Double Agent (23 page)

I noticed the beautiful dog that was following you on 42nd Street yesterday. I was very interested in it and a friend of mine wondered if you had it for sale or kept it for a companion. If you do neither, he will not be offended.

—Fritz Duquesne in a letter to Sebold, August 9, 1940

J
. Edgar Hoover couldn’t have been more pleased with the progress of his premier case. In a memo to the White House, he crowed that the Bureau “has undercover agents actually participating in a German espionage group in such a manner as to enable the Director of the Federal Bureau of Investigation to know the entire activities of this ring,” the only specific investigation mentioned in the nine-page letter. “. . . Special Agents of the Federal Bureau of Investigation as members of this German espionage group actually maintain and operate a short-wave radio station which is in daily contact with Germany, and through this station pass the messages of a number of German agents. All messages, of course, are surreptitiously submitted to the State, War, and Navy Departments prior to the time they are transmitted to Germany and, of course, information and instructions received from Germany are transmitted to interested agencies.” During a gathering of 175 law enforcement officials, Hoover boasted of the depth of the Bureau’s infiltration of secret networks of spies and saboteurs, explaining that the news media would be informed (and “honor and glory to all” duly accorded) when the evidence was ready for presentation in court. “The enemy does not know our actions,” he said, “and cannot anticipate a time when he might plan his devious task with a minimum chance of detection.”

Determined to prevent a repeat of the Turrou embarrassment, Hoover assigned one of his best men, Earl J. Connelly, who had led the celebrated raid on kidnapper Kate “Ma” Barker’s Florida hideout in 1935, to relocate to the city and assume control from the New York office, probably at about the time he was promoted to assistant director in June. “They brought Froelich in from Pittsburgh to start a filing and index system on it,” Ellsworth wrote. “Maxwell Chayfitz read and coordinated reports.” A small team of stenographers and clerks was assembled. German-fluent agents such as Joseph Fellner, an Austrian-born graduate of the University of Wisconsin Law School, and William Gustav Friedemann, an Oklahoman with an LLB from George Washington University, arrived to work as interpreters. New men were assigned to follow the growing list of suspects, which was done clumsily in the case of Paul “Fink” Fehse, who noticed suspicious figures following him on the subway and parked out front of his house, prompting him to lie low for a while. Agents took jobs at Sperry Gyroscope and Norden Inc., went undercover on the SS
Manhattan,
initiated a twenty-four-hour watch on Hermann Lang’s home to guard against his flight, and relaxed in the nicest of bars while Lilly Stein was charmed by her latest suitors. And just as E. J. Connelly began holding weekly conferences to discuss how to cope with unfamiliar challenges—“What do you fellows suggest?” Friedemann remembered the senior men asking. “What should we do here?”—a providential lesson came from Brooklyn in the form of the collapse of the Christian Front prosecution. Despite the Bureau’s (grainy) motion pictures, (scratchy) sound recordings, and (untrustworthy) cooperating conspirator, the jury returned exactly zero convictions for the simple reason that the Coughlinite defendants hadn’t done much in furtherance of their violent plan to turn America into a concentration camp. “An ill-timed arrest invariably will do more harm than good,” Hoover now believed, according to a newspaper op-ed he wrote headlined, “Is There a Spy Menace?” (“The answer is emphatically, Yes!”) “The real test of successful counterespionage, and that is our task, is locating the spy, ascertaining his contacts and methods of communication—and then closing off his sources of information.”

After the
Manhattan
returned from Lisbon in late July—“Passengers Assert Many of Stewards are Pro-Hitler and Ship’s Paper is ‘Defeatist’ ” was the subheadline on the
Times
’ story—Sebold met with the butcher, who gave him a gray paper package containing $1,350 to pay the salaries of the active I-L spies and $1,500 to purchase a bombsight other than the Norden, which further confirmed that the Germans had no need for the dream weapon the whole country was talking about. The butcher told Sebold that the
Manhattan
was ending its Lisbon run (because it was deemed too dangerous to have such a large passenger ship skirting the war zone in the manner of the
Lusitania
), and he and Stigler were taking senior kitchen jobs on the new SS
America,
which would be plying between New York and four ports in the Caribbean, a less propitious journey for Nazi espionage efforts. No worries about maintaining a courier connection to Europe, though. During a subsequent evening on the town, which ended with the butcher and the baker escorting a couple of young ladies to an Eighth Avenue flophouse, Sebold learned about a new man who was willing to make his first trip for the Abwehr, a waiter on the SS
Exochorda,
one of the four small ships of the American Export Lines still on the Lisbon passage, each with a capacity for just 130 passengers.

