Krueger's Men (27 page)

139 The pounds generally did not finance SS spies: Kahn,
Hitler’s Spies,
300. Kahn’s source was not only German archives but his own interview with Georg Duesterberg, finance officer of the Abwehr, the military intelligence service eventually swallowed by Schellenberg.

140 Skorzeny’s rescue of Mussolini: Lamb,
War in Italy,
23–24. Richard Lamb was an Italian-speaking British officer who served with the royalist Italian army, and his account of the military situation at Gran Sasso can be regarded as a primary source. See also Keegan,
The Second World War,
351; Porch, 470; Garland and Smyth, 536–39.

140 Far from having to pay partisans forged pounds: Hoettl,
Hitler’s Paper Weapon,
68, claimed, “It was forged bank-notes that found the vanished Duce: a fact unknown to this day.” This remains uncorroborated by any other source, although it has been repeated by others eager to pass on the myth.

141 Bernhard pounds did play a role in financing Cicero: The story of Cicero is taken mainly from Wires,
The Cicero Spy Affair,
by far the most reliable and comprehensive account because, like me, Richard Wires was able to examine previously sealed archives and thus weigh conflicting and often self-serving accounts of the principals as well as apologists for embarrassed British officialdom. Wires’s book is one of a series on intelligence history edited by David Kahn, whose own
Hitler’s Spies,
340–46, also served as a useful source.

144 a source in the German Foreign Ministry named Fritz Kolbe: See Bradsher, “A Time Act,” part 2, p. 7.

144 Dulles told Roosevelt that the Germans had penetrated: Undated Secret memo, “Germans Secure British Reports,” from OSS, Washington. “Shortly prior to the 4th of November, 1943, Ambassador von Papen came into possession of certain documents on which he clearly placed great value and which, seemingly, were secured from the British Embassy in Ankara by an important German agent. Among the cables was a list of questions which the British Ambassador took to Cairo for his own guidance in consulting with Eden.” NARA, RG 226, entry 210, box 440, folder 1: Boston Series No. 5, copy no. 8 of 8.

145 never identified as Cicero during the course of the war: The official story was told in considerably less dramatic terms, perhaps deliberately to protect the reputations of those still alive. On April 1, 2005, the British National Archives released additional records (KV 6/8), which document official efforts to piece together facts relating to “a serious wartime espionage case.” The file bin includes a summary of the case, written in 1979 by a research assistant to the official history “British Intelligence in the Second World War.”

146 buried his stock of counterfeit bills: Preliminary Statement of Agi Zelenay in connection with RSHA Financial Operations, 4 June 1945; Continuation of Statement, 26 June 1945. NARA, RG 226, Friedrich Schwend CIA Name File.

146 SS headquarters in Munich, which was much closer: Memorandum, 30 May 1945, re SCHWEND Alias WENDIG, based on “Interrogation of Josef Dauser,” NARA, RG 226, Georg Spitz CIA Name File. Dauser was the SS intelligence chief in Munich.

146 Hoettl regularly crossed into Switzerland: Interrogation of Theodor Paeffgen of the SD (Security Service), December 1945, NARA, RG 269, box 630. Cited by Goñi,
The Real Odessa,
64. Hoettl’s explanation for the visits to Switzerland — that he was trying to negotiate peace terms with the Americans — is not confirmed by any memoir, although such negotiations were under way at a much higher level.

146 amounted to 13 percent of the £1 billion: In 1944, there were a total of £1,077,464,198 genuine pound notes in circulation.
Bank of England Quarterly Bulletin,
June 1967.

146 public had been warned by their newspapers: “Germans Mass-Forge British Bank Notes,” London
Daily Mail,
January 18, 1944.

147 fledgling Budapest trader later known as George Soros: Kaufman,
Soros,
49; details elaborated by e-mail exchange between Soros and the author via Soros’s spokesman, Michael Vachon, March 14, 2005.

C
HAPTER
11: T
HE
D
OLLAR
D
ECEPTION

149 Radio Berlin announced: Nachtstern, 144.

149 for these 120-plus hostages then working in Operation Bernhard?: Although the prison roster was maintained with bureaucratic precision in this camp as in all camps, it was possible only to approximate how many men were enrolled at any given time — probably a few more than 120 in June 1944. Late in that year the last draft of about one dozen arrived from the Nazi roundup of Jews in Hungary, bringing the probable total on the final list to 143 prisoners (see Appendix).

