Authors: Ronald Kessler
Under the CIA’s charter, the agency may not exercise law enforcement or police powers or undertake internal security functions. But that does not mean it cannot operate within the United States. Obviously, in order to operate at all, the CIA must have a headquarters in the U.S. and train people in the U.S. The CIA’s charter does not specifically say the CIA may not gather intelligence in the U.S. Rather, the history
of the legislation makes it clear the CIA may gather intelligence within the United States so long as the target is foreign.
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That understanding was codified by Executive Order 12333, which President Reagan signed on December 4, 1981. It says the CIA may operate domestically in order to collect “significant” foreign intelligence, so long as the effort does not involve spying on the domestic activities of Americans.
The CIA’s internal regulations—most of them classified—make this clearer. They say that if a CIA officer intends to recruit a U.S. citizen or enlist the cooperation of a U.S. firm, he must identify himself as being with the CIA.
For years, through what used to be called the Foreign Resources Division within the Directorate of Operations, the CIA has operated within the U.S. by recruiting foreigners visiting in the U.S.—diplomats of other countries, for example, or visiting scientists. The greatest percentage of these recruits who become agents or spies for the CIA are military personnel being trained in the U.S. When they return home, these agents continue to work for the CIA. As a side benefit, they may also report on foreign targets of interest—for example, what is happening within the Chinese Communist embassy in Washington—while they are stationed in the U.S.
The very existence of the Foreign Resources Division—now called a branch within a new Domestic Resources Division—is a closely guarded secret. Usually, the only references in the press to domestic operations of the CIA are to what was previously called the National Collection Division, now a branch within the Domestic Resources Division. Also located within the Directorate of Operations, this component operates overtly, asking Americans who travel overseas to report on what they see once they return. During the war in the Gulf, the domestic collection office obtained plans for Iraqi targets from American and other businessmen who had helped build them.
The two components—the National Collection Branch and the Foreign Resources Branch—maintain separate offices in major cities throughout the country. The offices operate under commercial cover. That means the offices purport to be private
companies. For example, in the 1980s, the Foreign Resources office for the Washington area was identified only as a consulting firm in the Air Rights Building at 7101 Wisconsin Avenue in Bethesda, Maryland. Here, in a building sheathed with brown-tinted glass, the station chief, deputy station chief, and a communicator maintained their offices. In addition, three other nearby offices, also operating as national companies, targeted people from the Soviet bloc, East Asia, and the Third World. A lawyer was recruited to act as a front man for the companies.
Each CIA officer in the Washington office had three aliases used in conducting his work—one as a businessman, one as an ordinary government employee, and one as a CIA official. Meetings were never conducted at the office. Rather, the CIA officers arranged to meet contacts at lunch or in other social settings.
Besides the one in Washington, the CIA maintains FR stations—formerly known as bases—in such cities as Boston, New York, Chicago, St. Louis, Houston, Miami, San Francisco, Los Angeles, and Seattle. The two biggest stations are in Washington, which has some thirty officers, and New York, which has nearly forty.
The Domestic Resources Branch has more offices and a larger staff. Even though it operates under commercial cover, its activities are more open. Identifying themselves as CIA officers, its staff members ask American businessmen and university professors for information they pick up on their travels.
By contrast, the Foreign Resources Branch recruits foreigners to become agents or spies. In deciding which foreigners to recruit, each station has a wish list. The list ranks the importance of each target country, from one to five. Traditionally, the Soviets have been number one and still are within FR. But with the end of the Cold War, the Chinese, Japanese, and Cubans were given higher priority in many overseas locations.
In recruiting people, the CIA officers in the FR office go to receptions and parties where foreign diplomats may show up. They strike up conversations with them and try to gauge
their susceptibility. Pretending to be employees of private companies, they invite them to lunch or dinner. Eventually, they make a pitch, offering a steady income if they agree to spy for the U.S. The amount varies with the country and the status of the individual being recruited. Typically, it is a few hundred dollars a month. Money is seldom a motivating factor with Soviets or Communist Chinese. Rather, they agree to spy for ideological reasons or disagreements with their bosses.
