U.S. Law Enforce­ment Counter­attacks

image icon - click to for more details about the image German sabotage operations in the New York World; Bureau of Investigation badge; German bomb maker Lieutenant Robert Fay; German Commercial Attaché Heinrich Albert

In early 1915, U.S. authorities discovered a passport forgery operation, and documents subsequently seized by the Justice Department's Bureau of Investigation (BOI) - the forerunner of the Federal Bureau of Investigation - loosely tied the scheme to Ambassador Johann von Bernstorff and the German Embassy.

Established in 1908 by Teddy Roosevelt, the BOI was provided federal jurisdiction to investigate crimes nationwide yet lacked the legal authorities to carry weapons or make arrests. Preoccupied with white collar crimes and investigation of threats emanating from Mexico, the BOI lacked a mandate from the Justice Department to counter the German sabotage threat. Nonetheless, in late-1915, Bureau agents began focusing on domestic sabotage following the arrest of German bomb maker Robert Fay and, in July 1916, Congress authorized the Bureau to establish a special team to investigate German plotting and acts of sabotage, though subsequent investigations, to include the Black Tom Island blast, yielded little.

In 1934, Congress authorized the BOI to make arrests and carry weapons. The following year, the Bureau was renamed the Federal Bureau of Investigation, and its counterintelligence mission expanded, just as another world war was on the horizon.

Other evidence soon materialized of German collusion to disrupt U.S. merchant shipping. In May 1915, following the German torpedoing of the passenger ship RMS Lusitania and the loss of 128 American lives, an increasingly wrathful public was rapidly shedding its attachment to neutrality. President Wilson, for his part, had had enough. He ordered the Secret Service – a bureau in the U.S. Treasury Department – to tap the telephone lines at the Germany Embassy and place Ambassador von Bernstorff and his staff under surveillance.

Established in the aftermath of the Civil War for the purposes of staunching the rampant flow of counterfeit currency, the Secret Service’s investigative and protective missions gradually expanded in the late 19th and early 20th centuries. The agency notched an admirable counterintelligence record during the 1898 Spanish-American War, disrupting several spy rings controlled by Spanish agents operating across the United States, but by the dawning of World War I, the Secret Service had its hands full protecting the President and safeguarding the integrity of the U.S. monetary system.

image icon - click to for more details about the image Heinrich Albert’s briefcase
image icon - click to for more details about the image William Flynn, Chief of the United States Secret Service; President Woodrow Wilson with Secret Service agents; Seized explosives belonging to Robert Fay

Nonetheless, the evidence against the German saboteurs continued to mount. In July 1915, two Secret Service agents tailing a pro-German newspaperman observed him boarding a New York City subway train with Commercial Attaché Heinrich Albert. Albert had been appointed by Berlin in 1914 as the Commercial Attaché in its Washington embassy, a cover for his activities as paymaster for German sabotage operations. During his first year in America, Albert disbursed an estimated $30 million to German operatives (worth an estimated $700 million in 2021 dollars). Many of Albert’s subversive activities were financial schemes designed to disrupt acquisitions of essential materials and components by American munitions factories.

When the pair of Secret Service agents noticed that Albert had inadvertently left his briefcase behind on the train, they seized it and promptly shared the alarming contents with the White House. Detailing German sabotage and other subversive activities, the documents were then purposely leaked by the White House to the New York World newspaper. The ensuing scandal proved a scathing embarrassment to the German Embassy, further damaging Germany’s standing and credibility in the United States. Albert was eventually repatriated to Germany with other embassy staff following the U.S. entry in the war.

image icon - click to for more details about the image Captain Thomas J. Tunney; Captain Charles von Kleist; Rudder bomb; Seized German bombs; New York Tribune recall headline

The NYPD Bomb Squad was the first law enforcement organization to suspect that the string of bombing incidents was a coordinated sabotage campaign. In October 1915, under the leadership of Captain Thomas, the Bomb Squad together with Secret Service agents investigating a large shipment of explosives, arrested German operative Robert Fay. Fay was a German Army Lieutenant and explosives expert sent from Berlin months earlier to manufacture bombs for disabling commercial ships at sea. While the effectiveness of his bombs was questionable, his value to law enforcement was not. Fay was arrested while testing a bomb at a remote site in Hoboken, New Jersey, and during his interrogation, he named von Papen, the German Embassy Army Attaché, as an accomplice in his sabotage activities. That triggered von Papen’s prompt return to Germany.

image icon - click to for more details about the image Captain Thomas J. Tunney; Captain Charles von Kleist; Rudder bomb; Seized German bombs; New York Tribune recall headline

On the heels of this arrest, in December 1915, Captain Thomas Tunney came to suspect the involvement of longshoremen in the sabotage operations, including Paul Koenig, von Papen’s recruit. After ordering surveillance on Koenig, a wiretapping operation led to a raid of Koenig’s office and apartment. Koenig was arrested, and Tunney’s detectives discovered a diary containing explicit details about his year-long activities as a German military spy. That included his connection to a clerk at the City National Bank, whose access to international financial transactions provided Koenig with weekly detailed lists of British and French military supply contracts, shipping dates, and departure points. With this intelligence, it is no wonder that German saboteurs knew exactly which merchant ships to target.

By December 1915, German complicity had become obvious, and President Wilson demanded action against the German diplomats involved and their operatives. In his State of the Union Address that month, he urged Congress to pass legislation criminalizing espionage, sabotage, and other wartime subversive activities. Final passage of the landmark Espionage Act would not come until 1917.

In another blow to the German saboteurs, in early 1916, NYPD Bomb Squad agents duped Charles von Kleist, Dr. Walter Scheele’s assistant, by pretending to be fellow German agents, and entered Scheele’s Hoboken laboratory, where they discovered the designs of Scheele’s cigar-shaped incendiary bombs and his use of the interned German ship, the SS Friedrich der Grosse, to manufacture the bombs’ casings. Von Kleist and several others were arrested, but Scheele had already fled the country for Cuba. Tunney’s men then raided the Friedrich der Grosse, arresting two of the crew, including the captain.