Krueger's Men

by Lawrence Malkin

  No one swam more adroitly with the tide than Jaac van Harten, who may be accounted the ultimate survivor. When last seen in Budapest, jewels and counterfeit pounds literally popping out of his suitcases, he was headed for Schwend’s castle in Merano just across the border in Italy. Van Harten carried a card issued in Budapest identifying him as an agent of the International Red Cross. Although it was only a temporary document, he made the most of it. A file of papers two inches thick recording complaints by Swiss officials, and supported by the Allied military government in Italy, rests in the Geneva archives of the International Red Cross (IRC) under the heading Abus de Confiance J. van Harten — “Betrayal of Trust.” These official accounts attest he was using a former Nazi newspaper press to forge thousands of Red Cross identity cards for refugees to claim the protection of the Geneva Convention, some of whom received gratuities of 1,000 Italian lire each from the organization to help them get home across the cauldron of Europe.

  To the fury of the International Red Cross officials in Geneva, van Harten appointed himself “Swiss Consular Representative for the Province of South Tyrol of the International Committee of the Red Cross.” (The real IRC soon began issuing documents not only to bona fide refugees but to Nazi war criminals.) As the war went into its final months, van Harten tried to arrange exchanges with refugees who had been swept up in the Nazi dragnet. He sought help from Georg Gyssling, Schwend’s friend and art adviser, and from the Swiss consul general, Alberto Crastan, also one of Schwend’s money-launderers and one of many Swiss in the business of profiting from the misery of others. SS troops would snap to attention at the approach of van Harten’s big, open Mercedes. He traveled in civilian clothes with his wife, Viola, herself fashionably dressed even in those hard times. He signed Red Cross passes, presumably including one for Schwend. Then van Harten slapped IRC signs on Schwend’s warehouses holding the usual complement of clothing, household items, and canned staples. In Merano itself, American troops discovered a warehouse with “thousands of things stolen from merchants in all of Italy, such as: 60 cases of Vermouth, eight cases of Buton Cognac, bolts of silk and wool cloth, linen sheets, silk stockings, cretonne, zebra skins, shaving brushes, hair oil, women’s clothes, and children’s bathing suits.” These hoards led to van Harten’s undoing. On May 17, 1945, American troops arrested him for holding stolen goods and contraband, and on May 30 the IRC formally denounced him before Allied headquarters in Rome.

  Van Harten boldly replied to IRC directors in Geneva on June 8 with a lengthy account of how he had liberated almost 3,000 prisoners and clothed 7,000 more at the Bolzano concentration camp, set up soup kitchens for refugees, paid local hospitals in advance for treatment of the sick, enlisted the help of the Catholic church, and curbed the worst excesses of the retreating Germans. Moreover, he claimed, he had “sacrificed millions of my own money for this work” (his cover story was that he spent blocked currency from his Budapest company, which of course he neglected to identify as a Nazi money-laundering enterprise). Van Harten told the Red Cross that he had also promised “one million pounds in cash” to the Jewish Agency in Geneva to help Jews establish themselves in Palestine. It is unclear how much money actually reached the Agency, but that these counterfeit pound notes served a historic purpose provides one of the crowning ironies of this tale.

  And not the only one. As the war was winding down, a small group in the British Army’s Jewish Brigade had dedicated themselves to vengeance against the Nazis and to a new ingathering of exiles. They called themselves the Havurah — “the Gang” — or, in a linguistic stew, Tilhas Tizi Gesheften (TTG for short) — “The Kiss My Ass Company.” Operating from their base in Italy, the gang stealthily kidnapped and assassinated SS killers, and bought or stole arms. Its members helped ship war materiel and thousands of displaced Jews to Palestine aboard chartered old tubs in defiance of British policy designed to placate the Arabs by limiting Jewish immigration. This smuggling operation cost money. Although the TTG was naturally suspicious of his Nazi connections, van Harten with his huge stash of counterfeit pounds served first as willing helper and later as perfect mark. The Jewish Brigade’s transport unit, headed by Captain Alex Moskowitz (later a prominent banker in Israel), used trucks to rescue vagrant Jews. These refugees were followed south through the Brenner Pass by trainloads more. Van Harten and his helpers distributed food at the first train station south of the pass.

