Fresh Scrutiny Of Claims Conference Allocations

In wake of fraud revelation, group to move on new disbursement committee.

11/23/10
Staff Writer
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As the Conference on Jewish Material Claims Against Germany seeks to root out additional cases of fraud, the $42.5 million scandal that has rocked the organization has rekindled dissatisfaction with the group’s annual allocation of tens of millions of dollars.

To address those growing complaints, Julius Berman, the Claims Conference chairman, told The Jewish Week he plans to announce “in a couple of days” appointments to a long-delayed special committee that is to review past and future disbursements.

Just this week, Moshe Zanbar, a former chairman of the Claim Conference’s executive committee, complained to The Jewish Week that the Claims Conference board authorized the committee in July “and this is now November and we have heard nothing.”

Berman said the new Allocations Policy Review Committee “would be broadly represented” by Israeli and American Holocaust survivors.

He said it would “review where the money has gone over the last few years” and discuss future allocations.

The issue of allocations became so strained in recent months that Zanbar and six other survivors who sit on a 12-member Israeli advisory committee on allocations suspended their work. In a Sept. 28 letter to Berman, they wrote that until their status is clarified, they saw no reason to continue participating in the committee’s discussions.

“The committee’s decisions, as reached in Israel by a great majority, have not been appropriately addressed by the allocations committee’s plenum,” they wrote. “No real discussion was held and they were not brought before the board of directors, who discussed the plenum’s recommendations and reached resolutions.”

Zanbar explained that the Israeli survivors on the committee voted to recommend that all future Claims Conference allocations to Israel be used exclusively to provide home care for needy survivors. He said they specifically “don’t want to continue giving millions of dollars to the government of Israel to upgrade certain departments of hospitals.”

“The survivors are very afraid that in four or five years there won’t be money to continue home care because the Claims Conference will no longer have assets to sell,” Zanbar said. “So we have to build a reserve fund now. That is more important than upgrading various departments. … We did that in the past, but now I don’t think that’s acceptable because survivors have no place to go. Home care is much more important. Priorities have to change.”

Zanbar said the Claims Conference’s board of directors was never apprised of their concerns or recommendation when the Allocations Committee delivered its report for board approval.

“The Allocations Committee can disregard it, but they have to say that their recommendation was opposed by the Israeli advisory committee,” Zanbar said.

Berman said the Allocations Committee considered the advisory committee’s suggestion and “overwhelmingly decided to continue with the policy” of funding hospitals. The committee’s recommendations were then submitted to board members by e-mail, and members voted by e-mail before the board’s July meeting, he said.

Berman chairs the Allocations Committee, as well as its four advisory panels: the Israeli, the American, another on education and a fourth dealing with archives. He has no vote on the advisory panels.

Meanwhile, Claims Conference officials said they were still awaiting from the FBI the list of 4,957 persons whose Hardship Fund applications had been falsified. The fund provides a one-time payment of $3,600 to survivors who were forced to flee their homes to escape the Nazis.

The FBI discovered the fraud — which dates back 16 years — after comparing the Social Security numbers Hardship Fund applicants provided the Claims Conference with various government databases and finding that birthdates and family history were fabricated. That fraud alone totaled $18 million and the Claims Conference said it would seek repayment of that money from the recipients.

The other Claims Conference fund defrauded, the Article 2 Fund or German pension program for survivors, has to date uncovered 658 fraudulent applications. That fund provides eligible survivors whose income is less than $11,500 with a monthly pension of $411. In this fraud too, supporting documents such as immigration papers and passports were expertly altered to make applications fit eligibility requirements.

On Nov. 9, 17 persons were arrested and charged with fraud, including six present and former members of the Claims Conference who processed the claims.

To discover more cases of fraud, the Claims Conference is combing through its files to substantiate each applicant’s claims through outside documents. Although there are more than 100,000 recipients of German pensions, the Claims Conference is currently sending hundreds of questionnaires to recipients in Brooklyn, where the fraud appears to be centered.

Fira Stuckelman of Midwood, an activist in the Russian Jewish community, said she and other survivors she knows received the questionnaire about a month ago “saying we would be receiving money every month and asking us 16 questions.”

