Krueger's Men (20 page)
By now the Bank was worried about more than just its reputation for standing behind that inscription on every note that “promises to pay the bearer” (in gold, in times past). Edward Playfair, who had all the appropriate Treasury credentials — a brilliant Cambridge classics scholar with a mordant disdain for lesser intellects — remarked that the Bank was “hypnotised by looking at their own beautiful notes.” He was on his way to a two-year tour with the occupation authorities and was incensed that his country, which had bankrupted itself in a fight to the death against the Nazis, might have to compensate former enemies “in order to meet the Bank of England’s pride.” The Bank was painfully aware of the huge potential damage to its reputation if it refused to redeem pounds from unsuspecting foreign banks that had been bilked by the almost perfect forgeries. The Treasury, for its part, put severe limits on any foreign withdrawals based on the presentation of real pound notes, pinching every penny of foreign exchange to feed and rebuild the nation, which had been left exhausted by its victory.
In due course a typically obscure British compromise emerged: prewar pounds only would be exchanged in the “allied” countries of Belgium, Czechoslovakia, Denmark, Greece, and Norway, where, not coincidentally, very few counterfeits had circulated.
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Where the counterfeits had been most concentrated, the restrictions were more severe. Exchange arrangements were nonexistent in Yugoslavia, Italy, and Hungary, the latter two under the guise that they had been enemies. Because of suspected Nazi accounts in Switzerland, tight restrictions were enforced there.
But the fakes and even new fakers kept popping up for many years, especially in neutral or pro-Nazi countries that had sat out the war. A regular trade developed in phony fivers that were believed to have been shipped by Swiss banks and officials in Madrid and Rome, then pitched at a discount to unsuspecting buyers along the Mediterranean littoral with the story that they had been hidden during the war and now could be redeemed by the British. From Stockholm, Harry Söderman, director of Sweden’s National Institute of Technical Police, bombarded Scotland Yard with telegrams and letters giving details of Swedish businessmen who had been stuck with counterfeit pounds. And a Hungarian refugee from Budapest arriving in Switzerland in 1946 tried to have a friend change £2,000 at a bank. Could he have been one of the Soros family’s clients? No one can ever know, but the refugee soon learned to his chagrin that his pound notes were fakes.
The largest number of counterfeits were dredged up from the depths of the Toplitzsee, preserved in its deoxygenated waters fed by sulfur springs. In 1967 a bundle of Bernhard pounds with a face value of £5 million was found abandoned inside the organ of the San Valentino church in Merano. Argentina, which sheltered many Nazis after the war, also absorbed their counterfeiting tricks during its own Dirty War against leftist guerrillas in the 1970s and 1980s. Ricardo Coqueto, a carpenter, escaped execution in the notorious Naval Mechanics’ School in Buenos Aires because he not only learned to forge official credentials but “I can remember making British sterling notes.”
For more than half a century, the Old Lady uttered hardly a word about the whole distasteful matter, rather like a well-bred duchess ignoring a spot of red wine spilled on her linen tablecloth. The Bank’s archives appear to have been deliberately purged, or worse. A 1949 memorandum reports that two officials destroyed not only an unrecorded quantity of forged banknotes but “photographic copies and records of the plant engaged in the production of the High Sum Plates and Notes.” Peppiatt retired from the Bank in 1957 and became a director of Coutts & Co. (a bank whose most distinguished private client was the Queen of England). In old age he particularly enjoyed playing a mean hand of bridge, which is what he was doing in 1983 on the afternoon of the day he died peacefully at the age of ninety. His obituary in the Bank’s house organ,
The Old Lady,
did not breathe so much as a whisper about the most singular event in his career.
This obituary was written by his successor as chief cashier, Sir Leslie O’Brien (later promoted to governor and ennobled). Along with the Bank’s other senior executives he continued believing that many of the Bank’s own records of the Bernhard counterfeits could not be found. The official explanation was that they had been lost or handed over to the security services. Right into the twenty-first century, Sir Eddie George, O’Brien’s successor as governor, insisted that it was “conspiracy theory” to suggest that the Bank might have a file copy of the 1945 report from its own man Reeves. In fact, the Foreign Office did have one and declassified it in the 1970s.
