US justice authorities have arrested, and brought charges against, 17 people who allegedly stole some US$ 42 million from Holocaust compensation and pension funds administered by the Conference on Jewish Material Claims Against Germany (Claims Conference). Federal prosecutors said the scheme between 2000 and 2009 resulted in the approval of some 5,500 fraudulent payments from the Claims Conference, which administered the programs. "We are outraged that individuals would steal money intended for survivors of history's worst crime to enrich themselves," said Conference Chairman Julius Berman. "It is an affront to human decency."

The scheme was discovered late last year when Claims Conference officials noticed that several claimants had falsified information to receive pensions from the Hardship Fund, set up by the German government to make one-time payments of US$ 3,600 to Jewish victims of Nazism who emigrated from countries of the former Communist bloc in central and eastern Europe.

An indictment presented in New York on Tuesday said a network of individuals, including six employees who worked for the Claims Conference, systematically defrauded the fund, which was set up to compensate Nazi victims. The insiders allegedly approved over 5,500 fraudulent applications, resulting in payouts to applicants who did not qualify for the programs. In exchange, they kept a portion of the money for themselves and their conspirators. "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," US Attorney Preet Bharara said in announcing the indictment. "Sadly, those victim funds were themselves victimized."  

Janice Fedarcyk, assistant director of the Federal Bureau of Investigation (FBI, declared: "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. 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. This was a brazen miscarriage of the compensation programs."  

In July, the Claims Conference suspended payment of 202 pensions with a total value of US$ 7 million. Since then, it has uncovered suspected fraud in another 456 cases worth an additional US$ 24.5 million. It also suspects that false claims were made in 4,957 applications for one-time payments under the Hardship Fund, with a total value of US$ 18 million.

The Claims Conference emphasized that no Holocaust victims were deprived of any funds because of the crime, and pledged full cooperation to help US authorities bring the fraudsters to justice. “We are determined to get to the bottom of this,” Gregory Schneider, the executive vice president of the organization, told JTA over the summer. “We have worked very closely with law enforcement.”