17 arrested in $42.5 million fraud at Claims Conference

The U.S. Attorney’s Office in New York has arrested 17 people for participating in a $42.5 million fraud at the Claims Conference.

Those arrested include former and current employees of the Claims Conference, which distributes more than $400 million per year from the German government to victims of Nazism. The alleged ringleader oversaw the two funds from which the tens of millions of dollars were allegedly fraudulently obtained.

In a news conference Tuesday, Claims Conference officials stressed that no Holocaust victims were deprived of any funds because of the crime. Manhattan District Attorney Preet Bharara praised the Claims Conference for contacting the authorities as soon as the seriousness of the fraud became apparent and for cooperating with the FBI throughout its investigation.

“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,” Bharara said. “Sadly, those victims were themselves victimized. Without the extraordinary cooperation of the Claims Conference in ferreting out this alleged scheme to defraud them, it never would have been exposed.”

Claims Conference officials first noticed about a year ago that several claimants had falsified information to receive payments from the Hardship Fund, an account established by the German government to give one-time payments of approximately $3,600 to those who fled the Nazis as they moved east through Germany.

They were tipped off when multiple claimants used the same language and details in forms in which they documented evidence of victimization by the Nazis. That prompted a wide internal investigation that turned up thousands of additional fraudulent claims. The alleged fraud, which dates back to the mid 1990s, remained hidden so long because Claims Conference staffers at various levels conspired to hide and manage the false claims.

In all, 4,957 one-time payments totaling $18 million were obtained from the Hardship Fund through the alleged fraud. Another $24.5 million went to 658 fraudulent pension claims drawing from the Article 2 Fund, through which the German government gives pension payments of roughly $411 per month to needy Nazi victims who spent significant time in a concentration camp, in a Jewish ghetto in hiding or living under a false identity to avoid the Nazis.

Alleged ringleader Semyon Domnitser oversaw the two funds for the Claims Conference until he was fired in February. Domnitser could not be reached by JTA for comment for this story. (Read the charge sheet here.)

The other 16 people involved with the fraud all reside in Brooklyn and have been charged with mail fraud and conspiracy to commit mail fraud. Eleven were arrested Tuesday morning. Charges against five others, four of whom pleaded guilty, were unsealed Tuesday. The charges carry possible sentences of up to 20 years in prison and fines up to $250,000.

Since its founding shortly after the Holocaust, the Claims Conference has processed more than 600,000 individual claims with total payments exceeding $4.3 billion. The money came from the German government following negotiations with Claims Conference officials and Jewish leaders. The Claims Conference continues to negotiate with the German government for the expansion and continuation of various restitution programs.

In addition to processing restitution payments from the German government to Nazi victims, the Claims Conference is the trustee of money from the sale of heirless Jewish properties in the former East Germany that had been seized by the Nazis and are now being restituted to the Jewish community. It uses the money from the sale of those properties to fund institutions that aid survivors and Holocaust education programs, distributing approximately $135 million per year.

About four months after the fraud was discovered, Claims Conference officials went public with the news. In July, the agency announced the discovery of at least $7 million in allegedly fraudulent payments and said it had dismissed three employees in New York. Of those charged this week, six worked for the Claims Conference and 11 did not.

On Tuesday, Claims Conference officials stressed that the fraud represents a minimal amount of the annual payouts to survivors through the Hardship and Article 2 funds.

“The stealing of $40 million is disgusting,” Gregory Schneider, the executive vice president of the Claims Conference, told JTA. “But it’s less than 1 percent of funds distributed under those programs.

“No amount of fraud will be tolerated,” he said. “We identified it, documented it, investigated and brought it to the FBI.”

In recent months, the Claims Conference said, it has taken steps to strengthen anti-fraud safeguards, overhauling procedures and shifting some claims processing away from New York. The Claims Conference also said it retained K2 Global Consulting, an international firm, to review its procedures and make recommendations.

Nation and World Briefs

Geiderman Named Holocaust Commission Vice Chair

President Bush named Joel Geiderman as the vice chair of the U.S. Holocaust Memorial Council. Geiderman, co-chair of the department of emergency medicine at Los Angeles’ Cedars-Sinai Medical Center, previously served on the council, which oversees the U.S. Holocaust Memorial Museum. Bush also appointed Michael Morris of Georgia and Jay Stein of Florida to the council on Aug. 18.

Settlement Expansion Planned

“There will be building in the [West Bank] settlement blocs,” Israel Prime Minister Ariel Sharon was quoted as saying in the Jerusalem Post on Monday, as security forces prepared to evacuate two settlements in the northern West Bank in the final stage of the government’s withdrawal plan.

