Krueger's Men (26 page)

117 Stein’s summary of the total: Figures in McNally Report, 8, 16a.

117 a Yugoslav officer named Dusko Popov arrived: PRO KV 2/854, Records of the Security Services, Personal Files, World War II, Double Agent Operations, August 26–October 7, 1943.

Popov had already played a role as a double agent in the United States, although the failure of that mission was not his fault. Dispatched by the Germans in August 1941, Popov informed his British masters, who told him he had to obtain J. Edgar Hoover’s permission to erect a bogus espionage front on U.S. soil. Popov attempted to demonstrate his bona fides by telling the FBI chief that Hitler’s Japanese allies had shown intense interest in the destruction of a sizable part of the Italian fleet in Taranto harbor. British carrier-based torpedo bombers had made the attack the previous November, and Popov told Hoover that his German spymasters had ordered him to travel to Pearl Harbor with “the highest priority” and report in detail on the naval installations in Hawaii. Hoover, whose own agents had scouted out Popov as a womanizer and a spendthrift, dismissed him as an untrustworthy foreign playboy trying to gather American secrets to sell to the Germans. “I can catch spies without your or anyone else’s help,” said Hoover. He never passed on Popov’s tip, which was delivered six months before the Japanese attack on Pearl Harbor brought the U.S. into the war. See Persico,
Roosevelt’s Secret War,
138–41.

118 Enter Friedrich Paul Schwend, man of many aliases: Breitman et al.,
U.S. Intelligence and the Nazis,
123–25; Robert Wolfe, “Analysis of CIA Personality File of Friedrich Schwend,” prepared as background for
U.S. Intelligence,
of which he was a coauthor. Wolfe was for thirty-four years the chief of Foreign Records Seized (RG 242) at the U.S. National Archives, who has kindly shared his analysis with me; RG 226, entry 190C, Dulles Files, and a secret record of Memo from “399” [Gerhard P. Van Arkel, general counsel of the National Labor Relations Board, 1946–47] to “100” (Allen W. Dulles), April 17, 1945, re: Conversation with Georg Gyssling [code numbers defined at
http://archives.gov/iwg/declassified_records/rg_226_oss/rg_226_contents.html_
]; also Michael Horbach and Wolfgang Löhde, “Geld Wie Heu,”
Der Stern,
August–October 1959; Schwend CIA Name File released by the Nazi War Crimes and Japanese Imperial Records: NARA, RG 226, Interagency Working Group (IWG), CIA; description of Schwend by Georg Spitz and details from Bertha von Ehrenstein (customs violators, 3). NARA, RG 226, Georg Spitz CIA Name File. Interrogation of Bertha von Ehrenstein. Schwend’s Nazi Party number was 874-181; PRO KV 2/412. Records of the Security Service, Personal Files, World War II, German Intelligence Officers, August 1, 1944–August 1, 1945, Hoettl’s interrogation by the British, p. 13.

119 lived a comfortable life at the Villa de Nevoso: Schwend to Julius Mader, August 18, 1966, NARA, RG 226, Schwend CIA Name File (Part II). Mader had published
Der Banditenschatz
the year before but may have still been looking for material, presumably on behalf of East German intelligence. Schwend’s letter to Mader was intercepted, opened, photographed, and translated by the U.S. Army Operations and Research Department in Frankfurt, according to a December 21, 1966, cover letter from J. Edgar Hoover, director of the FBI, to the CIA’s Deputy Director, Plans. The copy in Schwend’s declassified IWG file (Part II) is marked
WARNING NOTICE
:
SENSITIVE SOURCES AND METHODS INVOLVED
. The FBI forwarded a photocopy of the envelope, which was addressed to Mader on Französiche Strasse, Berlin W.8 — the heart of the government district in East Berlin. In 2003 the author asked Markus Wolf, whose memoirs he had edited, whether Wolf knew of Mader. With characteristic indirection Wolf replied, “It is a long time since I have heard that name.” He then quickly changed the subject.

120 minister in the Croatian capital of Zagreb, bitterly complained: NARA, RG 242, Microfilm Publication T-120, A Catalog of Files and Microfilms of the German Foreign Office, Germany Department, Section DII, Internal DII, Secret, 23/4 Record; top secret excerpts concerning the matter of Schwend, Fritz, Blaschke, and Hedda Neuhold, from DII 136 top secret to DII 285 top secret 1943.

121 buying spurious plans for a new U-boat: NARA, RG 242, German Foreign Ministry Archives, May 27, 1942.

121 “And yet his conversational style was not brilliant”: Hoettl, 44.

122 were examined and declared “clever forgeries”: Sam[uel Edison] Woods, American Consul, Zurich, telegram no. 268, to Secretary of State Cordell Hull, December 3, 1942, NARA, RG 59, Central Files 1940–44, box 4969, 841.5158/38/.

