17 Charged in Massive Holocaust Fraud Case

Tuesday, Nov 9, 2010  |  Updated 2:45 PM PDT
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17 Charged in Massive Holocaust Fraud Case

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NEW YORK - Federal prosecutors said Tuesday they have broken up a long-running scam in which people falsely claimed to be victims of the Nazi persecution so they could get money out of a fund that pays Holocaust reparations.

The target of the scam, the FBI said, was the Conference on Jewish Material Claims against Germany, an organization that secures compensation for Jewish victims of Nazi persecution and negotiates for the return and restitution of Jewish-owned properties and assets confiscated or destroyed by the Nazis.

Seventeen people have been charged with participating in the fraud, including six employees of the organization's office in New York. The employees recruited people for whom they helped submit phony claims, then sought a kickback for what was paid out, according to the FBI. 

The amount of the fraud, the Justice Department said, totaled more than $42 million for more than 5,500 false claims against two programs. One program paid $3,600 to Jewish survivors who fled the Nazis and became refugees. The other was for Jews who were held in labor or concentration camps or who were in hiding in Jewish ghettos established by the Nazis.

"Each of the defendants played a role in creating, filing and processing fraudulent claims on behalf of non-qualifying applicants — and dividing up the spoils," FBI Assistant Director-in-Charge Janice K. Fedarcyk said in a statement. "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."

" 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," Manhattan U.S. Attorney Preet Bharara added. "Sadly, those victim funds were themselves victimized."

The FBI said the scheme came to light in December 2009 when other employees of the Claims Conference became suspicious.

Four of the 17 defendants have pleaded guilty to participating in the scam, federal prosecutors said. All the defendants are charged with conspiracy to commit mail fraud; some face additional counts of money laundering and witness tampering.

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