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.
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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.