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October 26, 2014 / 2 Heshvan, 5775
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JTA EXCLUSIVE

Top Claims Conference Officials Botched Probe of 2001 Fraud

“A majority of the claims made by the person who wrote the anonymous letter were refuted by Mr. Domnitser,” the report said.
By:
Claims Conference board chairman Julius Berman

Claims Conference board chairman Julius Berman

The Claims Conference in recent days has blamed a now-dead regional director for bungling an early warning in 2001 about a massive fraud scheme that wasn’t halted until 2009.

But a document obtained by JTA shows top conference officials were sufficiently concerned by the allegations that they launched their own probe in 2001 that failed to detect the scheme. Those involved in the second investigation included the organization’s chief professional at the time, Gideon Taylor, and its counsel, Julius Berman.

The probe resulted in an eight-page report that raised questions about the handling of several fraudulent cases by Semen Domnitser, a Claims Conference employee who was found guilty on March 8 of orchestrating the $57 million scheme.

The revelation of the report leaves unanswered the question of whether Claims Conference leaders showed gross negligence in failing to detect the fraud, as some critics contend, or whether Domnitser, who was questioned in the two 2001 probes, was such a shrewd operator that Claims Conference officials couldn’t help but be fooled.

The first probe was sparked by an anonymous letter in June 2001 alleging that five fraudulent claims had been approved for restitution payments. The letter reached the director of the Claims Conference office in Germany, Karl Brozik, who conducted an assessment that included questioning Domnitser about his handling of the claims.

Domnitser responded to Brozik by fax, acknowledging some inadvertent errors but lying about other facts to cover up his criminality. Brozik shared Domnitser’s responses with the staffer he had assigned to look into the matter, who marked them up with a lot of question marks. But there is no evidence in the public record indicating that the inquiry was taken further, and last week Claims Conference spokeswoman Hillary Kessler-Godin blamed Brozik, who died in 2004, for failing to pursue the matter.

However, it turns out that the Claims Conference’s top leaders launched a second probe of their own.

The investigation was assigned to a paralegal at Berman’s law office, Kaye Scholer LLP, who went to the Claims Conference office in New York on Aug. 27, 2001 to review the five fraudulent claims and question Domnitser.

The paralegal, Ryan Tan, produced a report that Berman sent to Taylor on Sept. 5, 2001. The report, a copy of which was obtained by JTA, raised questions about Domnitser’s handling of the fraudulent cases but did not suggest Domnitser was party to fraud.

“A majority of the claims made by the person who wrote the anonymous letter were refuted by Mr. Domnitser,” the report said. “However, the accusations did raise further questions about the way the cases were handled by the Conference.”

In reference to one case, Tan writes: “Mr. Domnitser has indicated that a caseworker named Voskreskney also handled the case, but no signature or stamp bearing that person’s name appear on the file. Further inquiry is needed in this case. An interview with [Claims Conference caseworker] Krylyak may clarify some of the discrepancies in this matter.”

Another case involved Mariya Fortel, the sister of Polina Berenson, a Claims Conference employee who this March pleaded guilty to participating in the fraud. After noting that Fortel received payment from two separate restitution funds in violation of the rules, Tan writes, “Because the Conference does not allow the applicants to receive both funds, Mr. Domnitser explained during the interview that Fortel had to forfeit the DM 5,000 that she obtained from the Hardship Fund. Unfortunately, the file does not contain a record that this money was ever given back or deducted.”

The report contains no smoking gun fingering Domnitser as perpetrating the fraud, and it’s not clear how common allegations of fraud were at the Claims Conference. However, the report demonstrates that the organization’s top leaders considered the matter sufficiently alarming that they had an outsider conduct an independent probe even after an internal inquiry had been conducted two months earlier.

Despite whatever actions Berman and Taylor took after receiving the Kaye Scholler report, Domnitser and his cronies managed to fleece the Claims Conference of millions more for another eight years.

In an email to JTA, Taylor blamed Brozik for dropping the ball, saying Brozik oversaw the review of the allegations in the 2001 letter and was sent the Kaye Scholer report.

“The report indicated that there should be specific follow up on allegations about the improper processing of five cases involving Claims Conference staff members,” Taylor wrote. “Karl Brozik subsequently indicated to me that no further action regarding the New York staff was required concerning the issues in the report.”

