SMITH GAINS ACQUITTAL IN SPY CASE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00494R001100710108-9
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: July 26, 2010
• Sequence Number: 108
• Publication Date: April 12, 1986
• Content Type: OPEN SOURCE

Approved For Release 2010/07/26: CIA-RDP90-00494RO01100710108-9
VA-SHm=w POST
DATE: i am_P_
Smith Gains
Acquittal
In S Case
By Caryle Murphy
Waa3inq*ai Powt stilt writer
A federal jury in Alexandria found
former Army intelligence specialist
Richard Craig Smith not guilty last
night of violating espionage laws by
divulging the identities of six U.S.
double agents to the Soviets for
$11,000.
The U.S. District Court jury ren-
dered its verdict after deliberating
six hours, whereupon Smith's wife
Susan broke into tears and the de-
fendant hugged his two attorneys.
Smith said following the court
proceedings he had been "through a
2%-year ordeal I would not wish
anyone to go through. My faith in
this government's system has been
restored."
His principal attorney, A. Brent
Carruth, said: "I give a lot of thanks
to the 13th juror. God had to be
with us to win this one."
Assistant U.S. Attorney Joseph
Aronica, who prosecuted the case,
said "no comment" when asked
what he thought of the outcome.
Smith, a 42-year-old McLean
High: School graduate and father of
four who lives in Bellevue, Wash.,
acknowledged taking $11,000 from
a Soviet official in Tokyo but said he
did so only'on .the instructions of a
CIA agent as part of an operation to
infiltrate Soviet intelligence. He
said his CIA contacts had links to a
subsitary of a Hawaiian firm that
the CIA later acknowledged had
been used as a front for its agents.
In testimony Thursday, Smith de-
nied the government's assertion
that he sold the information be-
cause he had encountered financial
difficulties after leaving the Army's
Intelligence and Security Command
in 1980. Four months before meet-
ing with the Soviet official, Victor I.
Okunev, in 1982, Smith had de-
Glared bankrupt a video company he
owned in Utah.
Smith testified he was recruited
for a U.S. double-agent operation in
Tokyo by two men who said they
were from the CIA and gave him a
Honolulu telephone number as a
contact point. The number, which
turned out to belong to the now-de-
funct investment firm of Bishop,
Baldwin, Rewald, Dillingham and
Wong, was on a business card that
also bore the names Richard P.
Cavannaugh and CMI Investments
Inc., he testified.
Charles Richardson, a former CIA
agent, told the Alexandria jury this
week he had used Cavannaugh as an
alias and CMI Investments, a Bishop,
Baldwin subsidiary, as a front in his
CIA work. But he also testified that
he did not know Smith.
Richardson also acknowledged
that he had involuntarily resigned
from the CIA because of his supe-
riors' unhappiness over his financial
dealings in Bishop, Baldwin.
Defense attorney Carruth char-
acterized Richardson as a renegade
CIA officer and said he did not in-
form his CIA superiors of every-
thing he did, including his contacts
with Smith.
Smith testified that after he met
with Okunev, his CIA case officers
dropped out of sight, so he con-
tacted the FBI in an effort to find
out what happened to the operation.
Prosecutor Aronica contended
that Smith went to the FBI only
because he believed his contacts
with the Soviet official had' been
detected. The prosecution also ar-
gued that Smith concocted the sto-
ry involving Richardson only after
his arrest, when he read newspaper
stories about troubles that the Bish-
op, Baldwin firm was experiencing,
an assertion Smith denied.
The company was in the news af-
ter it collapsed in 1983, leaving in-
vestors with losses of more than $10
million. One of its directors, Ronald
R. Rewald, alleged in a lawsuit that it
had been a front for the CIA.
The CIA has acknowledged using
the firm's CMI subsidiary as a cover
for agents, but,denied any
involve- ment in the company's financial
dealings. Rewald has been con-
victed of 94 counts of perjury, fraud
and tax evasion and sentenced to 80
years in prison.
Several FBI agents testified that
during a series of interviews with
them over a 10-month period prior
to his arrest in April 1984, Smith
never told any of them that he was
working for the CIA. A CIA em-
ploye said the agency had no record
of the two men, Ken White and
Danny Ishida, who Smith said re-
cruited him in Tokyo.
The prosecution stressed Smith's
financial difficulties, including a
$2,000 American Express credit
bill, but Carruth, in his closing ar-
gument, pictured his client as a nian
unwittingly caught up in an unau-
thorized CIA operation run by a
renegade officer and "not a man
who sells his country [to payl
$2,000 American Express bills."
The five charges of which Smith
was acquitted were conspiracy, two
counts of transmitting the identities
of six double-agents and two of dis-
closing classified information. If
convicted, he could have been sen-
tenced to life in prison. Jurors con-
tacted last night would not com-
ment on their verdict.
The federal government has been
successful in most, but not all, re-
cent espionage prosecutions. A
hung jury caused a mistrial last No-
vember in the espionage trial of FBI
agent Richard W. Miller in Los An-
geles. In January 1984, a federal
judge in New York dismissed espi-
onage charges against a Bulgarian
trade official because he had diplo-
matic immunity.
During his work at the Army's
Intelligence and Security Command
from 1973 to 1980, Smith worked
as a case officer or alternate case
officer on 21 double-agent opera-
tions in which agents for the United
States pose as agents for other gov-
ernments, his ex-supervisor testi-
fied. Smith, who testified he had a
good imagination, said his main re-
sponsibility was developing cover
stories for the U.S. double agents.
Prosecutor Aronica, in summing
up the prosecution's case yester-
day, declared: "The idea that the
CIA would have [Smith] working as
a double agent and that another
agency of the same government
would bring him in here to prose-
cute him'is preposterous."
Approved For Release 2010/07/26: CIA-RDP90-00494RO01100710108-9