Claims Conference at Crossroads as Fiery Meeting Looms for Holocaust Group

Critics Want Answers on Botched $57M Fraud Probe

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By Paul Berger

Published July 07, 2013, issue of July 12, 2013.

(page 3 of 4)

“The rest of the board seems to be asleep at the switch,” Letts said. “It’s very peculiar to have a person inside the organization that works for all these people to do the report, particularly when it’s the very top leadership implicated.”

Letts added: “It’s got to be an external group for anybody to believe it.”

Letts said board members ought to alert New York State Attorney General Eric Schneiderman to investigate the matter, particularly because executives and board members could be guilty of malfeasance.

It is unknown whether board members have contacted Schneiderman’s office, but a spokeswoman for the attorney general indicated that her boss had been alerted to the situation. “We cannot comment on matters before our office,” said Melissa Grace, the spokeswoman.

Questions have also been raised about whether the Claims Conference had insurance to cover its losses from the fraud.

Bruce Arbit, who runs a firm that helps find claimants in large class action suits, said that it is standard procedure for organizations in the claims administration industry to insure against employee error or fraud. Arbit said his own organization, A.B. Data, maintains around $100 million in so-called errors and omissions insurance and employee dishonesty insurance — a measure that all of his competitors also take.

If the Claims Conference had carried such insurance it would have been able to repay the $57 million to the ultimate victim of the fraud, the German government, which pays for the Holocaust funds that were defrauded. A Claims Conference spokeswoman, Hillary Kessler-Godin, did not respond to multiple requests for information about whether and, if so, how much insurance coverage the Claims Conference carries.

Meanwhile, Elie Rubinstein, a former social services administrator for Holocaust survivors, said he is concerned about the expansion of a Claims Conference program, the Hardship Fund, into the Former Soviet Union.

Rubinstein, the former executive director of The Blue Card, a not-for-profit that looks after destitute Holocaust survivors, fears that the Hardship Fund’s one-off payment of about $3,500, made primarily to those who fled Nazi persecution, will make an attractive target for fraudsters in a region of the world where corruption is rife and $3,500 is a significant sum. He added that there was also confusion about who is eligible.

Following negotiations last year, the German government expanded eligibility rules for the Hardship Fund. In addition to those who fled east during World War II because of the German army’s advance, the fund is now open to Jews who were trapped during the Nazi siege of Leningrad and those who were within 60 miles of the German front.



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