Ministry of Defense, were allegedly found to have been secretly spying for the US. German media reported on Thursday that the temporary halt in Berlin’s intelligence collaboration with Washington applies across the spectrum, with the exception of areas directly affecting tactical security concerns for Germany, such as the protection of its troops in Afghanistan, or defending against immediate terrorist threats. Sources in the German capital claimed that the removal of the CIA station chief was technically a “recommendation for his departure”, and did not constitute an official diplomatic expulsion. However, German observers described the incident as a “diplomatic earthquake”, which would have been unthinkable as a policy option for the German government, barring actions against “pariah states like North Korea or Iran”. This is not the first time an American intelligence officer has been asked to leave Germany. Berlin expelled another CIA officer in the 1990s, after it emerged that the American intelligence Agency had tried to recruit a German official at the Federal Ministry for Economic Affairs. However, unlike the current imbroglio, the previous spy affair was handled discretely and with almost no media fanfare, as is customary among allies. The decision to recommend the CIA station chief’s removal was reportedly made at a senior governmental level, following a “fruitless” telephone exchange between CIA Director John Brennan and Klaus-Dieter Fritsche, the coordinator between the German Chancellery and the BND. According to German newsmagazine Der Spiegel, Brennan offered Fritsche no apology and had “nothing to contribute other than clichés about transatlantic ties”, as well as his expressed irritation about the way the media were handling the incident. Read more of this post

Germany probes second case of intelligence officer who spied for US

Germany’s Federal Ministry of DefenseBy JOSEPH FITSANAKIS | intelNews.org
Just days after announcing the arrest of an intelligence officer on charges of spying for the United States, German authorities say they are investigating a second individual on suspicion of espionage. Federal prosecutors said yesterday that the individual in question is a German citizen and is under “initial suspicion of activity for an intelligence agency” of a foreign country. They refused to provide further information and added that an arrest had not yet been made. But German newspaper Süddeutsche Zeitung said on Wednesday that the subject of the investigation is suspected of spying for the United States. The news comes less than a week after an officer of the BND, Germany’s main external intelligence organization, was found to have allegedly spied for the US Central Intelligence Agency for over two years. According to Süddeutsche’s sources, the second suspect works for Germany’s Federal Ministry of Defense. German newsmagazine Der Spiegel reported that the unnamed individual specializes in “global security policy” and that he came under the suspicion of Germany’s military counterintelligence agency because of his “close proximity to alleged American intelligence operatives”. Later on Wednesday, German federal government spokesman Steffen Seibert confirmed that Berlin had opened “investigations in two cases of suspected espionage, on very serious suspicions”. Seibert refused to elaborate, but added that police had raided a number of properties in the German capital. Meanwhile, Germany’s Minister for Foreign Affairs, Frank-Walter Steinmeier, told the Saarbrücker Zeitung that he failed to understand why Washington would want to spy on his country. “We talk to each other all the time, and no side keeps its views secret”, he told the Saarland-based newspaper. “The attempt to use conspiratorial tactics to find out about Germany’s position is not simply unseemly, it is unnecessary”. But an unnamed former senior intelligence official, who has liaised extensively with the BND, protested to The Washington Post that “the Germans do lots and lots of stuff and don’t tell us everything they do”. Read more of this post

Germany ‘might scrap’ no-spy treaty with US, UK, France

Thomas de MaizièreBy JOSEPH FITSANAKIS | intelNews.org
The German government is considering scrapping a decades-old no-spy agreement with the three Allied victors of World War II, following the arrest of a German intelligence officer who was caught spying for the United States. The treaty was signed in 1945 between the German state and the governments of the United States, France and Britain. Their intelligence services are defined in the treaty as allied with Germany’s and are seen as working with Germany’s national interest in mind. Consequently, Berlin pledges not to direct counterespionage operations against French, American and British intelligence activities inside Germany. Implicit in the agreement is the understanding that these three countries can spy on German soil only when targeting non-German operatives in the country. However, in an interview with German tabloid newspaper Bild, Germany’s Minister of the Interior, Thomas de Maizière, said that Berlin is now seriously considering scrapping the postwar treaty, in response to the recent revelations about alleged espionage activities against Germany by the US Central Intelligence Agency. He was referring to news, aired last week, that an officer of the BND, Germany’s main external intelligence organization, was found to have spied for the CIA for over two years. On Monday, the Reuters news agency said it had confirmed that the alleged double spy had indeed been recruited by the CIA, and that the Agency’s Director, John Brennan, had asked to brief senior members of Congressional intelligence committees about the issue. Also on Monday, White House Press Secretary Josh Earnest told reporters in Washington that the US government would “work with the Germans to resolve this situation appropriately”. But these assurances seem to have done little to quell Berlin’s irritation. Another senior German politician, Stephan Mayer, who is close to German Chancellor Angela Merkel, told Bild that it was time for German intelligence to “focus more strongly on our so-called allies”. Read more of this post

