The federal courtroom in Manhattan was notably empty considering the eye-catching size and target of the fraud: a 15-year campaign to falsely claim $57 million meant for some of the world’s neediest Holocaust survivors.
Only a smattering of friends and relatives of the three accused were in the 26th-floor courtroom for the climactic closing statements on behalf of the two women and one man alleged to have colluded in the scheme. After half a day of deliberation, the jury found all three guilty.
But for some, miles away from the Daniel Patrick Moynihan courthouse, across America and overseas, the guilt of the three was of secondary importance compared to the alleged culpability of the organization tasked with administrating those funds: the Conference on Jewish Material Claims Against Germany.
The Claims Conference administers an array of funds set up by the German government to restitute Holocaust survivors. Critics want to know how such an enormous fraud could have been perpetrated for so long without being detected.
“If you are running an organization and you have oversight responsibility that [is not] fulfilled properly, you have to have some accountability and take some responsibility,” Isi Leibler, a longtime critic of the Claims Conference, told the Forward.
Leibler singled out Claims Conference Chairman Julius Berman and Executive Vice-President Greg Schneider for particular criticism in a recent Jerusalem Post opinion article. Leibler, a former World Jewish Congress official who lives in Israel, wrote that instead of launching an independent review following the fraud, the two men orchestrated a “Stalinist” board resolution that absolved the Claims Conference of all blame.
“Such contemptuous rejection of all managerial accountability in the wake of such a massive fraud would be inconceivable in any public company or government body where resignations or dismissals would have been mandatory,” Leibler argued.
In an interview with the Forward, Berman rejected Leibler’s charges. Liebler, he said, was just looking for a scapegoat for the fraud. Far from being a “bunch of nebishes,” the Claims Conference board, which is comprised of representatives from more than 20 organizations including B’nai B’rith and the American Jewish Committee, is independent and beholden to no one, said Berman. (Samuel Norich, Forward Association president, is on the board representing the Jewish Labor Committee.)
Berman also pointed to a recent review of the Claims Conference, conducted by Deloitte & Touche, as evidence that the matter had been independently investigated.
The Deloitte & Touche review looked at the Claims Conference’s application procedures, which have been revised since the fraud was discovered. It did not investigate whether top Claims Conference officials could have prevented the fraud.
Berman said that finding out how the fraud occurred is “just a detail, but much more important is how we are going to make sure it won’t happen again.”
Sam Dubbin, a Florida lawyer and another long-term Claims Conference critic, said that whether the Claims Conference could have known or should have known about the fraud is irrelevant. “It’s damning either way,” Dubbin said.
The fraudsters’ four-week trial, which began on April 8, featured many disputes of its own. About the only thing not in dispute was that the fraud was massive and long-running.
During two days of summation, over May 6 and 7, the jury was reintroduced to war-torn Eastern European towns and villages, to ghettoes and concentration camps, to forged documents from the Moscow Red Cross and the Hebrew Immigrant Aid Society and to Russian surnames that tied knots in attorneys’ tongues.
Jurors also had to understand the various criteria set by the German government to decide which survivors qualified for compensation from two funds, The Hardship Fund and The Article II Fund.
The Hardship Fund makes a one-time payment of about $3,500 to Jews who were forced to flee their homes during World War II. The Article II Fund pays a monthly lifetime pension of about $350 to Jews who lived in hiding or under a false identity for at least 18 months during the war and whose present income falls below a certain threshold.
According to the FBI and government prosecutors, the $57 million scheme was facilitated by Russian-speaking Claims Conference employees and aided by a network of runners and recruiters who submitted thousands of claims on behalf of people across North America who were ineligible for the funds.
Prosecutor Rebecca Rohr told the court that recruiters sent blank application forms, signed by Russian-speaking immigrants and their children, to the Claims Conference, where employees then forged documents and made up false survival stories. After applications were approved, the recruiters demanded thousands of dollars, often paid in cash or money orders, which was then shared with Claims Conference employees.
Rohr produced records showing money orders from Colorado, Massachusetts, California, New Jersey, Illinois and New York.
