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The Full-Employment Act For Spies

July 9, 1990

By CHIP JACOBS
Staff Reporter

In the six years since Richard Miller waddled into espionage fame by trading FBI secrets for a trench coat, $65,000 and the sexual favors of a KGB agent, U.S.-Soviet relations got downright friendly.

But not friendly enough to put spying out of business, even in Los Angeles where the world of espionage mingles oddly with smog, traffic, and celebrity¬†gliterrati. Experts say it is a golden irony of glasnost that as the Cold War is swept away in Europe, spying has heated up — especially in the Southland where liberal Hollywood producers have portrayed communism as a romantic alternative to the capitalism.

“It’s not a question if the KGB is in Southern California, it’s a question of how many are there,” asserted former CIA officer George Carver. It doesn’t take a Kremlinologist to figure out why.

For decades, the Pentagon has directed billions of dollars in defense contracts to the likes of Lockheed, Northrop, Rockwell and Hughes, all based in Los Angeles. The result, in the words of Los Angeles FBI Chief Lawrence Lawler, is that “Southern California is the most target-rich area in terms of technology in the U.S. The Soviets know that well.”

Indeed, much of America’s military arsenal was designed or built in Los Angeles — from nuclear-tipped missiles and eavesdropping satellites, to battle-ready jets and Star Wars gear. Encircling that sprawling weapons assembly line are a host of military bases like the Long Beach Naval Shipyard, Riverside’s March Air Force Base and the Air Force’s Special Project’s Office in El Segundo. Even the Rand Corp., the think tank that has honed some of America’s greatest defense minds, sits unobtrusively under the palm trees in Santa Monica.

That has made Southern California a juicy target for Soviet espionage, even more so today as the funds for Moscow’s military arsenal shrink under perostroika.

“There are a lot of Russians who have come over here since things have gotten better [between the two countries],” said Zola Zlobinski, an emigre from Kiev who has been in America since 1976. “Most of them just want a better life, but some of them look suspicious and ask a lot of questions like the KGB does.”

Zlobinski has reason to be dubious. Her father convinced KGB agent Svetlana Ogorodnikov $10,000 to deliver to his brother in Russia before the spy case erupted. But Ogorodnikov, the woman who seduced Miller, never carried out her end of the bargain. “My mother almost got into a fight with her because of that,” Zola said.

The Miller spy scandal proved typical East-West hubs of espionage — Moscow, Washington, Berlin and Vienna — don’t have a monopoly on spies. And Hollywood’s idea that KGB and CIA agents only snoop around in the cold with trench coats on, like the $675 Burberry number Svetlana gave her FBI lover, was laughable.

So was the Miller case, to a point.

Likened to an overweight Inspector Clouseau of `Pink Panther” fame, Miller became the first FBI agent ever charged with espionage, though he claimed he was only trying to revive his sagging career by infiltrating the KGB. His first trial ended in a mistrial in 1985, but he was convicted during the second trial for giving Ogorodnikov a secret FBI manual on U.S. espionage goals.

Miller, now 52, appealed his conviction and begins a third trial next month.

The first two trials shocked Angelenos more accustomed to hearing about movie-star gossip or the newest kind of frozen yogurt than stories fit for a John Le Carre thriller. Revelations about secret dinners in Mischa’s Russian restaurant and meetings between KGB agents and undercover FBI agents from Los Angeles International Airport to Marina del Rey titillated the city.

But, intelligence experts note, the Miller case was sensationalized by the press, and cloaked a more sophisticated KGB penetration of Los Angeles.

The Soviets, say the FBI, launch West Coast espionage operations from two primary spots: their consulate in San Francisco and their embassy in Mexico City. The KGB has been buoyed by its success in California’s high-tech haven, Silicon Valley, which Carver says the KGB wants to make into “an extension of the “Soviet industrial base.”

Fifteen years ago Andrew Daulton Lee and his friend Christopher Boyce, an employee at TRW’s El Segundo facility, were convicted of selling a top-secret satellite manual to the Soviets, enabling Moscow to learn of U.S. intelligence gathering and missile-tracking methods. That case later became the inspiration for the movie “The Falcon and the Snowman.”

Hughes Aircraft Co. also had a run-in with espionage in 1981. Hughes employee William Holden Bell was recruited by a Polish intelligence officer, acting as a proxy for the KGB, and traded data on secret radar systems, air-to-air missiles, and NATO defense secrets for the bargain-basement price of $110,000.

And Northrop, which probably fears congressional budget cutters as much as the KGB, had one of its employees caught in an FBI sting for trying to sell sensitive stealth technology.

(Even John Walker Jr., who gave the KGB a wealth of material on cruise missiles, U.S. war plans and even the codes for launching nuclear missiles, was stationed for a time in San Diego.)

The FBI and CIA, which maintains a “field office” in West Los Angeles, is now concerned that the thousands of unemployed defense workers will give the Soviets more than maps of the city’s freeway system. It’s a quandary: The same global changes that have accelerated prospects for world peace have spurred espionage opportunities between former adversaries.

“The biggest problem is all the openness that comes from peace breaking out,” the FBI’s Lawler said. “One might say `We are all friends and don’t worry about spying,’ when in fact additional information allows them to spy even more. Added to that are the defense layoffs here. The Soviets could try to get to a disgruntled employee or somebody that needs money. Rosey the Riveter won’t give away defense secrets, but an unemployed corporate vice president could.”

That prospect has defense contractors on their toes.

“In Southern California, we have seen the Soviets use three espionage methods,” explained the FBI’s Lawler. “They collect information from trade shows and conventions and peruse annual reports and brochures. Sometimes they’ll wait for a greedy American to contact them, like the did with Boyce and Bell, or they’ll study organization charts and look for people with weakenesses or financial troubles. They also try to establish contact in Russian communities, like the kind we have here.”

Southland aerospace contractors, who helped create Southern California’s economic boom of the 1980s thanks to its favorite son, Ronald Reagan, are on the defensive.

At Hughes Aircraft Co., where radars for the F-18 and F-14 were built and the Maverick and Phoenix conventional missiles are made, security is being stepped up. A special video tells workers how the KGB and other “hostile intelligence agencies” work, even now.

“The whole defense industry is of a common mindset: intelligence activity has not decreased, it’s increased,” exclaimed Hughes Vice President of Security George Best, a former FBI agent. “They [the Soviets] still want NATO defense plans but they are also after western industrial technology that might allow them to leapfrog others — commercial satellites, fiber optics, advanced computers. We go to great lengths to thwart the KGB because it’s become so much easier for them to move from East to West.”

While the KGB no doubt knows Los Angeles as well as many native Southlanders, many are concerned that America’s allies are the spies of the future.

Japan, whose aggressive businessmen have bought up large chunks of prime Los Angeles real estate, may soon compete with the Soviets, Germans and British for the industrial parts and economic secrets that some hope will make Los Angeles the gateway to the Pacific.

Just two weeks ago, U.S. Customs Agents arrested a Los Angeles engineer for trying to sell four Japanese companies Star Wars computer software.

Is Atlantic Richfield or Pacific Enterprises or MGM/UA the next target instead of Northrop’s B-2 plant in Pico Rivera. Some say yes.

“In the future you’ll see more industrial spying between the United States and its allies as we move move away from the Cold War,” said USC assistant professor of international relations Alex Hybel. “That’s not to say the KGB isn’t still working in Los Angeles. Even a friend, like the Soviets now seem to be now, can always turn out to be a bad enemy again.”

copyright Los Angeles Business Journal