The office of the Nazi Party Security Service (SD) was responsible for, among other things, falsifying passports and documents. Within the setting of Operation Bernhard, the SD forged pound notes in great numbers, funding Nazi Germany with ₤600 million in high-quality counterfeit currency (worth approx. $6 billion 2009).
The leader of the operation was Bernhard Krüger – a member of the NSDAP, SS Major (Sturmbannführer) during World War II, and leader of the Department VI F 4a, part of the SD-foreign branch in the Reich Main Security Office (RSHA).
After the war, Major Krüger was detained by the British for two years, then turned over to the French for a year forging documents for them. He was released in 1948 without any charges being pressed, and returned to Germany. In the 1950s, he went before a denazification court, where inmates under his charge at Sachsenhausen provided statements that resulted in his acquittal. He eventually worked for the company that had produced the special paper for the Operation Bernhard forgeries. He died in 1989.
This counterfeiting operation was named after Krüger, who led the operation from a segregated factory built at Sachsenhausen concentration camp, manned by 142 Jewish inmates.
The pound counterfeiting operation ended in 1944. However Krüger succeeded in establishing a new operation to forge American dollar notes. In May 1945 his team of prisoners were transferred to Ebensee concentration camp in Austria where they were liberated.
The unit successfully duplicated the rag paper used by the British, produced near-identical engraving blocks and deduced the algorithm used to create the alpha-numeric serial code on each note.
”This is not to be a forgery or counterfeiting in the usual sense, but authorised facsimile production. The notes must be such a perfect copy of the original that even the most experienced bank-note experts cannot tell the difference.”
To break the coded arrangement of the alphanumeric serial designation, the team worked with banking experts, examining records of currency from the previous 20 years in order to replicate the correct order. No records were kept by previously so-called forgery Operation Andreas and the method of how the Germans identified the correct sequences is not known; the paper historian Peter Bower states that it is possible that techniques adapted from those used in cryptanalysis were used to break the sequences.
Much of the output of the unit was dumped into the Toplitz and Grundlsee lakes at the end of the war, but enough went into general circulation that the Bank of England stopped releasing new notes and issued a new design after the war (until 1981).
Estimates of the number and value of notes printed during Operation Bernhard vary from a total of £132,610,945 (of which £10,368,445 were sent to the RHSA central office), up to £300 million (of which £125 million were usable notes).
Lake Toplitz has been the site of several large-scale searches. In 1958 an expedition located several cases of the counterfeit money from Operation Bernhard and a book that detailed the Bank of England’s numbering system. Following the death of a diver in the lake in 1963—his two companions on the lake included “a former Nazi secret agent and … a German business man mentioned in connection with counterfeit gold coins”—the Austrian government undertook a month-long search of the lake, during which they recovered more boxes of notes.
In 2000 the submersible that was used to search the wreck of RMS Titanic was used to survey the lake floor, and several boxes of notes were recovered, witnessed by Adolf Burger, a former prisoner involved in the counterfeiting operation.
On seeing the quality of the notes, one bank official described them as “the most dangerous ever seen”; the watermark was the most reliable source for detecting the forgeries. Counterfeit notes worth £15–20 million were in general circulation at the end of the war. With such a volume in general circulation, in April 1943 the Bank of England stopped releasing all notes of £10 and above. In February 1957 a new £5 banknote was issued; the blue note was printed on both sides and “relied on subtle colour changes and detailed machine engraving” for security. Other denominations were also reintroduced: the £10 in February 1964, the £20 in July 1970 and the £50 note in March 1981.
In late 1944 the prisoners had counterfeited the reverse of the dollar, and the obverse by January 1945. Twenty samples of the $100 note were produced—without the serial number, whose algorithm was still being examined—and shown to Himmler and banking experts. The standard of engraving and printing was considered excellent, although the paper used was technically inferior to the genuine notes.
Counterfeit notes worth £15–20 million were in general circulation at the end of the war. With such a volume in general circulation, in April 1943 the Bank of England stopped releasing all notes of £10 and above. In February 1957 a new £5 banknote was issued; the blue note was printed on both sides and “relied on subtle colour changes and detailed machine engraving” for security. Other denominations were also reintroduced: the £10 in February 1964, the £20 in July 1970 and the £50 note in March 1981.
The Tilhas Tizig Gesheften, a small group formed from the British Army’s Jewish Brigade, obtained a supply of counterfeit pounds from Jaacov Levy, one of Schwend’s money-laundering agents. The forged notes were used to buy equipment and to bring displaced persons to Palestine, in defiance of the British blockade of the territory.
Header: The US $100 note (obverse of the 1934 series pictured) was considered more difficult to counterfeit because of the complex artwork involved.