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Inside the FBI’s Shameful Battle To Shield Nazis

Alex Constantine - November 19, 2014

Federal Agent Stepped in To Aid Her Propagandist Father

November 17, 2014

It was October of 1990, and the Nazi hunters at the United States Department of Justice were furious at the FBI. The Nazi hunters, led by an attorney named Neal Sher, were tasked with finding and deporting former Nazis and other World War II-era persecutors. They had just tracked down a former pro-Nazi propagandist named Ferenc Koreh and sued to strip him of his U.S. citizenship. But the FBI seemed to be trying to sabotage the lawsuit.

A 46-page memorandum written on FBI letterhead had landed on the desk of Sher’s boss, claiming that the Office of Special Investigations, which he led, had been hoodwinked by the intelligence services of Romania’s communist government.

The conflict between OSI and the FBI is a shocking untold chapter in the Justice Department’s long history of trying to sweep up former Nazis — and of the interference of that same department’s fabled enforcement arm with that effort.

Sher knew the FBI was wrong. More than that, he also knew that Koreh’s daughter was an FBI agent stationed in the bureau’s New York field office. Even worse, the agent who wrote the 46-page memo was her supervisor — and her live-in boyfriend.

“I was outraged,” Sher said. “I thought it was scandalous. Those people, in my mind, should have been fired on the spot.” They weren’t. One agent was suspended for a week, another was censured. The boyfriend remained a senior official at the FBI’s New York office through at least 2001, when he played a major role for the office in the aftermath of 9/11.

The incident is described briefly in New York Times reporter Eric Lichtblau’s new book, “The Nazis Next Door: How America Became a Safe Haven for Hitler’s Men.” It’s also recounted in a secret official history of the OSI leaked to Lichtblau that was posted online by The Times in 2010. Still, it remains largely unknown. Two and a half decades later, Sher is still angry. “It was absolutely one of the most egregious breaches of ethics for someone in the FBI,” Sher told the Forward.

The two FBI agents, who married in 1991, did not respond to letters sent to their house seeking comment.

By 1990, the OSI’s investigations of former Nazis had begun to make major waves — and major enemies. Three years earlier, on OSI’s recommendation, Austrian President Kurt Waldheim had been banned from entering the United States due to his wartime collaboration with the Nazi SS. Waldheim was furious, Austria recalled its ambassador, and Sher was personally banned from traveling to Austria.

It wasn’t just former Nazis who were angry at OSI. Pat Buchanan, the right-wing gadfly and Republican White House staffer, argued throughout the 1980s that the KGB was leading Sher’s unit by the nose, providing forged evidence to frame opponents of the Soviet regime as Nazis.

It was an old charge. In “The Nazis Next Door,” Lichtblau shows how, from the 1950s onward, the powerful FBI director J. Edgar Hoover blocked investigations into former Nazis working as FBI informants, claiming they were victims of Communist propaganda.

According to Lichtblau, who reviewed OSI’s work over decades for his book, they never were. “There’s not a single case that I could find where the KGB was doctoring evidence,” he told the Forward. “There is no evidence [the KGB was] manufacturing cases.”

OSI’s campaign against Ferenc Koreh started with a libelous newspaper article.

According to the secret history of OSI, prepared internally at the Department of Justice in 2006 and kept under wraps for four years, Koreh came to the attention of U.S. authorities after two small New York newspapers published articles accusing Koreh of various war crimes. Koreh sued for libel, and the papers retracted most of the charges.

At the time, Koreh was working for Radio Free Europe, the American propaganda station that broadcast Western-slanted news into the Soviet bloc. Koreh was vocally anti-Communist, and had been active in activist groups that opposed the Romanian regime since moving to the United States in 1950. He became a U.S. citizen in 1956.

U.S. investigators came across the libelous newspaper articles and started looking into the radio broadcaster. They found that the Transylvanian-born Koreh had been editor of a Hungarian newspaper in the early 1940s that ran articles calling for the persecution of Jews. The newspaper blamed Jews for murders, rapes and World War II itself. In 1943 and 1944, Koreh worked for the Hungarian information ministry, and then, during the German occupation of Hungary, as editor of a government-owned newspaper. After the war, a Hungarian court jailed him for seven months for running that paper.

In 1989, OSI filed a lawsuit in federal court in New Jersey to strip Koreh of his citizenship, on the grounds that he had been naturalized on the basis of a visa that he could not have obtained if he had been forthright about his wartime activities.

“I will certainly fight it,” Koreh told the Associated Press when reached for comment at the time.

Soon after the suit was filed, someone threw a bottle through the window of his home in Englewood, New Jersey, bearing a threatening note that read, “Dog — You Will Die.”

OSI investigators hadn’t known before they filed the suit that Koreh’s daughter Veronica Koreh was an FBI agent in the agency’s New York field office. They soon found out.

