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”), pled guilty today in Manhattan federal court to conspiring to defraud programs administered by the Claims Conference, and established to aid the survivors of Nazi persecution out of more than $57 million.  BREYTER was arrested and charged in this scheme in November 2010 as part of an ongoing investigation that has resulted in charges against a total of 31 participants, 10 of whom were former Claims Conference employees, including a former director.  She pled guilty today before U.S. Magistrate Judge Ronald L. Ellis.    

Manhattan U.S. Attorney Preet Bharara said: “Polina Breyter is the eleventh person to plead guilty in connection with an elaborate and intricate scheme to steal tens of millions of dollars intended for victims of one of the worst atrocities in history – the Holocaust – and she will now face the justice she deserves.  We intend to continue pursuing the charges brought by this Office against the remaining 20 co-conspirators in this brazen and cynical fraud so this case is brought to a just conclusion and they too are punished for their alleged crimes.”

According to the Complaints and the Indictment filed in Manhattan federal court:

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 employees of the Claims Conference’s office in Manhattan, and the employees are supposed 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 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.  Many of the recipients of fraudulent funds were born after World War II, and at least one person was not even Jewish.  Some conspirators 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.

The Claims Conference has determined that at least 3,839 Hardship Fund applications appear to be fraudulent; to date, 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 an applicant’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; to date, those cases have resulted in a loss to the Claims Conference of approximately $45 million.

Since 2010, a total of 31 individuals have been charged with participating in the scheme to defraud the Article 2 Fund and Hardship Fund program.  BREYTER, a Claims Conference caseworker, was charged with knowingly processing fraudulent applications to both the Hardship and Article 2 Fund programs in return for payments made to her by co-conspirators.  BREYTER is the eleventh individual to plead guilty.  Charges remain pending against the remaining 20 defendants in the case, who are presumed innocent unless and until proven guilty.

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BREYTER, 69, of Brooklyn, New York, faces a maximum sentence of 20 years in prison, and a maximum fine of $250,000.  She is scheduled to be sentenced by U.S. District Judge Thomas P. Griesa on September 27, 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.

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