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U.S. Says Holocaust Fund Was Defrauded

While fleeing the Nazis in 1941, an 11-year-old girl dodged airplane bombs as she crossed the Dnieper River in Ukraine, ultimately finding refuge in Donetsk, where she and her mother lived in hiding until the liberation of 1944.

A 13-year-old boy escaped from Kiev with his mother and younger sister, shuttling from basements to barns and sometimes the forest, where they often stayed for weeks.

These tales were among thousands of similar accounts given in the name of elderly immigrants who were seeking reparations from the German government through a fund established to provide help to survivors of Nazi persecution.

But many of the stories were works of fiction or embellishment of facts, perpetrated by a group that included six employees and custodians of the fund, which is based in New York, federal prosecutors said on Tuesday. Eleven other defendants were outsiders who recruited and funneled applicants to the programs.

Over 16 years, the suspects used fake identification documents, doctored government records and a knowledge of Holocaust history to defraud the fund of more than $42 million, according to an indictment unsealed Tuesday by the United States attorney in Manhattan, Preet Bharara.

The defendants, the indictment says, would recruit applicants — many of them from Brighton Beach, Brooklyn — through Russian-language newspapers, offering help to people applying for compensation from the Conference on Jewish Material Claims Against Germany. In many cases, the immigrants’ actual experiences would be manipulated or tailored to fit the requirements of the fund; once the payments were approved, the defendants would receive kickbacks from the applicants, according to the indictment.

Birth dates were changed so people would appear to have been alive during World War II; anecdotes about surviving inhumane conditions in a Nazi-occupied territory were repeated in multiple applications; photos of certain applicants were reused on dozens of unrelated applications.

The conspiracy was directed at two programs run by the claims conference. The conference was established in 1951 to compensate Jewish victims of Nazi persecution; the German government appropriated money for the conference the following year, and has been financing it since.

One of the programs, known as the Hardship Fund, pays reparations to Jews who became refugees when they fled the Nazis; the majority of payments from the Hardship Fund went to people from the former Soviet Bloc countries who were not under direct Nazi occupation, but who fled to escape the Nazi advance, according to the indictment. The fund pays a one-time payment of approximately $3,600.

The second program, called the Article 2 Fund, compensates survivors who lived in hiding, under a false identity, in a Jewish ghetto, or who were incarcerated in a labor or a concentration camp. This program provides monthly payments of approximately $411 to survivors who make less than $16,000 per year.

“The alleged fraud is as substantial as it is galling,” Mr. Bharara said at a news conference announcing the indictment. The charges followed a yearlong investigation by the Federal Bureau of Investigation. F.B.I. agents arrested 11 of the defendants Tuesday morning; 5 were previously charged.