In October of 1990, while OSI’s lawsuit against Koreh was in its discovery phase, a memorandum on FBI letterhead by a special agent named Kenneth Maxwell was sent to Deputy Assistant Attorney General Mark Richard, who oversaw Sher’s unit. The memo claimed that OSI’s case against Koreh was based in part on forgeries, and that Koreh was under attack by the Romanian intelligence services for his anti-Communist activism.

Maxwell’s line was strikingly similar to the attacks on OSI and its predecessors leveled for years by figures like Buchanan and Hoover. The FBI agents in New York, said Lichtblau, “seemed to be buying into the whole Soviet propaganda argument that really didn’t have much merit.”

OSI staffers were furious over the memo. They knew their proof of Koreh’s past had not been forged by the Romanians — Koreh himself had admitted to much of it in depositions at his earlier libel case. The rest was based on records from Hungary, not Romania. Even so, they knew they would need to reveal the memo’s existence to the defense, slowing their case.

Even more infuriating, though, was the memo’s provenance. Maxwell was dating Veronica Koreh. They lived together at the time, and were married a year later.

In the internal war that ensued within the Justice Department, OSI officials interviewed Maxwell and Veronica Koreh. Sher claims he learned that Veronica Koreh helped Maxwell write the memo. She saw drafts, recommended sources for him to use, and even gave him documents.

At the same time, Sher discovered, Maxwell had given Ferenc Koreh advice about his lawsuit and gone to meetings with Ferenc Koreh, Koreh’s lawyer, and Veronica Koreh.

“It was absolutely one of the most egregious breaches of ethics,” Sher told the Forward.

According to its internal history, OSI complained to the FBI about Koreh and Maxwell in 1992, raising questions about conflicts of interest and whether they had sought to sabotage the Nazi hunting unit’s lawsuit. Maxwell brought his own charges against OSI: In a letter to the Justice Department’s Office of Professional Responsibility, he accused Sher and another OSI attorney of behaving in a “reprehensible, professionally unethical” manner when they interviewed him about his letter.

It took four years for the competing claims to be sorted out.

Meanwhile, OSI’s denaturalization case slogged on. It included lengthy fights over Maxwell’s memorandum, and how it would be disclosed to the defense.

Koreh eventually lost his suit in 1994. The district court decision noted that the case was complex, in that Koreh was not accused of personally committing any atrocities, and that the activities for which he was being denaturalized would have been protected speech under the First Amendment. Still, they held that he should be denaturalized for his untruthful affirmations to gain entry to the United States and to obtain U.S. citizenship. The circuit court, which ruled in 1995, agreed.

“We conclude that the undisputed facts of this case demonstrate that Koreh’s activities at [the Hungarian newspaper] Szekely Nep during 1941 and 1942 constituted both assistance in the persecution of civilians… and the ‘advoca[cy] or assist[ance] in the persecution of any persons because of race, religion, or national origin,’” wrote Judge Dolores Sloviter, chief judge of the United States Court of Appeals for the Third Circuit. “Koreh’s visa, and his citizenship was thus ‘illegally procured.’”

Ferenc Koreh died in 1997 still living in the United States, having admitted to various charges in return for being allowed to stay in the country due to his poor health.

The infighting between OSI and the FBI, in the meantime, continued unabated. In 1994, after leaving his job at OSI to become executive director of the American Israel Public Affairs Committee, Sher sent an angry letter to FBI director Louis Freeh asking why no action had been taken against Maxwell and Veronica Koreh.

The FBI’s general counsel responded within weeks. The agency had held off on investigating the agent’s actions until the Koreh case and all appeals were over, he said. In 1995, after the district court’s ruling, Sher wrote again. “The time to rectify this scandal has long since passed,” he told the bureau.

The general counsel again responded quickly, saying that the FBI’s Office of Professional Responsibility was already looking into the incident. It took until June of 1996 for the FBI to conclude its probe. The general counsel’s final letter to Sher, sent that month, was vague, saying that one special agent had been suspended without pay “for a period of time,” another was “censured.” Other FBI personnel, the lawyer wrote, would also have been punished, but had already left the agency.

The secret OSI history leaked and posted by the New York Times in 2010 provided more details: It was Maxwell who had been suspended — for a week — and it was Veronica Koreh who had been censured. The Department of Justice’s own Office of Professional Responsibility also finished its investigation into Sher, set off by Maxwell’s charges against him, at around the same time, according to the OSI history. He had been cleared.

“Some of Sher’s comments may have included words or phrases that could be colorful, [but] his overall ‘message’… was clearly one that needed conveying,” the probe concluded.

Maxwell, for his part, was hired as vice president of security for JetBlue in 2003, after rising at least to the level of assistant special agent in charge of the FBI New York Field Office. A representative of JetBlue said that Maxwell had recently retired. Neither Maxwell nor Veronica Koreh have a listed phone number.

The tensions that pitched the FBI and the unit once known as OSI into bureaucratic war have faded. Eli Rosenbaum, who succeeded Sher at OSI and continues to hold an equivalent position at the Justice Department, told the Forward, “I have no complaints [against the FBI] in my own experience.”

But Sher still steams at the memory. “It stuck in my craw,” he said.