“We don’t understand,” she said. “After all these years they’re asking questions about our parents and our children and marriage and death certificates — where was my mother born and my father born,” she said. “And you have to put in a short biography and documents to prove that you were really in the ghetto. Not everybody can remember and can know where their mother was born and died.”

The form tells German pension recipients that their “application is being reviewed again” and that the questions should be answered and sent to the Claims Conference office in Germany within 30 days.

“They will be paid monthly until their documents are reviewed,” a Claims Conference spokesperson said. “Once they are again verified, they will go back to getting quarterly payments.”

If any fraudulent application is discovered, the Claims Conference said it would immediately stop payments and demand reimbursement of the money already distributed. So far no additional fraud has been discovered. The amount of the fraud to date totals $24.5 million and to date a total of $510,467 has been repaid or is in the process of being repaid. The number of people appealing their cases is now up to 97 from 74 two weeks ago.

The work of the Claims Conference office in Midtown has been reduced to processing reimbursement claims from recipient agencies that provide services such as daily meals and medical assistance to 10,000 Nazi victims in New York. Of those, about 2,000 also receive home care.

The staff, which a year ago had numbered more than 100, has been cut to about 50. Although the office will still accept applications for the Hardship Fund and the Article 2 Fund — as well as answer questions about them — the applications will be processed at the Claims Conference office in Germany, where new procedures have been implemented to prevent additional fraud.

Last week the American Gathering of Jewish Holocaust Survivors issued a statement calling on the Claims Conference to appoint “an ombudsman acceptable to the survivor community to advocate on behalf of and represent the interests of survivors.”

But Berman, the Claims Conference chairman, said that request, reported in this newspaper last week, has left him puzzled.

“What would an ombudsman do?” he asked, saying the group never sent him a letter requesting the appointment and instead issued only a press release.

He pointed out that the American Gathering is a member of the Claims Conference and that “the easiest thing is to let me know what they want. … I read they had an emergency meeting and that survivors were very upset that they might not get their pensions. The chairman of the American Gathering [Roman Kent] is also the treasurer of the Claims Conference. If they were so worried, all they had to do was call Roman. He knows about it. They should have told people there was no problem with their pensions so that the people could sleep at night.”

Asked about critics who are calling for him to resign or apologize for it taking 16 years to uncover the fraud, Berman bristled: “If there is a scandal in Washington that the president has no control over, the first thing he should do is submit his resignation? I’m more than happy for anyone to show how I should have known. … I’m prepared to accept the theory that if a member of the board knew or should have known, he should rethink whether to stay on. But what happened is so far removed from what we do.”

“When all the facts are known, I doubt very much if anybody rationally would have been able to suggest that someone along the line would have known there was a problem,” he added. “When we did hear there was a problem, we immediately retained attorneys [and called in federal authorities]. … An apology to survivors should be coming from those who made even the implicit suggestion that survivors were hurt by this fraud.”

Last Update:

05/26/2013 - 16:18

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The time has come for complete transparency! Claims Conference has stated before that their primary goal is not only Surviors - it is also Jewish Education, Non-Profit business growth- etc. Well I ask you, would there even have been Reparation monied without the Holocaust Survivors, and their brave testimonies. It is a disgrace to not take care of our Survivor Community now, while they are still amongst us.

The mishandling of the Claims Conference fund is a severe violation of the fiduciary responsibility of those persons charged with safeguarding the fund and administering its distribution to Holocaust survivors. Something went terribly wrong. Who were the guardians of this funds and how were investment decision made? Perhaps a skilled investigative financial reporter could be brought into this situation to shed light on the colossal mismanagement of funds held for the sole benefit of survivors not administrators or public relation firm.
Thank you for this important piece. Most people in the survivor community do not realize just how close the ties are between the Claims Conference and the American Gathering. The Gathering has proclaimed itself the great advocate for the survivor community but it would appear they were better advocates for the Claims Conference all these years. The non-survivor care allocations should cease immediately. Having this group appoint a committee to monitor their allocations is nonsense. The entire Board of the Claims Conference should step down and a new Board, unblemished by scandal after scandal and truly representative of survivors' interests, should take over. If the people on this Board cared more about the survivors and less about their egos they would voluntarily step down for the good of the survivors, the Claims Conference and the entire Jewish community.

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