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PAGE 14A special re HERITAGE FLORIDA JEWISH NEWS, JULY 27, 2012 Sarah Levin/JDC Yekatrinia Rebuk of Bobruisk, Belarus, receives food in March 2008 from her locai Hesed organization as part of aid the Claims Conference sends to survivors via the American Jew- ish Joint Distribution Committee. Sarah Leyin/JDC Pasha Zalmanova (!) receives a visit from a home health aide sent by the Hesed organi- zation in Minsk, Belarus. Can Greg Schneider steer Claims Conference past a $57 million fraud? Part 2 of 2 opens with the days Of reckoning. By Uriel Heilman NEWYORK (JTA)--Forthe first few weeks after discover- ing that the Claims C.onfer- ence was being cheated, Schneider barely slept. Never very polished-looking--Sch- neider's shirts appear peren- nially rumpled and his light- brown hair grows unkempt as the day progresses--Sch- neider appeared more dishev- eled than usual. In an instant, his job had changed from convincing Germany to increase its as- sistance to aging survivors to trying to prevent the entire edifice of the Claims Conference from collapsing "under the weight of a fraud of Sarah Levi'n/JDC Duhenah Reveaka of.Bo- bruisk, Belarus, is among those survivors who rely on Claims Conference funding for aid. unknown magnitude. Sepa- rating credible claims from fake ones was a mammoth task, and it wasn't immedi- ately clearwhether the Claims Conference was dealing with laundreds of scammers or a small group of corrupt insid- ers. The only thing for sure was that the crooks had been at it for years. Uncertain of the extent of the conspiracy among his staff, Schneider had to make sure that no employ- ees discovered the internal investigation "There were many horrible parts, but that pretending was horrendous." Schneider recalls. "We had 100 people working on this fund world- wide, and every one of them had to be lied to." On Dec. 5, 2009, Schneider abruptly halted all payments to surwvors from the Hard- ship Fund. He told his staff at the Claims Conference offices in New York. Germany ~a - A N TI- SEMI TISM EUROPE" Taught by Rabbi Aaron D. Rubinger, Senior Rabbi Congregation Ohev Shalom Starting Wednesday,'August 15th and Thursday, August 16, 2012 The same class will be taught twice each week: Wednesdays at 12 noon and Thursdays at 7 PM Rabbi Rubinger just returned from a 7-month sabbatical in which he . visited over 10 countries investigating Contemporary Anti-Semitism in Europe. He will share with the community his findings in a 4-week course beginning August 15th. RSPV to Susan at 407-298-4650 or clergyasst@ohevshalom.org, as enrollment may be limited. Free of Charge - The Adult Conservative Yeshiva is funded thanks to e grant from Arnold and Barbara Sager through the "Sager Fund" of Congregation Ohev Shalom. Classes held at Congregation Ohev Shalom 613 Conco.urse Parkway South, Maitland, FL 32751 and Israel that the monthly wire transfers were delayed because of a computer prob- lem. In truth, he had to make sure that no new checks were issued to fake claimants. By this time, more than $5 million in fraudulent pay- ments had been discovered. On Dec. 18 of the sameyear, about a month into the inter- nal investigation, the Claims Conference and its lawyers from the firm Proskauer Rose were ready to go to the FBI. Schneider flew to Berlin to inform his interlocutors at "the German Finance Ministry, and the organization's lawyers took their dossier of evidence to the U.S. Attorney's Office. FBI investigators instructed the Claims Conference not to tell anyone else. Gradually, the mechanics of the fraud began to come into focus. A group of corrupt Rus- sian-speaking employees of the Claims Conference had hired recruiters to canvas the Russian-speaking com- munity in New York for immigrants to provide birth certificates, passports and other identifying materials. The conspirators then altered the documents to make it appear as if the immigrants fit the criteria required for Hardship Fund payments, changing dates of birth, places of prewar residence and even photographs. With some deft forgery, a Ukrainian Christian born in the 1950s could be transformed into a Jewish refugee who fled the Nazis and thus was eligible for compdnsation from Germany. Inside the Claims Confer- ence, employee accomplices issued quick approvals to the fake applications. Some of the conspirators received as much as $1,000 per applicant for their trouble. Recruiters got a cut, too, and payment also eventu- ally made its way to those who provided the original documents--many of whom, investigators later discovered, were unaware that they were participating in a fraudulent scheme. Investigators also discov- ered that