Claims Conference Blames Dead Official for Botched $57M Holocaust Fraud Probe
The Jewish organization that processes restitution claims for Holocaust survivors is blaming an official who has since died for its failure to act on a 2001 warning about a multi-million scam run by some of its own staff.
A spokeswoman for the Conference on Jewish Material Claims Against Germany blamed the failure on Frankfurt-based Karl Brozik, its former director in Germany. It was he, said the spokeswoman, who led the investigation into detailed allegations about the scheme that the group received in an anonymous letter almost a decade before the fraud finally came to light.
The Claims Conference failed to pursue the early tipoff, disclosed by the Forward on May 14, even though a staffer’s preliminary investigation of the letter’s charges supported its allegations.
The Claims Conference spokeswoman, Hillary Kessler-Godin, said that Brozik, who died in 2004, failed to uncover the fraud, which eventually netted $57 million in funds meant for needy survivors. Semen Domnitser, a Claims Conference employee, was convicted on federal fraud charges on May 8 as the scheme’s ringleader.
“Dr. Brozik in Germany accepted [Domnitser’s] explanations for the cases cited in the anonymous letter,” Kessler-Godin said in a prepared statement.
Domnitser was the ringleader of an approximately 15-year scheme in which thousands of people improperly claimed to be Holocaust survivors to obtain payments from German funds administered by the Claims Conference. He faces up to 40 years in prison when he is sentenced September 10.
Thirty others, including almost a dozen now-former Claims Conference employees, have pleaded guilty or been convicted in connection with the fraud.
The fraud eventually came to public light in 2009, when a Claims Conference employee discovered two highly dubious applications within a few weeks. The Claims Conference then hired the law firm Proskauer Rose to investigate further, and a few weeks later contacted the FBI.
Domnitser, the director of two Holocaust funds, worked in the Claims Conference’s New York office at the time of the letter.
Top Claims Conference officials in New York, executive vice president, Gideon Taylor, former executive vice president Saul Kagan and Greg Schneider, assistant to the executive vice-president, were copied on faxes about the letter sent between New York and Frankfurt.
Taylor and Kagan no longer work for the Claims Conference, but Schneider is today the organization’s executive vice president.
Referring to Schneider, Kessler-Godin said in her prepared statement, “The entire investigation in Germany, directed by Dr. Brozik (who was senior to Greg at the time), was never shared with Greg. The entire investigation that occurred did not include Greg and involved people senior to him.”
Kessler-Godin emphasized: “The only document that Greg received … was the explanation from [Domnitser].” In fact, documents obtained by the Forward reveal that Schneider received two separate faxes about the probe, both of which referenced the anonymous letter and its allegations.
The first fax, on June 21, 2001 was a letter from Domnitser to Brozik in which Domnitser dismissed the claims made against him and against several of his colleagues in the anonymous tipoff. The second fax, on June 28, contained Domnitser’s rebuttal of a detailed chart laying out queries and concerns that a Claims Conference employee in Germany assembled after being asked to look into the letter’s allegations.
The staffer confirmed that the five applications cited in the anonymous letter included false statements and apparently fraudulent documents. The Frankfurt-based staffer expressed serious concerns about Domnitser and several employees who had approved these applications.
Schneider testified in court at Domnitser’s trial in April that he was the Claims Conference’s chief operating officer in 2001, when the letter was received. But Godin-Kessler later said that Schneider had made an error and that he was only assistant executive vice president, a lower post.
Schneider declined to respond on the record to inquiries from the Forward about why the organization’s top managers decided not to pursue the allegations brought to their attention, as did Taylor.
The anonymous letter’s reappearance comes at a particularly difficult moment for the Claims Conference, which has faced increased pressure from critics who point to the fraud as a symbol of what they perceive as a lack of oversight and accountability at the organization.
In a recent Jerusalem Post article, Isi Leibler, a former World Jewish Congress official, criticized the Claims Conference’s board of directors for failing to launch an independent review to “establish the facts” of the fraud and for approving a board resolution expressing “complete confidence in the leadership and management of the Claims Conference.” Leibler termed the board’s action a “contemptuous rejection of all managerial accountability.”
Andrew Baker, a member of the Claims Conference board, said he did not believe that he was ever made aware of the letter. Baker said the fraud had been presented to the board as something that only came to the attention of senior staff in 2009.
“I think in hindsight it was obviously a mistake and more could have been done and should have been done,” Referring to senior Claims Conference officials, Baker said. “[We] don’t know what other things [were] on their desks at the time… we’re being asked to judge their judgment 12 year ago. I’m not sure how fair that request is.”
Baker stopped short of calling for an independent investigation into how the letter’s allegations were handled by Claims Conference officials in 2001. Nevertheless, he said that as a “longtime board member” he would be interested in knowing more.
“Not necessarily because that would lead me to change my view or judgment of [the Claims Conference’s] professional leadership,” he added.