EXCLUSIVE: FBI Expands Probe In Fraud At Holocaust Claims Conference

(POSTED MONDAY, JULY 5, 1:30 p.m.) The Federal Bureau of Investigation has widened its probe into allegedly fraudulent Holocaust-era claims that could have bilked the German government out of millions of dollars, The Jewish Week has learned.

The fraud was discovered in December by the Conference on Jewish Material Claims Against Germany in New York, which processes Holocaust-era claims for survivors in behalf of the German government. It immediately contacted federal authorities, including the FBI. The fraud initially involved claims submitted to the Hardship Fund but has now been broadened to include the Article 2 Fund, a pension program that may have been defrauded out of about $7 million over the last decade. Both investigations are continuing and the Article 2 Fund pensions of more than 200 people were suspended last Thursday. The individuals were notified by certified mail that the authorities were informed that they were suspected of fraud and that they must return all of the money they had received or file an appeal within 90 days.

The Hardship Fund was established in 1980 to compensate Jews who were forced to flee east during the Holocaust and remained in Soviet-bloc countries after the war, denying them German reparations. Three of 10 employees processing claims for the fund were fired in February, and the Claims Conference said at the time that it was not known whether they were complicit in the fraud.

The Claims Conference said the fraud is believed to have involved at least 100 claimants, each of whom received a one-time payment of about $3,500. It said 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.

Roman Kent, treasurer of the Claims Conference, said Monday that no arrests have yet been made but that as the FBI probe continued, it “became more and more clear that it [the amount of money involved] might be more than we originally estimated.”

“I don’t have a hard figure,” Kent said of the amount defrauded. “We are fully cooperating with the FBI and others. They know what to do and to go after it; they want to find the real culprits in the act.”

In February, Gregory Schneider, the Claims Conference’s executive vice president, stressed that “no money was taken from Holocaust survivors."

“This was done by very sophisticated persons or a group whose aim it was to defraud,” he said. “And the fact that it is connected with the Holocaust makes it even more disgusting.”

Schneider said also that he had 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. As a result, about 4,500 claims went unpaid.

That figure has increased since then because both Kent and Julius Berman, chairman of the Claims Conference, said only selected claims have since been paid.

“We have paid only claims that we were certain about,” he said, adding that he did not know the figure.

Kent said the German government had been informed of the fraud.

The Claims Conference experienced an increase in Hardship Fund applications after a recent major expansion of the program to include Jews who were in Leningrad at any time during the Nazis’ 900-day siege of the city or who fled during that time – from September 1941 through January 1944. Germany paid 7,000 claims in 2008 and 18,000 last year. After The Jewish Week reported in February on the federal fraud investigation, the number of new applications dropped off appreciably.

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.

“To me personally as a survivor and as someone who is part of the Claims Conference it is really disgusting that anybody would try to defraud the money designated for survivors,” Kent said. “It is distasteful and I would say for our part that we are fully cooperating with federal authorities. The sooner it is over and we find out the people behind it, the better for everyone; we are not yet sure where it will end.”

Signup for our weekly email newsletter here. Check out the Jewish Week’s Facebook page and become a fan! And follow the Jewish Week on Twitter: start here.