$40M in Holocaust Reparations Stolen in Massive Scam

Millions of dollars meant to help survivors of the Nazi holocaust instead were stolen and fraudulently given to thousands of people who were not eligible for the funds, Justice Department officials said.

The FBI said insiders who were responsible for verifying claims at the Conference On Jewish Material Claims instead helped commit a massive fraud. Investigators said in exchange for kickbacks, the employees signed off on bogus applications submitted in part by Russian immigrants who falsely claimed they had lost their homes and belongings during the Nazi era.

Officials said Semen Domnitser was one of the alleged ringleaders who signed off on fraudulent applications from more than 4,000 people. In all, more than $40 million in funds provided by the German government meant for survivors was stolen or is unaccounted for, prosecutors said.

One of the funds allegedly ripped off was the "Hardship Fund" which pays approximately $3600 in a lump sum to individuals from the former Soviet Union and other Eastern European countries who can show they lost their homes and were in hiding during World War II. Other victims can claim payments up to $21,000 annually if they can show they lived under harsh conditions during the Nazi-era.

The Conference on Jewish Material Claims has offices at 1359 Broadway. A spokeswoman did not immediately return calls for comment. A spokesman for the German Mission in New York said they will issue a statement later Tuesday.

Investigators said as part of the scam, the group took out ads in Russian language newspapers seeking individuals who could either provide documents that showed they were alive and living in the affected regions. The FBI said the group also submitted similar or duplicate paperwork and photos on different applications for assistance.

A home along Brighton West 12th Street in Brooklyn was a center where fake overseas documents were allegedly produced, officials said.

Investigators said the alleged scam has been running since 1994. When some suspects learned the FBI was investigating, they allegedly offered bribes to witnesses in an attempt to keep them from cooperating.

The FBI said 4,957 bogus claims resulted in $18 million being wrongly taken out of one of the reparation funds. The Claims Conference lost another $24.5 million as a result of 658 other fraud cases, officials said.

Domnitser was the official responsible for overseeing case files and making sure they were in order. His approval was needed before any funds could be released for payment to alleged victims, officials said.

Others insiders charged include caseworkers Valentina Staroseletsky, Polina Berenson, Polina Breyter and Liliya Ukrainsky. They coul dnot be reached for comment as they are expected to appear in court later Tuesday. The insiders allegedly paid recruiters to help them find willing participants for the alleged scheme.

US Attorney Preet Bharara and FBI New York Director Jan Fedarcyk are expected to detail the charges later Tuesday at a news conference.