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April 16, 2014 / 16 Nisan, 5774
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Posts Tagged ‘Hardship Fund’

Claims Conference Employee Admits to Stealing $550K from Survivors, $57 Mil. Missing

Thursday, June 7th, 2012

An employee of the New York based Conference on Jewish Material Claims Against Germany (the “Claims Conference”) pleaded guilty to defrauding her employers out of $550,000.

Zlata Blavatnik, 65, pleaded guilty to the charge that she had “produced falsified documents for myself” and “helped others in the same office” to make fraudulent “reparation” payments.

A total of 31 people have been charged in connection with the scheme, according to the FBI, including five former employees of the Claims Conference, which administered the programs.

The FBI is charging that, in exchange for kickbacks, those insiders, who were supposed to process and approve only legitimate applications, have knowingly approved nearly 5,000 fraudulent applications, resulting in payouts to applicants who did not qualify for the programs.

Manhattan U.S. Attorney Preet Bharara told reporters: “As I said when the initial charges in this case were announced, my office, working with our partners at the FBI, would not stop until we brought to justice those who are alleged to have stolen more than $57 million from the Claims Conference, thereby diverting money intended for survivors of the Holocaust.”

Bharara thanked the Claims Conference for “their outstanding, ongoing assistance in identifying the participants in this scheme.”

The Claims Conference, a not-for-profit organization which provides assistance to victims of Nazi persecution, supervises and administers several funds that make reparation payments to victims of the Nazis, including “the Hardship Fund” and “the Article 2 Fund,” both of which are funded by the German government.

Applications for disbursements through these funds are processed by employees of the Claims Conference’s office in Manhattan, and the employees are supposed to confirm that the applicants meet the specific criteria required for payments.

According to the FBI, as part of the scheme, a web of individuals—including five former employees of the Claims Conference—systematically defrauded the Article 2 Fund and Hardship Fund programs for over a decade.

The Claims Conference first suspected the fraud in December 2009, and immediately reported their suspicions to law enforcement, which conducted a wide-reaching investigation, resulting in unsealing the charges last October, 2011.

The Hardship Fund makes a one-time payment of approximately $3,500 to victims of Nazi persecution who evacuated the cities in which they lived and were forced to become refugees. Members of the conspiracy submitted fraudulent applications for people who were not eligible. Many of the recipients of fraudulent funds were born after World War II, and at least one person was not even Jewish.

Some conspirators recruited other individuals to provide identification documents, such as passports and birth certificates, which were then fraudulently altered and submitted to corrupt insiders at the Claims Conference, who then processed those applications. When the applicants received their compensation checks, they kept a portion of the money and passed the rest back up the chain.

From the investigation to date, the Claims Conference has determined that at least 3,839 Hardship Fund applications appear to be fraudulent. These applications resulted in a loss to the Hardship Fund of approximately $12.3 million.

The Article 2 Fund makes monthly payments of approximately $400 to survivors of Nazi persecution who make less than $16,000 per year, and either (1) lived in hiding or under a false identity for at least 18 months; (2) lived in a Jewish ghetto for 18 months; or (3) were incarcerated for six months in a concentration camp or a forced labor camp.

The fraud involved doctored identification documents in which the applicant’s date and place of birth had been changed. The fraud also involved more sophisticated deception, including altering documents that the Claims Conference obtains from outside sources to verify a person’s persecution by the Nazis. Some of the detailed descriptions of persecution in the fraudulent Article 2 Fund applications were completely fabricated.

From the investigation to date, the Claims Conference has determined that at least 1,112 Article 2 Fund cases it processed have been determined to be fraudulent. Those cases have resulted in a loss to the Claims Conference of approximately $45 million.

Manhattan federal Magistrate Judge Henry Pitman on Tuesday informed Blavatnik that she was facing a possible 40 years in jail for conspiracy and mail fraud.

But, according to the NY Post, Judge Pitman did not divulge the terms of Blavatnik’s plea deal, neither would the Manhattan US Attorney’s Office release a copy of the plea, which means that Blavatnik is probably cooperating with authorities in return for leniency in sentencing.

Claims Conference Faces Questions Over $7 Million Fraud

Wednesday, July 28th, 2010

After discovering $7 million in fraudulent payments, the Claims Conference is facing questions about whether it will recover the money and how extensive the fraud actually was.