In all, at least six senior Claims Conference figures were made aware in 2001 of the allegations involving fraud, though some were not privy to all the details: Domnitser, who perpetrated it; Brozik, who is dead; Taylor, who left the conference in mid-2009 and now works in real estate; former Claims Conference chief Saul Kagan, who is in his 90s and retired; Berman; and Greg Schneider, then assistant executive vice president and director of allocations and now the Claims Conference’s chief executive.

Of them, only Berman and Schneider still play prominent roles at the organization.

Berman, who is also a member of JTA’s board, was traveling as of press time and could not be reached for comment. But the Claims Conference released a statement to JTA attributed to Berman in which he cites recent error-laden press reports about the 2001 episode and notes that he has appointed a committee to “review all of the materials and recommend a course of action.”

“In deference to the work of that committee,” Berman says, “the Claims Conference will not publicly comment on any aspect of events that fall within the purview of the Committee until after the committee has concluded its work.”

Schneider declined to comment to JTA, but last week Kessler-Godin told JTA that Schneider is not to blame because he never saw the original anonymous letter and the other people CC’d on the correspondence were senior to him. Therefore, Kessler-Godin said, Schneider reasonably assumed they were handling the matter.

Ultimately, it was Schneider who finally halted the massive fraud scheme, when he and a colleague, Karen Heilig, came across a pair of suspicious claims approvals in November 2009 and began to investigate further. They quickly found hundreds more suspicious cases — what turned out to be the tip of the iceberg in a fraud scheme involving nearly 5,000 falsified claims.

Within hours, Schneider alerted Berman. Berman hired the law firm of Proskauer Rose LLP to do an initial investigation, and a few weeks later the conference alerted the FBI. Eventually, a total of 31 people were arrested in connection with the scheme. Twenty-eight pleaded guilty; the three who did not, including Domnitser, were found guilty at trial on May 8.

In all, there were at least 3,839 falsified applications to the Hardship Fund, an account established by the German government to provide one-time payments of approximately $3,360 to those who fled the Nazis as they moved east through Germany, and 1,112 false claims to the Article 2 Fund, through which the German government gives pension payments of approximately $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.

Domnitser oversaw both those two funds.

The September 2001 Kaye Scholer report was unearthed at the Claims Conference’s Germany office in 2010 by those working on rooting out the fraud, Kessler-Godin told JTA, and the report subsequently was passed along to the FBI. Because the prosecution did not use the material during the fraud trial, it did not appear in the trial’s public record.

However, the original 2001 anonymous letter did, and the prosecution cited it as evidence of Domnitser’s shrewdness at misleading his superiors. The Forward was the first news outlet to report the letter’s existence.

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11 Responses to “Top Claims Conference Officials Botched Probe of 2001 Fraud”

  1. Anonymous says:

    An anonymous letter sent to the Claims Conference’s Frankfurt office in 2001 identified five cases where restitution was approved for ineligible claimants. I have the guts to say they are a much of thieves. I am a child of Holocaust survivors. For years I have yelled and screamed that there has been hanky panky going on while Holocaust survivors were denied their due. How stupid are we not to protest? A lot of people belong in jail. Holocaust survivors are going without food and medicine while the thieves play with their funds. If you agree with me , speak out. I call on all Holocaust survivors and their children and grandchildren to demand retribution now. I am not afraid to speak out. The claims conference in my opinion is corrupt or at least inept. Soon the holocaust survivors will all be dead. How much more money will be stolen.

    Rabbi Dr. Bernhard Rosenberg

  2. Anonymous says:

    The more voices the public – especially survivors and their children – who raise their voices now demanding resignations, the more likely we can achieve our objectives to reform the organization and seek immediate diversion of the funds for the benefit of the dwindling numbers of ailing R survivors. RABBI DR. BERNHARD ROSENBERG

  3. Anonymous says:

    You speak for our Kedoshim, the martyrs who are no longer with us, as well for the few who are still alive.

    Your words should strike a chord in all our hearts because they come from the heart!

    I distinctly remember the 2001 outrage at the 'Claims Conference' in NY. There was much handwringing and finger pointing. Apparently there was insider involvement – mostly Russians who were administering the disbursement of funds. They created false identities for people, many of whom were born AFTER WWII. These people were paid off and turned the funds over to the crooks. At the time Eva and I wrote letters to the administration, etc. No one even bothered to respond and I do not know if any funds were recovered, or the perpetrators punished The German government left it to the locals here to police themselves… This was sent to me by Holocaust survivors. Both my parents have been long dead and holocaust survivors are dying everyday. I BEG OF YOU. GET THIS MESSAGE OUT TO THE SURVIVORS, THEIR CHILDREN AND GRANDCHILDREN BEFORE IT IS TOO LATE. Rabbi Dr. Bernhard Rosenberg

  4. Anonymous says:

    You speak for our Kedoshim, the martyrs who are no longer with us, as well for the few who are still alive.