122 Washington was less interested in counterfeit: NARA, RG 84, American Legation, Bern, Confidential File 1940–49, box 13 (1943), 851.51.

122 Swiss Bankers Association immediately sent: Counterfeit Circular No. 961, December 3, 1942.

122 ultraviolet light and rely: Byatt, 151.

123 Schwend and Blaschke were probably German agents: Sam Woods, American consul, Zurich, telegram to Cordell Hull, January 15, 1943, in reply to State telegram no. 1, January 2, 1943, NARA, RG 59, 1940–44, box 4969, 841.5158/41.

123 dumping thousands of bodies into ravines: “Italy opens sad pages of history,”
International Herald Tribune,
February 12, 2005, 3.

124 Schwend and Willi Groebl were caught: Hoettl, 104–7. For corroboration, see unsigned SS telegram, Berlin to Rome, September 19, 1943: “Ref. GROEBL’S death. WILLI was murdered by partisans 16/9 between TRIESTE and ABBAZIA. SCHWEND seriously injured,” NARA, RG 226, entry 122, box 2 (Decoded SS Message Traffic, August to October 1943). These tattered flimsies are typed decrypts of GP [German Police] Code No. 3, and are in PRO HW 16/27: German-language decrypts, Government Code and Cypher School: German Police Section. This and other messages cited here originated in the Government Code and Cypher School and Government Communications Headquarters at Bletchley Park, England. Intelligence derived from them was coded Top-Secret Ultra. That the British had broken the German Enigma code was the most decisive espionage coup and the best-kept secret of the European war. It was not revealed until 1976.

124 Between November 1942 and June 1943, more than 3,000: Walter H. Sholes, American consul general, Basel, memorandum to Leland Harrison, American legation, Bern, re “Ł5 and Ł10 Pound Notes Counterfeited,” June 7, 1943, NARA, RG 84, American legation, Bern.

125 It wrote the Swiss, giving more: Byatt, 152.

125 Peppiatt wrote Zurich that the Bank of England’s officers: Text of letters in Byatt, 151–54.

125 a personal emissary, a Monsieur Gautier: B/E C 5/136, Note Issue Files, 18 September 1942–5 December 1950. “Bank Note Forgeries (“BB” Type). H.G.A. [H. G. Askwith], 23 February 1944.

126 “we made a New Year’s resolution”: Askwith to Chamberlain, 29 February 1944, B/E, Note Issue Files.

126 they were stuck with about 1 million: Swiss Public Prosecutor to Dr. Motta, director of the Swiss National Bank, enclosing report “on the counterfeiting of foreign bank notes and passports by the German Reichssicherheitshauptamt,” October 24, 1945, Swiss Federal Archives, E4323 (A) 1988 Band 73 F11.1.

126 simply stopped accepting any British pounds: Sam Woods, American legation, Lisbon, telegram no. 1601 to Secretary of the Treasury re DEPTEL 1448, May 25, 1944, NARA, RG 56, International Statistics Division/Country Files: Germany 1931–1952. (Germany: Currency Counterfeit & Captured.)

126 The International Criminal Police Commission, under Nazi management: Sem and Mayer, 4.

127 even the slightest infractions of discipline: Nachtstern, 138.

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128 Schwend had been placed in command: Message, Berlin to Rome, October 21, 1943, reads: “The pounds question cannot be dealt with at this end as CDS [Chef der Sicherheitspolizei, i.e., Kaltenbrunner] has confided central control to WENDIG [Schwend]. If possible get in touch with the latter in TRIESTE HOTEL DELLE CITTA. HOET. [Hoettl],” NARA, RG 226, entry 122, box 2 (Decoded SS Message Traffic, August to October 1943).

128 Whenever Schwend needed more, he would cable: Allied interrogators got the figures and code words from Lieutenant Rudolf Guenther, private secretary and bookkeeper to Lieutenant Colonel Josef Spacil, who became chief of the administrative section (Amt II) of the RSHA in the summer of 1944. Six million Bernhard pounds was Guenther’s figure. He was in a position to know, and far enough down in the hierarchy not to be seriously implicated and therefore relatively trustworthy. But even he admitted he did not know the total for sure, and his accounts were almost certainly wanting. For example, Hoettl’s Munich account already showed 750,000 Bernhard pounds unaccounted for when Guenther arrived. CI [Counterintelligence] Intermediate Interrogation Report No. 47, February 6, 1945, NARA, RG 65, Class 65, entry A1-136P, box 185, case file 65-56600.

129 a mere 1 million lire, or £2,000: Telegram no. 7165, Berlin to Rome. NARA, RG 226, entry 122, box 2 (Decoded SS Message Traffic, August to October 1943). The sale apparently was negotiated by a priest known as Pater Michael, who was investigating “the possibility of inducing the tenants of the house to move as quickly as possible.” This forced sale appears to have been confused by some authors with the seizure of Schloss Labers. The castle was owned by the Stapf-Neubert family, descended from a Danish textile magnate who bought it in 1885. The family reclaimed the castle after the war and turned it into a hotel. The present owner and proprietor, Georg Stapf-Neubert, assured the author in a fax message on March 16, 2006, that “the sale never came through.” See Ralph Blumenthal, “The Secret of Schloss Labers,”
New York Times,
June 22, 1986.

