Cia Says Agent Spied For Russia Ex-Station Chief Is Highest Agency Official To Be Charged With Espionage

Federal investigators say that using a hidden video camera, they witnessed CIA training officer Harold J. Nicholson crouch beneath his desk at CIA headquarters last week and photograph top-secret U.S. files on Russia.

Officials said the FBI arrested Nicholson on Saturday as he prepared to fly from Washington to Switzerland to rendezvous with Russian agents who had paid him more than $120,000 over 2-1/2 years for U.S. national security secrets.

In a case as embarrassing, if not as damaging, to the U.S. intelligence community as the betrayal of former CIA agent Aldrich Ames, Nicholson became on Monday the highest-ranking CIA official to face charges of spying against the United States.

After 16 years with the CIA, Nicholson, the agency’s former station chief in Romania, stood silently in rumpled clothing as a U.S. District Court judge here ordered him held without bail on espionage charges punishable by life in prison without parole.

“There is no greater betrayal of our nation,” FBI Director Louis J. Freeh said of the allegations against Nicholson after his court appearance.

Both Freeh and CIA Director John Deutch expressed “grave concern” in a joint news conference that Nicholson had provided Russia with information that “could irreparably damage the national security of the United States.”

Investigators said they believe Nicholson sold Russian agents the names of CIA officers in Moscow and their informants as well as the identities of all new CIA agent trainees the past two years.

However, Deutch said a preliminary review indicates the damage would be far less severe than the tragedy that Ames caused.

Ames, a former CIA counterintelligence officer arrested for spying in 1994, is serving a life sentence for selling the former Soviet Union secrets that led to the murders of 10 Western agents and compromised dozens of covert operations.

When he was arrested on Saturday, Nicholson was a branch chief in the CIA’s Counterterrorism Center, where he outranked Ames.

“Thus far, we have no information that any CIA or FBI assets were killed as a result of Nicholson’s spying,” Deutch said.

Freeh said the Nicholson case underscores that Russia, despite the end of the Cold War and the government’s strained budget, continues to spy intensely on the United States.

“We’ve seen no reduction in the efforts of” the Russian intelligence service “to penetrate the security services and the national security of the United States,” Freeh said.

Despite the potential damage of the Nicholson case, Deutch and Freeh hailed his arrest as evidence that reforms enacted after Ames’s arrest in 1994 would help authorities better ferret out traitors in the U.S. intelligence community.

“The story here,” Deutch said, “is that we have a successful, post-Ames counterintelligence effort which is in a position to defend the country from any foreign intelligence service that targets our national-security apparatus.”

The major reforms included making a senior FBI official chief of the CIA’s counterespionage group and giving him broad access to CIA data. Authorities said the FBI and CIA chronically failed to cooperate with each other before the Ames disaster.

Nicholson’s arrest at Dulles International Airport followed a 13-month inquiry that began, authorities indicated, when he failed a routine lie detector test for CIA employees.

The trail led investigators from CIA headquarters in McLean, Va., to Nicholson’s townhouse - routinely adorned with a U.S. flag in the Washington suburb of Burke, Va. - to the streets of Singapore, Malaysia and Thailand.

In Singapore, FBI agents tracked Nicholson from the shadows as he slipped away from the swank Garden Wing of the Shangri-La Hotel in June to sell U.S. intelligence to Russian agents for an estimated $22,000, according to federal officials.

In Kuala Lumpur, Malaysia, where Nicholson served as deputy station chief from 1992 to 1994, authorities determined that Russian operatives enriched him by more than $63,000 during two secret meetings in 1994 and 1995.

A trip to Thailand in 1995 allegedly netted Nicholson about $27,000 from Russian agents.

Helen Fahey, the U.S. attorney for eastern Virginia, said Nicholson, who earned $73,000 a year training CIA officers in counterterrorism before his arrest, “betrayed his country for money.”

“He was not motivated by ideology,” she said, “but by greed.”

Unlike Ames, who lived lavishly in a fine home with a red Jaguar in the driveway, Nicholson showed no visible signs of having susbtantial outside income. A divorced father of three children, he lived in a modest townhouse, drove a 1994 Chevrolet minivan and steadily had climbed the career ladder without attracting any attention until the lie detector test in 1995.

But investigators said they soon discovered that Nicholson, who informed the CIA last summer that he planned to marry a woman living in Thailand, was funneling money into his credit union, credit card accounts and investment funds from no apparent legitimate source.

After visiting Kuala Lumpur in 1994, for example, Nicholson, an Oregon native, arrived at his credit union in Eugene with 130 $100 bills to pay off a $3,000 car loan and pay $10,000 toward his credit card account, according to court records.

Nicholson also gave his son $12,000 to buy a new car, the documents allege.

Authorities said Nicholson communicated with his Russian handlers through the mail, sending them cryptic messages on greeting cards under the alias “Nevil R. Strachey.”

In August, FBI agents said, they saw Nicholson mail a card that they believe was intended to advise the Russians that he would travel to Switzerland this week, a month earlier than they had anticipated.

“Hello old friend,” the card read. “I hope it is possible that you will be my guest for a ski holiday this year on 23-24 November. A bit early but it would fit my schedule nicely. I am fine and all is well. Hope you are the same and can accept my invitation. P.S. The snow should be fine by then.”

FBI officials also recovered classified information from Nicholson’s laptop computer, observed him photocopying secret documents and found classified data about Russia in his office that was unrelated to his CIA duties.

From 1994 until July, Nicholson was an instructor at the CIA training center in Virginia known as the “farm,” where he trained agents in skills like recruiting foreigners to spy for the United States and avoiding spy-catchers. He became a branch chief in the counterterrorism unit in July.

Nicholson had access to some of the most sensitive U.S. intelligence secrets, including reports from “access agents,” foreign recruits who spy for the CIA often at great risk. As a staff instructor at the “farm,” he had access to biographical information and the assignments of every new CIA officer trained there during his tenure, the CIA and FBI said.

Authorities said Nicholson has refused to speak with investigators since his arrest.

Nicholson, bearded and standing straight, listened in court as Assistant U.S. Attorney Robert Chestnut described him as “a danger to the community” and indicated that he would ask that at a hearing later this week that Nicholson be held without bail. Chestnut said he would seek an indictment against Nicholson from a grand jury within the next month.

MEMO: Cut in the Spokane edition

This sidebar appeared with the story: HISTORIC COOPERATION The FBI and the CIA have a history of bureaucratic battles over counterespionage operations. Reflecting his stated conficence that the Nicholson case was a model of continuing FBI-CIA cooperation, CIA Director John Deutch could joke at his joint news conference with Louis Freeh about the agencies’ past conflicts. “The last time I think that a director of Central Intelligence and a director of the FBI were seen together on film was when J. Edgar Hoover came to Allen Dulles’ funeral,” Deutch said, harking back to the 1969 ceremony after the death of one of the CIA’s early leaders.