150 To keep the wheels turning: Krakowski, 148–51.

150 And chief bookkeeper Oskar Stein spotted: Stein interview, McNally Report, 2.

150 The new scheme had begun quietly: Jacobson statement to Dutch police, June 9, 1945, p. 2, PRO FO 1046/268.

150 Some prisoners even suspected that Krueger: Krakowski, 171.

151 “I will have to go to the front”: McNally Report, 6.

151 However tiny they were in physical fact: This description of the prisoners’ first attempt to surmount the difficulties of counterfeiting dollars is based on McNally Report, 3, 5; Burger,
Des Teufels Werkstatt
(2001), 163–64; interview with Burger, who was the printer in the Dollar Kommando, by chief inspector Julius Sem of the Prague police, September 15, 1945, NARA, RG 260, box 451, file 950.31; and Sem and Mayer,
Report on Forgery in Sachsenhausen,
17–19.

152 more than two hundred trial press runs: Sem and Mayer. The precise number of experiments given there is 220.

152 a reserve army captain who had served: Jacobson statement, p. 1.

153 His chief photographer was… Norbert Levi: Krakowski, 160.

153 On August 25, 1944, a short, stateless, fifty-seven-year-old Russian: Smolianoff’s personal prison record, NARA, RG 242, A-3355, Mauthausen, roll 7:
Häftlings-Personal-Karte.
Smolianoff gave his profession as
Kunstmaler
(artist) and his Mauthausen number was 138498. In addition to several memoirs by his fellow prisoners, Smolianoff’s Mauthausen record definitively contradicts earlier authors who have incorrectly given Smolianoff a major role in counterfeiting pounds sterling.

153 Krueger had probably found him: In April 1938, a month after the annexation of Austria, the Nazis installed Otto Steinhaeusl, president of Vienna’s police, as president of the International Criminal Police Commission (ICPC). When he died of tuberculosis in June 1940, Arthur Nebe, head of the RKPA (Reich Criminal Police, the Kripo), became the nominal president until Reinhard Heydrich proclaimed his own “election.” The ICPC had been compiling dossiers on international counterfeiters since its creation in 1923. They were sent to the RKPA office in Berlin. In August 1945, the U.S. Army discovered the ICPC dossiers containing records of 18,000 international criminals at the Wannsee house in suburban Berlin that had served as the commission’s headquarters. According to Paul Spielhagen, the archivist who had overseen the records for fifteen years, the files had been carted off in 1939 to the four-story mansion that was used as a guesthouse for foreign police visitors and, more recently, to imprison two generals who had been part of the July 20 plot against Hitler’s life. After a review of the files, the FBI decided they had no interest in keeping them. FBI Interpol files at
www.fbi.gov
. Special Agent Frederick Ayer, Jr., Frankfurt, memorandum to J. Edgar Hoover, Director, FBI, re “Records of International Police Commission,” August 10, 1945, quoting article by John M. Mecklin, in the New York newspaper
PM,
“World Police Files Found/18,000 Small Criminals in Berlin Lists,” dated August 2, 1945. See also Deflem “The Logic of Nazification.”

153 “Good afternoon, you tonsorial beauties.” Nachtstern, 142–44; Krakowski, 158–59. Krakowski writes that the initiation was administered not by Bober, but by the barracks chief Felix Tragholz, and that he covered Smolianoff with soot from the stove. In this case, as in most, it is preferable to rely on memory recorded closer to the event, which is Nachtstern’s by at least forty years.

154 And in this fashion, in September 1944: This date can be deduced from Smolianoff’s admission date plus his period in quarantine. It is further confirmed by Krakowski, who writes that Smolianoff appeared “several days” after they had celebrated the Jewish New Year (p. 158), which in 1944 fell on September 18. For these prisoners held in total isolation, fixing such dates became increasingly difficult during the final days of World War II. They often ignore or do not agree precisely on dates, and Burger even disagrees with himself in different editions of his own book. However, Krakowski, a deeply observant Jew as well as an accountant, followed the Jewish calendar assiduously in order to celebrate the holidays on time. These now can easily be converted to secular days of the month with the help of Spier,
The Comparative Hebrew Calendar.
In the chaotic early days of 1945, Krakowski’s citations of the Jewish holiday calendar probably provide the most reliable check.

154 Smolianoff was born on March 26, 1887:
Häftlings-Personal-Karte.

154–55 Young Miassojedoff had been awarded Russia’s Prix de Rome: Hermann,
Ivan Miassojedoff/Eugen Zotow
, 18–19.

