Krueger's Men

by Lawrence Malkin

  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.

  CHAPTER 11: THE DOLLAR DECEPTION

  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.

  163 had been staging musical evenings: Nachtstern, 146–51; Kors, 85–89; Groen interview; Burger, 185–90.

  166 “Well, then, when, Cherr Chacobson?”: Edel, 145; Nachtstern, 165.

  166 Smolianoff meanwhile was heard boasting: Nachtstern, 156, 169.

  166 brought the stragglers to their senses: Exactly who belled these headstrong cats is unclear. Smolianoff told the whole story to Whitaker, the U.S. Secret Service agent, in his interrogation, p. 5. He said the message was brought by “the eldest” of the prisoners but did not name him, and the list of prisoners does not make clear who that was. The oldest on record is one Georg Jilovsky, a Prague painter born in 1884, whose Sachsenhausen number is not recorded and was not prominent enough to figure in any other account. More likely it was Artur Levin, the chief printer from Berlin, who at fifty-six was only a few years younger. Smolianoff was also approached by Kurt Levinsky, a thirty-six-year-old Viennese, who in chatting with him around the chessboard warned that the dollar bill “had better be finished quickly” (Nachtstern, 169). Whoever it was, as Smolianoff confirmed to Whitaker, the Dollar Group changed course immediately.

  166 with their fake demonstration bill mixed in: Burger (p. 170) writes that two dozen forgeries were printed from which the best were selected, and then another two hundred by the night shift. Smolianoff speaks of only one bill, but even if Burger is correct about the work in his print shop, they had nevertheless completed just one side of the bill before Krueger arrived, an important detail Burger omits.

  166 “We were delighted, he was ecstatic”: Bloom, 259.

  167 to counterfeit $1 million worth of bills a day: Burger, 170.

  167 He summoned the printer: “76628.” Memoir of Chaim Shurak, in the Holocaust Museum at Kibbutz Lohamei Hageta’ot, Israel. Courtesy of his daughter, Tova Ze’eli. The title “76628” was Shurak’s Auschwitz number.

  168 “He laughed maliciously”: Nachtstern, 170.

  CHAPTER 12: TOWARD THE CAVES OF DEATH

  169 stiffened as they heard Krueger’s Mercedes staff car: Nachtstern, 171–73; Krakowski, 172; Smolianoff interrogation by Whitaker, 5; Jacobson statement, 2. Burger (p. 214) gives a more unsettling version in which the order is issued not in February but on March 13, rescinded as the prisoners start packing up, and then reissued a day later. Burger also makes no mention here of Krueger, although the other memoirists do. Perhaps he was standing by the version he gave the Czech Interior Ministry’s investigators late in 1945, or perhaps the Communist Party functionaries who ran Czechoslovakia for more than forty years were forcing on him their habit of rewriting history. While this kind of revisionism usually appears convoluted and opaque to outsiders, it appears that in this case their motives — like Julius Mader’s in East Berlin — were to mention Krueger’s undisturbed existence in West Germany as support for the Communist argument that their enemies in Bonn still harbored unpunished Nazis. This they certainly did, but far bigger fish than Krueger.

  169 The next morning they began the brutal job of packing up: Smolianoff interrogation, 5. Operation Bernhard material and men: Burger, 215; Krakowski, 173, who gives the final day of packing as the Jewish holiday of Purim, which in 1945 fell on February 27. Krakowski gives the total number of boxcars as fifty, with twenty prisoners to a car and intelligence material from Friedenthal filling most of the other freight cars. Nachtstern, 175, says there were fifty men to a cattle car.

  170 In silent horror, the SS guards: Krakowski, 174.

  170 the train rolled through Prague: Burger, 215–16; Nachtstern, 175.

  171 the killing quarries of Mauthausen: Krakowski, 175–85; Smolianoff interrogation, 5–6; Nachtstern, 177–78; Max Groen, notes provided to the author by Anne Makkinje.

  172 (footnote) Musselmann was camp slang: Herman Langbein, Menschen in Auschwitz (Vienna: Europaverlag, 1972), 114. Quoted by Robert Jay Lifton in The Nazi Doctors (New York: Basic Books, 1986), 132.

  173 load everything into about sixteen freight cars: Harry Stolowicz, interviewed September 7, 1945, McNally Report.

  173 In the basement of the camp brewery: Fritz Kretz, manager of the oxygen works, and Hermann Weidner, chief engineer, statements to U.S. and British investigators, July 13, 1945, 430th CIC Detachment, Appendixes B and C to McNally Report.

