Ace of Spies (18 page)

T
hose regarded as dangerous aliens had always been the responsibility of the Labor Department’s Immigration Bureau, but in early 1917 the US Congress introduced new immigration legislation making it easier to deport undesirables. The Immigration Bureau now found it had neither the time, the manpower, nor the resources to conduct the investigations that would be prompted by the new law.

Two competing civil agencies, the Secret Service, which came under the US Treasury Department, and the US Bureau of Investigation, which came under the Justice Department, carried out domestic security investigations. As America entered the war they were also joined in this endeavour by the Military Intelligence Division and the American Protective League. The APL was a voluntary association of patriotic citizens created on 22 March 1917 as an auxiliary to the Bureau of Investigation.

In addition to assigning his own men to the investigation of Sidney Reilly, Roger Welles sent a copy of the Perkins’ memorandum
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to Maj. Ralph Van Deman of the US Military Intelligence Division, as it clearly had military implications:

From:   Agent L.S. Perkins, New York City      3 April 1917
In Re:   SIDNEY G. REILLY: NEUTRALITY MATTER

According to Winfield S. Proskey, consulting engineer for Flint & Co., 120 Broadway, close watch should be kept upon Sidney G. Reilly, Room 2721, Equitable Building, 120 Broadway. Col. Proskey says he has it from Capt. Gaunt of the British Consulate here that Reilly was a spy for the Japanese during the Russo-Japanese war, and is now an enemy of the Allies. Therefore, the conspicuous advocacy of the scheme to present 300,000 discarded Krag-Jorgensen rifles to the Russian army, which has attracted some attention to Reilly, as he seems to be the originator of it, should be looked upon with suspicion. In spite of his name, Reilly is of Semitic origin says Col. Proskey, and is of Oriental appearance. He is denounced by a prominent Russian, Peralstrauss, of 42 Broadway, as a pro-German.

The US Army had discarded the Krag-Jorgensen rifles back in early 1915. At the time it was believed that Franz Von Rintelen, the German intelligence agent, was seeking to purchase the rifles through an intermediary. It was thought that he intended, in turn, to supply them to the supporters of former Mexican President Gen. Victoriano Huerta to aid his restoration to power. Alternatively, his motive could simply have been to deprive the Allied powers of the opportunity to acquire them. At any rate, it seemed to Van Deman that here was a possible link between Reilly and a German attempt to purchase arms. Reilly was, by repute, a British citizen and Van Deman therefore wrote, on 7 July, to Sir William Wiseman requesting any information the British might have on Reilly.
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Wiseman, who was based in New York City, was nominally part of the British munitions purchasing operation and responsible for British propaganda. In reality, the thirty-two-year-old Baronet was head of SIS in the United States. On 9 July Wiseman replied that Sidney Reilly:
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...claims to be a British subject, but doubt has been cast on this and it has been said that he is in reality a Russian Jew. In any case he is married to a Russian Jewess. For the last two years he has been mixed up with various scandals in connection with the purchase of Russian
munitions here and his reputation is a bad one. He is said to do a certain amount of honest company promoting, but his chief line of business is collecting brokerages in more or less dishonest ways on any contract that he can possibly have something to do with. Reilly is said to have been at Port Arthur in 1903, where he was suspected by the Russians of acting as a spy for the Japanese. While in this country, during the present war, he has been mixed up with various undesirable characters and it would not be in the least surprising if he was employed by enemy agents in propaganda or other activities.