Each year, FR recruits two hundred to three hundred people as CIA agents or spies. Over the years, FR has recruited Czech, Hungarian, Polish, and other Soviet-bloc diplomats as spies.
During the early 1980s, roughly half of those recruited accepted money and training and then vanished once they returned home. Yet case officers and station chiefs still received credit for the recruitments.
“What was happening,” a former operations officer said, “was FR officers would recruit these guys, they would go back, and the local station couldn’t find them. They would arrange to meet on the third Thursday of the month, and they wouldn’t show. Or they would show up and wouldn’t be cooperative.”
To improve performance, the CIA put a new system into effect. No one would get credit for a recruitment until the agent had produced useful intelligence or had cooperated over a period of time.
If the fact that the CIA recruits spies in the U.S. sounds surprising, the idea of the CIA teaming up with the FBI to do so, given the historic relationship between the two agencies, is even more astonishing. Under the long reign of FBI director J. Edgar Hoover, the FBI and the CIA were frequently at loggerheads. At one point, Hoover actually forbade FBI agents to communicate with the agency, forcing them to meet with CIA officers clandestinely.
That changed dramatically when William H. Webster became FBI director, succeeding Clarence M. Kelley. In 1980, the CIA and the FBI created a secret joint operation to recruit Soviet spies in Washington—a move that would have been unthinkable under Hoover. The operation, in the form of a squad within the FBI’s Washington metropolitan field office,
was the idea of George Kalaris, who had been chief of the CIA’s counterintelligence staff, and James Nolan, the FBI’s deputy assistant director in the counterintelligence division. In part, it represented an effort to overcome the historical enmity between the two agencies.
Normally, the CIA recruits agents in the U.S. so they can spy overseas. It is the FBI that is charged, as part of its counterintelligence program, with developing agents to engage in counterspying within the U.S. But Nolan and Kalaris, who had become friends in the course of work, decided it made sense to pool the knowledge and resources of the FBI and the CIA to recruit Soviets to work for the intelligence agencies while still stationed on American soil.
Code-named COURTSHIP the joint operation is designated squad CI-11 within the FBI’s Washington metropolitan field office. Besides secretaries and an administrative officer, the squad consists of nine professional employees—five FBI agents and four CIA officers. The squad is headed by an FBI agent whose deputy is a CIA officer. Each of the CIA officers and FBI agents assigned to the squad has three different covers. They could pose as employees of another government agency, as employees of a private company, or as FBI or CIA officers—under aliases. To back up their cover stories, they have VISA cards, social security numbers, and driver’s licenses, all in false names. The credit limit on the VISA cards was only $1,000 until FR objected, and the limit was raised to $2,000.
Until recently, the squad was based in the Loisdale Court building behind the Hilton Inn off exit 57 on Interstate Route 95 in Springfield, Virginia. In contrast to the spartan appearance of the building and its lobby, COURTSHIP’s suite was lavishly furnished with Oriental rugs and screens confiscated during raids. A receptionist sat behind a glass window inside a reception area. Only the members of the squad could enter the inner offices. At the time COURTSHIP was recruiting a KGB officer in the Soviet embassy in Washington, it was operating out of the Springfield office building, behind the sign of a consulting firm.
As its name implies, the purpose of the squad is to court
Soviet spies—either officers of the KGB or the GRU, the Soviet military intelligence organization. Normally, when a Soviet is assigned to work in Soviet establishments in the United States for the first time, one of the FBI’s counterintelligence squads is assigned to watch him. For a year, the FBI studies his activities to determine if he is an intelligence officer. If the FBI decides he is, the FBI assigns him to an appropriate counterintelligence squad for further observation and possible recruitment. Each of the twenty squads specializes in a particular intelligence service and division within that service. Even if the FBI decides he is not a spy, he is still assigned to a squad for observation.
Under the rules established by the FBI and CIA, the COURTSHIP squad has first choice in picking the intelligence officers that appear most susceptible to recruitment. Once an intelligence officer is recruited by COURTSHIP, he is reassigned to the appropriate FBI squad based on his KGB or GRU affiliation.
