The Billions and the Shanda

By Steve Rodan

Shanda: Misbehavior by a particular Jew or Jewish group that leads to embarrassment among the broader Jewish community. [Jewish English Lexicon]

On the face of it, the Conference on Jewish Material Claims Against Germany has been one of the most effective organizations in obtaining money from Germany for victims of Hitler.

But the truth is that the group, known as the Claims Conference, stands out as being one of the most corrupt elements in the Jewish community. Yes, the organization has succeeded in obtaining tens of billions of dollars for survivors over the years. And at the same time, it has lost huge amounts to theft by some of its own 280 employees.

The biggest part of the corruption has been that the Claims Conference remains unwilling to own up to massive fraud or take steps to ensure it is not repeated. At least one who tried was fired.

Shameless self-promotion

Ten years after federal prosecution and sentencing, the Claims Conference has resisted any serious attempt to examine itself. Indeed, the non-profit group has rejected outside auditing as well as introducing anti-fraud measures. Instead, it has engaged in shameless self-promotion that purports to help the last Holocaust survivors, almost all of them way past 90, mostly in Israel.

The Conference on Jewish Material Claims Against Germany was established as part of the German reparations agreement in 1952. A year earlier, 23 Jewish organizations outside Israel, led by Zionist leader and World Jewish Committee chief Nahum Goldmann, formed an apparatus that would receive money from West Germany for Holocaust victims. Goldmann coordinated with Israel, who eventually received a much greater sum from Bonn, ostensibly for the survivors.

From the beginning, the operations of the Claims Conference were characterized by lack of transparency and accountability. Goldmann, who throughout his career kept everything close to his vest, was president of the conference until his death in 1982. The main question was how the organization spent the reparations funds. Bonn and later Berlin maintained strict rules on who was eligible for restitution. For decades, this excluded most Jews in the communist East Bloc as well as those outside Hitler's Germany.

Much of the money received by the Claims Conference was earmarked for rebuilding Jewish communal life in Europe. After World War II, however, the Jewish communities in Poland, where most of the victims lived, were decimated with little option for Jews to return. The same went for money to reclaim property confiscated by the Third Reich.

The result was that much if not most of the money relayed by Germany was never spent. In 2013, the Claims Conference was reported to have accumulated revenues of $813.5 million and assets of more than $1 billion. For years, the conference refused to provide updated figures. [1]

The window on the Claims Conference opened ever so slightly after Goldmann's death. His responsibilities were divided between two people. Israel Singer, an academic who essentially replaced Goldmann at WJC, became the president; and Julius Berman, an attorney, was named chairman.

Silence and cover-up

Berman's real job at the Claims Conference was silence and cover-up. For at least eight years, the rabbi hushed up allegations of widespread fraud within his organization. The detailed accusations identified executives who were stealing tens of millions of dollars by creating fictitious claims and recipients.  Berman, Singer and their colleagues did virtually nothing and kept secret a letter in 2001 that told of the massive embezzlement.

But federal prosecutors in New York didn't act the same way. They eventually received the tip-off letter and conducted an investigation into the Claims Conference. The U.S. Attorney for the Southern District of New York determined that the rot began from the top and extended at least 15 years.

U.S. Attorney Preet Bharara disclosed how the scam worked. It began with Semen Domnitser, a former caseworker who rose to become head of funds meant to expand those eligible for German stipends to Holocaust survivors from the former Soviet Union. Unlike Jews in the rest of Hitler-occupied Europe, many of the Soviet survivors escaped ghettos or camps and instead lived in hiding or under false identities. In the 1990s, Germany agreed to provide hundreds of millions of dollars to these people.

Doctoring applications

From 1994, Domnitser processed fraudulent claims by doctoring applications in which the date and place of birth were changed. He and his colleagues also altered documents to verify that an applicant had been persecuted by the Third Reich. Some of the details were complete fabrications. Applicants came from advertisements in the Russian press in New York. In the first stage, 17 people were indicted, eight of them employees of the Claims Conference.

The fraud grew bigger in 1999 when Domnitser became the director of the so-called Article 2 Fund, which issued monthly payments of $400 per month to those who also could prove they had been in a German prison camp for six months. He also served as director of the Hardship Fund, which approved a one-time stipend of $3,600 to those who escaped the Germans and became refugees during World War II. The successful applicants to these funds would kick back money to Domnitser.

