A Moral Responsibility


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Published May 23, 2013, issue of May 31, 2013.

In November 2010, when the Manhattan U.S. attorney announced the arrest of 17 Brooklyn residents on charges that they bilked the Conference on Jewish Material Claims Against Germany out of many millions of dollars, he minced no words. This was “perverse and pervasive fraud,” said prosecutor Preet Bharara.

The leadership of what is known as the Claims Conference, which since 1951 has processed billions of dollars in restitution claims for Holocaust survivors, was equally aghast. Greg Schneider, the executive vice president who first reported the fraud to the FBI in 2009, called the scheme run by his own employees “disgusting” and said that he was utterly stunned that it had gone on for 15 years. “We never expected something like that to happen,” Schneider said at the time.

Julius Berman, chairman of the Claims Conference board, said that the organization was “outraged that individuals would steal money intended for survivors of history’s worst crime to enrich themselves. It is an affront to human decency.” And here’s an excerpt from a JTA story last year about the fraud: “Calling the controls that the Claims Conference had in place to prevent fraud ‘reasonably adequate,’ Berman said the deception was as impossible to anticipate as the attacks of 9/11. ‘Until it happens once,’ he added. ‘Then you’re on notice that something you never foresaw can happen.’”

Never expected something like this?

Impossible to anticipate?

How can that be when Berman, Gideon Taylor (Schneider’s predecessor) and Schneider himself were apprised of the fraud eight years earlier, in 2001?

As the Forward has reported, the fraud scheme — which grew to include 31 people who have since pleaded guilty or were convicted of diverting $57 million to unqualified recipients — was first described in an unsigned but detailed letter sent to the Claims Conference office in Germany in June 2001. A preliminary investigation of the letter’s charges supported its allegations that “rules were broken for many office employees.” It identified fives cases that should never have been approved, accusing Claims Conference employees of approving Holocaust funds for themselves and their relatives, who were “non-eligible.”

When recently asked about the letter, a Claims Conference spokesperson contended that the head of the German office was the one responsible for failing to take action on the allegations in 2001. That person has, conveniently, died.

But this attempt to absolve the New York leadership of responsibility does not hold up to scrutiny. Schneider and Taylor were copied on some of the correspondence between the New York and German offices. And, as the Forward has reported, Berman arranged for his own internal review, conducted by a paralegal in his law firm and sent to Taylor in September 2001. So he was, to use his own words, “on notice” that something wrong could, indeed, happen.

Since Taylor left the Claims Conference in early 2009, he has refused to comment on the fraud but for an email sent to JTA on May 21 that repeated the blame-it-on-the-dead-German argument. That’s unacceptable. He needs to be held accountable for his apparent failure to act, and that begins with a public statement of what he knew, when.

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