People close to Robert Stein say he ran legitimate medical clinics in Amherst and Kenmore, helping people injured in automobile crashes.
Federal agents say Stein, 39, is really Mikhail Solovey, a fraud artist who associates with a Russian crime gang that specializes in kidnapping and murder.
For more than a year, authorities believe, Stein ran a major scam in the Buffalo Niagara region that staged automobile accidents and taught people how to fake injuries and file thousands of dollars of phony insurance claims.
Before that, Stein ran a California computer school that is accused of scamming the federal government out of $1.6 million in education grants. The FBI also accused Stein of threatening to kill two government witnesses and their families. He denied the allegations.
Stein's presence is a sign of a growing infiltration of Russian crime groups into the region, according to FBI agents.
A growing presence
While the more widely known Sicilian Mafia organization -- La Cosa Nostra -- seems to be losing influence here, Russian crime figures are slowly but steadily filling the void, the FBI says.
"Whether it's actual organized crime members, or just individual Russians are involved in criminal activity, they're beginning to establish a toehold here," said Peter Ahearn, special agent in charge of the Buffalo FBI office. "I'd say 99 percent of Russians who settle here are honest, decent people. But we're seeing some involved in extortion, drugs and running scams that take advantage of our social programs."
Stein's family said federal authorities are wrong about him. They describe Stein as a law-abiding man who left Russia a decade ago to find a better life in America.
"We're an honest, hard-working family. Mikhail served two years in the Russian Army. We had $90 in our pockets when we came to America," said his sister, Mira Abramovich, in a telephone interview from her home in San Francisco. "He moved to Buffalo to help a friend who was starting a medical business. They had real patients, from real accidents . . . I think he's completely innocent."
Abramovich said Stein may have unknowingly associated with criminals in the early 1990s while running a wholesale chocolate business in Moscow.
"Mikhail has never been a mobster or gangster," she said. "Every successful businessman in Russia has to hire people to protect him (from kidnappings and extortion). When you hire people to protect you, you don't know what they are into. Maybe some of these people killed people."
FBI raids closed clinics
For months, the FBI investigated Stein's former business, All Care Management, which ran clinics on North Forest Road in Amherst, Delaware Avenue in Kenmore and in a Rochester suburb.
The clinics all closed after a series of FBI raids in September. Dozens of people who worked at the clinics -- including doctors, chiropractors, office managers, physical therapists and acupuncturists -- are under investigation. One All Care Management doctor reportedly left the country and abandoned his local practice after the FBI raids. No charges are expected to be filed in the case for at least several weeks.
Phony accident scams -- many of them tied to Russian emigres -- have a direct financial impact on law-abiding drivers, according to the state Insurance Department. It estimates that every driver in the state pays an extra $177 a year for car insurance because of auto insurance fraud.
An American citizen who drove a Mercedes-Benz sedan and lived in an upscale Amherst condominium, Stein has been in jail since Sept. 27, charged with operating a San Francisco computer training school that embezzled the federal government out of education grants. Stein ran the school before moving to Amherst last year to start All Care, authorities said.
In a hearing after Stein's arrest, federal prosecutor Brett Harvey called Stein an associate of a Russian organized crime outfit that specializes in kidnapping and murder.
Former Sabre a victim
Russian gangsters first appeared on the local radar screen in 1994, when a Russian was accused of trying to extort $150,000 from Alexander Mogilny, at the time a star winger on the Buffalo Sabres, FBI officials said. Mogilny said Serguei Fomitchev threatened to shoot him in the legs if he didn't pay the money. Fomitchev was deported after pleading guilty to a reduced charge.
"The Russian mob has tried to extort money from other pro hockey players, and it's something we're always watching for here in Buffalo," Ahearn said.
But Ahearn said a bigger moneymaker for Russian crime figures in America is the staged accident scam, which usually involves intentional low-speed car crashes, the faking of neck and back injuries, and medical clinics that process bogus insurance claims.
"We're seeing the first signs of it in the Buffalo area," Ahearn said.
Stein is not the only native of Russia under FBI scrutiny here. In May, agents charged in court papers that Maxim Levin, 26, of the Town of Tonawanda, sold cocaine and medical prescriptions. They charged him as well with operating an Amherst "medical mill" that cheated insurance companies by staging "questionable automobile accidents."
Levin, a prelaw student, also ran a company selling neck braces, knee braces and other equipment for people with injuries.
Levin and 21 other people, including several Russians living in the Buffalo area, were arrested on drug conspiracy charges last May. A judge denied bail for Levin after learning that Levin told a cellmate that he planned to escape to Moscow and "finish off" a person who provided information about him.
Stein is represented by Buffalo attorney Paul J. Cambria, and Levin, who also denied the allegations, by Anthony Lana.
Investigators say the local clinics were much smaller versions of Russian-organized insurance scams that were disrupted in New York City, Boston and other cities in recent years.
One of the biggest operations was uncovered last year in New York City and Long Island. More than 560 people and corporations were indicted. The ring, organized by Russian emigres, was believed to be linked to more than 1,000 fake accidents and up to $500 million in fraudulent insurance claims.
Suffolk County prosecutors said the ring staged accidents involving cooperating drivers in both cars, and sometimes caused collisions involving innocent drivers. Drivers and passengers who acted as "crash dummies" were typically paid $500 to fake injuries. They then received a percentage of the insurance claims -- usually somewhere between $5,000 and $10,000.
For those running the scams, the benefits can be lucrative. Neighbors recall seeing many luxury cars, including Mercedes, BMWs and an occasional Jaguar, driven by some of the people who worked at Stein's clinics.
Stein attracted attention
Several people who worked in other businesses near the clinics said they often noticed Stein standing for hours in the parking lot, chain-smoking cigarettes while talking into a cellular telephone in rapid-fire Russian.
More than 21,000 people from former Soviet Union republics were reported in the most recent federal census count for Erie and Niagara counties. Many of them live in Amherst and North Tonawanda.
Leonid Shapiro, 48, a Russian native in Amherst, said he has heard some Russian mobsters are living in Western New York. But Shapiro said the vast majority of Russians in this area want nothing to do with criminal activity.
"I ran a wool-processing factory in Russia. Every month, I had to pay bribes to government officials to let me do business. Every day, I had to hire two big guys to sit in my office, just to watch me and protect me from kidnapping or extortion," Shapiro said.
"Most Russians who move to America are trying to get away from that kind of activity. They're trying to make a good, honest life for themselves and their families."