Germany summons US ambassador following arrest of CIA spy

BND headquarters in BerlinBy JOSEPH FITSANAKIS | intelNews.org
Authorities in Germany have summoned the American ambassador to Berlin following the arrest of a German intelligence officer who was apprehended last week on suspicion of spying for the United States. The man, who has not been named, is suspected of passing classified government information to American intelligence operatives on a variety of subjects. His most recent undertakings are said to have targeted activities of a German parliamentary committee investigating US espionage against Germany. The episode is expected to further strain relations between the two allies, which were damaged by revelations last year that the National Security Agency, America’s signals intelligence organization, had bugged the telephone of German Chancellor Angela Merkel. The revelation, which was made public by Edward Snowden, an American defector to Russia who had previously worked for the NSA, showed that Chancellor Merkel had been targeted as part of a wider US spy operation against Germany. The revelations sparked the establishment of a nine-member parliamentary committee that is tasked with evaluating Snowden’s revelations and proposing Germany’s response. It appears that the man arrested, who is believed to have been secretly employed by the Central Intelligence Agency, tried to spy on the activities of the committee on behalf of his American handlers. According to German media reports, the man, who is said to be 31 years old, is a “low-level clerk” at the Bundesnachrichtendienst, or BND, Germany’s external intelligence agency. According to Der Spiegel newsmagazine, he is believed to have spied for the CIA for approximately two years, and to have supplied the American spy agency with around 200 classified German government documents in exchange for around €25,000 —approximately $30,000. Read more of this post

Is Estonia’s Russian counterintelligence program the world’s best?

EstoniaBy JOSEPH FITSANAKIS | intelNews.org
Until not so long ago, the former Soviet Republic of Estonia was known as a playground for Russian intelligence. The tiny Baltic state, with a population of just under 1.4 million, a fourth of whom are ethnic Russians, struggled to build its security and intelligence infrastructure following its emergence from communism. Some of the country’s low points during that process include the infamous 2007 cyberattacks, which are believed to have been orchestrated by Moscow, and which kicked the entire country off the World Wide Web for over a week. A year later, authorities in Tallinn announced the arrest of Herman Simm, a senior official at the Estonian Ministry of Defense, who was apprehended along with his wife for spying on behalf of Russian intelligence for nearly 30 years. Since that time, however, Tallinn has been able to transform its Russian counterintelligence program into something resembling the envy of the world, according to Foreign Affairs columnist Michael Weiss. In an intriguing analysis published on Tuesday, Weiss argues that Estonia’s claim to fame in the counterintelligence world centers on its initiative in hosting the North Atlantic Treaty Organization’s Cooperative Cyber Defense Center of Excellence, which was founded in response to the 2007 cyberattacks. But, says Weiss, much more quietly, the tiny Baltic state has become a global leader in “old-fashioned counterintelligence” directed against Russian spy operations on its territory. He quotes one observer as saying that Estonia’s Russian counterintelligence program “is now better by a long way than that of any other country in Europe”. John Schindler, a professor at the United States Naval War College and former analyst at the National Security Agency, tells Weiss that, unlike the Federal Bureau of Investigation, Estonia’s counterintelligence service, Kaitsepolitseiamet, known as KaPo, “intuitively understands Russian intelligence culture”. The agency, says Schindler, used the Simm case as an impetus to upgrade its offensive and defensive counterintelligence posture. This effort led to the well-publicized arrests of Aleksei and Viktoria Dressen, as well as Vladimir Veitman, all Estonian citizens who had been spying for Russia for many years. Read more of this post