    Your words should strike a chord in all our hearts because they come from the heart!

    I distinctly remember the 2001 outrage at the 'Claims Conference' in NY. There was much handwringing and finger pointing. Apparently there was insider involvement – mostly Russians who were administering the disbursement of funds. They created false identities for people, many of whom were born AFTER WWII. These people were paid off and turned the funds over to the crooks. At the time Eva and I wrote letters to the administration, etc. No one even bothered to respond and I do not know if any funds were recovered, or the perpetrators punished The German government left it to the locals here to police themselves… This was sent to me by Holocaust survivors. Both my parents have been long dead and holocaust survivors are dying everyday. I BEG OF YOU. GET THIS MESSAGE OUT TO THE SURVIVORS, THEIR CHILDREN AND GRANDCHILDREN BEFORE IT IS TOO LATE. Rabbi Dr. Bernhard Rosenberg

  5. Anonymous says:

    These are some of the anti Semitic responses I received ; thought I would share them with you. This only encourages me to fight harder. Please help me condemn the Holocaust claims Conference and ask for the dismissal of their leadership.
    May 25, 2013 – 4:21 pm.

    **** off Rosen****!

    Reply brian

    Reverend Loki
    May 25, 2013 – 4:28 pm.

    “You speak for our Kedoshim, the martyrs who are no longer with us, as well for the few who are still alive.”.

    “kedoshim” IS YIDD FOR LICE.
    “the martyrs” ARE THE BILLION OF LICE THAT THE “BAD” NATIONAL SOCIALISTS GASSED WITH ZYKLON-B.

    OY VEY, OY VEY.

    rosenbugger GO JOIN THE kedoshim, BASTARD.

    Reply

    RABBI DR. BERNHARD Rosenberg

  6. Anonymous says:

    1.

    These are some of the anti Semitic responses I received ; thought I would share them with you. This only encourages me to fight harder. Please help me condemn the Holocaust claims Conference and ask for the dismissal of their leadership.

    RABBI DR. BERNHARD Rosenberg

    Reply

    Brian
    May 25, 2013 – 4:21 pm.

    **** off Rosen****!

    Reply

    2.

    Reverend Loki
    May 25, 2013 – 4:28 pm.

    “You speak for our Kedoshim, the martyrs who are no longer with us, as well for the few who are still alive.”.

    “kedoshim” IS YIDD FOR LICE.
    “the martyrs” ARE THE BILLION OF LICE THAT THE “BAD” NATIONAL SOCIALISTS GASSED WITH ZYKLON-B.

    OY VEY, OY VEY.

    rosenbugger GO JOIN THE kedoshim, BASTARD.

    Reply THIS IS A THREAT KEDOSHIM MEANS THOSE HOLY ONES WHO ARE DEAD.

  7. Anonymous says:

    anti-SEMITISM IS ALIVE AND WELL. The message below was a comment on my complain t against the holocaust claims conference. We need the J.D.L. Rabbi Meir Kahana was correct. Regarding the fellow who called me ****, bring it on you gutless mamzer. I will not go to the gas chambers without a bloody FIGHT. THIS HAS BEEN REPRTED TO THE POLICE AND F.B.I. AS A BIAS THREAT. Do you have the guts to debate me on t.v. or go some rounds in the gym. THIS IS ONE Jew who will knock you out in three rounds. RABBI DR. BERNHARD ROSENBERG

  8. Anonymous says:

    BernhardRosenberg – YouTube PLEASE SHARE.
    http://www.youtube.com/user/BernhardRosenberg

    Nice Peter's Youtube… Please send to you friend and family to view… Rabbi Dr. Bernhard Rosenberg shares his response to the statement that was made at an…

  9. Anonymous says:

    To World Jewry:

    I hope you will consider my plea as one of the few Rabbis in Americas who speaks out for Israel, fights anti-Semitism throughout the world and one who speaks out vehemently against extremist Muslims. In addition I fight on behalf of Holocaust survivors and have been vocal regarding the Holocaust Claims Conference missing funds. I was also president of Rabbis for Romney. You are welcome to look me up on the internet.

