I remember reading that article too. As I recall, the Nazis sneakily planned on taking over the Japanese part of the American West after the takeover.
Major Strasser: Are you one of those people who cannot imagine the Germans in their beloved Paris?
Rick: It's not particularly my beloved Paris.
Heinz: Can you imagine us in London?
Rick: When you get there, ask me!
Captain Renault: Hmmh! Diplomatist!
Major Strasser: How about New York?
Rick: Well there are certain sections of New York, Major, that I wouldn't advise you to try to invade.