NEW YORK, April 20 (JTA) — The U.S. federal court overseeing the $1.25 billion Swiss banks Holocaust settlement this week moved a step closer to awarding much of the remaining money to poor survivors in the former Soviet Union. Judge Edward Korman of the U.S. District Court of Eastern New York ultimately will decide how the approximately $650 million remaining will be distributed. This week, the “special master” Korman appointed to advise him in the case, New York attorney Judah Gribetz, urged the judge to give top priority to the “neediest” survivors — those living in Central Europe and the former Soviet Union. Gribetz echoed Korman’s earlier recommendations that 75 percent of the remaining settlement money should go to survivors there. An estimated 146,000 to 208,000 survivors live in those areas, or 39 to 47 percent of Holocaust survivors worldwide. The latest proposals stem from a 1998 class-action lawsuit filed by survivors and heirs to money looted from Swiss bank accounts during the Holocaust. A landmark settlement aimed to compensate not just those survivors but others as well. Already, $594 million from the settlement has been distributed to Swiss bank account holders or their heirs, refugees from Switzerland, slave laborers of German firms that held Swiss accounts and several humanitarian groups. “As the court repeatedly has confirmed, the neediest survivors must be served first, wherever they reside,” Gribetz wrote in his 77-page report to Korman. Gribetz’s recommendations set the stage for Korman’s April 29 hearing of some 80 appeals for the remaining money by groups from Israel to Latin America. Korman’s decision after that hearing is certain to spark controversy not only over the settlement’s beneficiaries but also over the broader dilemma of how Holocaust reparations should be distributed. Sparks already are flying. One survivor group has vowed to stage protests outside of Korman’s Brooklyn courthouse. Another is filing an appeal in the hope of forcing a new settlement distribution altogether. “There is a tremendous feeling of sadness and betrayal,” said Samuel Dubbin, an attorney for the Miami-based Holocaust Survivors Foundation-USA, a chief critic of the court. In his report delivered Monday, Gribetz did not specify how Korman should divvy up the $650 million remaining to needy survivors, from the $800 million set aside for Swiss account holders. But he signaled the payments may be slowed by the complexities of competing claims, ongoing negotiations with Swiss banks and the court’s determination to find as many account holders as possible. Korman “has made it clear that it is too soon to begin to redistribute funds,” Gribetz wrote. One key figure who helped broker Holocaust compensation settlements between the United States and Austria, Germany and France criticized the court for taking too long to pay out the landmark 1998 settlement. “It’s gone on much too long,” said J.D. Bindenagel, the former U.S. special envoy on Holocaust issues to the White House under Presidents Clinton and Bush. “Justice delayed is justice denied.” Gribetz declined to address the charge, but his report cited Korman’s opinion that had the original lawsuit that produced the settlement gone to trial, deserving survivors who were not account holders would “never have survived a motion to dismiss” — that is, they would have been denied any reparations from the Swiss. The settlement reached under the legal doctrine of “cy pres,” or next best, tried to help needy survivors who lost property to Nazi Germany but who never would have won a claim against “Swiss banks with a far more tenuous connection” to their losses, Gribetz wrote. In the Swiss case, Gribetz held fast to the judge’s previous statements that the bulk of the remaining money should go to the poorest survivors in Central Europe and the former Soviet Union. Those survivors represent a larger proportion of the Jewish population than in other country, rely on less income and lower-quality social services and suffered under both communism and Nazism. At the same time, Gribetz said competing demographic studies attempting to count survivor populations in the former Soviet Union, Israel, the United States and elsewhere for the court “present an incomplete picture of survivor needs.” The “greatest number of survivors in the most desperate straits still reside in the Former Soviet Union and Central and Eastern Europe,” Gribetz wrote. Some applauded the report, including Steve Schwager, vice president of the American Jewish Joint Distribution Committee, which oversees aid to survivors and other Jews in the former Soviet Union. Gribetz’s recommendations “present a thoughtful and comprehensive analysis of the needs of Nazi victims around the world,” Schwager said. But others were far less satisfied. On April 8, the Holocaust Survivors Foundation, which represents thousands of survivors in 14 cities nationwide, appealed Korman’s March report on the Swiss banks case, which was similar to Gribetz’s report this week. The challenge to the Second Circuit Court of Appeals in New York said that between 35,000 and 40,000 survivors in the United States live in poverty but would receive less than 4 percent of the Swiss banks settlement. Of $205 million earmarked for survivors beyond Swiss bank account holders so far, only $1.4 million is aimed at U.S. survivors, Dubbin said. His group has sought $50 million for U.S. survivors, leaving more than $400 million for survivors around the world, Dubbin said. The Holocaust Survivors Foundation has “said all along the needs of all survivors should be addressed and no one should be denied just because of where they live,” Dubbin said. By deciding to allocate money according to need, Dubbin said, the court “changes this from a case of restitution to a case of charity.” Along with the Holocaust Survivors Foundation, the National Association of Jewish Child Survivors in New York issued an appeal this week for survivors to attend a rally outside Korman’s courthouse later this month, urging “fairness” to U.S. survivors.