Officials at the Claims Conference, which acts as a pass-through to distribute more than $400 million per year from Eastern European governments directly to survivors, discovered last year that it had paid out at least $7 million in pension payments dating back as far as 1980 to 202 imposters who used fraudulent documents to file claims for payments.

The Claims Conference notified the recipients earlier this month that their payments were being suspended and that they had 90 days either to return all the money they had received or appeal the suspension. Some 40 people have responded, with about half saying they wanted to return the money and half asking for appeals, according to the Claims Conference.

It is not clear what, if any, criminal charges they will face.

“Criminal activity is not a matter for the Claims Conference,” Gregory Schneider, its executive vice president, told JTA. “We reserve the right to go after them in civil court for the return of money.”

Claims Conference officials first noticed last November 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 roughly $3,000 to those who fled the Nazis as they moved east through Germany.

A further internal investigation revealed that more fraudulent claimants received payments from the organization’s Article 2 fund, through which the German government gives pension payments of roughly $375 per month to those who spent either six months minimum in a concentration camp or at least 18 months in a Jewish ghetto, in hiding or living under a false identity to avoid the Nazis.

Conference officials said they immediately notified the FBI and the U.S. Attorney’s Office, and discussed the matter in meetings with the German government. The Federal Bureau of Investigation and the Claims Conference are continuing to investigate the matter.

“We are determined to get to the bottom of this,” Schneider said. “We have worked very closely with law enforcement, and on a regular basis they are in touch with us.”

In total, the Claims Conference has made pension payments to more than 160,000 people in 78 countries on behalf of the Germans since the start of the Hardship Fund in 1980 and the Article 2 fund in 1995. The organization now is reviewing each of the recipients, comparing the information it has from the fraudulent claims, such as where the claims were made, to all other claims, going case by case through all their case histories.

The 202 suspects come from reviewing “thousands” of recipients, according to a Claims Conference official, but it expects to find more as the organization reviews the entire caseload.

Payments are made from Claims Conference’s offices in Frankfurt, Tel Aviv and New York, but thus far all the suspected fraud was processed through the New York office. The discovery led to the firing of two case workers and one supervisor in that office. Schneider would not comment on whether the employees were under criminal investigation.

The fraud was reported in the New York Jewish Week just before the Claims Conference board of directors held their annual meetings in New York two weeks ago.

At the meetings, the board approved a $500,000 reserve fund “as a contingency to cover potential expenses associated with investigating the fraud and recovering the funds,” according to a spokesperson for the Claims Conference.

The board also has spent some money on public relations services from the high-profile firm Howard Rubenstein; Claims Conference Chairman Julius Berman described the sum as “minimal.”

The Claims Conference makes several kinds of payments. Most of the money it handles are pass-through payments from the German government to Nazi victims. The organization handled about $418 million in such payouts in 2009, and some $4 billion since 1980 from agreements negotiated between the German government and the Claims Conference acting as the representative of Nazi victims and the Jewish people. This is where the $7 million fraud was discovered.

In addition, the Claims Conference decides on how to distribute money each year from the sale of heirless Jewish property in the former East Germany. That money is distributed using a formula in which 80 percent goes to organizations that aid survivors and 20 percent to programs involved in Holocaust education, documentation and commemoration.

Over the past few years, however, as the Claims Conference upped the payouts from this fund – in 2010, the organization is set to distribute $136 million – the Holocaust education portion was capped at $18 million. The Claims Conference has about $1.16 billion from this fund earmarked for future payments.

The organization also distributes other monies negotiated from European governments for such issues as home care for needy, ailing survivors. The Claims Conference will distribute about $80 million in such funds this year, officials said.

“The Claims Conference has a 59-year history of working with the German government,” Schneider said. “During this time, the Claims Conference has continuously negotiated for the rights of Holocaust victims, establishing compensation funds and obtaining expansions of existing programs.”

He added, “While all understand that money can never truly compensate Holocaust victims for their suffering, the German government has assumed responsibility throughout the decades and acknowledged its obligation to survivors. The Claims Conference believes that the German government will continue to honor this obligation as long as Nazi victims remain alive.”

(JTA)

Claims Conference Faces Questions Over $7 Million Fraud

Wednesday, July 28th, 2010


After discovering $7 million in fraudulent payments, the Claims Conference is facing questions about whether it will recover the money and how extensive the fraud actually was.