The outsize white fivers with the postwar metal thread were finally superseded in 1957, to great public outcry. British traditions were falling away like pieces of the Empire, and this was no exception. It took another two generations for the Bank to acknowledge that the five-pound note was not much good as money anyway. In 1998 John Keyworth, head of the Bank’s museum, admitted: “Not only did you have to fold it into your wallet, but many shopkeepers would insist on your writing your name and address on it because it was so easy to fake.” Yet the Bank’s own promotional film boasting in the late 1990s about how it had maintained the security of its banknotes over the centuries dared not even mention the name Bernhard. The cover-up continued until the old guard died off. Finally, in March 2003, the Bank publicly conceded in a brief but frank account of Operation Bernhard on its website that the scheme had indeed threatened the wartime stability of sterling and that “significant numbers [of counterfeits] found their way into circulation and were a constant headache for the Bank and other financial institutions for years to come.”
No one can say the prisoners came out of it well, but they had learned how to gain strength from hope. In Block 19, Salomon Smolianoff had filled his idle hours working on the mathematical probabilities of roulette with Jacob Laskier, a Polish office worker good at figures. They were certain they could devise a system to break the bank at Monte Carlo, which Smolianoff tried after the war but failed. He seems also to have tried to get back into his old game. He wrote his mentor, Professor Miassojedoff, now living under the name Eugene Zotow, in the postage-stamp country of Liechtenstein. Miassojedoff drew, painted, and had, quite naturally, designed some of its postage stamps. Neither could obtain a visa to visit the other, so they arranged to meet at the Swiss border in March of 1946 but could only gaze across a no-man’s-land separating them by some 125 feet. Smolianoff claimed to be organizing an exhibition of exiled Russian artists and wrote his friend asking for paintings, but the police figured he really meant a more instantly exchangeable form of art and kept an eye on him.
Sometime in 1946, Smolianoff settled in Rome and in February 1947 married Carlotta Raphael, daughter of an old Italian Jewish family and widow of a professor of engineering. In May the Italian police questioned him about his black-market sale of a five-hundred-dollar bill. He spun a complex tale of exchanging it on behalf of his wife who had been left more such bills by her late husband; of an intermediary who said a bank had certified the money as genuine; and of yet another woman who took a five-hundred-dollar bill to the United States, where it was declared counterfeit. The Italian police seized the money, and in September 1947 Smolianoff took ship for South America. The next year Miassojedoff/Zotow was convicted in Liechtenstein of counterfeiting hundred-dollar bills, the court wisely ignoring an exculpatory statement from Smolianoff in Montevideo. The International Criminal Police Commission in Paris issued a wanted circular for Smolianoff as a notorious international counterfeiter in March 1948. But he was already working in Uruguay with his brother-in-law, a bookseller, who helped him peddle Russian icons that he occasionally claimed to have uncovered (how they would have turned up in South America was not immediately explained). The professor sailed to join his prize student in 1953 but died just after his arrival in Buenos Aires. In 1955 Smolianoff and Carlotta moved on, settling in Porto Alegre, Brazil, to manufacture toys. Smolianoff stayed straight because his firm and expert counterfeiter’s hand was gradually weakened by Parkinson’s disease, of which he died in 1978.
The lives of most of the other prisoners took a more prosaic turn, although there was an occasional dash of celebrity. Oskar Stein, the meticulous bookkeeper, was already running his own bar in Pilsen when interrogators came to question him soon after the war. Hirsche and Moshe Kosak, two brothers who were typesetters, emigrated to America and spent their lives working for the Yiddish newspaper
Vorwerts
in New York. Felix Cytrin, the chief engraver of Block 19, entered the United States in 1950 as a displaced person; the Secret Service kept him under surveillance almost until his death in New Jersey in 1971. Norbert Levi adopted the name Norbert Leonard, gravitated back to the high life, and spent some time as a photographer for Aristotle Onassis. Hans Kurzweil, chief of the bindery that produced fake passports, got revenge of a sort. When SS officer Hoettl published his book reporting falsely that Krueger had used criminals to forge sterling, Kurzweil sued and won on the basis of a sworn deposition from Krueger that he had not. Kurzweil’s legal victory in a Viennese court deprived Hoettl of his government license to run a school, which he had to close.
