Seattle Couple Sentenced to Prison for Defrauding Aid Programs Intended for the Poor

Monday, September 24, 2012
Office Affiliation: 

 A Seattle couple was sentenced today to prison terms for theft of government funds for defrauding state and federal benefit programs intended to provide a safety net for the poor and vulnerable, announced U.S. Attorney Jenny A. Durkan.  The chiropractor, DAVID SILVERSTEIN, 60, was sentenced to 18 months in prison, an additional $30,000 criminal fine and three years of supervised release.  SILVERSTEIN’s long time live-in partner, LYUDMILA SHIMONOVA, 53, was sentenced to 18 months in prison and three years of supervised release. SHIMONOVA was ordered to pay more than $261,000 in restitution.  SILVERSTEIN has already paid $333,970 which includes more than $160,000 in restitution and a civil penalty of more than $173,000.  At sentencing U.S. District Judge Ricardo S. Martinez said the pair fraudulently collected benefits, “denying truly needy families the help they needed…. They did it while not needing anything at all.”

“While this couple was fraudulently accepting Section 8 housing benefits, hundreds of needy families languished on the waiting list. For eight years this fraud denied truly needy families the opportunity to obtain decent housing,” said U.S. Attorney Jenny A. Durkan. “They stole funds intended to provide food, cash and medical assistance to the poor. In short, these defendants enriched themselves by victimizing the most vulnerable members of the community.  Today they are held accountable.”

According to the plea agreements, the couple began defrauding HUD in 2003, when they falsely claimed that SILVERSTEIN was SHIMONOVA’s landlord who was accepting rent for her and her two children to live at his waterfront property.  SILVERSTEIN fraudulently stated that he was not living at the house and posed as SHIMONOVA’s landlord, not her romantic partner.  SILVERSTEIN used the address of his chiropractic practice on correspondence with HUD to conceal the fact that he was living in the waterfront property.  SILVERSTEIN collected more than $1,250 each month as rent payments from HUD on behalf of SHIMONOVA.  The couple even went so far as to submit a fraudulent “Eviction Notice” in October 2003, so that they could collect $750 in emergency rent assistance as a “damage deposit” on the home.  SHIMONOVA and SILVERSTEIN lied about their living circumstances to qualify for the HUD benefits. 
SHIMONOVA further lied about her personal financial circumstances to qualify for food and medical benefits from DSHS, as well as Supplemental Security Income payments.  These programs are available only to people with less than $2,000 in total assets.  Beginning in 1995, SHIMONOVA claimed to have no assets other than a small balance in a checking account.  In fact she had a life insurance policy with a cash value exceeding $2,000 making her ineligible for assistance.  In 2003, after beginning her relationship with SILVERSTEIN, she continued to lie about her resources.  In annual reports to DSHS and Social Security she claimed poverty while owning a platinum and diamond ring appraised at $12,500 and diamond earrings worth $17,000.  She also owned certificates of deposit of more than $30,000.  Any one of these assets disqualified her from the assistance programs.  Between 1999 and 2011 she fraudulently collected $84,000 from DSHS.  Between 2005 and 2011 she fraudulently collected $60,124 from Social Security.
In the request for prison sentences for both SILVERSTEIN and SHIMONOVA prosecutors wrote to the court, “When people lie to social agencies about the basic circumstances of their lives, these agencies must use their budgets to detect and investigate fraud instead of delivering benefits. Deliberate fraud also rightly outrages taxpayers, causing public cynicism about social welfare programs and undermining support for programs needed by the poor. In all of these ways, defendants’ offenses are an assault on the community’s ability to deliver resources to the destitute.”
 This case was investigated by the Department of Housing and Urban Development Office of Inspector General (HUD-OIG), the Social Security Administration Office of Inspector General (SSA-OIG) and the Department of Social and Health Services Office of Fraud and Accountability.
The case is being prosecuted by Special Assistant United States Attorney Seth Wilkinson.  Mr. Wilkinson is an attorney with the Social Security Administration specially designated to prosecute fraud cases in federal court.  The civil litigation in this case was pursued by Assistant United States Attorneys Harold Malkin and Kayla Stahman.