The Battle For Berlin

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The dealmaking worked both ways. In the case of a big new Bundesrat office building on Schiffbauerdamm, another Wertheim property, Hertie assigned its rights to the government for just j700,000, a fraction of the estimated €20 million that the government would have had to pay at market prices. "Governments the world over give sweetheart deals," says Gary Osen, a U.S. lawyer whose suit in a New Jersey court on behalf of the Wertheim family helped to unearth some of these details. "What you don't see a lot of — and what makes this alarming — is that the government is writing checks."

If the government isn't talking, Osen and his client Barbara Principe are. She's a 70-year-old mother of seven children who grew up on a chicken farm in New Jersey, barely aware that her grandfather Franz Wertheim was co-owner of a German retail legend. In 1951 a German lawyer named Arthur Lindgens, a distant relative by marriage of the Wertheim family, bought out Principe's father's and uncle's share for the equivalent of about $5,100 at the time. That enabled Lindgens to get majority control of Wertheim, and he promptly sold it to Hertie. "My father was told there was nothing left. It was a total lie," Principe says.

It speaks volumes that the U.S. has not intervened — STUART E. EIZENSTAT, Former Deputy U.S. Treasury Secretary

The suit by Principe and her nephew is not directly related to the main battle over who owns the Berlin properties; it rather focuses on the alleged 1951 fraud. But Principe does stand to gain if the Jewish Claims Conference wins, as it usually gives a percentage of any settlement to surviving relatives. This sort of legal morass was exactly what the Germans hoped to avoid after reunification. The government deliberately decoupled unresolved ownership questions from use of the property itself, which enabled large swaths of eastern Germany to be developed even as title to the real estate remained contested. And in a move to protect German companies from U.S. lawsuits relating to the Nazi era, the government in 2000 made a deal with Washington that involved setting up a €5 billion fund to pay outstanding Holocaust-related slave-labor claims in exchange for legal immunity from restitution demands.

Indeed, the German ambassador in Washington, Wolfgang Ischinger, in January wrote to the New Jersey judge who is considering Principe's suit in the U.S., urging him to dismiss that case. It should, according to the ambassador, be subsumed by the 2000 agreement. Principe's lawyers filed an angry rebuttal, saying the ambassador's letter "inexcusably" failed to disclose the German government's own "substantial pecuniary interest" in the case. Behind the scenes, the German Foreign Ministry has been trying to convince the Bush Administration to intervene to dismiss the case, so far to no avail, according to letters to the U.S. State Department obtained by TIME. Significantly, Stuart E. Eizenstat, the former Deputy U.S. Treasury Secretary who negotiated the 2000 accord, believes it doesn't cover the Wertheim case. Eizenstat accepts the argument by Principe's lawyers that her family was defrauded after the war's end. "It speaks volumes that the U.S. government has not intervened," Eizenstat tells TIME.

Perhaps none of this would have emerged had it not been for 38-year-old German former law student Simone Ladwig-Winters. In the early 1990s, she started working on a doctoral thesis about the way the Wertheim empire was "Aryanized" by the Nazis. Among other things, she discovered that Hitler's lieutenant Hermann Göring in December 1937 personally ordered the firm's name to be changed, and all Jewish shareholders and employees to be ousted. Winters is now working with another writer on a historical novel about the family, and seems taken aback by the legal avalanche she helped to set off. Her research is being used by all the claimants and the courts. "When I started looking into this, people didn't seem very interested," she recalls. They are now.

The next legal steps are uncertain. Germany's supreme court is expected to settle once and for all the ownership question, although not for another couple of years at the earliest. The federal judge in the New Jersey case is expected to rule much sooner, probably in early fall, whether to admit Principe's suit. And it's possible that the government will try to restart the settlement talks that broke down last year. In the meantime, on the spot in Leipziger Platz where Berliners once flocked to buy their hats, silverware and sausage, the weeds continue to grow.