Holocaust claims fraud

The US-based Jewish Claims Conference (JCC) says a multimillion dollar fraud case - involving compensation funds from Germany for victims of Nazism - has not damaged the organization's ties with the German government.

"Two years ago," JCC chairman Julius Berman told Deutsche Welle, "when we first discovered it, I said, God forbid, what's going to happen in terms of our relationship with Germany?"

"But I no longer have that worry," said Berman.

A total of 30 people have been charged in connection with the fraud case, including eight people in the past week and eleven former JCC employees.

They are alleged to have helped bogus applicants from Eastern Europe file successful claims for compensation provided by Germany and Austria and administered by the JCC.

"As soon as we smelled the problem we ran to Germany," said Berman, "and they kept on saying one thing: keep us informed."

"They appreciated how we were defrauded, they appreciate that we're keeping them informed, and that we have instituted policies to ensure that these things should never happen in the future," he said.

Corrupt insiders

As the investigation stands, at least 4,951 false claims are responsible for having defrauded the JCC of an estimated $57 million (41.4 million euros).

It is thought the fraud may have started as early as 1993.

But it was only in 2009 that the JCC became suspicious and ordered an independent internal investigation.

And "within a matter of week", the JCC says, it handed its findings to the US Federal Bureau of Investigation and the US Attorney's Office for the Southern District of New York (USAO-SDNY).

Eleven months later, in November 2010, the first 17 people were arrested. More arrests followed throughout 2011 with a batch of eight people incarcerated on October 12.

Janice K. Fedarcyk, assistant director at the FBI, described those charged as "corrupt insiders."

"These were people hired to give who conspired to take," said Fedarcyk.

Dodgy details

The group of former JCC employees and others are alleged to have placed adverts in Russian-language newspapers in the United States, looking for Jewish applicants from Eastern Europe.

The employees then filed claims for Holocaust reparations even if the applicants were ineligible. And if funds were awarded, the employee would split the funds with the applicant.

In some cases, they are said to have tampered with government records or used fake identification documents, and passports that, in one case, according to Berman, actually showed the applicant was ineligible because they had been born after the Second World War.

Berman was unable to say why it had taken so long for the JCC to discover the fraud, but implied that the less-than-diligent nature of Russian records during the war had made it difficult to verify the Eastern European applications.

"I say this without being facetious," said Berman, "one of the great facets of the German culture is their record keeping."

"If we want to know who was in concentration camp X, their names, how old they were, we've got records - but when you switch to the former Soviet Union, those records just don't exist," he said.

Galling fraud

Many of the claimants who received defrauded money were apparently unaware of the fraud scheme or that their documents had been altered to meet the requirements.

The "complex scheme" - as it has been called - seems to have been directed almost entirely from within the JCC.

When the original indictment was announced in November 2010, the US Attorney in Manhatten, Preet Bharara, said the alleged fraud was as "substantial as it is galling."

And the JCC fears there may be further arrests to come.

It has written to people who received fraudulent payments and 626 have repaid or have agreed to repay money, worth about $4.7 million - less than 10 percent of the total estimated sum.

Germany set up the Hardship Fund in 1980 to award one-off payments and the Article 2 Fund in 1992 to pay monthly pensions to Holocaust survivors.

The German Federal Finance Ministry - which is responsible for the fund in Germany - declined to comment when asked, saying it does not want to get involved in a criminal case in another country.

Author: Zulfikar Abbany
Editor: Mark Hallam