Claims Conference fraud – local Survivors secure

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17 people have been charged in New York following an FBI investigation into a fraud which has resulted in $42.5 million being paid by the Claims Conference as a result of falsified claims …Sydney-based Claims Conference board member Robert Goot tells Australian survivors dependent on the CC that their pension funds are secure.

It has been revealed that six of those arrested were staff members of the New York-based Claims Conference.

The United States Attorney in Southern New York Preet Bharara said that employees of the Conference on Jewish Material Claims Against Germany  [The “Claims Conference”] approved more than 5,500 claims which did not qualify for the program. The insiders kept part of the payments for themselves and their co-conspirators.

U.S. Attorney Bharara added: “If ever there was a cause that you would hope and expect would be immune from base greed and criminal fraud, it would be the Claims Conference which every day assists thousands of poor and elderly victims of Nazi persecution.”

Bharara said that without the extraordinary co-operation of the CC, the fraud “would never have been exposed”.  He added: “With our partners at the FBI, we will bring to justice all those who would callously line their own pockets by looting a lifeline for Holocaust survivors.”

In Sydney, CC Board member and president of The Executive Council of Australian Jewry Robert Goot told J-Wire: “The recent publication of the extent of the fraud on funds administered by the Claims Conference, is obviously a matter of serious concern and we all hope that those who perpetrated these  crimes will speedily be brought to justice and that restitution of the funds will be forthcoming. Whilst I will be reporting in greater detail on these matters at the forthcoming Annual Conference of the ECAJ, at this stage, I would emphasise that:

1. the fraud was in respect of 2 funds administered by the Claims Conference on behalf of the German Government, and did not involve any of he Claims Conferences reserve funds;
2. as a result of the fraud, other than during a 90 day period of suspension of all payments during the investigation, no survivors who were properly entitled to pension or other payments,  were deprived of those monies nor will they be in future – they have not  been prejudiced by the crimes committed against the Claims Conference – they have no reason to fear that their entitlements will not continue to be paid;
3. senior management of the Claims Conference were not involved in any fraudulent conduct, on the contrary they discovered and promptly reported it to the FBI; the Claims Conference has co-operated and will continue to co-operate with and kept the relevant law enforcement authorities and the German Government fully informed; and
4. Steps are being taken to minimise the possibility of any recurrence.”

But J-Wire undersstands the German Government has the right to make claim on the CC for the money it has paid out on the fraudulent claims.

There is a restitution process in place and some funds have already been repaid…but some of those thought to have been involved in the fraud have fled the U.S.

The Attorney’s report states that six employees of the Claims Conference “systematically defrauded the Article 2 Fund and the Hardship Fund for over a decade”.

The CC did not suspect the fraud until December 2009 when they alerted the authorities.

Many of the recipients of the fraudulent funds were born after WWII and one person was found not to be Jewish.

The report states that 4,957 Hardhip Fund applications between 2000 and 2009 appear to be fraudulent resulting in a US$18 million loss for the fund.

The Article 2 fund which pays $411 monthly to qualifiable survivors whose income is below $16,000 annually . 658 cases between 1993 and 2009 have been found so far of fraudulent claims on this fund resulting in a loss of US$24.5 million.

Of those charged, four have pleaded guilty. The penalty is up to 20 yeats’ imprisonment: fine of up to $250,000. All seventeen have been charged with conspiracy to commit mail fraud. Furthermore, one has been charged with money laundering, three have been charged with witness tampering and four have been charged with mail fraud.

Julius Berman, the President of the Claims Conference, told fellow directors that 4,957 applications to the Hardship Fund had been falsified.  He added that to date, the Claims Conference had processed 456,969 applications under the Hardship Fund. He said that in the case of the Article 2 Fund, 658 cases had so far been found to have been falsified out of  176,092 applications.

The Claims Conference has closed its New York office responsible for processing claims. Claims will now be dealt with by processing centres in Frankfurt and Tel Aviv. The Claims Conference will now only accept documents it receives from official archives. Passports and birth certidficates had been falsified by those seeking fraudulent payments.

The Executive Director of the Simon Wiesenthal Centre in Jerusalem, Dr Efraim Zuroff told J-Wire: “The fraud case at the Claims Conference is an incredible scandal and a serious embarassment to the organisation, which no doubt will be exploited by anti-Semites the world over for many years to come.

Those, like Isi Leibler, who for months have been calling for greater transparency at the Claims Conference are to be commended for their vigilance.”

Rbert Goot told J-Wire: “I do not know exactly how many survivors in Australia are receiving funds from the Conference. Restitutions have begun but some are appealing.”

J-Wire has published “At the Expense of the Survivors”  an article written by Isi Leibler last weekend…read it here.