Though Julius Herf had been forced to accept Günther Quandt’s quasi acquittal, the dogged attorney wasn’t finished with the profiteers of the Third Reich. He had another chance at justice in his prosecution of one Baron August von Finck. Despite heavy scrutiny from American investigators, Bavaria’s richest man wasn’t, in the end, a serious contender for a trial at Nuremberg. In early November 1948, Herf indicted von Finck as an offender: a committed Nazi who had raised twenty million reichsmarks for Hitler’s art museum. The regime had lavishly rewarded von Finck for his efforts, Herf showed. His Aryanizations of two banks, Berlin’s Dreyfus and Vienna’s Rothschild, quadrupled the balance sheet of his private bank, Merck Finck: from 22.5 million reichsmarks in 1933 to 99.2 million reichsmarks in 1944.
The denazification trial against von Finck took place in Munich in late December 1948. The main witness against the banker was Willy Dreyfus. Although Dreyfus and von Finck had come to a swift private settlement in October 1946, they hadn’t been allowed to execute it; they had to settle in formal restitution proceedings under American occupation law. After the restitution law was put in place in November 1947, the two men reopened negotiations. In August 1948, after exhaustive talks, they came to an agreement that exactly mirrored the one they had concluded two years earlier.
Dreyfus was to receive shares to restore what Merck Finck had underpaid for the Berlin branch of his bank, as were the surviving relatives of Dreyfus’s former partner, Paul Wallich. Dreyfus held that Wallich, who committed suicide after the Aryanization, “suffered indignities at the hands of the management of Merck, Finck & Co., which . . . contributed lagerly [sic] to breaking his spirit.” But then Dreyfus moved to change one final passage in the settlement, which would have forced him and Wallich’s relatives to return all restitution shares if a future German law nullified the settlement. Seeing a chance to regain shares that were slipping away, von Finck backtracked. All of a sudden, he claimed that the American restitution law wasn’t applicable to their settlement and any insinuation that his bank was responsible for Wallich’s suicide was offensive. The agreement was off.
On December 22, 1948, at the trial’s start, the usually relentless Herf, for reasons that weren’t clear, changed the category of von Finck’s indictment from offender to lesser offender. That same day in court, von Finck denied all charges. According to the financier, the Dreyfus transaction had been concluded in good faith in 1938, and his bank’s acquisition of Rothschild was meant to protect the owners’ assets from the Nazis. He argued that his fundraising efforts as the chairman of the museum’s board of trustees, to which he was appointed on Hitler’s explicit instruction, hadn’t been an expression of Nazi sympathies. Rather, it was just a good way to promote his business interests, von Finck contended. He claimed that networking also accounted for his bank’s growth during the Nazi era.
About forty Persilscheine had been submitted to the court, each attesting to von Finck’s apolitical, even anti-Nazi stance; they included several affidavits from former colleagues and clients who were Jewish. This defensive move had become all too common in denazification proceedings. But then von Finck’s trial took a series of strange turns. It was unusual enough that Herf had reduced the seriousness of the indictment against the banker. Then, allegedly incriminating correspondence, confiscated from the baron’s estate by US investigators, disappeared from the court dossier; the judges suddenly ordered the part of the trial that dealt with the Rothschild Aryanization to be handled behind closed doors, “for reasons of state security”; prosecution witnesses who had been summoned to testify against von Finck failed to appear in court or suddenly reversed the substance of their testimony before the judges.
A former confidant of von Finck later told Der Spiegel magazine that one potential prosecution witness, “who knew a lot and hated Finck,” was paid the staggering sum of 500,000 deutsch marks (about $120,000 at the time) not to appear in court. The bribe was said to have been paid without the knowledge of the frugal financier.
The subterfuge didn’t stop there. Julius Herf was gay — this was already an open secret. In the early 1930s, the nickname of the criminal prosecutor in Berlin’s underworld had been Schwule Jule, or “Gay Jules.” Just before von Finck’s trial commenced, someone showed up at Herf’s office and openly alluded to the lawyer’s sexual orientation; he also “betrayed knowledge of certain details of a very delicate nature, the disclosure of which would have been devastating for the prosecutor,” the erstwhile confidant of von Finck told Der Spiegel. “His conduct before the court must be considered in this light.” Homosexual acts were a criminal offense in Germany (and remained so until 1994), and much gossiped about. Rumors circulated about Herf’s and other prosecutors’ involvement with younger men, and no doubt von Finck’s henchmen were eager to exploit them.
In addition to lessening the charges against von Finck, Herf also announced, near the end of the trial, that he would no longer consider the Rothschild Aryanization in his closing arguments, claiming to believe the banker’s defense that he seized the company to protect its assets. Whereas Willy Dreyfus’s testimony was considered credible, another key prosecution witness, a half-Jewish Dreyfus director initially retained by Merck Finck after the Aryanization, was dismissed as an unreliable drunk by former colleagues.
On January 14, 1949, Munich’s denazification court ruled that von Finck was just a follower of the Nazis and ordered him to pay two thousand deutsch marks to a general restitution fund. The judges sided with the banker, accepting the claim that his role at the museum hadn’t been an expression of Nazi sympathies; it was solely for promotion of his own business interests. The court agreed that Dreyfus had suffered serious economic disadvantages as a result of the Nazi regime’s discriminatory laws but also held that von Finck wasn’t personally responsible for those laws, nor did he take advantage of the situation. The judges determined that in the Rothschild case, von Finck “behaved in such an exemplary manner that every word about it to the contrary is too much.” According to the court, the fifty-year-old financier had conducted himself as a “royal merchant” who actually put himself in considerable danger vis-à-vis the Nazi authorities in the transaction. The judges went so far as to call his “efforts” in the Rothschild matter “active resistance.”
Herf soon regretted giving in to blackmail. One month after the ruling, the prosecutor filed an appeal against von Finck. But again, the same visitor showed up at his office with the same veiled threats. A week after Herf filed the appeal, he withdrew it without explanation, in a terse one-sentence note to the Munich court.
As for von Finck, he wasn’t completely satisfied with the trial’s outcome and appealed his sentence. He applied for amnesty based on a World War I knee injury, to avoid paying any restitution. The amnesty was granted. Von Finck was “denazified” and returned to work.
Herf and Dreyfus weren’t so lucky. Soon after the trial, Herf was suspended as a public prosecutor on charges of homosexual “offenses,” after flirty letters he had written to younger men were leaked to the public. In 1951, according to Dreyfus, his own lawyer went behind his back and settled with von Finck for a fraction of the initial agreement. The baron had stalled the deal long enough for the balance of power to shift in his favor. Dreyfus then pursued a case against von Finck in American courts. His litigation proceeded all the way up to the Supreme Court, but in 1976 the Court refused to hear the case. Willy Dreyfus died the next year, at the age of ninety-one.