Born in Ohio in 1903 but brought up in Germany, Ludwig was an Abwehr officer who was arrested while on a mission in Austria in February 1938. He was released soon afterward, following the Anschluss, and in March 1940 arrived in the United States, where he established an extensive spy ring. The existence of Ludwig’s organization became known to the Federal Bureau of Investigation when his reports, written in secret ink concealed in ostensibly innocuous letters addressed to neutral countries, were detected by British censors in Bermuda.
The FBI eventually identified Ludwig as the reports’ author, “Joe K.,” from clues contained in the correspondence. He was placed under surveillance, thus leading to the compromise of other members of the network. These included his young secretary, who later gave evidence against him at his trial in March 1942 and received a reduced sentence of five years in prison. Ludwig was arrested in Seattle in August 1941, and eight others were charged with espionage, including a scientist, Paul Borchardt, and a soldier based at Governor’s Island, New York. Because his espionage had been conducted before Germany declared war on the United States, Ludwig received a prison sentence of 20 years and escaped the death penalty.