NEW YORK -- Six years after reaching a historic agreement with two banks accused of hiding Jewish accounts, Holocaust survivors and their heirs returned to federal court yesterday, telling a judge the deal is falling short of its goals.
Switzerland's two largest banks agreed in 1998 to pay Holocaust survivors $1.25 billion in a deal that was supposed to ease thousands of survivors' twilight years and restore the reputation of the Swiss banking industry, which was accused of hiding and misappropriating accounts worth hundreds of millions of dollars.
But many families who were supposed to benefit from the settlement told Chief Judge Edward R. Korman that both goals remain unfulfilled.
''I am very frustrated and disappointed witnessing this process first hand," said Thomas Molnar, a Hungarian immigrant. He said he has struggled in vain for access to an account opened by his father before his death.
Korman has allocated most of the money in the settlement, $800 million, to Jews who had accounts in Swiss banks or to their heirs.
But only $154 million from that fund has been distributed because the Swiss have kept thousands of victim accounts secret and a vast number of account holders and their families were wiped out, said Stuart Eizenstat, the former US undersecretary of state who negotiated the settlement.
Some families blamed Swiss banks for the delay; others blamed the Zurich-based tribunal dedicated to hearing Jewish claims under the settlement agreement.
A lawyer for the families filed a motion this week demanding more openness from Swiss banks, but the Swiss Bankers' Association said the banks were simply following the recommendations of a US committee that had audited Nazi-era accounts after the settlement and warned against publishing massive lists that could lead to frivolous claims by people with no link to Holocaust victims.
The hearing followed a searing opinion by Korman that blasted the Swiss banks' legal tactics, comparing their maneuvers to Nazi propaganda. ''The truth appears to be that the banks fear the embarrassment that will come from further access to accounts," Korman wrote in February. ''These objections bring to mind the theory that if you tell a lie big enough and keep repeating it, people will eventually come to believe it."
Many Holocaust survivors objected to a proposal to take money unclaimed by account holders and distribute most of it to survivors in the former Soviet Union.
Natan Sharansky, Israel's minister for diaspora affairs, testified by video that needy survivors in his country would not be adequately served by the proposal.
Outside the courthouse, protesters gathered to criticize what they see as unfair treatment of survivors living in the United States.
The renewed attention threatens to revive negative publicity that peaked for the Swiss in the late 1990s, when bank guard Christoph Meili rescued Nazi-era documents from a shredding room and turned them over to a Jewish group in Zurich.
The original lead plaintiff, Estelle Sapir, then 73, eventually received hundreds of thousands of dollars from Credit Suisse, which for decades refused to turn over the account of her father, a concentration camp victim, without a death certificate, which she and other victims' families did not have.