Brooklyn Woman Sentenced In Manhattan Federal Court To One Year And One Day In Prison For Participating In $57.3 Million Fraud On Organization That Makes Reparations To Victims Of Nazi Persecution
The Fraudulent Scheme
Preet Bharara, the United States Attorney for the Southern District of New York, announced that MARINA ZAYTSEVA was sentenced today in Manhattan federal court to one year and one day in prison for her participation in a $57 million fraud scheme that targeted programs administered by the Conference on Jewish Material Claims Against Germany, Inc. (the “Claims Conference”) and that were established to aid the survivors of Nazi persecution, and for instructing others to lie to the FBI if questioned about the fraud. ZAYTSEVA pled guilty in July 2012 to one count of conspiracy to commit mail fraud, and one count of witness tampering. She was sentenced by U.S. District Judge Thomas P. Griesa.
Manhattan U.S. Attorney Preet Bharara said: “Not only did Marina Zaytseva recruit participants into a multi-million dollar fraud scheme against an organization that exists solely for the purpose of aiding victims of Nazi atrocities, but she compounded her shameful conduct by obstructing the investigation into the fraud. She is the latest defendant in this massive scheme to be punished, but she will not be the last.”
According to the Superseding Indictment, the Complaint, and statements made during court proceedings:
The Claims Conference, a not-for-profit organization which 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.
ZAYTSEVA, along with other members of the conspiracy, recruited people to provide their identification documents, such as passports and birth certificates, which were then fraudulently altered and submitted to corrupt insiders at the Claims Conference. The corrupt insiders 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 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.
From the investigation to date, 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.
When ZAYTSEVA first learned that the FBI was investigating her involvement in the fraudulent scheme, she instructed other participants in the fraud to lie to the FBI if questioned. Specifically, ZAYTSEVA instructed one witness to claim falsely a lack of memory about the fraud and instructed a second witness to deny having split money with her.
Of the 31 individuals who have been charged with participating in the scheme to defraud the Article 2 Fund and Hardship Fund programs since 2010, 19 defendants, including ZAYTSEVA, have pled guilty, and seven of those defendants have been sentenced. Charges are pending against 12 defendants in the case, and they are presumed innocent unless and until proven guilty.
In addition to her prison term, ZAYTSEVA, 52, of Brooklyn, New York, was sentenced to one year of supervised release. ZAYTSEVA was also ordered to pay $66,597.12 in restitution and to forfeit $6,000.
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. Attorneys Christopher D. Frey and Jonathan Cohen, and Special Assistant U.S. Attorney Rebecca Rohr, are in charge of the prosecution.