Sharon vowed that the Gush Emunim and Ariel blocs would remain Israel’s forever, and stood by his decision to connect the Ma’aleh Adumim settlement to Jerusalem, despite the fact that it has drawn censure from Washington.

“This will not cause the cutting off of Judea and Samaria,” Sharon said, playing down U.S. contentions that the Greater Jerusalem plan would effectively split the West Bank, where Palestinians are demanding a state. “Solutions can be found,” he said.

Abbas Praises Pullout

Mahmoud Abbas praised Israel’s withdrawal from the Gaza Strip in a conversation with Israeli President Moshe Katsav. Israel Army Radio quoted the Palestinian Authority president as telling Katsav on Tuesday that the withdrawal increased chances for Israeli-Palestinian peace. Katsav reportedly asked Abbas to carry out Palestinian obligations under the “road map” peace plan to crack down on terrorist groups.

Abdullah Backs ‘Right of Return’

King Abdullah said Jordan would not resettle any Palestinian refugees in its territory. Addressing Parliament in Amman last week, Abdullah said that Jordan would insist that Palestinian refugees go to lands under Israeli control.

“It is the right of the Palestinians to return to their homeland and create an independent state on Palestinian land and nowhere else,” he said.

Jordan was created from land included in Britain’s original Palestine Mandate, and its population is mostly Palestinian.

Plea Reinstated in JDL Case

A U.S. judge reinstated a plea deal in the case of a Jewish radical accused of bomb plots against Muslim targets. Monday’s decision means prosecutors cannot pursue additional charges against Earl Krugel, a member of the Jewish Defense League arrested in 2001 in California for plotting to bomb a mosque and the offices of a Lebanese-American congressman. Krugel’s accomplice, Irv Rubin, died in jail in 2002.

Innovative Rabbi Succumbs to Cancer

Rabbi Joshua Simon, who tried to revitalize a synagogue near Broadway in New York City, died last week at age 44 from brain cancer. A former magazine editor and rock musician, Simon took the pulpit in 2002 at the Actors Temple, a synagogue where stars had once worshipped, which was struggling with a dwindling congregation in recent years. Simon led services with an electric guitar and increased the synagogue’s membership. But the congregation continued to struggle, and Simon left in June, his wife told The New York Times. He also completed a CD of liturgical music before he died.

Holocaust Claims Hit $16 million

The commission for Holocaust insurance claims announced it would be distributing $16 million to Holocaust victims and their heirs. The International Commission on Holocaust Era Insurance Claims (ICHEIC) said Friday it was offering $5.5 million for life insurance policies held with companies that have been liquidated since World War II, and $10.5 million for claims containing anecdotal information about policies.

“While no amount of compensation in any form can make up for what Holocaust victims suffered, these payments are an important step in addressing one particular aspect of the many wrongs of that time,” said ICHEIC’s chairman, Lawrence Eagleburger.

Israeli Poet Kills Self

Dalia Ravikovitch, an Israeli writer and a former recipient of the Israel Prize, committing suicide Sunday. She was 69.

“Dalia Ravikovitch is one of the main pillars of Hebrew poetry,” wrote the committee that decided to award her the Israel Prize in 1999, according to Ha’aretz. “Her poems are a personal testament of solitude, forbidden love and a desperate struggle for existence, while at the same time expressing universal truths and the experiences of many.”

Ravikovitch reportedly suffered from clinical depression and had attempted suicide in the past. She was buried Monday.

Sushi Bill Hits Raw Nerve

A Jewish couple eating in New Jersey received a restaurant bill with the words “Jew couple” written on it. The couple was dining last Friday at an eatery on the New Jersey shore when their bill for sushi came, with “Jew couple” in the part of the bill where a table number or description of customers normally would be, the New York Post reported. Elliot Stein said that when he complained to the restaurant manager, he was told there was nothing derogatory about the term. The restaurant’s general manager told the Post that the words reflected “poor judgment” on the part of a worker who is no longer employed by the restaurant.

Swimming Pork Is Kosher

A kosher fish that ancient Jewish sages said tastes like pork has arrived in Israel. The shabut, which is mentioned in the Talmud as having a pig-like taste, was shipped from Iran in formaldehyde by Israeli academics with the help of an Iranian liaison, the Jerusalem Post reported. The medieval commentator Rashi noted that the shabut’s brain tastes like pig and that the fish could serve as a potential alternative for kosher keepers who want to taste the “other white meat.” The shabut, whose scientific nomenclature is Barbus grybus, also inhabits rivers in Iraq and Syria. Some Israeli fish farmers are considering breeding the fish.

