FORMER ARMY AGENT'S SPYING TRIAL OPENS IN ALEXANDRIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00552R000605480002-8
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: June 30, 2011
• Sequence Number: 2
• Publication Date: April 8, 1986
• Content Type: OPEN SOURCE

Sanitized Copy Approved for Release 2011/06/30 :CIA-RDP90-005528000605480002-8
AA'TIC1E AF
FIM PK,'~
Former Army agents spyu-g treat
opens in Alexandria
By Pam McClintock
rHE WASM~NGTON TIMES
The government yesterday
opened its espionage case against
Craig Smith, the former Army coun-
tetintelligenceagent accused ofsell-
ingsecret information to the Soviets
in Tokyo after setting up a series of
clandestine meetings with a KGB of-
ficer.
The government contended in
opening arguments that Mr. Smith
sold classified information on six
U.S. double-agent operations in No-
vember 1982 and February 1983,
while Mr. Smith alleges that he was
working for the Central Intelligence
Agency.
Before a crowded courtroom in
federal court in Alexandria, Assis-
tant U.S. Attorney Joseph Aronica
said that it was a "straight trade -
money for information. Those were
his words:'
Mr. Aronica said the government's
case rested on conflicting
statements made by Mr. Smith to
FBI agents before his arrest on April
4, 1984, at Washington Dulles Inter-
national Airport.
Mr Smith, who worked with the
Army's Intelligence and Security
Command from 1973 to 1980, is
accused of receiving $11,000 in ex-
change for giving the classified in-
formation to KGB officer Victor I.
Okunev during several meetings at
the Soviet commercial compound in
Tokyo.
Mr. Okunev was then working as
a first secretary at the Soviet Em-
bassy.
After contacting the Soviet com-
mercial compound in October 1982,
Mr. Smith met with Mr. Okunev, who
gave him procedures to follow for
subsequent meetings, Mr. Aronica
said.
The procedures included having
)VIr. Smith paged at a Tokyo hotel un-
der the names "Hemingway" and
"Shakespeare;' Mr. Aronica said. Mr.
Smith also was instructed that if he
wanted to meet with Mr. Okunev, he
was to call a number and let it ring
three times before going to a des-
ignated cafe the next day.
A. Brent Carruth, an attorney for
Mr. Smith, told the jury yesterday
that Mr. Smith had been approached
by two men claiming to be CIA
agents, Ken White and Danny I-
shida. The men allegedly told Mr.
Smith they were attempting to infil-
trate Soviet intelligence in Japan.
The two men instructed Mr. Smith
to set up meetings and turn over the
information in an attempt to bait Mr.
Okunev, Mr. Carruth said.
Mr. Carruth said he would intro-
duce evidence showing that Mr.
Okunev is the third highest KGB of-
ficer.
"Is this man [Mr. Smith] a spy?
Yes. For the United States of
America;' said Mr. Carruth.
"It is kind of like the picture of the
Mona Lisa. We all know she is smil-
ing, but why? That is what this case
is all about -the whys," he said.
Mr. Carruth said that Mr. Smith, a
direct descendant of the founder of
the Mormon Church, was "left out to
dry" by the CIA after he could no
longer reach his contacts by ringing
a number in the Hawaiian firm of
Bishop, Baldwin, Rewald, Dilling-
ham & Wong, which collapsed in
1983.
Ronald R. Rewald, one of the di-
rectors of the firm, has alleged in a
lawsuit that the firm was a front for
the CIA. The CIA has acknowleged
using one of the firm's subsidiaries,
CMI Investment Corp., as a cover for
agents.
Mr. Smith alleges that a card
given to him by the two men identify-
ing themselves as CIA agents had
CMI Investment Corp. and the name
of Richard P. Cavannaugh, a CIA
agent, printed on it.
But Mr. Aronica said that Mr.
Smith was less than candid with FB I
agents who interviewed him after he
contacted an agent in San Francisco
in June 1983.
"He tried to con the agents into
believing that he hadn't sold out to
the Soviets," said Mr. Aronica.
Mr. Aronica stated that Mr. Smith
was facing financial ruin when he
approached the Soviets and that a
coirtpany he had founded filed for
bankruptcy four months before he
traveled to Tokyo.
In February 1984, Mr. Smi[h alleg-
edly admitted to turning over the
classified information, Mr. Aronica
said.
J. Peter Chase, an FBI agent in
Salt Lake City, testified yesterday
that when he interviewed Mr. Smith
in June 1983, Mr. Smith said that he
had ,approached the Soviets about
doing business with his company,
Business Consultants International.
The now-defunct business, fi-
nanced by two prominent men from
Utah, one of whom was Lt.Gov Da-
vid Monson, dealt in high-
technology robotics equipment. Mr.
Monson, a Republican, is now a
member of Congress.
Mr. Chase said that Mr. Smith told
him the Soviets gave him $5,000 in
November and $6,000 in February as
a token of "sincerity."
Mr Chase and another FBI agent,
Rick Smith, who was present at the
interview with the defendant, testi-
fiedthat they didn't believe the Sovi-
ets would hand out $11,000 for noth-
ing.
Sanitized Copy Approved for Release 2011/06/30 :CIA-RDP90-005528000605480002-8