FBI Charges to 17: Fraudulent Applications for Payments Meant for Actual Victims of the Holocaust

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Manhattan U.S. Attorney Charges 17 People with Participating in $42.5 Million Fraud on Organization That Makes Reparations to Victims of Nazi Persecution
Six Corrupt Insiders Allegedly Processed Thousands of Fraudulent Applications for Payments Meant for Actual Victims of the Holocaust

PREET BHARARA, the United States Attorney for the Southern District of New York, and JANICE K. FEDARCYK, the Assistant Director-In-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of criminal charges against 17 alleged members of a long-running scheme that defrauded programs established to aid survivors of Nazi persecution out of more than $42 million. Employees of the Conference on Jewish Material Claims Against Germany (the “Claims Conference”), which administered the programs, were supposed to process and approve legitimate applications. Instead, they allegedly approved over 5,500 fraudulent applications, resulting in payouts to applicants who did not qualify for the programs. In exchange, these insiders kept a portion of the money for themselves and their coconspirators.

Manhattan U.S. Attorney PREET BHARARA said: “If ever there was a cause that you would hope and expect would be immune from base greed and criminal fraud, it would be the Claims Conference, which every day assists thousands of poor and elderly victims of Nazi persecution. Sadly, those victim funds were themselves victimized. Without the extraordinary cooperation of the Claims Conference in ferreting out this alleged scheme to defraud them, it never would have been exposed. We thank them for their assistance. With our partners at the FBI, we will bring to justice all those who would callously line their own pockets by looting a lifeline for Holocaust survivors.”

FBI Assistant Director-in-Charge JANICE K. FEDARCYK said: “Each of the defendants played a role in creating, filing and processing fraudulent claims on behalf of non-qualifying applicants—and dividing up the spoils. Funds established and financed by the German government to aid Holocaust survivors were siphoned off by the greedy, and not paid out, as intended, to the worthy. This was a brazen miscarriage of the compensation programs.”

FBI Assistant Director in Charge Janice Fedarcyk speaks at this afternoon's press conference as U.S. Attorney for the Southern District of New York Preet Bharara looks on.
FBI Assistant Director in Charge Janice Fedarcyk speaks at this afternoon’s press conference as U.S. Attorney for the Southern District of New York Preet Bharara looks on.
Photo Credit: FBI

As alleged in the Criminal Complaint and other charging documents unsealed today:

The Claims Conference, a not-for-profit organization which provides assistance to victims of Nazi persecution, supervises and administers several funds that make reparation payments to victims of the Nazis, including “the Hardship Fund” and “the Article 2 Fund,” both of which are funded by the German government. Applications for disbursements through these funds are processed by employees of the Claims Conference’s office in Manhattan, and the employees are supposed to confirm that the applicants meet the specific criteria for payments under the funds.

As part of the charged scheme, a web of individuals—including six of the employees who worked for the Claims Conference—systematically defrauded the Article 2 Fund and Hardship Fund programs for over a decade. As explained in the Complaint, the Claims Conference first suspected the fraud in December 2009, and immediately reported their suspicions to law enforcement, which conducted a wide-reaching investigation resulting in the charges unsealed today.

The Hardship Fund pays a one-time payment of approximately $3,600 to victims of Nazi persecution who evacuated the cities in which they lived and were forced to become refugees. Members of the conspiracy submitted fraudulent applications for people who were not eligible. Many of the recipients of fraudulent funds were born after World War II, and at least one person was not even Jewish. Some conspirators recruited other individuals to provide identification documents, such as passports and birth certificates, which were then fraudulently altered and submitted to corrupt insiders at the Claims Conference, who then processed those applications. When the applicants received their compensation checks, they kept a portion of the money and passed the rest back up the chain.

FBI Assistant Director in Charge Janice Fedarcyk speaks at this afternoon's press conference as U.S. Attorney for the Southern District of New York Preet Bharara looks on.
Personnel from the FBI’s Criminal Justice Information Services Division during this morning’s arrest.
Photo Credit: FBI

From the investigation to date, approximately 4,957 Hardship Fund applications from 2000 through 2009 appear to be fraudulent. These applications resulted in a loss to the Hardship Fund of approximately $18 million. The Article 2 Fund makes monthly payments of approximately $411 to survivors of Nazi persecution who make less than $16,000 per year, and either (1) lived in hiding or under a false identity for at least 18 months; (2) lived in a Jewish ghetto for 18 months; or (3) were incarcerated for six months in a concentration camp or a forced labor camp.