Briefs courtesy Jewish Telegraphic Agency.


Liaison to the Past

Since she fled the former Soviet Union more than a decade ago, Anya Verkhovskaya has come more than full circle. As an assistant to the director of outreach and notification for the International Commission on Holocaust-Era Insurance Claims, she travels frequently to her birthplace to work on the project of advising Jews living in Eastern Europe and the former Soviet Union on their claims. To date they have garnered 250,000 applications.

Returning to work in the region she had left as a teenage political refugee was “very, very emotional,” said Verkhovskaya, now 30. Her current work there is a stark contrast to her youth in Moscow as a member of the Jewish Musical Theater. The Communist authorities had used it as “governmental proof that there was no anti-Semitism or program to destroy Jewish culture and Jewish religion,” Verkhovskaya said. “Of course it was very carefully watched by KGB. They traveled with us very closely and we were only allowed to do certain things.” Their big fear, Verkhovskaya recalled, was that “we would send out a pro-Israeli message.”

Following her flight from Russia at age 19, Steven Spielberg’s Survivors of the Shoah Visual History Foundation asked Verkhovskaya to work in Eastern Europe, where she helped gather more than 9,000 survivors’ testimonies. (While working for the Foundation in Bulgaria, Verkhovskaya met her husband, Haim Cohen. They now have a 14-month-old son, Aaron.)

“Anya has to be taken seriously,” said Dr. Michael Berenbaum, president of the Berenbaum Group and former CEO of Spielberg’s foundation, where Verkhovskaya worked from 1994-97. “She’s done a Herculean job gathering information on the former Soviet Union and has been deeply involved on getting the accurate information to the right people. She’s a serious hard worker to be reckoned with.”

“It’s been lot of hard work, but I’m very comfortable in this country because I can be who I am and I can give whatever education I want to my children,” said Verkhovskaya. “I left Russia when I was 19, and for 10 years I couldn’t get away from this feeling of fear every time I passed by a shul . I don’t want my children to ever go through that.”

After coming to America, Verkhovskaya worked as production manager on the 1998 Oscar-winning documentary “The Last Days.” She is currently co-producing another documentary called “Children of the Abyss,” about the youngest Holocaust survivors in the former Soviet Union.

In addition to her professional work, Verkhovskaya has been very active in community affairs. She serves on the board of directors of the Archive for the Russian-Jewish-American Institute of the Diaspora. In 1998, Verkhovskaya started Heritage Films, a company to help others record their personal histories.

The local Russian community in Los Angeles is both weak and strong, Verkhovskaya said. “It is weak because anyone who’s found themselves in a new environment is completely vulnerable. On the other hand, it’s very strong because it was able to overcome all complexity of immigration and achieve certain goals.” She finds the community “absolutely wonderful” and hopes to build more bridges between the Russian Jewish community and the people of Los Angeles.

Though Verkhovskaya has come far from home, she would still like to go farther: “My dream job would be to go to Israel to work as an [inter]mediary between sabras and Russians.” Given Verkhovskaya’s determination, she will no doubt fulfill her dreams, but the L.A. community will surely miss her.

For more information on Anya Verkhovskaya and Heritage Films, visit www.heritagefilms.com.

Process of Payments

Virtually all Jews locked up in concentration camps, ghettos and similar places of incarceration during the Holocaust may now apply for compensation from a newly created $5 billion German foundation. And on Feb. 5, the names of 21,000 probable Holocaust victims whose dormant accounts still sit in Swiss banks were posted on the Internet.

These two efforts are the first major attempts to see that survivors and their heirs begin to realize the fruits of talks that started with Swiss negotiations five years ago. The Swiss negotiations resulted in a court-approved $1.25 billion fund being established, 80 percent of which has been set aside to pay the heirs of those who had money in bank accounts the Swiss hoarded.

While applauding steps to begin the distribution, Elan Steinberg, executive director of the World Jewish Congress, said he was "appalled that the total going to lawyers is on the order of $100 million from both of these funds." The figure was either negotiated or court ordered and represents a fraction of the total.

Survivors and their heirs are asked to complete applications if they believe they qualify for money from either fund. Applications can be downloaded from the Internet or obtained from toll-free numbers and at several locations in greater Los Angeles (see box, below).

As many as 170,000 Jewish survivors worldwide are expected to apply for the German money, which is designed to compensate slave and forced laborers. Those who were slave laborers may receive up to $7,500, forced laborers up to $2,500.