155 The tolerant capital of the Weimar Republic: Otto Friedrich,
Before the Deluge: A Portrait of Berlin in the 1920s
(New York: Harper Perennial, 1995), 82–92.

155 “like a god from high Olympus”: Francis M. Kayser, Scarsdale, N.Y., to Murray Teigh Bloom, May 10, 1959. Kayser, a young judge serving on the Berlin criminal court in 1924, was driven from Germany by the Nazis, settled in the United States, and wrote Bloom after reading about Zotow’s trial in Bloom’s
Money of Their Own.

155 Two years later, with police already alerted: J. W. Kallenborn, “An International Counterfeiting Champion,”
International Criminal Police Review
(journal of Interpol), August–September 1957, 209–18. Kallenborn, chief of the Interpol counterfeit office in The Hague, presaged his own story in an illustrated “Visit to the Interpol Counterfeits and Forgeries Museum,” published in the same journal in 1950, identifying the counterfeiter only by the letter
S
and his Berlin confederate only by the letter
M.
In addition, the real names of both are not given in Kallenborn’s journal article. The reason for this, according to Interpol’s spokesman at its present headquarters in Lyon in a conversation with me in 2004, is that Interpol never releases the names of suspects, even after they have been arrested and convicted, without the formal permission of the government that has supplied them to the international police organization. This is logical in cases where a suspect is not aware he is the object of an international police dragnet, but it makes no sense in this one, when all involved are dead. However, Interpol rarely maintains historical files, even on such notorious cases as this one, not only to my amazement but to that of incoming Interpol officials trying to penetrate its labyrinthine bureaucracy, now largely French in nationality, style, and obstructionist culture.

156 Smolianoff was sentenced to two and a half years: “Forged Bank Notes/Berlin Discoveries/Russian Emigres on Trial,”
Times
of London, October 25, 1932, datelined Berlin, October 24.

156 for passing ten-pound notes, and sentenced to four years: Burger, 161.

157 Yet he was saved by Germany’s: “Without control of the criminal courts the RSHA and the Gestapo were nothing like as omnipotent as is generally supposed. The best refuge from the Gestapo was to be in the custody of the court. It is true that the Gestapo might keep a man out of the court’s reach, and it could pounce on him if the court freed him, but such is German protocol that, once a man possessed a judicial record, it was no longer possible for the Gestapo merely to spirit him away. His legal existence continued even in a concentration camp. And if he happened to be a Jew, he was not whisked into the gas chamber… His court record traveled with him; he was given a registration number in the camp files and, protected by his criminal record, he had a chance of survival. This Erwhonian justice prevailed until the end of the war, a monument to the incompleteness of the Gestapo system.” Reitlinger,
The SS,
212.

157 the Mauthausen commandant’s recommendation as a fine artist: “Report about ‘F.6.4’ secret Counterfeiting Camp in Sachsenhausen from Sali Smolianoff,” PRO MEPO 3/2766: Trafficking of forged Bank of England notes by the Nazis, 1946–1948 (Document 17E). This is a seven-page, single-spaced typewritten report of Smolianoff’s postwar interrogation at a refugee camp in Rome by U.S. Secret Service agent A. E. Whitaker. He regarded Smolianoff’s account as reliable and forwarded a copy to Scotland Yard, which only recently declassified it. According to a 1985 statement written by Whitaker and provided to the author by Murray Teigh Bloom, the Secret Service agent had written “a lot of reports. They are probably microfilmed in the archives somewhere.” But according to the Secret Service’s helpful archivist Michael Sampson, the agency had apparently already purged the main file on Operation Bernhard (CO-12,600) in February 1980.

157 the Vaduz residence of one Malvina Vernici: Smolianoff’s personal prison record.

157 the stiff-necked chief of the SS guard: Smolianoff interrogation, 2–3.

158 “Well, here you are” et seq: Ibid.

159 Krueger conducting Ernst Kaltenbrunner on a lightning tour of Block 19: Krakowski, 171; Krakowski interview; Nachtstern, 166.

159 For weeks they quarreled about the color balance: Smolianoff interrogation, 4.

160 the operation could not proceed without “heavy water”: Krakowski, 168.

160 a normally insouciant young artist named Peter Edel: Edel,
Wenn es ans Leben geht,
145–55. Also quoted and attributed by Burger.

160 Leo Haas, an anti-Nazi cartoonist from Prague: Mader, 77.