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MELISSA BLOCK, host:

This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.

Federal prosecutors in New York have uncovered massive fraud involving a fund that compensates Holocaust survivors. More than $42 million was stolen and 17 people have been charged, including people who worked for the fund.

NPR's Margot Adler reports.

MARGOT ADLER: The Conference on Jewish Material Claims Against Germany is a not-for-profit organization that for 60 years has aided victims of Nazi persecution. They administer several funds paid for by the German government that make reparation payments.

Just a year ago, last November, the Claims Conference noticed two forged documents and began suspecting foul play. After seeing some suspicious patterns, they went to the FBI and the U.S. attorney's office. There were more than 5,500 fraudulent applications.

Preet Bharara is the U.S. attorney for the southern district of New York.

Mr. PREET BHARARA (Attorney): More than $42 million that was intended for Holocaust survivors instead found its way into the pockets of corrupt employees of the Claims Conference and an elaborate network of fraudsters, as the charging documents describe.

ADLER: Prosecutors say members of the Russian Jewish community in Brooklyn gave their identification documents to the fraudsters in exchange for money. The documents were then altered to make the applicants seem eligible. Some people recruited were not even born until after World War II. Six of the defendants worked for the Claims Conference.

Gregory Schneider is the executive vice president of the Claims Conference. He says he feels relieved that the people responsible have been apprehended and gratitude to the FBI and the U.S. attorney's office.

Mr. GREGORY SCHNEIDER (Executive Vice President, Claims Conference): What's important is that we identified it, documented it, went to law enforcement. It's obviously a deep betrayal. But we will not be deterred from our core mission, which is to help Holocaust survivors, particularly in these final years.

ADLER: George Foldi(ph) is 85 years old. He was in three concentration camps and at 19, when he was liberated, he weighed 75 pounds, had typhus and double pneumonia. He says he has received about $5,000 in reparations. He says he has had two serious strokes. He says, I'm not supposed to get angry because of my heart.

Mr. GEORGE FOLDI: I'm not supposed to say that, but I'd like to pick up a Kalashnikov.

ADLER: But then he says philosophically...

Mr. FOLDI: Nothing new.

ADLER: He remembers being naked, waiting three days for clothes, back in 1945, clothes meant for survivors, and finding that the best clothes were being sold on the black market. He says Holocaust survivors are used to poor treatment.

Mr. FOLDI: They are stealing from the lowest, the poorest, the sickest. We are all old now. We have ill health, all the way through, during the remaining of our lives. That wound never heals.

ADLER: Over the decades, the Claims Conference has received 630,000 applications. So the fraud represents less than one percent. They say no Holocaust survivors were denied funds as a result of the fraud and their work will continue.

Margot Adler, NPR News, New York.

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