  Near the end of the war, two members of the Hashomer Hitzair (Young Guardians), idealistic collectivists allied to the kibbutz movement, smuggled themselves from Palestine into Italy dressed as British soldiers. Levi Argov and Moshe Ben David wanted to participate in the movement known by its Hebrew name, Brichah (Escape), by organizing routes for thousands of Jewish survivors to flee Central Europe, van Harten’s old stamping ground. Moskowitz asked for help. “Of course!” van Harten replied. “Do they have money? Send them to me immediately.”

  Van Harten handed the young men packets of brand-new British notes with a face value of £40,000 to £50,000. As the money was stuffed into their rucksacks, van Harten asked them to pay off a debt in Budapest. As usual he did not tell them that the bills were counterfeit. Argov and Ben David changed into nondescript refugee clothing, moved north, and got to work — the first as coordinator for the Brichah in Hungary, Austria, and Czechoslovakia; the second as a representative of its youth movement. They established close contacts with Czech Zionists, a delegation of whom used van Harten’s pound notes to finance a trip to England. There one unsuspecting Czech was arrested, interrogated, investigated, and harshly informed that his money was fake.

  While van Harten’s wife wrote frantic letters to the Red Cross extolling his humanitarianism and pleading for his release, Jewish Brigade officers brought her to the attention of another underground escape group, Mossad l’Aliyah Beth, roughly translated as the Organization for Immigration B (the letter B meaning illegal, to distinguish it from its prewar function of bringing Jews to Palestine; after the war the British blockaded the coasts of their Palestine mandate to discourage Jewish settlement). An underground Jewish leader, learning that Viola van Harten was holding her husband’s stock of gold, jewelry, and counterfeit notes, approached her and was given real Swiss francs and fake British pounds, the latter soon traded for gold on the Austrian black market. The Jewish underground soon realized that the van Hartens were more valuable with her safely in Palestine and him released from his prisoner-of-war cage in Rimini. They shipped out Viola van Harten first by posing her as a nurse; upon arrival in Palestine she was quietly relieved of the valuables her husband had obtained from his wartime financial services for the Nazis.

  Van Harten himself was released in 1946, thanks to a combination of political pressure on the Americans and less savory inducements that probably will forever remain secret. Members of the Gang realized they could squeeze him for hush money and gave him a choice: in exchange for whatever money he could raise quickly, they would keep quiet about his wartime dealings. One of their leaders, Shalheveth Freier, spent hours threatening and haggling with van Harten, and one of the members saw this world-class confidence man literally quaking with fear before Freier’s restrained but very real threats. The Jewish underground wanted van Harten’s money and did not care whether it was counterfeit or real. They passed the bogus pounds to supply Holocaust survivors and help the Brichah smuggle more refugees to Palestine. On the international arms market, they used the money to buy weapons for Jews arming themselves against the British and then the Arabs. They purchased engines, lashed them to the decks of refugee ships, and had them mounted on armored truck bodies that served as makeshift tanks for the Haganah, the nascent Jewish army. (Freier, later chairman of Israel’s Atomic Energy Agency, in 1955 gained the dubious distinction of being one of the first Israeli diplomats expelled from the United States, probably for trying to steal atomic secrets; many of his comrades joined him in Israel’s nascent espionage service, now known the world over by part of its name — the Mossad,
or the Organization.)

  Van Harten arrived in Palestine in 1947 after a short spell selling undergarments in Milan, and returned to the jewelry business. When the British found out he was in Tel Aviv — they were still a year away from giving up their mandate — they tried to expel him as a counterfeiter. But van Harten, a master at pulling political strings, made the underground leaders honor their pledge to whitewash his wartime activities. They apparently had no compunction about doing so because of his help to them. No less than Goldie Myerson, then chief of the Jewish Agency’s political department and later prime minister of Israel as Golda Meir, was asked by van Harten’s lawyer for a testimonial. Her office toned down the attorney’s fulsome draft and sent a letter over her signature praising van Harten for saving many Jewish lives at great personal risk and “considerable financial sacrifice… [which] entitles him to priority consideration in his application to remain in Palestine.” It worked.

  But van Harten’s chutzpah knew no bounds. He sought $5 million compensation from the U.S. government for the contraband seized at Merano. Biting the hand that had just fed him, he filed more modest claims against the Jewish Agency for the note signed by its agents in Budapest. He also tried to obtain money from the Joint Distribution Committee, whose funds helped Jewish refugees. All these outrageous claims failed, but van Harten’s jewelry store and other businesses prospered. Because his payoffs had been channeled through men who became powers in the new Jewish state, the hush money lasted right through the trial of Adolf Eichmann until van Harten’s death in 1973. The record of Eichmann’s interrogation after his capture by the Mossad in 1960 states that the Nazi was believed to have had a Jewish collaborator in Budapest identified only as “Jaac.” This page of the Israeli record has remained sealed.

