Suspects Stole More Than $42M From Holocaust Relief Fund
Seventeen people -- including six employees at a nonprofit that arranged reparations to Jewish victims of Nazi persecution -- stole more than $42 million from the Holocaust survivors' fund by submitting and processing bogus claims for relief, federal prosecutors announced today.
In the criminal complaints unsealed today in Manhattan federal court, FBI agents say the defendants defrauded the Conference on Jewish Material Claims Against Germany (also known as the "Holocaust Claims Conference"), a non-profit tasked with administering payments from a relief fund for Holocaust survivors. The suspects are accused of approving more than 5,000 false applications and pocketing huge chunks of the payments themselves.
The complaints say that since 1993, "a web of individuals" have stolen money from two of the Conference's funds, both funded by the German government and meant for Holocaust survivors.
The so-called "Hardship Fund," established by the German government in 1980, allocated more than $280 million to survivors. According to the Conference, five percent of the fund is set aside for institutional grants, while the remaining balance is doled out to survivors (mainly those who fled Nazi occupation and became refugees). Each individual is then eligible to a one-time payment of approximately $3,800, but only those who were alive (or in utero) during World War II are eligible.
The second fund, called the "Article 2 Fund," makes monthly $411 payments to survivors who make less than $16,000 per year and either lived in hiding, under false identities, in Jewish ghettos, or were incarcerated in concentration or labor camps.
Together, the Conference estimates it's paid almost $42.5 million to more than 5,000 false claims against the funds.
According to the U.S. Attorney's Office, 11 of the defendants were arrested this morning. Faina Davidson, a 50-year-old Brooklyn woman who worked for the Claims Conference since 1991 and was employed processing applications, was singled out in an FBI affidavit unsealed this morning. She is accused of orchestrating an elaborate kickback scheme and approving falsified applications to steal money from the Hardship Fund.
The affidavit says that since 2007, a pair of unnamed, self-described "middle men" (they are not named in the complaint, although the government calls them cooperating witnesses in the investigation) recruited Jews and Russian immigrants to provide copies of their IDs, passports, and birth certificates "in return for a promise of money." They would then use this data to make crudely forged applications, fudging birthdates and once even using the same person's photograph on four applications with different names.
The "middle men" then passed the applications onto Davidson, who would process the claim, cut the checks, and take her finder's fee -- a cool $1,000 per head. Incidentally, the FBI says it found that while most caseworkers spent two months reviewing an application, Davidson's turnaround was "a few days."
According to the affidavit, one of the middle men was even caught on tape alleging Davidson had been perpetrating the fraud "for so many years." "She has millions," he claimed.
In a statement, Claims Conference chairman Julius Berman called the fraud "an affront to human decency."
"We are outraged that individuals would steal money intended for survivors of history's worst crime to enrich themselves," Berman said.
In addition to Davidson, the complaints names five other Claims Conference employees, one of whom is also charged with witness tampering. Semen Domnitser, who previously served as director of both funds until he was fired in February, is also named as a defendant. Each defendant faces 20 years in prison and fines of up to $250,000.