2001 letter shows Claims Conference alerted to fraud a decade before it was stopped

NEW YORK (JTA) – The Claims Conference was alerted as early as 2001 to a fraud scheme within the organization that ran unimpeded from 1993 to 2009 and cost $57 million.

The warning to the Claims Conference came in the form of an unsigned letter that reached the organization’s then-director in Germany, Karl Brozik, in mid-2001.

The letter identified five ineligible cases and accused Claims Conference employee Semen Domnitser of approving restitution for them. Domnitser, who was found guilty last week of spearheading the $57 million scheme, managed to deflect the blame away from himself, and the fraud continued for nearly a decade more.

The 2001 letter and subsequent internal review came up in Domnitser’s trial and first appeared in a report this week by the Forward, which obtained the letter.

At the time Brozik, who has since died, brought the letter to the attention of Greg Schneider, who was then the COO of the Claims Conference and is now its chief executive. Gideon Taylor, then the executive vice president of the Claims Conference, also was alerted.

A Claims Conference staffer who conducted an internal review for the organization expressed serious concerns about Domnitser and other Claims Conference employees who reviewed and approved the fraudulent applications, but the organization failed to take action against Domnitser and the fraud continued.

The scheme involved falsifying applications to the Hardship Fund, an account established by the German government to provide one-time payments of approximately $3,360 to those who fled the Nazis as they moved east through Germany, and the Article 2 Fund, through which the German government gives pension payments of approximately $411 per month to needy Nazi victims who spent significant time in a concentration camp, in a Jewish ghetto in hiding or living under a false identity to avoid the Nazis.

By the time Claims Conference leaders realized in 2009 that a massive fraud was under way, more than $57 million had been defrauded from the two funds.

In all, 31 people were arrested in connection with the scheme. Twenty-eight pleaded guilty and the three who went to trial were found guilty last week.