New details about FBI probe that led to Chinese spy’s conviction

Dongfan "Greg" ChungBy JOSEPH FITSANAKIS | intelNews.org
Some of our longtime readers will recall the case of Dongfan “Greg” Chung, a Chinese-born American engineer for Boeing, who was convicted in 2009 of passing US space program secrets to China. The case is arguably far more important than it might have seemed at the time, as Chung was technically the first American to be jailed for economic espionage. Many at the Federal Bureau of Investigation view the Chung conviction as a landmark case for providing clear legal proof of Chinese espionage in the US. Little is known, however, about how the FBI managed to uncover Chung’s espionage activities, which are believed to have gone on for nearly three decades. In the latest issue of The New Yorker, Yudhijit Bhattachargjee reveals for the first time the fascinating background of how the Bureau got to Chung. It did so through another American engineer of Chinese origin, named Chi Mak. Unlike Chung, who was ideologically committed to Maoism and was recruited by Chinese intelligence after immigrating to the US, Mak was an accredited intelligence operative who was allegedly specifically planted in the US by the Chinese. He came to America from Hong Kong in 1979 and worked for California-based defense contractor Power Paragon. He almost immediately began stealing secrets relating to US Navy systems. The FBI first started monitoring Mak and his wife, Rebecca, in 2004, following a tip. The effort evolved in one of the Bureau’s biggest counterintelligence cases, involving elaborate physical and electronic surveillance that lasted for nearly 18 months. During that time, FBI and Naval Criminal Investigation Service agents installed surveillance cameras outside the Maks’ residence, followed the suspects around, and monitored their telephone calls. Eventually, the surveillance team managed to acquire a warrant allowing them to clandestinely enter the Maks’ home and conduct a secret search. The nondestructive entry team discovered numerous stacks of secret documents “some two or three feet high” all around the suspects’ house. Among the findings was an address book containing the names of other engineers of Chinese origin living in the state of California. That, says Bhattachargjee, was the first time the FBI came across Chung’s name. Read more of this post

Russian espionage in Germany rising sharply, says Berlin

Embassy of Russia in BerlinBy JOSEPH FITSANAKIS | intelNews.org
Russian espionage activity in Germany has reached levels not seen since the days of the Cold War, according to senior counterintelligence officials in Berlin. An article published in weekly newspaper Die Welt am Sonntag on Sunday said Russian intelligence-gathering activities in the German capital center on infiltrating German political institutions and corporations. The Berlin-based publication said Russian spies typically seek to gain “intimate knowledge” of German energy policy as well as corporate practices. Another area of interest for Russian intelligence concerns Germany’s activities in the European Union and the North Atlantic Treaty Organization. Citing Hans-Georg Maassen, Director of the Office for the Protection of the Constitution (BfV —Germany’s primary counterintelligence agency), Die Welt said that no foreign intelligence service is more active on German soil than Russia’s SVR —one of the KGB’s successor agencies. Most Russian intelligence officers “pose as embassy workers”, said the paper, adding that the BfV believes up to a third of all Russian diplomats stationed at the German capital have a “background in intelligence gathering”. According to Burkhard Even, who directs the BfV’s counterintelligence operations, the primary task of Russian intelligence operatives in Germany is to “closely analyze individuals who could be of interest” to Moscow. Those targeted —usually key staffers at the Bundestag (Germany’s federal parliament) or major German companies— are then systematically accosted by Russian ‘diplomats’. The latter often ask to take them out to lunch or dinner, said Maaßen, and will often pick up the bill. Read more of this post