The jury was unaware that before the trial began, 28 people, including nine former Claims Conference employees, had already pleaded guilty to fraud and, in some cases, witness tampering. The three on trial in Manhattan were convicted of mail fraud and conspiracy to commit mail fraud. Of the three, only one, Semen Domnitser, was a recent Claims Conference employee.
The Russian-speaking Domnitser was director of the two pillaged Holocaust funds from 1999 to 2010 and had final approval over applications. During one day in May 2008, Domnitser approved four applications from two couples in Maryland and Pennsylvania who each had almost identical persecution stories.
Rohr also produced money orders totaling several thousand dollars paid to Domnitser by fraudulent applicants.
Rohr added that prior to 1999, when Domnitser was a caseworker at the Claims Conference, he also forged documents to enable fraudulent claims.
The government’s case was supported by four cooperating witnesses, including former Claims Conference employees Faina Davidson, Zlata Blavatnik and Ella Voskresenskiy.
Domnitser’s defense attorney, Marlon Kirton, told the jury that Blavatnik and her daughter, Voskresenskiy, made more than $500,000 combined from the fraud. Kirton produced a bank statement showing that in 2010, when Domnitser was arrested, he had only $3,000 in a joint account he shared with his wife.
Kirton described Domnitser as a hard worker who rarely took vacations. He produced emails in which Domnitser rejected applications because of forged documents. He also said that Domnitser rented his Brooklyn apartment and did not show any of the “trappings of making money with all these applications.”
While some cases of fraud were blatant, such as people born after the war applying for Holocaust funds, there were also more complicated instances of fraud. These included applications submitted by people who did not have sufficient documentation to support their claim or by those who did not suffer under the Nazis for the required period of time, or who suffered in a location deemed not to be under Nazi occupation.
John C. Conard, another defense attorney, summed up the quandary for survivors. “If you are fleeing an advancing army, when are you off occupied territory?”
Conard represented Luba Kramrish, a Toronto woman whose mother, a Holocaust survivor, did not have the necessary documentation to prove that she had been in a ghetto. Prosecutors said that a Claims Conference worker, Davidson, fabricated the documentation so that Kramrish’s mother would be approved. Kramrish paid Davidson $2,000.
During the following decade, Kramrish forwarded applications from about 20 more people, many of whom were ineligible, to the Claims Conference. Rohr outlined one case in which an applicant paid Kramrish $5,500 after a fraudulent Article II Fund application was approved. Kramrish gave $4,000 to Davidson, keeping $1,500 for herself “for doing nothing but passing on a signed blank application form and knowing… that [the applicant’s] story was not real,” Rohr said.
Conard pointed to the small number of applicants that Kramrish directed to the Claims Conference, an average of about two per year over a decade, saying, “That’s not a business, that’s a hobby. That’s what you do when people down the street say, ‘I heard your mum got approved, can you help me with my application?’”
Oksana Romalis, the third defendant, left the Claims Conference years before the fraud was discovered. Prosecutors allege that although Romalis and her daughter were born after World War II, they both received Hardship Fund payments. Prosecutors also accused Romalis of being a middleman for Blavatnik and Voskresenskiy.
Rohr said that Romalis passed between 150 and 200 fraudulent applications to the Claims Conference, largely by sending the organization signed, blank application forms. She also arranged for a Claims Conference employee to change some applicants’ addresses to Romalis’s Brooklyn home so that she could receive and control the money.
Romalis’s attorney, Harvey Slovis, delivered a long and impassioned defense of his client, quoting liberally from Shakespeare and once from Spike Lee.
Slovis told jurors that Romalis laundered checks from applicants because her friend, Voskresenskiy, asked her to do so and that Romalis did not benefit financially from the scheme. Slovis also implied that Jews, even children and grandchildren of survivors, could have believed they had a right to Holocaust funds.
“This wasn’t Germany’s money,” Slovis said. “It was money stolen from the Jews.”
That assertion may have surprised one other observer in the courtroom, a representative from the German consulate, which has sent a legal specialist to the trial each day. Her job: taking notes on how and why the money collected as taxes from German citizens went to individuals who were not Holocaust survivors.