Jerusalem & Babylon America's Giant Holocaust Claims Fraud - More Than Just a Blip?

The scam that defrauded the conference of $43 million earmarked for Holocaust survivors was not just a matter of a few bad apples.

Anshel Pfeffer
Anshel Pfeffer
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Anshel Pfeffer
Anshel Pfeffer

You could almost say it was a crime without victims. Sure, $43 million were stolen over the last 16 years through false claims submitted to two funds run by the Claims Conference, the main organization that administers reparations to Jewish Holocaust survivors. And granted, six present and former employees of the organization were at the center of the scam, including the man in charge of overseeing both funds.

But hey, according to Greg Schneider, executive vice president of the Claims Conference, "it's less than one percent of funds distributed under those programs" and no authentic Holocaust survivor received less because of the scam. Well, that's okay then.

A visitor, wearing a Jewish skullcap, looks at an installation at the Yad Vashem Holocaust History Museum.Credit: Reuters

And of course, no one is saying this on the record, but most of the money came from the German taxpayer. So don't expect any official recriminations from that quarter.

The Manhattan district attorney was full of praise for the Claims Conference's cooperation in the investigation, saying without its help "in ferreting out this alleged scheme to defraud them, it never would have been exposed." So now the conference will hire an international consulting firm to help it strengthen its anti-fraud measures and everything will be fine. We should have no worries about allowing the conference to remain the Jewish people's sole custodian not only of official reparations from the German government, but also of property confiscated from Jews by the Nazis in former East Germany and other countries, and recently for stolen art treasures as well.

But just a moment. Six employees may seem a small number in a large multinational company or a government agency, but less than 100 people work at the Claims Conference's headquarters in New York, where all the suspects were employed. So even assuming that no other employee was tainted by the corruption, this was not just a matter of a couple of rotten apples; it was a sizable group operating within the organization for 16 years. Sixteen years!

And it doesn't even seem like the fraud was that elaborate. Indeed, it was almost wholesale - 4,957 false one-time payments and 658 fake pension claims.

The conference claims in its defense that this is but a drop in the ocean when compared to the number of recipients to whom it has made payments over the years, over 600,000. But if 5,615 claims were so easily fabricated, who knows how many other thousands of fake Holocaust survivors have been collecting payments over the years? I can't even bear to check the Holocaust denial websites to see how they must be crowing right now.

It would be easy to simply blame the conference for incompetence. But that is only a small part of the problem. The organization has no lack of impressive professionals. For example, Reuven Merhav, the chairman of its executive committee, is a former senior Mossad official, ambassador and director general of the Israeli Foreign Ministry, whose investigative skills were at least sufficient to make him a member of the Turkel Committee that is now investigating May's botched raid on a Gaza-bound flotilla. (Justice Jacob Turkel, the eponymous committee's head, is another Claims Conference director. )

No, the real problem at the Claims Conference seems to have been complacency. From various hints and off-the-record remarks to the press, you get the impression that conference leaders are trying to blame Russian organized crime. Apparently all those indicted had links to the group in Brooklyn's Brighton Beach that ran the operation.

That may well be true. But how does that exonerate the senior executives who allowed members of this gang to serve in positions where they authorized hundreds of millions of dollars a year in payments? Were there no serious background checks?

The conference is nominally accountable to a board of directors representing 25 Jewish organizations from around the world, some of them large and influential, others archaic and unrepresentative of any real Jewish constituency. But what interest do any of these directors have in demanding a comprehensive overhaul of how the conference does business or appointing an external committee to review this latest scandal?

In addition to the money going to survivors, the conference distributes tens of millions of dollars annually to a long list of organizations loosely involved in Holocaust commemoration and education. Many of these institutions are subsidiaries of the organizations represented on Claims Conference board of directors. They are not interested in altering this cozy arrangement, despite claims by survivors' groups that in the final years of survivors' lives, every spare cent should be going to their welfare.

One former director did dare to break ranks: Zeev Bielski, the previous Jewish Agency chairman, demanded answers to some uncomfortable questions. When he did not receive them, he launched an independent audit of his own, revealing to the press that the conference had over $1 billion of liquid assets in reserve.

He also argued that Israel, as home to the majority of living survivors, should have more of a say in how the New York-based organization allocates funds. This, of course, was a grave breach of protocol, and the cash-strapped agency was punished: Funds for its projects were withheld. Bielski was forced to back down with a groveling apology. Others learned the lesson.

The Claims Conference is the richest, most powerful and least answerable old-boys network in the Jewish world. Yet it is entrusted not only with billions of dollars, but with a duty to the welfare of Holocaust survivors worldwide until the end of their days. And no amount of scandal, media exposes and political pressure is about to change that.



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