Claims Conf. Fraud Put At $350,000; No Survivor Funds Bilked


The Claims Conference fired three employees last week who allegedly approved more than 100 fraudulent Holocaust-era claims — filed primarily by Russians now living in Brooklyn — that bilked the German government out of more than $350,000, The Jewish Week has learned.

A federal investigation has reportedly been launched but it is not known if the employees, one of whom was the supervisor of the Hardship Fund, were complicit in the fraud. The Claims Conference declined to reveal their names.

“The German government was defrauded,” said Gregory Schneider, the Claims Conference’s executive vice president. “No money was taken from Holocaust survivors. … This was done by very sophisticated persons or a group whose aim it was to defraud. And the fact that it is connected with the Holocaust makes it even more disgusting.”

Julius Berman, chairman of the Claims Conference, said he was “outraged that anyone would engage in a fraud of what we consider holy money.”
Schneider said the dismissals came last Thursday, a little more than two months after two of 10 employees processing Hardship Fund claims brought fraudulent documents to him. Two different claimants submitted them two weeks apart.

“I was unwilling to accept within a space of two weeks that this was a coincidence,” he said. “So within 72 hours of those claims being brought to me we hired an outside party to confirm my suspicions. They began to document what we thought was fraud going on.”

He said the information gathered in a forensic audit by the law firm of Proskauer Rose was subsequently turned over to the U.S. Attorney in Manhattan, Preet Bharara. Bharara’s spokeswoman, Yusill Scribner, said only: “It is the office policy not to confirm or deny the existence of investigations.”

Schneider said he also directed that neither the New York office nor the other processing offices in Germany and Israel pay Hardship Fund claims in December, January and February while the investigation proceeded. Thus, he said, about 4,500 claims have gone unpaid.

The law firm found that the fraud was limited to the Hardship Fund and to the New York office, Schneider said. He said Brooklyn residents claiming to be survivors from the former Soviet Union submitted most of the fraudulent claims, although some applications were also sent from other parts of the United States. He said it is “too early” to know how many fraudulent claims had been paid, but he put the number at “likely more than 100.”

Schneider said he has now directed that all pending Hardship Funds claims from the German and Israeli offices be paid this month. There are 1,500 pending claims in New York and Schneider said those that have been verified are also to be paid in coming days; he declined to say if additional fraudulent claims had been filed since November.

Each verified claimant receives a onetime payment from the government of Germany if he or she was forced to flee to the East during the Holocaust and was then compelled to remain in Soviet bloc countries after the war. By the time they were able to migrate to the West, the deadline to file for German reparations had ended.

But in negotiations in 1980 with the Claims Conference, which is formally known as the Conference on Jewish Material Claims Against Germany, Germany agreed to pay each of them a flat $3,500 under the newly created Hardship Fund that to date has paid more than $940 million.
In the last 12 months alone, payments were made to about 92,000 survivors worldwide.

In the last two years, there has been a surge in Hardship Fund applications because Germany broadened the eligibility criteria to include Jews who were in Leningrad at any time during the Nazis’ 900-day siege of the city from September 1941 through January 1944, or fled from Leningrad during those years; Germany paid 7,000 claims in 2008 and 18,000 last year.

There is no deadline for filing an application, and those who were previously rejected because they did not meet all German government criteria may file a second application.

“The tremendous expansion of the program made it easier for the fraud to be perpetuated,” Schneider said. “There were so many more claims filed that a few doctored documents could slip through.”

Applicants must submit proof of their birth date and place of birth as part of the qualification process. It was those documents that were found to have been fraudulent, Schneider said. In addition, all claimants must sign their application and have it notarized.

“We believe beyond a doubt that we were defrauded and a victim of a crime,” Schneider said. “We have cooperated in every possible way with the authorities.”
Berman, the Claims Conference chairman, has formed a three-member task force headed by Sheldon Rudoff to recommend what measures to take to “ensure that no fraudulent claims slip through the cracks again,” Schneider said.

Under the current process, three separate people — a caseworker, the supervisor and a person in another country — must approve each application.
“I’m angry and upset,” Schneider said. “The fact that some thugs perpetrated a fraud will not deter the Claims Conference from making sure survivors live their final years with some dignity as we pursue a measure of justice for them.” n