Holocaust reparations stolen, federal prosecutors say

The German money was supposed to go to Jews who had been victims of the Nazis. Instead, the supervisor of two reparation funds and several accomplices steered more than $42 million to thousands of ineligible recipients while skimming millions of dollars for themselves, according to federal charges filed Tuesday.

The alleged ringleader was identified as Semyon Domnitser, a Russian immigrant who for the last 11 years had headed two large funds at the Conference on Jewish Material Claims Against Germany, a nonprofit established in 1951 to distribute German money to Holocaust survivors, prosecutors said.

The roughly 5,400 people who received improper payments over the last decade were mostly elderly Jews from the former Soviet Union and Eastern Europe who now live in Brooklyn. It is unclear how many were unwittingly drawn into the scheme. “Some of the elderly recipients weren’t eligible, but they certainly suffered during the war. We’re still trying to sort this all out,” said Greg Schneider, executive director of the claims conference.

Seventeen people, including Domnitser and five other insiders, face a range of charges that include fraud, conspiracy, money laundering and witness tampering.

“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 Manhattan U.S. Atty. Preet Bharara. “Sadly, those victim funds were themselves victimized.”

Schneider said the investigation began shortly after he took over about a year ago, when he was made aware of false information given in two applicants’ claims. Federal investigators were called in.

The indictment alleges that about $18 million was stolen from the Hardship Fund, which provides a onetime payment of $3,600 to people who were forced by Nazi occupation to abandon their homes and become refugees; $24.5 million was drained from the Article 2 Fund, which pays $411 a month to survivors who were forced to live in hiding, in a Jewish ghetto or in a concentration camp for at least 18 months during the war. To be eligible, survivors must earn less than $16,000 a year.

Many of the applicants became involved after responding to advertisements in Russian-language newspapers directed at people affected by World War II. They were instructed to bring documents — marriage and birth certificates, immigration papers and passports — to a New York law firm that would help them apply for reparation money.

The documents were then allegedly doctored, or new ones fabricated, to show that a person had lived in a particular ghetto, for example. Prosecutors say that people used false histories to apply for benefits even though they weren’t born until after the war, and that one wasn’t even Jewish. At least one employee at the law firm was charged in the case.

Domnitser and the five caseworkers were fired in February after the alleged scheme was uncovered. At least two suspects are accused of trying to thwart the investigation by offering witnesses $1,000 bribes to lie to federal authorities. After the organization developed procedures to block fraudulent claims, a staff member involved in helping investigators allegedly received a death threat against him and his family from a Russian speaker who called him at the office.

Schneider said the conference, which has distributed $60 billion in German money worldwide, was contacting all those who benefited from false claims to ask that the money be returned.

“Some are appealing, some are returning the money, and a few have asked to set up installment plans to return, say, $50 a month,” Schneider said.

During a news conference Tuesday announcing the charges, Janice Fedarcyk, assistant director in charge of the New York office of the FBI, quoted from Eli Weisel’s Holocaust memoir, “Night”: “For the survivor who chooses to testify it is clear his duty is to bear witness for the dead and for the living. To forget would be offensive.”

“More offensive still,” added Fedarcyk, “was the shameless scheme of these defendants fabricating victims to take money intended for genuine Holocaust survivors.”

geraldine.baum@latimes.com