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November
09 Tuesday
2010

Holocaust survivor funds raided for $42 million

Two funds created to provide relief for cash-strapped Holocaust survivors were raided for more than $42 million with the help of several people who were supposed to administer the funds, federal authorities said Tuesday as they announced charges against 17 people.

U.S. Attorney Preet Bharara described the decade-long scheme at a news conference, saying the money was stolen in a "perverse and pervasive fraud" from the Conference on the Jewish Material Claims Against Germany, a not-for-profit group that disburses funds provided by the German government to individuals and organizations.

Six corrupt employees approved more than 5,500 fraudulent applications for aid, leading to millions of dollars being paid to people who did not qualify for help, Bharara said.

The prosecutor portrayed the Claims Conference as a victim, saying the organization had for six decades provided a "financial lifeline for thousands of survivors who suffered the worst of what World War II had to offer."

He said the defendants created thousands of false applications and duped residents of New York's Russian Jewish immigrant community into participating, sometimes by convincing them that they qualified for payouts.

Bharara said there was such a "culture of fraud" among the defendants that some Claims Conference employees and their families received payments. He said the Claims Conference had provided "tremendous assistance" after reporting the fraud to the FBI and prosecutors as soon as it completed an internal investigation last December.

"Sadly, the alleged fraud is as substantial as it is galling," he said.

Janice K. Fedarcyk, head of the New York office of the FBI, said the defendants each played a role in creating, filing and processing fraudulent claims on behalf of non-qualifying applicants and then dividing up the proceeds.

"Funds established and financed by the German government to aid Holocaust survivors were siphoned off by the greedy — and not paid out, as intended, to the worthy," she said.

The Claims Conference said in a statement that no Holocaust victims were deprived of any funds as a result of the fraud.

"We are outraged that individuals would steal money intended for survivors of history's worst crime to enrich themselves," said Julius Berman, chairman of the Claims Conference. "It is an affront to human decency."