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Posts Tagged ‘Kaye Scholler’

Top Claims Conference Officials Botched Probe of 2001 Fraud

Wednesday, May 22nd, 2013

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.

Printed from: http://www.jewishpress.com/news/breaking-news/top-claims-conference-officials-botched-probe-of-2001-fraud/2013/05/22/

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