Brooklyn Woman Pleads Guilty In Manhattan Federal Court To Participating In $57.3 Million Fraud On Organization That Makes Reparations To Victims Of Nazi Persecution
FOR IMMEDIATE RELEASE
Tuesday July 31, 2012
Defendant Also Pleads Guilty to Witness Tampering
Preet Bharara, the United States Attorney for the Southern District of New York, announced that MARINA ZAYTSEVA pled guilty today in Manhattan federal court to conspiring to defraud programs administered by the Conference on Jewish Material Claims Against Germany, Inc. (the “Claims Conference”), established to aid the survivors of Nazi persecution out of more than $57 million. ZAYTSEVA also pled guilty to witness tampering in connection with the investigation of the case. She was arrested in November 2010 as part of an ongoing investigation that has resulted in charges against a total of 31 defendants, 10 of whom were former Claims Conference employees, including a former director. ZAYTSEVA pled guilty today before U.S. Magistrate Judge Ronald L. Ellis.
Manhattan U.S. Attorney Preet Bharara said: “Marina Zaytseva exploited her access to money that was intended to benefit victims of one of the worst atrocities in modern history, and to make matters worse, she attempted to thwart the government’s investigation into her crimes. Today she becomes the 14th defendant to plead guilty for her crimes, and we remain committed to ensuring that all of her remaining, alleged accomplices, are also brought to justice.”
According to the Complaints and the Indictment filed in Manhattan federal court:
The Fraudulent Scheme
The Claims Conference, a not-for-profit organization that 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 underwritten 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 required to confirm that the applicants meet the specific criteria for payments under the funds.
As part of the charged scheme, a web of individuals systematically defrauded the Article 2 Fund and Hardship Fund programs for over a decade. The Claims Conference first suspected the fraud in December 2009, and immediately reported their suspicions to law enforcement, which conducted a comprehensive investigation.
The Hardship Fund pays a one-time payment of approximately $3,500 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 members of the conspiracy, including ZAYTSEVA, 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.
Since the onset of the investigation, the Claims Conference has determined that at least 3,839 Hardship Fund applications appear to be fraudulent. These applications resulted in a loss to the Hardship Fund of approximately $12.3 million.
The Article 2 Fund makes monthly payments of approximately $400 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 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 Fund applications were completely fabricated.
Since the onset of the investigation, the Claims Conference has determined that at least 1,112 Article 2 Fund cases it processed have been determined to be fraudulent. Those cases have resulted in a loss to the Claims Conference of approximately $45 million.
As ZAYTSEVA admitted during today’s plea proceeding, when she first learned that the FBI was investigating her involvement in the fraudulent scheme, she instructed several witnesses to lie to the FBI. Specifically, ZAYTSEVA instructed one witness to falsely claim a lack of memory if questioned by the FBI about fraud she and others had committed, and instructed a second witness, if questioned by the FBI, to deny splitting money with her.
ZAYTSEVA is the 14th of the 31 defendants charged in the scheme to plead guilty. Charges remain pending against the remaining 17 defendants in the case, who are presumed innocent unless and until proven guilty.
* * *
ZAYTSEVA, 51, of Brooklyn, New York, faces a maximum sentence of 40 years in prison. She is scheduled to be sentenced by U.S. District Judge Thomas P. Griesa on November 30, 2012 at 4:30 p.m.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation (“FBI”). He also thanked the Claims Conference for bringing this matter to the FBI’s attention and for its extraordinary continued cooperation in this investigation, which he noted is ongoing.
This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorney Christopher D. Frey is in charge of the prosecution.