another, much larger German account, theArticle 2 Fund, which provides month- ly pensions of about $300 to 60,000 Holocaust survivors. had been defrauded. The ringleader on both counts, according to fed- eral investigators, was Semen Domnitser, the director of the Hardship and Article 2 funds. Domnitser, who through his lawyer declined to be interviewed for this story, maintains that he is innocent. Even today, it's not clear who among those whose names appeared in the fraudu- lent applications were aware that they were participating in a deception and who were unwitting accomplices. Over the last couple of years, as the Claims Conference has contacted recipients of the ill-gotten gains to return the money, many have complied. The Claims Conference has recovered about $4.3 mil- lion; another $3.3 million is scheduled to be returned by recipients in installment plans. While the FBI probe wid- ened and restitution payments remained suspended, word spread among Claims Con- ference staff that something unusual was afoot. One of the suspects, Faina Davidson. [eft the countrY. She later would plead guilty to one count of conspiracy to commit mail fraud. A senior staff member in- vestigating the theft received a threatening letter. The Claims Conference hired a security guard for the office. Federal investigators arranged for witnesses to wear undercover wires. Finally, in early 2010, the Claims Conference began con- f onting employees. Nobody confessed. .On Feb. 10ofthatyear, Sch- neider fired three employees, including Domnitser, and had security guards escort them out of the building. Schneider then made an announcement to the media. The fraud figure: $7 million and counting. The ensuing months were a blur. The Claims Conference found that the fraud at the Article 2 Fund dated back at least to 1993 and exceeded $24 million. More than 200 suspicious pensions were suspended. On Nov. 9, 2010, a year to the day after Schneider was handed the first irregular case, the FBI arrested 11 more suspects, unsealed its federal indictment and held a news conference to lay out the case of how Claims Conference em- ployees managed to steal more than $42 million from the German government in the name of Holocaust survivors. The next day, the story was on the front page of The New York Times. As the months wore on, the number of arrests and the total fraud figure have continued to climb. To date, 31 people have been arrested and the figure is now at more than $57 million. Twelve of the 31 people . charged in the case have pleaded guilty, four of them ex-Claims Conference em- ployees. The most recent plea came in June: Zlata Blavatnik, a former clerk at the orga- nization, pleaded guilty to conspiracy to commit fraud. She was charged with know- ingly coUecting documents from ineligible applicants to be used in the submission of fraudulent application to the Hardship Fund. She faces a maximum prison sentence of 40 years. The first sentence con- nected to the conspiracy was handed down last August in U.S. District Court in Man- hattan: a year in prison and two years' probation for a 63-year-old Russian immi- grant from Brooklyn named Polina Anoshina who had recruited some 30 people for the scheme. The crime netted her $9,000 and cost the Claims Conference about $105,000 in fraudulent claims. Anoshina's lawyer called her "avery small part of a very large wheeL" Two others who have plead- ed guilty have been sentenced. Tatyana Grinman was given six months in prison and six months of home confinement. Rozaliya Brodetskaya was given two years' probation. The 19 others who have been charged in the case and pleaded not guilty, including Domnitser, are set to face trial beginning Jan. 14. It still will be some time before the Claims Confer- ence has completed its review of applications and knows exactly how widespread the fraud was. It has found 3,839 fraudulent Hardship Fund ap- plications totaling $12.3 mil- lion in fraudulent payments and 1,112 fraudulent Article 2 Fund cases, amounting to another $45 million. "I want all these people to go to prison," Schneider said. "It makes me sick how they put in jeopardy our programs and our relationships." Accountability When the British phone- hacking scandal erupted last summer, the head of Scot- land Yard, Paul Stephens0n, quickly resigned. It wasn't because he'd done anything wrong, he said, but because he didn't want to become a distraction for the agency. At the Claims Conference, where the fraud went on for at least 17 years, there haven't been any resignations at the top. "Anxious survivors have flooded our office with calls asking why senior leadership of the Claims Conference didn't resign in thewake of the Fraud on page 19A