This letter no doubt spurredVan Deman to extend the investigation further in order to identify the ‘various undesirable characters’ referred to by Wiseman. The investigation itself was deputed to APL agents Hollis H. Hunnewell and Abel Smith, who worked under the supervision of McGregor Bond of the Office of Naval Intelligence. He in turn sent copies of all reports and memorandums to Lt-Col. Townsend Irving of the Military Intelligence Division. Not being experienced professional investigators, Hunnewell and Smith soon found themselves sinking into the mire of Reilly’s complex personal and business relationships. One suspicious character seemed to open the door to several others. Before too long the investigation was taking on a momentum of its own. This may be one reason why it went on for so long. Neither were the investigators helped by the fact that within six months of Agent Perkins’ memorandum, Reilly left New York and proceeded to Toronto to join the RFC. He was therefore absent for the remainder of the war and indeed for the remainder of the investigation. While it is clear that Hunnewell and Smith were certainly more than successful in tracking down a large number of individuals who were able to supply information, they seemed unable to successfully interpret what they found or discriminate in favour of what was relevant and meaningful. A seasoned investigator would no doubt have done a more circumspect job, but would not have committed to paper the same wealth of detail and trivia as Hunnewell and
Smith. To them we should be eternally grateful for inadvertently documenting, in such depth, the many dimensions of Reilly’s life in New York.

Indeed, there seemed to be no shortage of people who were willing to come forward and testify against Reilly, which is not surprising given his ruthless approach to business. During the two and a half years he had been in New York he had undoubtedly crossed, or more to the point, double-crossed, a good many people. Norbert Rodkinson was one such person. Described in the reports as an Englishman,
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Rodkinson is very much an enigma. He had lived in Russia for many years and now worked in New York for the brokerage firm Wagner & Company of 33 New Street. He told the investigators that Reilly’s reputation as a spy and scoundrel was well established in Petrograd. He also commented on Reilly’s marriage to Nadine, stating that it must be bigamous, as Reilly already had a wife and two children who had until recently been living in Port Arthur.
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He further added that Reilly had sent them to Petrograd in 1916 where they had been left in ‘dire straits’. The English colony in Petrograd had apparently taken up a collection for the family ‘so that they could exist’. An Englishman by the name of Fred Hill is named in the testimony as being responsible for the money that was donated.
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Rodkinson also confirmed his belief that Reilly had not been born in Ireland but in the town of Bendzine in Poland and claimed that both Reilly and Alexandre Weinstein asked him to transact business for them when he arrived in New York in 1916, but knowing of their ‘evil reputation’ he refused.