British spies infiltrated Nazi sympathizer groups, wartime files show

Page from MI5's Jack King filesBy JOSEPH FITSANAKIS | intelNews.org
A British counterintelligence agent managed to neutralize an extensive network of Nazi sympathizers in the United Kingdom by pretending to represent the German government, newly released files show. The documents, which were released this week by the British National Archives, identify the agent only as “Jack King”, which was the operational codename given to him by his handlers in the British Security Service, commonly known as MI5. Senior officials at the agency, which is tasked with counterintelligence, described “King” as “a genius” at luring in Nazi sympathizers in the UK. The files show that “King’s” work helped MI5 identify hundreds of residents in Britain —most of them British citizens— as committed Nazis who were prepared to pass national secrets to Berlin. The MI5 operative utilized his pro-German contacts in the southeast of England and was able to infiltrate pro-Nazi circles operating in and around London. He did so by posing as an agent of the Gestapo, Nazi Germany’s secret police. He quickly gained the trust of some of the most fervent pro-German activists operating in the British Isles. These included Edgar Whitehead, Hilda Leech and Marita Perigoe, a Swedish resident of the UK, who was so fervently pro-Nazi that she once dismissed Oswald Mosley’s British Union of Fascists as “insufficiently extreme”. Many of these Nazi supporters pledged to “King” that they could be relied on to assist in the event of an invasion of Britain by Nazi forces. The files released by the National Archives show that “King” was well connected with British Nazis by 1942. Read more of this post

Israel jails Orthodox Jew who offered to spy for Iran

Neturei Karta membersBy JOSEPH FITSANAKIS | intelNews.org
An Israeli citizen, who belongs to an Orthodox anti-Zionist Jewish group that rejects the existence of the state of Israel, has been jailed for offering to spy for Iran. Yitzhak Bergel, 46, a father of eight, who resides in Jerusalem’s ultra-Orthodox Mea She’arim neighborhood, is a member of the Neturei Karta —which translates in English as “Guardians of the City”. The Jewish group opposes Zionism —the belief that a state-sanctioned Jewish homeland ought to be created in the territory described as “Land of Israel” in Jewish scriptural texts. The group, which was founded in the 1930s and has thousands of adherents in Israel, the United States and Europe, is one of several branches of conservative Judaism whose members believe that Jews are forbidden by the Torah to create their own state before the coming of the Jewish Messiah. Its members therefore oppose the existence of the current state of Israel and favor its dismantling as a Jewish state. According to his indictment, Bergel, who became religious 20 years ago, traveled to the German capital Berlin in January of 2011, intent on contacting Iranian diplomats. He walked into the Iranian embassy there and offered to collect intelligence on Israel on behalf of Iran, in return for regular payments. Israeli government prosecutors said Bergel remained in contact with his Iranian handlers until his arrest last summer. According to court documents, Bergel pleaded guilty to charges of contacting foreign agents with intent to commit treason and attempting to aid an enemy of Israel. Read more of this post

US charges 49 Russian diplomats with fraud, says some were spies

Russian consulate in NYBy JOSEPH FITSANAKIS | intelNews.org
The United States has filed charges against dozens of current and former Russian diplomats, accusing them of defrauding American taxpayers of over a million dollars. Meanwhile, sources have told CNN that some of the accused also engaged in espionage against the US. Last week, the US Department of Justice charged 49 Russian citizens with participating in a nine-year fraud scheme, through which they pocketed approximately $1.5 million from Medicaid. Created in 1965, Medicaid is a US government insurance program for persons of all ages whose income and resources are insufficient to pay for health care. Twenty-five of those accused of fraud are current and former Russian diplomats, while 24 are spouses of diplomats. Eleven of them are currently in the US, ten of whom work at the Russian consular mission in New York. The remaining diplomat is stationed at the embassy of Russia in Washington, DC. The members of the fraud ring are accused of falsifying applications for Medicaid benefits by systematically under-reporting or completely concealing their incomes. While receiving thousands of dollars in benefits from the American government, the diplomats and their spouses lived a frivolous lifestyle, purchasing luxury goods in some of America’s most expensive department stores, like Tiffany’s and Bloomingdale’s. On Monday, however, CNN’s Security Clearance blog reported that some of the 49 Russian diplomats involved in the fraud scheme are also believed to have engaged in espionage against the United States. The spies were in fact investigated “for quite some time” by Federal Bureau of Investigation counterintelligence agents in Washington and New York, said CNN. At the end, however, federal prosecutors decided they had insufficient evidence to file espionage charges, and passed the case on to the Department of Justice, which brought fraud charges against the Russians. Read more of this post

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