Two funds created to provide relief for cash-strapped Holocaust survivors were raided for $42.5 million with the help of several people who were supposed to administer the funds, federal authorities said Nov. 9 in New York as they announced charges against 17 people.
U.S. Attorney Preet Bharara described the decade-long scheme by saying the money was stolen in a “perverse and pervasive fraud” from the Conference on the Jewish Material Claims Against Germany, a not-for-profit group that distributes more than $400 million annually from the German government to victims of Nazism.
Six corrupt employees approved more than 5,500 fraudulent applications for aid, leading to millions of dollars being paid to people who did not qualify for help, Bharara said.
Bharara portrayed the Claims Conference as a victim, and agency officials stressed that no Holocaust victims were deprived of any funds because of the crime.
“The stealing of $40 million is disgusting,” Gregory Schneider, the executive vice president of the Claims Conference, said. “But it’s less than 1 percent of funds distributed under those programs.
“No amount of fraud will be tolerated,” he added. “We identified it, documented it, investigated and brought it to the FBI.”
Bharara said the defendants created thousands of false applications and duped residents of New York’s Russian Jewish immigrant community into participating. He also said some payments went to Claims Conference employees and their families.
He lauded the Claims Conference for providing “tremendous assistance” after reporting the fraud last December. Agency officials had noticed that several claimants falsified information to receive payments from the Hardship Fund, an account established by the German government to give one-time payments of approximately $3,600 to those who fled the Nazis as they moved east through Germany.
In all, 4,957 one-time payments totaling $18 million were obtained from the Hardship Fund through the alleged fraud. Another $24.5 million went to 658 fraudulent pension claims drawing from the Article 2 Fund, through which the German government gives pension payments of roughly $411 per month to needy people who spent significant time in a concentration camp or were otherwise adversely affected by the Nazis.
Alleged ringleader Semyon Domnitser was the Claim Conference’s director of the two funds from 1999 until he was fired in February. He has been freed on $250,000 bail. A dozen defendants were arrested Nov. 9 while five had been arrested previously. Four have already pleaded guilty to charges in the case.
Janice K. Fedarcyk, head of the New York office of the FBI, said the defendants each played a role in creating, filing and processing fraudulent claims on behalf of non-qualifying applicants and then dividing up the proceeds.
Uriel Heilman of JTA and Larry Neumeister of the Associated Press contributed to this report.