At least five survivors published memoirs or cooperated in them. The first was Moritz Nachtstern’s, still fresh with anecdote; he returned to work as a stereotyper, employed by
Hjemmet
(Home), a Norwegian family magazine, and lived until 1969. Adolf Burger worked closely with the police from the time of his return to Prague, publishing his memoirs in Czech and then in German. Avraham Krakowski settled in Brooklyn and resumed work as an accountant, still so pious that his Flatbush neighbors knew him as “the rabbi” even though he wasn’t one. Peter Edel became an author, man of the theater, and novelist celebrated by the Communist government of the German Democratic Republic. Max Groen, whose father had been the prewar manager for 20th Century Fox in the Netherlands, subtitled imported films, which permitted him the leisure to enjoy the café life he loved. To the end of his life Groen insisted he had never doubted for a moment that he would outlast his captors: “I knew the future. I’d be free.” Even his last wish was fulfilled, that death come peacefully and without suffering, as it did one morning in 2004 at his home on a placid Amsterdam canal at the age of eighty-six.
But the hands-down winners were the tourist operators around the Toplitzsee, who have in recent years turned it into an Austrian Loch Ness, complete with its own website. The lure of sunken treasure made the lake a cynosure for fishermen, divers, and assorted adventurers, not all of whom survived. Only weeks after the war ended, the first catch was made innocently by a real fisherman who hooked a bundle of fake fivers with a face value of £400,000. He turned them over to the American occupation forces. U.S. Navy divers based in Cherbourg also went down that spring but were stopped by the logs that regularly slip down the steep mountainsides and form an interlocking, almost impenetrable mantle floating about a hundred feet below the surface. Others were more determined and less lucky. In 1946, two former engineers from the abandoned naval research station who had been camping on the lip of hills above the lake were found dead in mysterious circumstances. In 1950 two more alumni of the station tried to slither down its steep sides; one lost his grip on the brittle limestone and fell to his death.
The most ambitious underwater expedition was mounted in 1958 by the German magazine
Der Stern.
It retrieved a printing press and millions in counterfeit sterling before being stopped by the publisher, possibly on the orders of the Austrian government. This gave rise to persistent stories that
Stern
’s crew of divers and reporters had located — or was about to — SS records including the numbers of Swiss bank accounts. Representatives of the Bank of England were present when the counterfeits retrieved from the deep were burned in the boilers of the Bank of Austria. Their official report contains no hint of secret accounts that might lead the Old Lady to recover hidden treasure on deposit in Zurich, to which it might be entitled as profit from the counterfeits. In 1963 the Austrian government put the lake off limits to treasure-hunters and conducted its own survey of the bottom with a sounding device and underwater video camera. It declared there was nothing more to be found. Again neither the Bank nor the Yard made mention of any SS records in its reports, and the next year Scotland Yard formally closed the case.
Predictably, this only intensified the search. Hans Fricke, the underwater biologist, spent three years scouring the bottom in a miniature submarine, filming with the aged Krueger as a passenger on one dive. Fricke discovered more forged pounds, various rockets, missiles, and other detritus of experimental Nazi ordnance, as well as a previously unknown worm that lived without oxygen. Fricke said there was no more to find. Nevertheless, in 2000 the World Jewish Congress, prompted by an Israeli adventurer who declared himself a Mossad operative, advanced most of the $600,000 needed for a month’s sonar mapping of the lake and five weeks of diving for hidden SS archives. The operation was filmed by CBS News. Still, nothing was found aside from a case of beer caps and more counterfeit fivers, the latter on display at the Simon Wiesenthal Museum of Tolerance in Los Angeles.
As of this writing, yet another undersea adventurer, Norman Scott, who went after the wreck of the
Republic,
an American Civil War steamship that foundered off the coast of North Carolina with a cargo of gold, has obtained a three-year license from the Toplitzsee’s state proprietors to hunt for gold. He claimed to have turned up new leads in the archives in Washington and Berlin and expressed confidence he would find “something damn big.” After more than half a century, perhaps he will finally recover an underwater Treasure of the Sierra Madre, assuming that it has not blown away.