As part of Hitler’s Final Solution, Jews were forced to perform labor under the harshest of conditions as one way of exterminating the Jews of Europe. Therefore, all those thrown into concentration camps, ghettos and other areas of confinement are considered former slave laborers and thus entitled to compensation. Forced laborers are those who were made to work in areas under Nazi or Axis occupation during World War II under conditions not included in the definition of a slave laborer.

Claims will be accepted from former slave or forced laborers except those currently residing in Poland, the Czech Republic and other former Communist nations. Their respective national foundations will process their claims. Certain heirs of former laborers who died on or since Feb. 16 are also eligible.

Those who received previous payments from a private German industry fund for slave and/or forced labor will have such payments deducted from the amount they will now receive. This fund is independent of other funds and requires new applications. Payments will be made in two stages, with the second amount dependent on the number of people who apply. Applications must be filed by Aug. 11.

To obtain an application to apply for money under this fund, call (800) 697-6064 or go to the Web site www.claimscon.org. Information is available on the Web site in seven languages.

The Conference on Jewish Material Claims Against Germany will help administer the fund. It estimates that as many as 50,000 survivors in the United States and Canada are eligible for the money.

"Nothing can make whole again the horrors during the Third Reich," said Rabbi Israel Miller, president of the Claims Conference. "But survivors have received some justice through Germany’s recognition of its moral obligation to create this fund."

Half of the foundation’s money will come from the German government and the rest from more than 5,000 of the country’s businesses, including Volkswagen, Daimler-Benz, Bayer and Siemens. Most German industry and business benefited from slave or forced labor during the Holocaust.

In the Swiss case, applications for those who believe they are heirs of Holocaust victims whose money still sits in Swiss banks are available. To obtain an application form, call (800) 881-2736, or visit one of the following Web sites: www.dormantaccounts.ch, www.crt-ii.org or www.swissbankclaims.com.

Although 26,000 names were to be posted, Michael Bradfield, a special master appointed by Brooklyn Federal Court Judge Edward Korman, said the number was reduced to 21,000 because of a duplication of names. He said a special team of auditors headed by former Federal Reserve Chairman Paul Volcker found that there were 36,000 dormant accounts probably opened by Jews who were murdered during the Holocaust. But in a compromise with Swiss banks, only 21,000 will be posted.

Bradfield said that anyone who believes he or she is the heir of a Holocaust victim who had a Swiss account should complete the application form whether or not the victim’s name is posted on the Internet. Even those who paid a Swiss ombudsman to search Swiss bank records and were told no account existed should apply.

"The ombudsman didn’t look where [the auditors] looked," said Bradfield. "We have a lot of accounts that were closed that the ombudsman never looked at."

He stressed that the entire process is free, and there is no need to hire a lawyer. The deadline for filing applications is in six months; Bradfield said he expected 100,000 claims to be filed. He said it is expected to take two years to review and act on each application and that every filing will be acknowledged. Once a determination is made, a letter will be sent explaining the disposition. Under Swiss law, the names can be kept confidential, but the dollar amounts will be made public.

Those applying for dormant funds will be asked to provide "plausible information to demonstrate that they have a legitimate relationship [to the person on the list] and that they would be the heir under normal inheritance laws," Bradfield said. "We are looking for plausible evidence, taking into account the destruction of documents, the disruption of the war and horrible persecution."

These local agencies are offering applications for payments from the fund for slave and forced laborers:

Los Angeles
(310) 271-3306;
(323) 937-5900
(818) 984-1380
West Hollywood
(323) 851-8202

Santa Monica
(310) 393-0732
Bet Tzedek:
(323) 549-5883
Los Angeles Museum of the Holocaust:
(323) 761-8170

Disturbing Numbers

Three out of every four insurance policy claims submitted by Holocaust survivors or heirs of victims are being rejected by European insurers.

The 75 percent rejection rate is particularly startling since these claims, submitted through an international commission, are considered the strongest ones and were to be processed on a fast track basis, requiring only minimum backup proof.

The figures are based on internal documents of the International Commission on Holocaust Era Insurance Claims, headed by former U.S. Secretary of State Lawrence S. Eagleburger, according to a front-page article in Tuesday’s Los Angeles Times.

So far, the five European insurers participating in the commission have agreed to settle only 124 of 909 claims submitted. Some 393 claims have been rejected, and the rest have been pending for more than three months.

Deborah Senn, Washington state’s insurance commissioner and a leading voice among state insurance officials, said that “I am very seriously concerned about how the companies have participated in this process. The companies are turning down claims even when they are well documented. If three out of four claims are being rejected in the fast track, how are the larger group of survivors and their heirs going to see some justice?”