The fraud on the Article 2 Fund involved doctored identification documents in which the applicant’s date and place of birth had been changed. The fraud also involved more sophisticated deception, including altering documents that the Claims Conference obtains from outside sources to verify a person’s persecution by the Nazis. Some of the detailed descriptions of persecution in the fraudulent Article 2 applications were completely fabricated.

From the investigation to date, approximately 658 Article 2 Fund cases processed by the Claims Conference have been determined to be fraudulent, from approximately 1993 through 2009. Those cases have resulted in a loss to the Claims Conference of approximately $24.5 million.

Eleven defendants were arrested this morning. Charges against five other defendants, four of whom have pled guilty, were unsealed today. The names of all of the defendants, along with the charges and maximum penalties, are included in a chart below.

Mr. BHARARA praised the investigative work of the FBI. He also thanked the Claims Conference for bringing this matter to the FBI’s attention and for its extraordinary cooperation in this investigation, which he noted is ongoing.

The case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys REBECCA ROHR and LISA ZORNBERG are in charge of the prosecution.

The charges contained in the Complaints are merely accusations and the defendants charged in the Complaints are presumed innocent unless and until proven guilty.

Defendants in U.S. v. Semen Domnitser, et al.

Defendant Residence Charges Penalties
Semen Domnitser Brooklyn, NY One count of Conspiracy to Commit Mail Fraud 20 years in prison; fine of up to $250,000
Valentina Romashova Brooklyn, NY One count of Conspiracy to Commit Mail Fraud; one count of Money Laundering 20 years in prison on each count; fine of up to $250,000 on the conspiracy count and up to $500,000 on the money laundering count
Polina Staroseletsky Brooklyn, NY One count of Conspiracy to Commit Mail Fraud 20 years in prison; fine of up to $250,000
Polina Berenson Brooklyn, NY One count of Conspiracy to Commit Mail Fraud;one count of Witness Tampering 20 years in prison on each count; fine of up to $250,000
Polina Breyter Brooklyn, NY One count of Conspiracyto Commit Mail Fraud 20 years in prison; fine of up to $250,000
Liliya Ukrainsky Brooklyn, NY One count of Conspiracy to Commit Mail Fraud 20 years in prison; fine of up to $250,000
Galina Trutina-Demchuk Brooklyn, NY One count of Conspiracy to Commit Mail Fraud 20 years in prison; fine of up to $250,000
Marina Zaytseva Brooklyn, NY One count of Conspiracy to Commit Mail Fraud;one count of Witness Tampering 20 years in prison on each count; fine of up to $250,000
Dora Grande Brooklyn, NY One count of Conspiracy to Commit Mail Fraud 20 years in prison; fine of up to $250,000
Polina Anoshina Brooklyn, NY One count of Conspiracy to Commit Mail Fraud 20 years in prison; fine of up to $250,000
Abram Grinman Brooklyn, NY One count of Conspiracy to Commit Mail Fraud 20 years in prison; fine of up to $250,000
Tatyana Grinman Brooklyn, NY One count of Conspiracy to Commit Mail Fraud 20 years in prison; fine of up to $250,000

Defendants previously charged

Defendant Residence Charges Maximum Penalties
Faina Davidson Brooklyn, NY One count of Conspiracy to Commit Mail Fraud 20 years in prison; fine of up to $250,000
Raisa Belgorodskaya Brooklyn, NY One count of Conspiracy to Commit Mail Fraud; one count of Mail Fraud; one count of Witness Tampering 20 years in prison on each count; fine of up to $250,000 on each count
Polina Toikach Brooklyn, NY One count of Conspiracy to Commit Mail Fraud; one count of Mail Fraud 20 years in prison on each count; fine of up to $250,000
Rozaliya Brodetskaya Brooklyn, NY One count of Conspiracy to Commit Mail Fraud; one count of Mail Fraud 20 years in prison on each count; fine of up to $250,000
Esfira Bas Brooklyn, NY One count of Conspiracy to Commit Mail Fraud; one count of Mail Fraud 20 years in prison on each count; fine of up to $250,000

FBI New York Criminal Division Sign

Posted by: Conrado Garcia Jamin

About northernbarbarians

I'm an activist and advocate for human rights and the establishment of penalties to the simulators and inconsistent. My fight is for respect for universal rights and freedoms. Journalist various print and electronic media in several countries. Independent research analyst of social risks in unions, political, corporate and institutional image. Four books published and three in electronic version. Live one day at a time, even on payments, sometimes alive yesterday. Modest income is the price of freedom.
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