  Friedrich Schwend was arrested by the U.S. Military Government in June 1945, probably fingered by a former collaborator who had been caught with a packet of forged pounds. Like van Harten, Schwend tried to ingratiate himself with the winning side, although he was neither as smooth nor as lucky. At first, Allied intelligence agents took him on “bird-dog” missions to dig up buried treasure, hence his code name, Flush. In July he led Allied investigators into the Austrian Alps, where only days before the end of the war he had buried 7,139 French and Italian gold coins weighing about 100 pounds; he put their value at $200,000. The investigators believed the gold was destined to finance die-hard Nazi resistance (instead of Schwend’s own retirement), so that was what he told them. The U.S. officers confiscated the haul, and Schwend then took them back to Merano for more loot. Meanwhile, his Jewish money-launderer Georg Spitz led his interrogators to stolen paintings in a Nazi cache near Munich.

  As the Cold War began, U.S. intelligence in Germany used Schwend and Spitz to help organize a local counterintelligence network. Schwend tried to insinuate himself into Germany’s new intelligence agency (named for its chief, the turncoat Nazi expert on Russia, General Reinhard Gehlen). Spitz meanwhile began mixing in Munich society and feeding Allied intelligence under the code name Tarbaby. Soon their wartime pasts caught up with them. In 1947, Dutch investigators questioned Spitz about his shady art dealings, and the newly formed CIA quickly dropped him. This onetime merchant of fake American Express traveler’s checks moved back to his native Vienna to become a banker. When the former SS intelligence officer Wilhelm Hoettl, writing under the pseudonym Walter Hagen, published the first book about Operation Bernhard, Spitz bought up all copies of the first edition. He forced Hoettl to drop half a dozen pages from the next edition and to gloss over Spitz’s connection with the counterfeiters. Then Spitz went back to business.

  Caught trying to defraud the Gehlen Organization, Schwend fled to Rome, where he was issued a Red Cross passport under the name of Wenceslas Turi and then turned up in Lima, Peru. Ostensibly working as the local Volkswagen manager, he was living comfortably on proceeds of his wartime counterfeits parked in Europe and forwarded by his brother-in-law Hans Neuhold. He Hispanicized his name to Federico Schwend, acted as an informant for Peruvian intelligence, and kept in contact with far more vicious Nazi escapees in Latin America such as Klaus Barbie, known as the Butcher of Lyon for torturing his prisoners to death.

  The CIA shadowed Schwend for years. His bridges to the Americans had been burned early in the 1950s when his former comrade Louis Glavan denounced him for living on the proceeds of the Bernhard counterfeits. As late as 1963 the CIA began wondering whether Schwend was counterfeiting dollars for Fidel Castro, and he attracted the notice of James Jesus Angleton, the agency’s legendary and paranoid chief of counterintelligence. Nothing came of it. A decade later the Peruvians turned on Schwend and convicted him of blackmail, currency smuggling, and selling state secrets. He was imprisoned for two years and deported to West Germany. He had sunk so far down and out that he was jailed in 1976 for failing to pay a $21 hotel bill. Years before, Schwend had been tried in absentia in Italy for murder, and a German warrant still hung over his head in connection with the mysterious death of an agent who had attempted to abscond with Bernhard currency in 1944. Tried in Munich, Schwend received a suspended sentence for manslaughter on June 8, 1979, claiming poverty so he could receive legal aid and welfare payments. He also visited Schloss Labers, now returned to its owners, who ran it as a hotel, and walked out without paying his bill. Suffering from diabetes, Schwend returned to Lima, where he died in 1981 at the age of seventy-four — the only person connected to the greatest counterfeiting operation in history to face judicial action. Even when Schellenberg, Naujocks, and Hoettl testified at the Nuremberg war crimes trials, Hoettl alone made only the slightest reference to Operation Bernhard — although he later made a literary career of it.

  Bernhard Krueger had a somewhat less adventurous retirement. He gave various versions of how he eluded capture and made his way home to Dassel, near Hannover, hiding for eight days until one of his children called out, “Mama, there’s a strange man in the closet.” He finally turned himself in to the British occupation authorities on November 25, 1946. They were waiting for him: Krueger’s card in the British file of wanted Nazis listed his offense as “Forging Foreign Currency–Passports.”

