Ludwig made a practice of visiting docks in New York Harbor and along the New Jersey coast where, from his observations, he could report information to Germany on the identities of the ships and their cargoes.

[1] Letters of the highest priority were bound for Heinrich Himmler, who was assigned the alias "Manuel Alonzo"; Reinhard Heydrich, the head of the RSHA was "Lothar Frederick".

Subsequent letters from Joe K were intercepted, their contents read and recorded, and the envelopes carefully resealed so that their recipients would not detect any evidence of tampering.

(The censor working on the Joe K correspondence was Nadya Gardner who conducted chemical tests and found secret writing in some letters, according to historian H. Montgomery Hyde.

The New York Police had taken note of the seemingly uncaring action of Señor Lido's companion as reported by witnesses, and took a deeper look into the dead courier's background.

The BSC had informed the FBI that "Phil" had been Captain Ulrich von der Osten of the German Abwehr who had entered the United States via Japan a month prior to his "removal from circulation": he was supposed to direct the activities of a group of spies in the U.S. Based on this, the FBI was able to determine that "Señor Lido" and von der Osten were one and the same.

Piecing together a reference from "Phil's" notebook, an intercepted cable from Portugal to "Fouzie", and information from the Joe K letters themselves, the FBI was able to identify von Osten's companion as Ludwig himself.

On one occasion during May he took an extended trip to Florida, accompanied by Lucy Boehmler who acted as his "secretary" and courier who assisted him in preparing his reports and in maintaining detailed records of his observations by using a toothpick dipped in invisible ink.

Soon, the FBI was able to gather information on all who were connected with the Joe K spy ring, aside from Ludwig and Boehmler (ages given as of time of arrest and/or conviction): A ninth member of the ring, known only as "Robert," was tracked down by the FBI through papers obtained from a janitor in a building that housed the German Consulate; the janitor was in charge of the burn-bag detail and regularly put papers in the furnace while the Germans watched.

[7] When the Duquesne Ring was broken by the FBI in June, 1941, Ludwig and his associates decided to temporarily cease their activities in fear of being caught.

Ludwig himself retreated to a summer resort in Pennsylvania, and then drove west in an effort to escape, driving his car along country roads through the Midwest at speeds of up to 90 miles per hour (140 km/h).

When he arrived in Missoula, Montana, he stored his car, shipped his entire luggage except for the bare necessities to relatives in the East Coast, and continued his journey by bus.

Her quest for thrills already well dissipated, she also wanted to get back at Ludwig, who despite his promise to pay her $25 a week for her services more often than not withheld payment, allegedly because of her shoddy work abilities.

Because their spying was undertaken before the U.S. entered World War II, Ludwig, Borchardt, and Froehlich avoided possible execution and were each sentenced to 20 years in prison instead.