In determining which KGB officers would most likely agree to spy for the U.S., the COURTSHIP squad consults with psychologists from the CIA and the FBI and reviews all the available information about him. Each officer looks for different signs of receptivity. Some are interested in Soviets who have never been outside the Soviet Union before, who dress well, and who seem to be interested in American society. Others swear these qualities bear no relation to whether a Soviet will agree to be recruited. As a rule, the squad targets only one Soviet at a time. If the recruitment effort fails, they assign the Soviet to the appropriate FBI squad and target another individual.
The squad never uses outright blackmail or other forms of coercion. It is an article of faith within the U.S. intelligence community that blackmail never works. The CIA once spent months trying, to no avail, to recruit a KGB officer in Southeast Asia who was believed to be a homosexual. However, a vulnerability such as cheating on an expense account or becoming involved in repeated car accidents with an embassy vehicle may be used to coax a prospective agent into cooperating.
Money is one way to recruit an agent. It also contributes to compromising agents in case they later have second thoughts about cooperating. But even large sums do not work if a prospective agent does not already have misgivings or complaints about his situation.
Just before he was to be sent home in 1982 after a lengthy tour in the United States, the FBI sought to recruit Dmitri I. Yakushkin, the KGB resident or station chief in Washington. For the purpose, the FBI had been authorized to offer $20 million—a reasonable figure when one considers that Yakushkin could have revealed almost every detail of the KGB’s operations against the U.S.
Shortly before Yakushkin was to leave for Moscow, two FBI agents approached him when he and his wife, Irina, were shopping at the Safeway on Wisconsin Avenue in Washington’s Georgetown section. As Irina went off in another direction and Yakushkin was fondling the oranges, an FBI agent approached him.
“I am a special agent of the FBI, and I wondered if I could have an opportunity to talk to you,” the FBI man said. He asked Yakushkin if he would agree to meet with the special agent in charge of the Washington field office.
“What is your name?” the KGB man asked.
The agent gave a false name.
“May I see your ID to prove you are an FBI agent?”
Sheepishly, the agent showed it to Yakushkin. The KGB officer saw that the FBI agent had given a phony name.
“I’m sorry; I kind of made that up,” the agent said.
“Yeah, I know how it is.”
“Would there be a way to arrange an appointment for our SAC [special agent in charge] to speak to you?” the agent persisted.
“Sure, have him come by the embassy anytime,” Yakushkin said, smiling.
“Well, actually, I was hoping for a less formal environment, if that would be okay.”
“I don’t really think I’d be interested in that.”
It was clear the conversation was going nowhere, so the agent decided to take a chance and make the offer on the
spot. He offered Yakushkin $20 million to work for the U.S.
“Young man, I appreciate the offer,” Yakushkin said. “If I were twenty years younger, I’d give it serious consideration.
“It was nice meeting you,” the KGB officer said, then adjusted his beret and walked off toward the meat section to find his wife.
It was a CIA officer assigned to the Foreign Resources Branch who first spotted the KGB officer later recruited by COURTSHIP in late 1982. The man was attending a professional conference in Washington. To the CIA officer, he seemed susceptible to recruitment. The CIA officer had a hunch that the man was more interested in American life than other KGB officers. For one thing, he spoke English better than others. He was also more eager to please the Americans he met than other Soviets. All reports of contacts by FR officers are seen by COURTSHIP, which decided to single him out for recruitment.
Pretending to be a private consultant, a member of the COURTSHIP squad befriended the KGB officer, taking him to dinner and letting him know that he had access to military secrets. Once satisfied that the man would likely agree to work for the American side, the COURTSHIP officer revealed his true affiliation. For a number of years, squad members met with the KGB officer at least once a week.
The meetings with the KGB officer were alternately held in two safe houses, both apartments in the Washington area. To give the KGB officer an alibi for taking time away from his regular duties, the squad passed him information obtained from a man who was in the defense consulting business. Acting as a double agent, the man pretended to work for the Soviets but really was working for COURTSHIP. Occasionally, the squad members let the KGB officer meet with the man himself. Anything the man told the KGB officer or the Soviets was cleared by the U.S. government first.