‘Closure’ On Holocaust Claims Fraud

Senior employee of Conference on Claims Against Germany convicted in $57 million scheme; only $5 million recovered to date.

05/17/13
Staff Writer
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A former senior employee of the Conference on Jewish Material Claims Against Germany and two codefendants were convicted last Wednesday in Manhattan federal court of helping defraud the organization out of $57.3 million intended for Jewish victims of the Holocaust.

A total of 28 other people arrested in the scam, believed to have begun in 1994 and first discovered in November 2009, previously pleaded guilty.

The $57.3 million was stolen by filing applications for German reparations by making false claims about the individuals’ wartime experiences.

Of the 31 arrested, 10 had been employees of the Claims Conference. None of the recipients of the money have been charged.

Those arrested were convicted of falsifying applications or recruiting applicants for the fraud. Some members of the conspiracy were convicted of recruiting others to provide identification documents — such as passports and birth certificates — which were then fraudulently altered and submitted to corrupt conspirators inside the Claims Conference who processed and approved them. When the applicants received their checks, they paid a kickback to the thieves.

The investigation found that many of those who received fraudulent funds were born after World War II, and at least one person was not even Jewish.

Only about $5 million has so far been recovered from the people who wrongly received it, and another $1 million has been ordered paid by defendants who pleaded guilty. In addition, another $3 million is to be repaid in installments by 400 people who wrongly received it.

“We’re happy that this is over,” said Greg Schneider, executive vice president of the Claims Conference. “It’s been a three-and-a-half-year horrible experience and now finally there is closure.”

Manhattan U.S. Attorney Preet Bharara said these verdicts bring to a close the prosecution of individuals who stole money “intended to benefit victims of the Nazi genocide — one of the darkest chapters in all human history … We said we would not stop until we brought to justice those who committed these unthinkable crimes, and today our objective was accomplished.”

The senior Claims Conference employee convicted last week was Semen Domnitser, who worked as an Article 2 Fund caseworker from 1994 until 1999 helping to process fraudulent pension claims of about $400 per month. Those eligible had to be making less than $16,000 per year and meet other criteria regarding their living conditions during the Holocaust. In 1999, Domnitser was promoted to director of both the Article II Fund and the Hardship Fund, a one-time payment established in 1980 of about $3,500 to victims of Nazi persecution who fled their homes and were forced to travel east as refugees, and had never received German reparations.

The jury in the four-week trial convicted Domnitser and two recruiters of applicants, Oksana Romalis and Luba Kramrish, in connection with the fraud. They are to be sentenced Sept. 10. The jury found that Domnitser, as the ringleader of the scam, received thousands of dollars in kickbacks, primarily in the form of money orders, from applicants who had received money to which they were not entitled. He continued to serve as the director of both funds until he was fired in February 2010 along with two other employees.

At the time, the Claims Conference said it did not know for sure if they were implicated in the fraud. After the full dimensions of the rip-off were uncovered, Schneider ordered the firing of all employees in New York — about a dozen people — who had been involved in processing the applications.

An internal investigation was conducted to “identify weaknesses” in the application process and make immediate changes. Deloitte & Touche was then brought in by the German government, which suffered the monetary loss in the fraud. It reviewed the Claims Conference’s operations in both individual compensation programs and home care allocations to look for any weaknesses. It submitted a list of recommendations that have or are in the process of being adopted.

To date, investigators have uncovered at least 3,839 Hardship Fund applications totaling about $12.3 million that appear to be fraudulent, and 1,112 fraudulent Article II applications totaling $45 million. All of the claims involved men and women who claimed to have lived in the former Soviet Union during World War II and who now live in Brooklyn.

Schneider said most of those who submitted applications “didn’t know what was happening nor that a fraud was taking place. Often they were just told to fill out a blank form that someone else altered; sometimes they were just asked to sign a blank form that others filled in. … Many were confused by the language or don’t know English.

“Most of those people are indeed elderly poor Jews,” he continued. “In fact, many are Nazi victims who legitimately fled the Nazis and are entitled to a one-time payment. But their documents were altered so that they claimed they were in a ghetto and thus entitled to get a monthly pension.”

Asked about attempts to recover the money wrongly received by recipients, Schneider said: “Lots of people did not answer our demand for repayment. … In many cases, these are people who are old and living on SSI. Even if we got a judgment against them, they would not have the money to repay. … Ultimately, the money belongs to the German government and they understand that when someone is living on SSI and in their 80s, there is little that can be done. The real focus has been on the perpetrators.”

One of them, Polina Breyter, a former caseworker at the Claims Conference, played a central role in the fraud and was sentenced to 18 months in prison, ordered to forfeit $22,000 and pay restitution totaling $461,875.65.

In a statement, the Claims Conference stressed that its work to assist Holocaust survivors continues and that this year it expects to distribute $370 million to individual survivors through German-funded compensation programs it administers. It is slated to allocate another $300 million – including $180 million from the German government — for home care and other essential aid.

stewart@jewishweek.org
 

 

Last Update:

06/16/2013 - 17:42

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To the Editor:
I would like to thank Mr. Schneider for ending up the shameful "activity" published in your newspaper. But this shame would be over when Mr Schneider will solve one more shame, which is that some and many Nazi Victims does not receive the funds, which the Claims Conference allocates to the local Jewish organizations. Wrongly, the Conference stay away from monitoring this process claiming that it does not have jurisdiction over the the organizations, which receives German -funded home care and emergency assistance from the Claims Conference. In the absence of distribution policies and even applications for already allocated to the local Jewish organization funds, our fellow Jews and employees of the centers that paid a hansom salary and bonuses grab the German funds from us Nazi Victims who lives near FPL (federal poverty line). Do we have to ask German government to hire again Deloitte & Touche to determine how much German funds weren't received by the Nazi Victims but by survivors of the WWII who did not even live on Nazi occupied territory or this funds went directly into the packets of the Jewish employees.
I believe that it is something wrong with our Jewish community, when the Jews steals from poor Jewish people. Mr. Schneider, your job would be over and you may declare your happiness when the Nazi Victims will receive every penny , which German government entrusted you for fair distribution to them.
Thank you.
L.Butler,Nazi Victim

Claims Conference top heads, and Board members, should be ashamed for lack of focus on helping known Concentration Camp Survivors, but focus on organization growth- salary increments of their CEO, COO, and those of their partner organizations. How in the world could 57M dollars have been stolen when, someone as well documented as my parent, an Auschwitz survivor, is put in the position of having to provide insane documentation, and proof, and then have to grovel for a little more help. My guess would be, that because of their focus on identifying more "holocaust survivors"- they could seek more monies. Claims Conference, how about focusing on the Holocaust Survivors that are known to you. The few, that faced Dr. Mengele daily, that struggled with the courage to rehash those memories in order to testify on your behalf- how about re-examining the treatment of these survivors. Reducing home health care of known survivors by over 50%, in order to distribute to "new cases" is shameful.

Several newspapers reported that management of the Claims Conference had been alerted nearly a DECADE BEFORE about the massive $57 million fraud but failed to act. Surely, in any other organization, whether public or private, the executives responsible for such negligence would have been fired or offered their resignation. The Holocaust survivors being serviced by this organization have a right to expect similar ethical conduct from executives whose salaries and annual compensations are about equal with that of the head of the "International Monetary Fund".
Leo Rechter, president 'National Association of Jewish Child Holocaust Survivors, Inc. - NAHOS.

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