Federal authorities estimated that the fraud reached $57.3 million and involved at least 1,112 Article 2 cases. Later, the Claims Conference determined that nearly 4,000 Hardship Fund applications appeared to fraudulent. In 2013, he was sentenced to eight years and ordered to pay restitution of the $57 million. In all, 31 people, many of them turned in by other defendants, were convicted, 10 of them Conference employees.

"As the highest-ranking insider to participate in this despicable fraud against the Holocaust Claims Conference, Mr. Domnitser played an integral role in the scheme by processing fraudulent applications to the conference and turning a profit of thousands of dollars for himself," Bharara said. [2]

Greater fraud

In virtually every major organization, such a scandal would have caused heads to roll. But Berman kept his position although in 2012, under heavy pressure, he appointed an ombudsman. Shmuel Hollander was a former senior Israeli official who for 14 years ran the civil service. He was promised complete freedom and access. A year later, Hollander issued a report that was scathing: He determined that the fraud was much greater than the reported $57 million. He discovered that since the scam was discovered, the Claims Conference took virtually no steps to prevent fraud and embezzlement. The report said the conference was "governed in a manner unacceptable in both public and corporate bodies." [3]

Another question was whether the Claims Conference was forced to repay the embezzled funds. The German Finance Ministry, prodded by parliament, said it wanted the money and the Claims Conference denied that such a request was issued. When Hollander's questions became infuriating, Berman refused to renew the Israeli's contract.

 “Numerous obstacles were placed in our path, hampering our work," Hollander said in a letter to the organization's board of directors. "Relevant information was withheld from us, and formal obligations were violated.” [4]

Berman, who insisted that his "conscience is totally clean," remained chairman until 2020. Singer was less fortunate: He was dismissed in 2007 for financial improprieties at WJC and before the scandal at the conference erupted.

"The mishandling of sacred Holocaust restitution funds represents the greatest moral failure of organized Jewish life in our generation," Isi Leibler, a former president of the Executive Council of Australian Jewry, wrote  [5]

The State of Israel supplied Israelis to help the Claims Conference. Otherwise Israel remained silent. Hollander was replaced by Ayelet Metzger, who provided oversight of the country's commercial radio and television network. Metzger didn't repeat Hollander's behavior and remained in her post until today. Unlike Hollander, Metzger has not dealt with alleged improprieties.

By 2025, all dead

Israel's silence reflected its own policy regarding Holocaust reparations. From the start, Israel has kept German money meant for Holocaust survivors. In April 2016, the Social Welfare Ministry released a report that more than 20,000 survivors were denied eligible government assistance financed by Germany, including nursing care and discounts on electricity. Thousands of other survivors never received public housing they were promised [6]]

The Israeli policy has been as cynical and probably more larcenous than that of the Claims Conference -- because by 2025, in another year, all of the survivors are expected to be dead. [7]

And then the shanda might very well be forgotten.

Notes

1. "Claims Conference Ombudsman Says He Was Dumped Over Critical Report." Larry Cohler-Esses. Forward. June 30, 2015

2. "Six Corrupt Insiders Allegedly Processed Thousands Of Fraudulent Applications For Payments Meant For Actual Victims Of The Holocaust." United States Attorney Southern District of New York. Nov. 9, 2010.

3. "Claims Conference leaders continue obfuscating the truth" Isi Leibler. April 28, 2015

4. "Claims Conference Ombudsman Says He Was Dumped Over Critical Report."

5.  "Claims Conference leaders continue obfuscating the truth" Isi Leibler.. Also, "Claims Conference head ‘never considered’ public apology over huge fraud." Uriel Heilman. Times of Israel. May 24, 2013.

6.  "Over 7,000 Holocaust survivors in Israel still waiting for public housing." Bar Peleg. Haaretz. April 28, 2022

7. "How the State of Israel Abuses Holocaust Survivors." Yardena Schwartz. Tablet. Jan. 26, 2017. How the State of Israel Abuses Holocaust Survivors

Below: Conference chairman Julius Berman."My conscience is totally clean on the role I played."