  174 As at Sachsenhausen, the counterfeiters: Smolianoff interrogation, 6; Nachtstern, 179–82; Jacobson statement, 2. His estimate of £180 million burned and £10 million dumped in the water is likely exaggerated. Only Burger alone (p. 222) writes that the Spaniards were veterans of the International Brigade and that they kept up their morale by singing Spanish songs with guitar accompaniment. This seems unlikely, but during the Cold War there were political reasons for mythologizing this largely Communist unit, which had few if any Spanish troops.

  174 nothing was ever printed at Redl-Zipf: Stolowicz, McNally Report; Jacobson statement. Georg Kohn and Jack Plapler to British interrogators, PRO FO 1046/269. Kohn and Plaper are also the source for the statement that banknotes were burned around the clock — in their words, “day and night.”

  174 two Nazi civilians from Berlin buried crates: Fritz Schnapper, Operation Bernhard printer, interviewed September 5 and September 25, 1945; Richard Luka, interviewed October 8, 1945, McNally Report.

  175 Krueger as saying it would continue “in hiding”: Krakowski, 189–90.

  175 Putting his arm on the shoulder: Nachtstern, 132. In Smolianoff’s version to Whitaker (p. 6), Krueger appears twice, first to give the order to break camp, then to order the prisoners to break open the boxes of third-class notes and burn them, while the first- and second-class notes were carried away on trucks. Smolianoff would be unlikely to stress to an American interrogator how closely they came to counterfeiting dollars. But in a memoir written when he was safely back home in Norway, Nachtstern would feel no such constraint.

  175 both a Swiss driving license: Stolowicz, McNally Report. He said he knew Krueger had Swiss and Paraguayan passports. All documents probably had been forged in Krueger’s own shops.

  175 suspected mistress, Hilda Moeller: Smolianoff, who calls her Krueger’s “girl-secretary” (p. 6), was one of the few to talk privat
ely with Krueger on his last day with the prisoners. Bloom, 259, describes her as “an attractive 24-year-old blonde with an arresting, high-cheekboned face” who worked as an artist at RSHA headquarters in Berlin. But her name is not listed in the June 1943 internal telephone directory (Fernsprecherzeichnis) of the security police. Krueger is listed at Extension 220. NARA, RG 242, microfilm T-175, roll 232.

  175 had warned his lieutenants (or so he said): Krueger, “I Was the World’s Greatest Counterfeiter,” part 2.

  176 the general direction of the SS flight from Redl-Zipf: Nachtstern, 182–83; Burger, 226; Groen interview; Krakowski, 192; Smolianoff interrogation, 6. Once again, it is uncertain whether there was only one truck to make several trips, or two trucks in relay. Smolianoff remembers three. Among these understandably panicky recollections, Nachtstern’s seem more reliable because they were recorded close to the event and not under police interrogation.

  176 a dumping ground for about 15,000: Goetz, I Never Saw My Face.

  176 and the most advanced German rocket: NARA, RG 72, entry 116: Reports of NTE/Europe, 1945–1946, box 12: serial 1470, U. S. Naval Technical Mission in Europe Technical Report No. 500-45, German Underwater Rockets (October 16, 1945). The report is based in part on interrogation of Dr. Determann, director of underwater research at the Toplitzsee Naval Research Laboratory, who became a primary source of information for investigators into what happened at the Toplitzsee in the last days of the Third Reich.

  176 four heavy Lancia and Mercedes trucks: Statement by Hans Kraft, truck driver, and statement by Engineer [Viktor] Doubrava, July 13, 1945, to detectives Minter and Chadburn, Appendix D, McNally Report. A copy of the latter was given to the U.S. 430th CIC Detachment, also working on the case. Doubrava was a district partisan leader who showed the investigation team to a number of the local sites for abandoned or buried Bernhard material. Other versions, none contradictory but necessarily slightly different given the confusion of those final days, can be found in a number of the memoirs and interrogations already cited. Smolianoff, for example, counted “approximately 10–15 trucks with trailer.” Sem and Mayer’s account, which was based partly on Burger’s testimony, says some crates contained Operation Bernhard’s account books and “secret archives” of the Sicherheitsdienst (Security Service), the alleged existence of which was to become a postwar bone of contention (p. 21). In his book (p. 225), Burger says the papers were driven away during the night of April 28 aboard two military vehicles carrying about forty crates. Out of all this slightly variant material, I have tried to piece together as coherent and factual a story as possible.