Officials at the Claims Conference, which acts as a pass-through to distribute more than $400 million per year from Eastern European governments directly to survivors, discovered last year that it had paid out at least $7 million in pension payments dating back as far as 1980 to 202 imposters who used fraudulent documents to file claims for payments.


The Claims Conference notified the recipients earlier this month that their payments were being suspended and that they had 90 days either to return all the money they had received or appeal the suspension. Some 40 people have responded, with about half saying they wanted to return the money and half asking for appeals, according to the Claims Conference.


It is not clear what, if any, criminal charges they will face.


“Criminal activity is not a matter for the Claims Conference,” Gregory Schneider, its executive vice president, told JTA. “We reserve the right to go after them in civil court for the return of money.”


Claims Conference officials first noticed last November 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 roughly $3,000 to those who fled the Nazis as they moved east through Germany.


A further internal investigation revealed that more fraudulent claimants received payments from the organization’s Article 2 fund, through which the German government gives pension payments of roughly $375 per month to those who spent either six months minimum in a concentration camp or at least 18 months in a Jewish ghetto, in hiding or living under a false identity to avoid the Nazis.


Conference officials said they immediately notified the FBI and the U.S. Attorney’s Office, and discussed the matter in meetings with the German government. The Federal Bureau of Investigation and the Claims Conference are continuing to investigate the matter.


“We are determined to get to the bottom of this,” Schneider said. “We have worked very closely with law enforcement, and on a regular basis they are in touch with us.”


In total, the Claims Conference has made pension payments to more than 160,000 people in 78 countries on behalf of the Germans since the start of the Hardship Fund in 1980 and the Article 2 fund in 1995. The organization now is reviewing each of the recipients, comparing the information it has from the fraudulent claims, such as where the claims were made, to all other claims, going case by case through all their case histories.


The 202 suspects come from reviewing “thousands” of recipients, according to a Claims Conference official, but it expects to find more as the organization reviews the entire caseload.


Payments are made from Claims Conference’s offices in Frankfurt, Tel Aviv and New York, but thus far all the suspected fraud was processed through the New York office. The discovery led to the firing of two case workers and one supervisor in that office. Schneider would not comment on whether the employees were under criminal investigation.


The fraud was reported in the New York Jewish Week just before the Claims Conference board of directors held their annual meetings in New York two weeks ago.


At the meetings, the board approved a $500,000 reserve fund “as a contingency to cover potential expenses associated with investigating the fraud and recovering the funds,” according to a spokesperson for the Claims Conference.


The board also has spent some money on public relations services from the high-profile firm Howard Rubenstein; Claims Conference Chairman Julius Berman described the sum as “minimal.”


The Claims Conference makes several kinds of payments. Most of the money it handles are pass-through payments from the German government to Nazi victims. The organization handled about $418 million in such payouts in 2009, and some $4 billion since 1980 from agreements negotiated between the German government and the Claims Conference acting as the representative of Nazi victims and the Jewish people. This is where the $7 million fraud was discovered.


In addition, the Claims Conference decides on how to distribute money each year from the sale of heirless Jewish property in the former East Germany. That money is distributed using a formula in which 80 percent goes to organizations that aid survivors and 20 percent to programs involved in Holocaust education, documentation and commemoration.


Over the past few years, however, as the Claims Conference upped the payouts from this fund – in 2010, the organization is set to distribute $136 million – the Holocaust education portion was capped at $18 million. The Claims Conference has about $1.16 billion from this fund earmarked for future payments.


The organization also distributes other monies negotiated from European governments for such issues as home care for needy, ailing survivors. The Claims Conference will distribute about $80 million in such funds this year, officials said.


“The Claims Conference has a 59-year history of working with the German government,” Schneider said. “During this time, the Claims Conference has continuously negotiated for the rights of Holocaust victims, establishing compensation funds and obtaining expansions of existing programs.”


He added, “While all understand that money can never truly compensate Holocaust victims for their suffering, the German government has assumed responsibility throughout the decades and acknowledged its obligation to survivors. The Claims Conference believes that the German government will continue to honor this obligation as long as Nazi victims remain alive.”

(JTA)

Printed from: http://www.jewishpress.com/news/claims-conference-faces-questions-over-7-million-fraud-2/2010/07/28/

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