EX-ARMY MAN'S SPY TRIAL SET AFTER TWO-YEAR DELAY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00552R000605480003-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: June 30, 2011
• Sequence Number: 3
• Publication Date: April 6, 1986
• Content Type: OPEN SOURCE

Sanitized Copy Approved for Release 2011/06/30 :CIA-RDP90-005528000605480003-7
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WASHINGTON POST
6 April 1986
EY-army 1VIan's Spy Trial
Set _~fter Two-year Delay
C!S. C7aims Double .-gent Information Sold
By Caryle Murphy
Washington Post Sta((Wnter
Richard Craig Smith, a former
Army counterintelligence specialist
accused of giving a Soviet KGB of-
ficer the identity of six U.S. double
agents for $11,000, goes on trial
tomorrow in Alexandria after atwo-
year court fight over his efforts to
use classified information in his de-
fense.
Smith's arrest at Dulles Interna-
tional Airport in April 1984 and his
subsequent claim that he contacted
the Soviet official at the behest of
the Central Intelligence Agency
disclosed allegations of what at the
time seemed to be a rare and seri-
ous case of espionage.
Since then the case against
Smith, a 42-year-old Mormon from
Bellevue, Wash., has been over-
shadowed by a wave of espionage
cases in which 25 people have been
charged with spying.
Smith, a McLean High School
graduate and father of four, is
charged with conspiracy, with
transmitting the identities of six
double agent operations and with
disclosing classified information-
all charges he denies.
If convicted, he could be sen-
tenced to life in prison.
At issue during Smith's trial, ex-
pected to last at least a week, will
be conflicting explanations for
events both sides agree took place:
that in 1983 Smith met with KGB
officer Victor I.Okunev, then a first
secretary in the Soviet Embassy in
Tokyo, and told him the identities of
purported U.S. double agents in
exchange for $11,000.
Federal prosecutors allege that
Smith sold the information because
he encountered financial difficulties
after leaving the Army's Intelli-
gence and Security Command in
1980,
He had bEen a case officer for
double agent operations during the
last seven of his 13 years in the Ar-
my.
Four months before he met with
the KGB officer, Smith had de-
clared bankrupt a video company he
owned in Utah.
Smith and his attorneys contend
that he acted only after he was con-
tacted by two men who said they
worked for the CIA and who asked
him to pass the information to the
Soviets as part of an operation to
infiltrate Soviet intelligence.
Ina 1984 interview with The
Washington Post a month after his
release on $500,000 bond, Smith
said he was instructed to pose as an
American businessman with termi-
nal cancer who wanted to secure
financial help for his family. He was
warned, he said, that the CIA would
disavow him if he was discovered.
He said the information he
passed to Okunev did not harm na-
tional security.
"Some of of those operations nev-
er existed," he told the Post. "Some
of them did work, but they had been
terminated .... There was no
damage."
Smith, who speaks Japanese and
had top secret clearances, said that
his meetings with Okunev ended
when the two CIA agents disap-
peared. He said he was unable to
contact them despite repeated at-
tempts.
In an effort to find out what hap-
pened, Smith said, he contacted a
former bishop in the Mormon
Church, who was an FBI agent. The
agent made a report to the FBI that
eventually led to Smith's arrest.
Federal prosecutor Joseph
Aronica has said Smith contacted
the FB[ and told them of his meet-
ings with Okunev because he be-
lieved that he had been detected.
Smith said the two CIA agents,
who identified themselves as Ken
White and Danny Ishida, gave him a
contact telephone number in
Hawaii. The number proved to he
that of the now-defunct Honolulu
investment firm Bishop, Baldwin,
Rewald, Dillingham and Wong.
After the firm collapsed in 1983,
leaving investors with losses of
more than $10 million, one of its
directors, Ronald R. Rewald, al-
leged in a lawsuit that the firm had
been a front for the CIA. The CIA
RICHARD CRAIG SMITH
...says CIA agents recruited him
has acknowledged using one of the
firm's subsidiaries, CMI Investment
Corp., as a cover for agents, but it
has denied any involvement in the
firm's financial dealings.
Last October Rewald was con-
victed of 94 counts of perjury, fraud
and tax evasion and sentenced to 80
years in prison in connection with
his firm's collapse.
Smith's trial, originally set for
July 9, 1984, was delayed when fed-
eral prosecutors appealed a ruling
by Judge Richard L. Williams that
Smith could use some classified in-
formation at his trial. Much of the
information was related to the in-
vestment firm and had been placed
under seal at the CIA's request.
William's ruling was upheld on
appeal, but the government asked
for reconsideration by the full 4th
U.S. Circuit Court of Appeals. In a
7-to-5 decision last December, the
judges reversed the ruling, clearing
the way for Smith's trial.
In the meantime, much of the
secret information in dispute was
declassified. Federal prosecutors
made it available to Smith's defense
team two weeks ago, according to
Smith's lawyer, William B. Cum-
mings.
The documents confirm that CiVIi
Investment Corp. was used as a
front by a CIA agent~.~,a~med Charles
Richardson, who has'kft CIA and
cannot be located, Cummings said.
Sanitized Copy Approved for Release 2011/06/30 :CIA-RDP90-005528000605480003-7