This story started with a Golbat TCG card (though accounts of an Alakazam card with a similar story also exists) that had what appeared to be a swastika in the background.  This immediately set off red flags with parents who became convinced that the show was promoting Nazism.

Is there a connection between Pocket Monsters and the Third Reich?  Or are parents, once again, overreacting?

The symbol seen on the card was indeed a swastika, but it's important to have a little history on the symbol before jumping to any conclusions.  The symbol presented in the Japanese card was the left-facing manji, used in most Buddhist nations to represent love and mercy.  The reason for the symbol's inclusion on the card is unknown, but it should be noted that this commonly used Buddhist symbol is not taboo in Asian countries since it's more strongly tied to Buddhism than it is to Nazism.

The image on the American version of the card, like the images on many of the TCG cards, was mirrored for release in America.  Flipping Japanese artwork was actually a common practice at the time; manga series that were released in the States, for example, also had their artwork flipped to make them more accessible to Western audiences.  Because of this mirror image, the left-facing manji became a right-facing swastika, which actually is strongly tied to Adolf Hitler.

While the inclusion of a Buddhist symbol on a children's trading card does seem odd and the fact that the mirrored swastika wasn't edited out before the card went to press in the United States is baffling, the idea that Pocket Monsters is somehow trying to promote Nazism is absurd.  If anything, this story is a sign of cultural misunderstandings that have, unfortunately, resulted in some bad publicity for the franchise.