A naturalized German American of small stature and thinning blond hair who (like Ed Roeder) was blind in the right eye, Erich Strunck was something of a legend among the marine spies for maintaining his loyalty to Hitler even though he underwent three months of rough interrogation in a Hamburg jail, where he was serving time for a currency scam that defrauded refugees attempting to get their money out of the Reich. He was “a very tough fellow who refused to talk,” said the butcher, who was incarcerated alongside him. When ringleader Fehse later asked Sebold if he was impressed with the waiter’s “gallant” willingness to serve his native land even in the face of such
Fertigmachen
abuse, Sebold responded, “No, I think he is dumb to take such treatment.”

After gathering up new materials and informing Ed Roeder of Germany’s desire for the Sperry bombsight, Sebold met Strunck in Columbus Circle and handed him a brown manila envelope for delivery via the
Exochorda.
It was all going a little too well for Duquesne, who appears to have alerted Ast Hamburg to his belief that Sebold was an amateur who had been made by the authorities. “Friend reports you are under surveillance,” according to a radio communication received from Germany. “Caution. You must stay off the air for two weeks.” In response, Agent Price sent out a message insisting that “Dunn,” one of Duquesne’s code names, was actually the careless one, undeserving of his reputation as a master spy. “He might have seen me with Bill,” wrote Ellsworth in his diary, citing the “beautiful dog” letter that Duquesne mailed to Sebold. “Lately it had appeared Duke was getting jealous because Bill was now in direct contact with Germany, handling all the spies, sending over all the materials etc. So he probably was trying to cut Bill out of the picture and place himself in control of the spy ring.” The crisis passed when Hamburg responded, “Don’t let Dunn make you nervous too, and you be careful.”

▪  ▪  ▪

On August 12, Ast Hamburg radioed its desire “to receive from you and friends regular accurate details” about aircraft deliveries from North America to England, which was now coming under more sustained attack as the Luftwaffe began its all-out effort to destroy the capacity of the RAF and establish the blanket of air superiority necessary for a cross-Channel landing. The invasion of Great Britain was code-named Operation Sea Lion and planned for the middle of September. Yet it was soon apparent that the Hurricanes and Spitfires, aided by radar installations lining the coast, cryptologists at Bletchley Park who had cracked the Germans’ Enigma code, and binocular-wielding civilian spotters of the Royal Observer Corps, were more than a match for a German air force operating at the limits of its speed and range, haunted now by the failure to develop a four-engine heavy bomber with the capacity to readily traverse British airspace. “I never really thought there would be a war with Britain,” complained the Technical Office’s Ernst Udet, whose beloved Ju 87 dive-bombers, the scourge of the Continent, were shot down in such numbers that they were pulled from the battle within a week.

With the prospect of an easy invasion looking less likely by the day, President Roosevelt made two politically risky decisions that brought the United States closer to open hostility with the Axis powers, which, following the signing of the Tripartite Pact, now included Imperial Japan. Bypassing Congress, he used his executive authority to give Great Britain fifty World War I–era destroyers that had been certified by Navy admiral Harold R. Stark (at FDR’s demand) to be militarily insignificant, exchanging them for leases on several British military installations from Newfoundland to British Guiana, which was hailed by the public as a shrewd deal that gave America the means to repel an invasion from Europe. And FDR threw his full support behind the Selective Training and Service Act, the first peacetime draft in the nation’s history, which earned the pivotal support of Willkie and made it through Congress in the face of hyperbolical warnings from the likes of Senator Burton K. Wheeler of Montana, who said the bill would “slit the throat of the last democracy still living.”

By early September, with Hitler having second thoughts about Operation Sea Lion, the Luftwaffe was ordered to pivot away from eliminating the RAF as a prelude to invasion and begin pounding in and around cities in the hope that a collapse of British morale would force a capitulation. The months-long bombardment campaign that would come to be known as the Blitz began on the afternoon of September 7, when three hundred bombers accompanied by six hundred fighters spent hours dropping incendiaries upon the densely populated dock areas of London’s East End, killing several hundred civilians at a minimum. Yet the daylight raids were too costly for the Luftwaffe, which lost 298 aircraft during the first week, forcing Göring to switch to nighttime sorties, less susceptible to fighter interception and perhaps more conducive to inducing panic in the British people. “The decisive thing is the ceaseless continuation of air attacks,” Hitler said. In his cigarette-enriched basso profundo, CBS’s Edward R. Murrow assured the American people that the plan wasn’t working. “Today I saw shop windows in Oxford Street covered with plywood,” he said in one of his “This Is London” broadcasts, which sometimes featured the sound of air-raid sirens and antiaircraft bursts in the background. “In front of one there was a redheaded girl in a blue smock, painting a sign on the board covering the place where the window used to be. The sign read OPEN AS USUAL.”

