Reinhard Heydrich's name is certain to come up tomorrow at the State Department when the US Office for Holocaust Issues hosts a session to review restitution proposals and grievances concerning unresolved Holocaust-era assets. The review is preparation for a diplomatic conference scheduled for late June in Prague, which has a special association with Heydrich. The chief of Reich security and chief executor of the "final solution to the Jewish question," Heydrich was appointed the Reichsprotektor of Bohemia and Moravia in 1941. "The hangman," as he was known, was ambushed by Czechoslovak saboteurs in May 1942 as he left his home outside Prague. Heydrich died of his wounds more than a week later. That fatal attack unleashed a deadly series of German reprisals against Czechoslovaks and Jews, including the liquidation of the village of Lidice. It is Heydrich's murderous role that makes the question of his home all the more galling in any discussion of Holocaust assets. The barbarian who hosted the Wannsee Conference that sealed the fate of European Jewry lived in a castle that had been confiscated from Ferdinand Bloch-Bauer, a wealthy Jewish industrialist. Long before the Nazis' rise to power, the castle, known as Panenske Brezany, had become Bloch-Bauer's summer home near Prague after he, like other Jews, moved from the edges of the Austro-Hungarian empire to its center, Vienna. There, Bloch-Bauer and his wife, Adele, were among the cultural elite, patrons of prominent artists such as Gustav Klimt. Unlike many others at the empire's heart, however, Bloch-Bauer remained a loyal Czech and retained his Czechoslovak citizenship. He also was a good friend of Tomas Masaryk, the first president of Czechoslovakia, and later assisted the Czechoslovak government in exile during World War II. "He was as fine a patriot as the Czechs could find," said Randol Schoenberg, the Los Angeles attorney who represents Maria Bloch-Bauer Altmann, Ferdinand's niece. Altmann, now 93, was a newlywed who escaped with her husband, Fritz, after he was released from Dachau. They built a life in Southern California. After the Anschluss, Ferdinand fled to Panenske Brezany. When the Nazis took the Sudetenland, he fled again, this time to Zurich, where he died in 1945. SIXTY YEARS after her flight, Maria Altmann began a seven-year legal battle for the Bloch-Bauer heirs to recover five Klimt paintings from Austria, including two iconic portraits of her aunt Adele, who died in 1925. Bloch-Bauer's heirs also recovered his home in Vienna and a dormant account in a Swiss bank. However, they have been unable to recover Panenske Brezany. After the war, the castle briefly was a Soviet garrison, then was nationalized by the Czechoslovak communist regime as "enemy property." "What better example of the need for restitution than the castle taken for the Nazi leaders of the so-called 'Protectorate'?" asked Schoenberg. However, Bloch-Bauer's heirs were not able to recover the castle because the post-communist restitution laws had citizenship requirements. This is one of the major problems of restitution in Central and Eastern Europe. Where laws exist, they often come with strict eligibility requirements for claimants. States would argue that their own citizens should benefit from the properties within their borders. They overlook the prewar owners, sometimes arguing that it would be unjust to favor Jews over non-Jews. But like the former East Germany, they must carve out exceptions in property laws for Nazi victims. They must take measures to acknowledge that Jews were targeted, persecuted, disenfranchised and impoverished. Jews were stripped of citizenship, deported or forced to flee. Or they were murdered. Others who managed to survive in new countries should not be penalized for lack of citizenship, particularly where new states, with new borders, have replaced old empires, often distorting the question of nationality within a single generation. This penalty for victims and heirs is sheer profiteering for Central and Eastern European governments and institutions that, in effect, are perpetuating the Nazi confiscations by stealing the property anew. IT HAS BEEN SAID that the Jews of Central and Eastern Europe were double victims: first of the Nazis, then of the communists. But it often appears that there is an additional class of victims - those residents of the post-communist regimes that make it virtually impossible for victims and heirs to recover their family properties. This is not limited to the Czech government, which sold Bloch-Bauer's castle soon after the collapse of communism. Comparable problems exist across Central and Eastern Europe and in the former Soviet Union, where there are flawed restitution laws - or none at all. It is American policy that there be restitution laws and these must be nondiscriminatory, that there should be no residence or citizenship impediments to recovering property. This is one of the issues that the Americans are expected to discuss at the Prague conference, where governments will report on their activities in the past decade to return real estate, Judaica and looted art to Nazi victims. It is hard to imagine what kind of carrot or stick the US can bring to the table. Perhaps, though, the State Department could make a profound and symbolic gesture: It could demand a change of venue for the Prague conference. Rather than meeting in an official convention center, diplomats should convene at a castle, the one at Panenske Brezany, with the ghosts of Ferdinand Bloch-Bauer and Reinhard Heydrich.