  The British held Krueger for slightly more than a year. Already embarrassed by the enormity of what he had done to them, they never breathed a word of his existence, not even to George J. McNally or other U.S. Secret Service agents who were working closely with them in their own hunt for forged dollars. The British also never charged Krueger; forging enemy currency was no war crime. They turned him over to the French early in 1948, who were also ready for him. While Krueger was still a fugitive, Captain S. C. Michel of French intelligence had accurately described his activities and concluded: “Very clever but will probably give up all information if caught especially if convinced it will save his hide.” Krueger said the French secret service offered him his old job of forging passports — for them. Unlike the British, they threatened him with murder charges for the four prisoners killed for illness, meanwhile attempting to recruit him as he sat in Wittlich prison in the French zone of occupation. But Krueger declared he had had enough of forgery, and the French dropped the charges when they released him in November 1948.

  Returning as an engineer to the factories of Chemnitz was out of the question: the city was in the Soviet occupation zone (it was renamed Karl-Marx-Stadt in 1953). In 1955, Krueger was discovered by the official census working as a storekeeper near Hannover. He had to undergo a denazification process, during which he made a fairly clean breast of his wartime counterfeiting exploits, although he stressed that he was only a “technical consultant.” Several former prisoners later declared that they either testified or sent affidavits in his support. He was exonerated after a brief hearing. For their own propaganda purposes, the Communist government of East Germany pursued him during the 1960s as a murderer of the four prisoners, but the charges had to be filed in West Germany and were dismissed. Krueger eventually found work as a salesman, uncoincidentally at the Hahnemühle p
aper plant.

  Shortly before Krueger’s death in 1989 at the age of eighty-three, the marine explorer and biologist Hans Fricke of the Max Planck Institute took him in a miniature submarine to the depths of the Toplitzsee. The vessel’s searchlight picked up piles of pound notes still preserved beneath the oxygen line. Krueger stared in amazement and, according to Fricke, uttered the old slogan, still freighted with the code words of Nazi Germany, Alles für Fürher, Volk, und Vaterland — “Everything for the fuehrer, the people, and the fatherland.” Sobs obscuring his German inflections, Krueger blubbered: “I did everything I could [and] after the war they treated me like a scoundrel” in German, a Lump. Self-pitying and unrepentant to the last, he was like so many Nazis who looked straight past the catastrophe they had helped create and valued only their own efforts and their own suffering.

  Not a trace remains of the original Reichsfinanzministerium, where the whole thing started — not even on the present-day guideposts to Wilhelmstrasse erected along this historic avenue. Number 61 would have stood just above Leipziger Strasse; the space is now occupied by featureless office buildings and a stylish building housing the embassy of the Czech Republic. The RSHA headquarters on Prinz-Albrecht-Strasse (which has been renamed Niederkirchnerstrasse after a Communist heroine who parachuted into Russian-occupied Poland and was captured by the Nazis and killed in Ravensbrück) was still a pile of rubble overgrown with trees and shrubs sixty years after its destruction. An attempt to preserve the Gestapo’s torture cells as a reminder of its terrors has been stymied by a typically German dispute over the meaning of the nation’s past and how to memorialize it.

  In one of the many accidents of history that have created today’s Berlin, with its layers stripped bare like those of a geological fault, the RSHA ended up just inside the Allied zone of occupation. Its torture cells stood hard against what would become the boundary marked by the infamous Berlin Wall, remnants of which are visible from the Gestapo site. In what was East Berlin, street names and numbers along Wilhelmstrasse were scrambled by the Communist authorities. Today, the neighborhood is filled with working-class apartments occupied by families with Slavic and Turkish names. But at the corner of Wilhelmstrasse and Leipziger Strasse stands a huge, utilitarian building of Nazi construction that served as Hermann Goering’s Air Ministry (some officials there were part of the Russian spy network known as the Red Orchestra). Until reunification in 1990, it housed ministries of the German Democratic Republic, then the organization responsible for privatizing state-owned Communist industry. When the German government moved to Berlin at the start of this century, the building became the seat of the nation’s Finance Ministry. Along one side remains a singular historical artifact: a long, colorful mural in the style of socialist realism depicting smiling workers and farmers, determined bureaucrats and technocrats, all united under a sign carried by one group of marchers proclaiming “Sozialismus.”