Although the Federal Bureau of Investigation came into existence, under that title, as part of the Department of Justice in 1935, it did not enter the counterespionage field until January 1938 when MI5 provided leads regarding Sergeant Gunther Rumrich, the FBI’s first case of Nazi espionage in the United States. A Sudetan German who had become a naturalized American citizen, Rumrich—a deserter from the U.S. Army who had absconded with the sergeants’ mess funds from Fort Missoula, Montana—confessed under interrogation that he had been recruited as a spy by Germany in May 1936 and ever since had communicated with his controller in Wilhelmshaven through a Mrs. Jessie Jordan in Scotland. In addition, he named the other members of his network, including two couriers working on the SS Europa and four other spies, among them an aircraft mechanic and a draftsman working for the Sikorsky plant at Farmingdale, New York.
This case was followed in 1940 by a lengthy investigation into the contacts of a reluctant Nazi spy, William Sebold, who led the FBI to a large network in New York headed by Fritz Duquesne. FBI director J. Edgar Hoover’s considerable success in breaking up Duquesne’s organization, which resulted in more than 30 convictions, mostly from guilty pleas, encouraged him to negotiate President Franklin D. Roosevelt’s consent to the establishment of a Special Intelligence Service to counter an Axis threat from Latin America.
The FBI was late to appreciate the scale of the threat of Soviet espionage and only learned of the true role of the NKVD rezident in New York, Vasili Zubilin, after he had been denounced in an anonymous letter mailed to the FBI in August 1943 by his deputy, Vasili Mironov. Having previously demonstrated considerable complacency in its assessment of the Soviet Union’s efforts to build a network in the United States and recruit agents, the FBI mounted a vast surveillance operation to link the Communist Party of the United States of America (CPUSA) membership to espionage directed from Moscow. Initially the evidence came from CPUSA defectors, including Louis Budenz and Elizabeth Bentley, but their testimony was to overlap with wiretap evidence, surveillance reports, and VENONA intercepts. Both of the FBI’s first major postwar Soviet espionage cases, those of Amerasia in 1945 and Judith Coplon in 1949, were compromised by legal constraints on the admissibility of wiretap evidence.
Following the establishment of the Central Intelligence Agency in 1947, several FBI Special Intelligence Service veterans moved to the new organization, and the FBI was left with an overseas network of legal attachés (legats) based at U.S. embassies. Although the agency with the lead role in counterespionage, the FBI deliberately avoided developing a cadre of dedicated counterintelligence personnel and instead moved staff around from law enforcement to national security duties.
The FBI has experienced hostile penetration. A spy recruited in the New York Field Office and handled in 1968 by the KGB’s Oleg Kalugin was identified after his retirement but never charged with a crime. In October 1984 Richard Miller, a special agent with 20 years’ experience in the elite Foreign Counterintelligence squad in California, was arrested and charged with selling classified information to the KGB.
A year later the FBI closed in on Randy Miles Jeffries, a former support employee who had worked for the Bureau between 1978 and 1980. Jeffries had been spotted entering the Soviet Military Office in Washington, D.C., in December 1985 and was quickly identified as a messenger employed by the Acme Reporting Company, the stenographic firm contracted to record and provide transcripts of the closed hearings of the House Armed Services Committee. He was approached at home by an FBI special agent posing as a Soviet intelligence officer, who obtained confirmation that the former addict with a conviction for possession of heroin had given the Soviets a sample of 60 pages of a classified transcript on the procurement of military nuclear systems. A further meeting was arranged in a hotel, where Jeffries was arrested. A search of his home revealed that he had removed material intended for destruction and had smuggled it out of the building with the intention of selling it to the Soviets for $5,000.
Jeffries admitted that, using the code name DANO, he had passed the Soviets transcripts concerning nuclear weapons, the vulnerabilities of U.S. computer and telephone systems, and information about the Trident submarine. In March 1986 he was sentenced to between three and nine years of imprisonment.
In October 1991 another former FBI employee, Douglas Tsou, went on trial, accused of having contacted the government of the Republic of China in 1986 and disclosed the identity of a People’s Republic of China (PRC) intelligence officer who had been recruited by the FBI. The unnamed PRC officer had approached the FBI in Taiwan, and Tsou passed this information on to a Taiwanese representative in Houston. Originally from Taiwan, Tsou had emigrated to the United States in 1949 and become a naturalized citizen 20 years later, going to work for the FBI in San Francisco in 1980. According to the prosecution, Tsou had passed huge quantities of classified information to Taiwanese contacts throughout the six years he had worked for the Bureau. Convicted on one count of espionage, Tsou was sentenced in January 1992 to a 10-year federal prison term.
In December 1996 Earl Edwin Pitts, a 43-year-old FBI special agent with 13 years’ experience, was arrested at the FBI’s training academy in Quantico, Virginia, and in June 1997 was sentenced to 27 years in prison. The prosecution conceded that all the material he had compromised had been below the level of Top Secret, so he did not have to face a life sentence.
The cases of Miller, Jeffries, Tsou, and Pitts all paled into insignificance when compared to the damage inflicted by Robert Hanssen, who was arrested in February 2001 and in July the same year sentenced to life imprisonment.
In April 2003 a recently retired FBI supervisory special agent, James J. Smith, was arrested in Los Angeles and charged with gross negligence, having allowed a known Chinese agent, Katrina Leung, whom he had been handling, to copy classified documents. However, the charges against Smith were dropped, and this had the effect of the compromising Leung’s prosecution, which was dismissed.
Clearly the Federal Bureau of Investigation has been vulnerable to hostile penetration by both the Russians and the Chinese, but in the post-9/11 political environment, the National Security Division’s priorities have been terrorist oriented, leaving the organization to fight a turf war in Washington, D.C., to retain a responsibility for counterintelligence and counterespionage operations.