On September 3, Lilly Stein informed Sebold that British factories were producing a thousand airplanes a month, a piece of intelligence that she could’ve obtained from a prominent English cricketer and military officer she was consorting with, Captain Hubert Martineau. She was not far off. The actual number was 1,601 for August and 1,341 for September, which, one of the major reasons for the RAF’s resilience, exceeded the output of a German aircraft industry that was a victim of the Technical Office’s misguided schemes, impossible demands, and increasingly unstable director. (Udet was now drinking heavily and taking Pervitin methamphetamine tablets.) Alas, Stein’s information was never communicated to the Luftwaffe, then in the midst of fatally underestimating the ability of British plants to keep up with the rates of attrition. Probably sick of her constant demands for money in the face of her inability to come up with anything significant from diplomat Ogden Hammond Jr., Ast Hamburg ordered Sebold to stop seeing her. “Lilly should be careful and report in writing” were the instructions. “You personally will please sever connections as instructed.” Also: “As reasons say that you don’t work for us anymore.” On September 11, Sebold let Stein talk awhile about an English gentleman she’d met at the Hotel Pierre before passing along a note that included a new contact address in Cologne, where Hermann Sandel (aka Heinrich Sorau and Uncle Hugo) had been transferred.

“What? Have you dropped me?” she said.

“No, they have dropped me,” Sebold responded.

A few weeks after Sebold’s final visit with Stein, Assistant Secretary of State Adolf Berle summoned Oggie Hammond to his office and told him that he knew all about the relationship. (Hammond had also mimicked the president “in a reprehensible manner” in front of eyewitnesses during a summertime party in Newport, another tidbit passed along by J. Edgar.) “This is nasty business,” Berle said, according to Hammond. “We might as well get it over quickly. You had better resign.” Incensed, Hammond refused. He assembled the lawyers and swore under oath that “at no time did I live with . . . or have intimate relations” with Lilly Stein. He was just returning the gold watch! The $100 was a repayment for a loan! With Berle unwilling to budge, Hammond took the unusual step of suing the State Department, which resulted in newspaper stories about the high-society scion’s allegedly disloyal dealings with a “female agent of a foreign power,” prompting Sebold to send a radio message notifying Ast Hamburg that one of its spies had been partially exposed.

Yet even without Sebold’s cooperation, Stein continued to seek material on behalf of the Reich, often discussing her work with Else Weustenfeld, a secretary for the law firm representing the German consulate who had been brought into the spy business by her boyfriend, Hans Ritter, the affable younger brother of Nikolaus Ritter. The newspapers would later describe her as the “Blond Spy Mistress of Nazi Chief’s Brother.” In one of a handful of German-language conversations between Stein and Weustenfeld recorded by the microphones of the FBI, Weustenfeld complained of the way Sebold spoke to Stein “about her immoral conduct.” Weustenfeld said she knew Lilly was “not clean, but that Harry had no reason for making such a great point” of it. Indeed, the FBI seemed to be mostly occupied with cataloging her love life. When she attended a prizefight at the Bronx Coliseum featuring Romuald Wernikowski, a heavyweight from Vienna who went by the ring name Rex Romus, G-men noted that Stein was “accosted” by Rudolph C. “Rudy” Schifter, another European with connections within elite athletic circles. A short time later, Romus (who knocked out his opponent in the first round) was recorded as a visitor to Stein’s new apartment on East Seventy-Ninth Street in Yorkville. Another guest, Georg von Birgelen, a Zurich-born skating champion known for his daredevil jumps over card tables and the like, was described by the Bureau as Stein’s Swiss boyfriend in an apparent attempt to distinguish him from the multinational pack. Still another companion, Hans Ruesch, a prominent driver on the European racing circuit who was beginning to make a name for himself as a writer, was thought by the New York office to have mailed letters on her behalf in Europe.