A former board member
of the Conference on Jewish Material Claims Against Germany wrote to a US judge
that the organization was ill equipped to prevent fraud, joining a group of
American Holocaust survivors aiming to block it from distributing settlement
The declaration, filed in late December as part of a case
involving Swiss banks, comes six months after the Claims Conference faced
stinging criticism for its inability to identify or stop a fraud scheme in which
$57 million was stolen from the organization.
The petition by the board
member, Haim Roet, does not introduce new evidence of wrongdoing; however, the
case is distinctive because it represents one of the first times the fraud
incident has been used against the Claims Conference in separate legal
Holocaust Survivors Foundation- USA is challenging the
distribution of $1.25 billion from a 1998 settlement with Swiss banks, which had
been used by the Nazis. The judge, Edward Korman, allocated a portion of the
settlement money to the Claims Conference and the Jewish Joint Distribution
Committee to provide services to Holocaust survivors.
foundation has argued for more than a decade that the formula used to distribute
the funds is unfair to American survivors.
It has also asked Korman to
prevent both the Claims Conference and the JDC from distributing those funds
because of alleged accounting and management problems.
Korman did not
respond to a request for comment about a timeline for his ruling.
Claims Conference board member between 2009 and 2010, provided more than 60
pages of documents detailing his complaints about the lack of resources devoted
to internal audits during his yearlong tenure.
In an interview on Monday,
Roet acknowledged that he hasn’t followed any subsequent Claims Conference
reform closely. But he said he does not believe that basic management issues
have been resolved.
“It’s unbelievable. I saw it immediately when I was
there,” he said, adding that he expressed his “opinion about the need for better
internal control, but they didn’t listen.”
The Claims Conference did not
publicly respond to the recent filing.
However, Greg Schneider, the
Claims Conference executive vice president, wrote in a November filing that
“there has never been any independent fraud related to the allocations and
distribution of the Looted Assets Class funds that the Claims Conference has
He added that “a record exists for every dollar transferred by
the court” to the Claims Conference.
As of July, the Claims Conference
distributed $46.5m. to 80 social welfare agencies.
conference has distributed more than $262 million from the settlement to Jewish
With Roet’s filing, the survivors foundation aimed to show
that the previous fraud case tainted the reputation of the Claims Conference and
should call into question its present role.
“Given the management and
accounting catastrophes that have occurred under the Claims Conference regime
during the time period for which the US survivors seek an independent
investigation, why should any of the reports, audits or invoices that the
organization [submitted] during the 1994-2009 period be taken at face value?”
Samuel Dubbin, the attorney representing the foundation, wrote to the
Menachem Rosensaft, general counsel for the World Jewish Congress
and a law professor, said on Monday that the previous fraud case is “utterly,
totally and completely irrelevant to whether or not the distribution of [the
Swiss bank] funds is being handled appropriately.”
“Over the years, the
Claims Conference and the [JDC] have helped and are helping tens of thousands
[of] survivors around the world. And that simple fact needs to be taken into any
consideration when looking at the organization,” he said.
“To take the
criticisms in a vacuum and to focus only on them and to ignore all of the
humanitarian work that has been done, and is being done, by these two
organizations is disingenuous at best and outrageous at worst,” he
The current debate centers around relatively small amounts of
money that the court did not anticipate having to dole out. The US Congress’s
decision not to subject the fund to income tax and accumulated interest caused
the fund to be larger than originally anticipated.
In recent months, the
court divided up $50m., with 75 percent of the money going to survivors in the
former Soviet Union, and the rest going to other countries, the same formula
previously used. About 4% would end up in the hands of US survivors.
the total, the Claims Conference was asked to distribute $12.5m.
survivors foundation said the court’s determination is unfair to American
“Do you have any empathy at all for the Holocaust survivors in
the class who live in the US and who have been suffering every day while
millions of dollars recovered from their losses was available to be distributed
for their assistance in this court, in the Claims Conference, in the hands of
other institutions?” David Schaecter, the foundation’s president, wrote to the
judge in May.
But Korman’s position has been consistent for more than a
In 2004, he wrote a 32-page rebuttal to a survivors foundation’s
proposal, reiterating that the survivors in the former Soviet Union represent
the “neediest” people.
Korman wrote that the survivors foundation’s
“proposed distribution scheme is wholly inconsistent with law, morality and most
importantly, the settlement of this lawsuit. In sum, these objections are
Dubbin unsuccessfully appealed Korman’s ruling to an appeals
court and the US Supreme Court.
While the recent filing focused on the
Claims Conference, the survivors foundation also alleged that the JDC provided
false information in declarations to the court.
The foundation argued
that the JDC was unable to quantify the survivors aided by the specific
In a response filed on January 2, JDC lawyers said
“there is no truth to [the] HSF Survivors’ accusations.”
They said that
since the settlement funds are included in a larger pool of money, which aids
survivors, the specific role of the settlement funds cannot be
The JDC has been transparent about this fact, it
Herbert Block, JDC assistant executive vice president, said on
Tuesday that “nothing has stopped because of this litigation.”
primary concern is for the needs and care of the elderly Jewish Nazi victims,
the survivors in the former Soviet Union who are in great need of care,” he
“That has not ceased.”
Relevant to your professional network? Please share on Linkedin