Col. Proskey, a consulting engineer for Flint and Company, the man who had sparked off the enquiry in the first place, told the investigators that he considered Reilly, ‘one of the most astute and dangerous international spies now at large’.
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It was well known, he said, that Reilly was a crook and an enemy of the Allies. He restated his earlier charge that he had spied for Japan and introduced the investigators to John F. Cordley, also from Flint and Company. Cordley identified Alexandre Weinstein as
Reilly’s right-hand man and described the pair as ‘dangerous’. In his view they would ‘do anything for the almighty dollar’.
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Cordley believed that Reilly had been educated at the University of Berlin, and stated that in 1914 he had visited Japan, but not ‘as a member of the Russian Purchasing Commission’.
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He further ventured that Reilly was said to be an officer of the Allied Machinery Company, and had made $1 million in Russian contracts.
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The Bureau’s enquiries indicated that Weinstein was born in Kiev, Ukraine, in 1873,
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where his father was a prominent banker. However, he was believed to have run a brothel there and served a prison sentence for bribery. Maj. Norman Thwaites, Wiseman’s SIS deputy, was approached and permitted Hunneman and Smith sight of MI5 material on Weinstein, which indicated that he was viewed as an undesirable character during the eighteen months he spent in London. He was also reputed to have done business with German firms during this time in London. Another report from Thwaites stated that ‘Weinstein claims to be a Russian and professes strong pro-British and pro-Ally sentiments but assurances have been received on good authority that he is in touch with prominent Germans’.
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Known to be a gambler and womaniser, he resided at 60 St James’s Street in Mayfair and had a reputation as an extravagant spender. This was hardly surprising, given that he had earned some £800,000 in commissions during the time he was in London.
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As the investigation gathered pace, the Bureau began to suspect that Weinstein was involved in business deals with those under suspicion of being German agents. The Elliot Bay Shipbuilding Company, for example, alleged that Weinstein had been involved in a recent, questionable shipbuilding transaction and that he possessed plans and specifications belonging to the company which must have been stolen.
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He had apparently been introduced to them by Nicholas Kousnetzoff, who was involved in a wireless contract backed by Germany in 1917. It was noted that he had employed as his valet a German, Frederick Herron, who was apparently connected with Louis Miller, a saloonkeeper
on West 30 Street, who had been charged with being an anti- American propagandist.
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Antoine Jahalsky, alias Tony Farraway, was an even greater concern to the investigators. He, too, was referred to as a womaniser and gambler. They believed him to be the author of a pamphlet entitled ‘Why Poland Should Stand By Germany’.
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He claimed to have been born in Russian Poland, although Hunneman and Smith suspected that he was in fact Austrian, and may have been connected with the sale of Russian military documents to the Austro-German consuls-general in New York.
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Their suspicion appears to have been kindled by a statement from the actress Clare Kimball Young, who related that he had told her on one occasion that he had a brother who was an officer in the Austrian army.
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She firmly believed that he was an Austrian and added that she knew him as Tony Farraway. The actress Nita Naldi, a former mistress, also mentioned that he had told her about his brother, who had served in the Austrian army.
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The statement of another female acquaintance of Jahalsky only added to the suspicion that he was a German spy. Former chorus girl and actress Peggy Marsh had met Weinstein in London in 1915, where she said he had a great reputation as a spender and was constantly showering money and presents on the chorus girls. She said that few women liked Weinstein because of his appearance (he apparently had very prominent teeth), but were willing to accept his friendship because of his extravagant generosity.
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Marsh’s testimony also asserted that her friend and fellow chorus girl Gertie Millar had been Weinstein’s mistress before he left for America. When she herself returned to New York a short while later, she had met Weinstein again. He had introduced her to Jahalsky, with whom she had an affair, and who had in turn introduced her to Sidney and Nadine Reilly. In 1916 she had travelled with him from New York to the west coast. In her opinion Jahalsky gave every impression of being a German spy
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– he had apparently asked her to mix with officers and businessmen and get as much informa-tion from them as possible. She said he was interested in the study of maps and had
taken photographs, one apparently of the Roosevelt Dam, with a ‘remarkable camera’. She recalled that he had made a mysterious visit to the mining country outside Phoenix, Arizona, to visit a Polish miner he had known ‘in the old country’. She eventually left him in California and returned to New York.
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At the time Jahalsky made the Phoenix trip, Kurt Jahnke was co-ordinating a desperate, half-baked plan to slow down US troop movements to France by creating trouble for the US on the Mexican border.
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German agents were to foment a wave of strikes among Arizona’s copper miners with the connivance of the radical Industrial Workers of the World (IWW). These mines had a history of militancy, and it was hoped the strikes would soon lead to violence. In conjunction with inducing mutiny among black army units in Arizona and attacks on US border posts, Jahnke hoped this cocktail would send US troops rushing south. It was also noted that the British Secret Service had stated that Jahalsky was a ‘most dangerous German spy’, and was acquainted with Col. Nekrassoff of the Russian Commission.
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The third associate, former Russian naval lieutenant T.N. Agapeef, came to New York in 1917, taking an apartment at 29 West 52nd Street. The Russian Navy Department had purchased a converted yacht for use as a patrol vessel in the White Sea. Although commissioned under the Russian flag it had not left New York due to the ‘present conditions in Russia’. According to the report:

The commander of the ship, Lt T.N. Agapeef, was instructed to put the ship out of commission, send the crew to Russia and deliver to the representative of the Russian Admiralty the letter of credit which he had received in his capacity as commanding officer for the expenses during the voyage to Russia. Lt Agapeef did not comply with the order to return the letter of credit and disappeared from his post. Investigations showed that all the money of the letter of credit had been drawn.
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Agapeef had clearly thought better than to return to a country in the midst of revolutionary turmoil and could not resist the
temptation to redeem the letter of credit, valued at $40,000. The Russian Embassy had requested his arrest, but this had been refused by the US State Department because of ‘the present Russian situation’. He soon joined Weinstein in Reilly’s office suite, where he also sought out commissions on war contracts.