129 Schwend’s money-laundering network of about fifty agents: NARA, RG 226, Georg Spitz name file, SCI 6th Army Group, Spitz interrogation, May 16, 1945.

129 Schwend stationed his five principal agents: James Jesus Angleton, CIA Deputy Director, Plans, memorandum to Chief, U.S. Secret Service, citing information received from the CIA representative in Peru on October 11, 1963, NARA, RG 226, Fritz Venceslav Schwend CIA Name File, Part 2.

129 “did not rely on ancestry”: Hoettl, 60.

130 One Jewish agent was Georg Spitz: PRO MEPO 3/1182, Office of the Commissioner, Correspondence and Papers — Special Series: International Crime, Sergeant’s Special Report, SB 15019/25, 6 February 1926, to the Chief Inspector, Metropolitan Police, English translation of memo from Police Headquarters, Vienna [page 38 B], Feb. 2, 1926. MEPO CID Extradition Report. April 9, 1926. “To the Examining Magistrate at the County Court of Frankfurt am Main” and MEPO CID Extradition Report dated 9 April 1926 [p. 14a].

130 The other was Yaakov Levy, a successful jewelry and art expert: NARA, RG 226, London X-2, PTS-13, SCI Twelfth Army Group, “RSHA Financial Operation,” 20 and 28 July 1945. See also Braham, “The Nazi Collaborator with a Jewish Heart”; Elam,
Hitlers Fälscher.
Braham, a professor at City University of New York, is an expert on wartime Hungary; Elam is an Israeli investigative journalist based in Switzerland.

131 Obersturmbannfuehrer Kurt Becher. A businessman’s son: Höhne, 564–65.

132 had first become entangled with the SS: Spitz interrogation, May 16, 1945. NARA, RG 226, Spitz CIA Name File.

132 Alois Miedl, a German businessman: Nicholas,
Rape of Europa,
102–10.

134 new currency was issued at 400 lire to the pound: Hoettl,
Hitler’s Paper Weapon,
98.

135 even the legendary American spy chief: William J. Donovan, Coordinator of Information, Memorandum for the President, February 19, 1942, NARA, FDR Library, President’s Secretary’s Files, Subject File, OSS Reports, 2-12 to 2-20-1942 (Box 148); RG 226, M1642, roll 22, frames 1075–1078.

135 “came from the retreating Italian Seventh Army”: Letter from Schwend to Mader, August 18, 1966 (passages also quoted in paragraph that follows).

135 Italian generals turned over their equipment: Porch,
Path to Victory,
470; Elena Aga Rossi,
A Nation Collapses: The Italian Surrender of 1943
(Cambridge: Cambridge University Press, 2000), 111–2. Garland and Smyth,
Sicily and the Surrender of Italy,
535.

136 In his letter: Schwend to Mader, August 18, 1966.

136 Italian passports in the name of Wendig and others: Hoettl,
Hitler’s Paper Weapon,
55.

136 His closest associates included: Interrogation of Bertha von Ehrenstein, 25 May 1945, NARA, RG 226, Schwend CIA Name File.

136 Georg Gyssling, the former consul general in Los Angeles: Lt. Charles Michaelis QMC, memorandum to Commanding Officer, X-2 Germany, re “RHSA Financial Operations,” 5 June 1945; Spitz interrogation, dated 16 May 1945, NARA, RG 226, Georg Spitz CIA Name File.

137 Glavan owned ships and moved goods: Secret Dispatch, 14 March 1960, from Chief, WHD, to Chief [redacted], CIA, re “Transmittal of Traces on Friedrich Schwend and Additional Information on Aloys GLAVAN,” NARA, RG 226, Friedrich Schwend CIA Name File, Part 1.

137 inside their engines in asbestos-lined: Hoettl,
Hitler’s Paper Weapon,
97.

137 Reginald G. Auckland, a propaganda-leaflet specialist: Cited by Burke, 37. See Auckland,
Air-dropped Propaganda Currency.

137 The most meticulously organized network: Report of Detective Sgt. J. Chadburn, Criminal Investigation Department, Metropolitan Police, New Scotland Yard, 18 February 1946, PRO FO 944/4, German Section, Finance Records, 1943–1956, Counterfeit and Foreign Currency, Germany and Austria 1945–7.

137 Johnny Jebsen, a Danish double agent: The origin of this information is clearly British intelligence, which handled Jebsen under his code name Artist. D. I. Wilson, memorandum on the Tricycle/Artist group, November 20, 1943, NARA, RG 226, entry 119, box 23, folder 177A.

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