Fraudsters stole $42.5million (£26million) from a hardship fund for victims of the Nazi holocaust while working for the charity set up to deliver German reparations to concentration camp survivors.
Seventeen people are facing charges of fraud, five who worked for the Conference on Jewish Material Claims Against Germany, and 12 accomplices.
As members of the Claims Conference, the fraudsters were supposed to process legitimate applications for financial aid.
Instead, they forged documents for money to channel funds to ineligible people who had invented Holocaust survival stories.
More than 5,500 fraudulent claims were approved over 16 years.
Federal prosecutors said the gang was led by Semen Domnitser, the manager of the hardship fund and a separate fund called Article 2, who personally signed off on more than 4,000 fraudulent applications.
He was assisted by former Claim Conference employees Polina Staroseletsky, Polina Berenson, Polina Breyter and Liliya Ukrainsky.
They in turn were allegedly helped by Valentina Romashova, aka Tina Rome, who worked at a specialist compensation claims company, and forger Dora Grande.
Four of the 17 arrested are currently co-operating with the FBI against Domnitser and the others.
The plot was first uncovered in December 2009 and, with the help of the Claims Conference, has now come to court in Manhattan.
Manhattan US Attorney Preet Bharara called it a 'perverse and pervasive fraud' that was 'as substantial as it is galling.'
'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,' said Bharara.
'Sadly, those victim funds were themselves victimized.
'Without the extraordinary co-operation of the Claims Conference in ferreting out this alleged scheme to defraud them, it never would have been exposed.'
The group are alleged to have falsified documents including birth certificates, passport applications and marriage licences and among the evidence against them are a series of different passport applications, all of which carry the same photograph.
On some forms applicants made it appear they had either fled the Nazis or had been incarcerated in concentration camps.
Those applications led to about $18million in false hardship fund payments of $3,600 each to almost 5,000 ineligible recipients.
Another $24.5million was paid out in $411 monthly pensions to more than 650 applicants who falsely claimed to have spent at least six months in a concentration camp or 18 months in a Jewish ghetto.
Prosecutors said many of the applicants were recruited through adverts in Russian-language newspapers and some were unwitting participants in the fraud.
The fund was set up so that victims can claim payments if they can show they survived the Holocaust and overall, 450,000 legitimate applications have been processed.
Funding comes from the German government, which has paid more than $60billion in indemnities for Nazi horrors since 1952.
The scheme was discovered when officials at the Claims Conference spotted inconsistencies between applications and after internal investigation the Claims Conference called in the FBI.
All the false pensions have now been halted and the more than 5,600 fraudulent applicants from both funds have been instructed to pay back the money.
Domnitser and two other charged employees were fired in February, while another had been previously laid off in 2006. Two more were fired yesterday this week.
'That the schemes were carried out for so long is an indicator of how well-planned and precise they were,' said Manhattan FBI Assistant Director-in-Charge Janice Fedarcyk.