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Brooklyn Woman Sentenced In Manhattan Federal Court To 18 Months In Prison For Participating In $57.3 Million Fraud On Organization That Makes Reparations To Victims Of Nazi Persecution

FOR IMMEDIATE RELEASE
Friday, October 19, 2012

Preet Bharara, the United States Attorney for the Southern District of New York, announced that POLINA BREYTER, a former caseworker and employee of the Conference on Jewish Material Claims Against Germany, Inc. (the “Claims Conference”) who participated in a $57 million fraud scheme targeting programs administered by that organization that were established to aid the survivors of Nazi persecution, was sentenced today in Manhattan federal court to 18 months in prison. BREYTER pled guilty in May 2012 to one count of conspiracy to commit mail fraud. She was sentenced by U.S. District Judge Thomas P. Griesa.

Manhattan U.S. Attorney Preet Bharara stated: “Polina Breyter played a central role in a multi-million dollar fraud scheme perpetrated against an organization whose sole mission is to provide relief to victims of Nazi atrocities. Eighteen of 31 people charged have now pled guilty and face the same prospect of prison as a result of this wide-ranging fraud.”

According to the Superseding Indictment, the Complaint, and statements made during court proceedings:

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 funded by the German government. Applications for disbursements through these funds are processed by Claims Conference employees in the Manhattan office, who are supposed to confirm that the applicants qualify for payments.

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 wide-reaching 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, including many who were born after World War II, and at least one person who was not Jewish. Some members of the conspiracy 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.

From the investigation to date, 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 obtained 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.

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.

While employed as a caseworker at various times in both the Article 2 Fund and Hardship Fund programs at the Claims Conference, BREYTER knowingly processed fraudulent applications in return for payments from her co-conspirators. In addition, BREYTER personally recruited a number of ineligible applicants to the Hardship Fund program, collected their identification documents and processed fraudulent applications in their names, in exchange for half of the money they received from the German government.

Since 2010, a total of 31 individuals have been charged with participating in the scheme to defraud the Article 2 Fund and Hardship Fund programs. Eighteen defendants, including BREYTER, have pled guilty, and five of those defendants have been sentenced. Charges remain pending against 13 defendants in the case, and they are presumed innocent unless and until proven guilty.

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In addition to her prison term, BREYTER, 69, of Brooklyn, New York, was sentenced to one year of supervised release, and ordered to forfeit $22,000 and pay restitution in the amount of $461,875.65.

Mr. Bharara praised the investigative work of the Federal Bureau of Investigation. 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. Attorneys Christopher D. Frey and Jonathan Cohen are in charge of the prosecution.

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