Former employee pleads guilty to defrauding nonprofit aiding Nazi victims
The Claims Conference, an aid fund that pays reparations to victims of the Nazis, uncovers a fraud on massive scale
Renee Ghert-Zand is the health reporter and a feature writer for The Times of Israel.
A former Claims Conference clerk pled guilty in Manhattan Federal Court on Tuesday to participating in a $57.3 million fraud.
Brooklyn resident Zlata Blavatnik, 64, is the 12th of 31 defendants in the case to plead guilty. While charges are still pending against the remaining 19 defendants, Blavatnik, who faces a maximum of 40 years in prison, will be sentenced in October.
The fraud involved two funds of the Conference on Jewish Material Claims Against Germany, Inc., which disburses reparations from the government of Germany to victims of Nazi persecution. A network of individuals, both inside and outside the organization, defrauded the “Hardship Fund” and the “Article 2 Fund” over the course of a decade, until December 2009 when the Claims Conference notified law enforcement and a thorough FBI investigation began.
The first fund makes one-time payments to victims, while the second pays $400 per month to survivors who make less than $16,000 a year and meet certain criteria related to their wartime experiences.
It appears that 3,893 Hardship Fund applications were fraudulent, having been submitted by individuals who were ineligible for the reparations, or supported by fraudulently obtained or altered documents. As a result, $12.3 million were lost in payments to fraudulent applicants, who in turn paid kickbacks to allegedly corrupt Claims Conference employees.
The fraud involved with the Article 2 Fund was similar, but also involved the fabrication or altering of documents detailing and verifying victims’ persecution by the Nazis. It appears that 1,112 of these cases were fraudulent, leading to a loss to the Claims Conference of $45 million.
It’s not just clerks like Blavatnik who were involved. The case’s superseding indictment documents filed in December 2011 in the United States District Court for the Southern District of New York indicate the Semen (Semyon) Domnitser is among the defendants. He served as the director of both the Hardship Fund and Article 2 Fund from 1999 until his termination in February 2010. Domnitser was responsible for reviewing and approving all applications before they were sent on to the German government for payment.