    We are living in pre Holocaust times. European Jewry is facing major anti-Semitism and parts of Europe are Judenrein. Israel is facing a possible Holocaust from Iran and surrounding enemies. I was just banned from the Huffington Post for expressing my displeasure with Muslims praying at Auschwitz over my family ashes. Extremist Muslims want Israel and all Jews annihilated. My plea to all Jews: Speak out. Tell your Rabbis not to remain silent. We are running out of time.

    Rabbi Dr. Bernhard Rosenberg

  10. Anonymous says:

    Is It True the Claims Conference May Be Paying Reparations to an alleged Nazi sympathizer?

    An Open Letter to Claims Conference Chairman, Rabbi Julius Berman.

    by Rabbi Dr. Bernhard Rosenberg

    Two years ago, I read an article about Alex Kurzem in a Melbourne newspaper. Having watched the "60 minutes" segment in horror and disbelief, I've followed this story and the Jewish Claims Conference's involvement.

    As a Rabbi, I am ashamed by the Conference's lack of scrutiny in its determination of Kurzem's eligibility for reparations – based purely on a tall tale, which now appears even to have included a fraudulent document! Surely, the Conference has a fiduciary responsibility and owes those who truly were persecuted by the Nazis, to be thorough and discriminating in its validation of veracity. It did not fulfill that responsibility.

    Please explain to me, how it is you have been aware of the doubts and inaccuracies of Mr. Kurzem's story since 2009, yet have done nothing about rescinding his reparations?

    How does the Claims Conference accept, tolerate, and apparently condone, that in 1972, Kurzem provided an affidavit endorsing the good character of Nazi SS Colonel Karlis Lobe?

    Please help me understand the inconsistency in the Haaretz article appearing last year, where Greg Schneider was quoted as saying no fraud was found in Kurzem's application.Yet in the same article, Kurzem claims he never said he "was Ilya Galperin" , the person he claimed to be when filling out his application for reparations.

    How does the Conference define persecution? In a 2008 Penthouse article Kurzem is quoted as saying, the Nazis were "my family", “I felt safe; I wasn’t hungry and I was looked after". Please tell me, Rabbi Berman, that cannot possibly qualify as persecution by the Conference's criteria, can it?

    A multi-million dollar fraud was committed on your watch already. Isn't that enough embarrassment to the Jewish community? I don't need to remind you of the higher standard to which we, as Jews are always held, and that the Conference cannot afford its integrity to be doubted or compromised.

    Six million are owed so much more. Isn't it time, Rabbi Berman the Claims Conference came clean on Kurzem?

    (The Testimonies Director at the Centre, Mr Phillip Maisel, who recorded Kurzem’s story formed the impression that his interviewee was not being entirely truthful: “There was something strange about his story, something didn’t add up.” Researcher Colleen Fitzpatrick, concerned with preserving an accurate history of the Jewish Holocaust, has written: "Mr. Kurzem not only has and will continue to experience substantial financial gain and recognition from his books and his movie, he also lectures internationally to school children, thereby feeding the next generation with what may be distortions of the truth.").

  11. Anonymous says:

    My major suggestion which will get Rabbis, the Jewish community, Second Generation and Holocaust survivors involved is: those Holocaust survivors in need of food, medication, etc will be first priority. There are obviously some Holocaust survivors who are comfortable. The added funds from the Claims would be beneficial to their children and grandchildren for education, day schools , yeshivas, college tuition, programs on college campuses and Holocaust teaching programs on the university level with scholarships for these families.. This might awaken those who are uninterested because at this point they see no personal benefit. I don't know the legalities of this but I do know that children, grand children and great grandchildren of Holocaust survivors, especially if they are religious , are in need of these funds. There should be a way to include those families where the Holocaust survivors have perished, but their children and grandchildren could benefit greatly from the funds. These funds could also be used for other purposes for these 2G, 3G, and 4G families. Unfortunately the courts decided that survivors and their children and grandchildren should not have the same rights as every other American to sue insurers who cheat them out of their policy proceeds. That is the decision that an attorney has been trying to overturn via Federal legislation over the past 6 years, unsuccessfully of course. We should all fight to undo this injustice.

    Rabbi Dr. Bernhard Rosenberg

Comments are closed.

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