The five participating companies are Allianz AG of Germany, Assicurazioni Generali of Italy, Axa of France, and Switzerland’s Winterthur and Zurich. These companies wrote about 35 percent of European life, homeowner and dowry policies between 1930 and 1945.

Allianz spokesman Andrew Frank confirmed the low number of approved claims and said that rejected claimants “should theoretically be taken care of” by a separate humanitarian fund established by the insurers and to be administered by the same international commission.

But so far, there are no guidelines of how much money will be paid into the fund and who will qualify for payments.

Geoffrey E. Fitchew, the commission’s vice president, expressed concern at the slow pace of the “fast track” process and told the Times that some insurance companies are not adhering to the established criteria and are basing rejections on incomplete records.

Fitchew said that some companies may have classified policies confiscated by the Nazis from their Jewish owners as already paid.

The European insurers have also stalled in making public the names of all policyholders during the Holocaust era. Allianz, for example, has so far provided only 15,000 out of a possible 1.5 million names.Bobby Brown, the Israeli government representative on the commission, said in a court deposition this week that without full policyholder lists, “many survivors and their heirs will have no knowledge as to whether their relatives purchased any insurance, whether they are eligible to make a claim, or against what company such a claim should be made.”

Elan Steinberg, executive director of the World Jewish Congress, said he plans to raise the issue of rejected claims at the commission’s next meeting in June in London. “I have found my experience on the international commission as dispiriting,” he said. “It has been a struggle every step of the way.”

California Pressures Insurers to Settle Holocaust-era Claims

California’s top officials, legislators and private organizations are throwing their collective weight behind a series of measures aimed at pressuring European insurance companies into settling claims from the Holocaust era.

The charge is being led by Gov. Gray Davis and state Insurance Commissioner Chuck Quackenbush. Speaking at a news conference last Friday, they pledged, in Davis’ words, to “begin a sacred pilgrimage to bring healing and hope to those victimized not once, but twice. We will do everything possible to seek justice for Holocaust victims, survivors and their families.”

At the conference, held in the Simon Wiesenthal Center, Davis also warned insurance companies “to pay now, or we guarantee you will pay more later.”

State Sen. Tom Hayden handed Quackenbush a petition that called for the suspension of 64 insurance companies practicing in California which have failed to honor Holocaust-era claims.

To enlist public support, Davis announced the formation of the California Holocaust Insurance Settlement Alliance, which consists of 25 organizations and individuals.

Quackenbush announced the creation of a Web site — www.insurance.ca.gov — and a toll-free phone line — (888) 234-4636 — to help potential claimants. His office is placing ads in some 30 general and Jewish newspapers in California, each ending with the line, “It’s about restitution, it’s about justice and it’s about time.”

The California Insurance Department will mail restitution application forms to Holocaust survivors and their families throughout the state.

The effort is intended primarily for the estimated 20,000 Holocaust survivors in California, but information is also available to the other 120,000 to 140,000 survivors throughout the United States. It is believed that there are up to 860,000 survivors worldwide.

In a series of hearings hosted by U.S. insurance commissioners last year, numerous witnesses charged that the European insurers have been stalling for 50 years to avoid payment on policies taken out by Jews in prewar years.

Based on its research into the unpaid policies, the World Jewish Congress has put their value at between $2 billion and $2.5 billion in today’s currency — 10 times their value in postwar dollars.

Recently enacted state laws have empowered California courts to deal with claims against European insurance companies doing business in the state and for officials to withdraw the licenses of uncooperative companies.

Currently, subsidiaries of six major insurance companies are collecting billions of dollars in premiums in California, Hayden said. They are: Assicurazioni Generali of Italy; Germany’s leading insurer, Allianz Holding; France’s AXA Group; and the Winterthur, Zurich and Basel insurance firms in Switzerland.

Quackenbush said he is hopeful that the California actions will encourage the six companies, plus 13 others operating in California, to reach a fair and speedy settlement.

“When they feel the heat, they’ll see the light,” he said.

Implicitly, Hayden said in an interview, some of the pressure is also directed at the International Commission on Holocaust Era Insurance Claims, which was to meet this week in London under former U.S. Secretary of State Lawrence Eagleburger.

Hayden said both Eagleburger and Undersecretary of State Stuart Eizenstat, the Clinton administration’s point man on Holocaust reparation issues, have opposed action by individual states against European insurance companies.

But Hayden maintains that only the threat of losing lucrative business in California and other states will persuade the firms to settle the claims.