The Billion Dollar Spy: A True Story of Cold War Espionage and Betrayal

by David E. Hoffman

  From the author of the Pulitzer Prize–winning history The Dead Hand comes the riveting story of the CIA’s most valuable spy and a thrilling portrait of the agency’s Moscow station, an outpost of daring espionage in the last years of the Cold War

  While driving out of the American embassy in Moscow on the evening of February 16, 1978, the chief of the CIA’s Moscow station heard a knock on his car window. He was handed an envelope by a man on the curb. Its contents stunned the Americans: details of top-secret Soviet research and developments in military technology that were totally unknown to the United States.

  In the years that followed, that man, a Russian engineer named Adolf Tolkachev, cracked open the secret Soviet military research establishment. He used his access to hand over tens of thousands of pages of material about the latest advances in aviation and radar technology, thereby alerting the Americans to possible developments far in the future. He was one of the most productive and valuable spies to work for the United States in the four decades of global confrontation with the Soviet Union. Tolkachev took enormous personal risks—but so did his CIA handlers. Moscow station was a dangerous posting to the KGB’s backyard. The CIA had long struggled to recruit and run agents in Moscow, and Tolkachev became a singular breakthrough. Using spy cameras and secret codes as well as face-to-face meetings in parks and on street corners, Tolkachev and the CIA worked to elude the feared KGB.

  Drawing on previously secret documents obtained from the CIA and on interviews with participants, Hoffman reveals how the depredations of the Soviet state motivated one man to master the craft of spying against his own nation. Exciting, unpredictable, and at times unbearably tense, The Billion Dollar Spy is a brilliant work of history that reads like an espionage thriller.

  David E. Hoffman is a contributing editor at The Washington Post and a correspondent for PBS’s Frontline. He is the author of The Dead Hand: The Untold Story of the Cold War Arms Race and Its Dangerous Legacy, which won a Pulitzer Prize, and The Oligarchs: Wealth and Power in the New Russia. He lives with his wife in Maryland.

  Published by Doubleday 2015.

  Also by David E. Hoffman

  The Oligarchs: Wealth and Power in the New Russia

  The Dead Hand: The Untold Story of the Cold War Arms Race and Its Dangerous Legacy

  This is an uncorrected eBook file. Please do not quote for publication until you check your copy against the finished book.

  Copyright © 2015 by David E. Hoffman

  All rights reserved. Published in the United States by Doubleday, a division of Random House LLC, New York, a Penguin Random House Company, and in Canada by Random House of Canada Limited, Toronto, Penguin Random House companies.

  www.doubleday.com

  doubleday and the portrayal of an anchor with a dolphin are registered trademarks of Random House LLC.

  Book design by [to come]

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  Library of Congress Cataloging-in-Publication Data

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  manufactured in the united states of america

  10 9 8 7 6 5 4 3 2 1

  First Edition

  To Carole

  Everything we do is dangerous.

  —Adolf Tolkachev, to his CIA case officer

  October 11, 1984

  Contents

  Cover

  About this Book

  By David E. Hoffman

  Title page

  Copyright page

  Dedication

  Epigraph

  PROLOGUE

  1 OUT OF THE WILDERNESS

  2 MOSCOW STATION

  3 A MAN CALLED SPHERE

  4 “FINALLY I HAVE REACHED YOU”

  5 “A DISSIDENT AT HEART”

  6 SIX FIGURES

  7 SPY CAMERA

  8 WINDFALLS AND HAZARDS

  9 THE BILLION DOLLAR SPY

  10 FLIGHT OF UTOPIA

  11 GOING BLACK

  12 DEVICES AND DESIRES

  13 TORMENTED BY THE PAST

  14 “EVERYTHING IS DANGEROUS”

  15 NOT CAUGHT ALIVE

  16 SEEDS OF BETRAYAL

  17 VANQUISH

  18 SELLING OUT

  19 WITHOUT WARNING

  20 ON THE RUN

  21 “FOR FREEDOM”

  EPILOGUE

  A NOTE ON THE INTELLIGENCE

  ACKNOWLEDGMENTS

  NOTES

  About the Author

  Prologue

  The spy had vanished.

  He was the most successful and valued agent the United States had run inside the Soviet Union in two decades. His documents and drawings had unlocked the secrets of Soviet radar and revealed sensitive plans for research on weapons systems a decade into the future. He had taken frightful risks to smuggle circuit boards and blueprints out of his military laboratory and handed them over to the CIA. His espionage put the United States in position to dominate the skies in aerial combat and confirmed the vulnerability of Soviet air defenses—that American cruise missiles and bombers could fly under the radar.

  In the late autumn and early winter of 1982, the CIA lost touch with him. Five scheduled meetings were missed. Months had gone by. In October, an attempt to rendezvous with him failed because of overwhelming KGB surveillance on the street. Even the “deep cover” officers of the CIA’s Moscow station, invisible to the KGB, could not break through. On November 24, a deep cover officer, wearing a light disguise, managed to call the spy’s apartment from a pay phone, but someone else answered. The officer hung up.

  On the evening of December 7, the next scheduled meeting, the future of the operation was put in the hands of Bill Plunkert. After a stint as a navy aviator, Plunkert had joined the CIA and trained as a clandestine operations officer. He was in his mid-thirties, six feet two, and had arrived at the Moscow station in the summer for a tour devoted to handling the spy. He pored over the files, studied maps and photographs, read cables, and talked to the case officers. He felt he knew the man, even though he had never met him face-to-face. His mission was to give the slip to the KGB and make contact.

  In the days before, using the local phone lines they knew were tapped by the KGB, a few American diplomats had organized a birthday party at an apartment for Tuesday evening. That night, around the dinner hour, four people walked to a car in the U.S. embassy parking lot, under constant watch by uniformed militiamen who stood outside and reported to the KGB. One of the four carried a large birthday cake. When the car left the embassy, a woman in the rear seat behind the driver held the cake on her lap.

  Driving the car was the CIA’s chief of station. Plunkert sat next to him in the front seat. Their wives were in back. All four of them had earlier rehearsed what they were about to do, using chairs set up in the Moscow station. Now the real show was about to begin.1

  Espionage is the art of illusion. Tonight, Plunkert was the illusionist. Under his street clothes, he wore a second layer of clothes that would be typical for an old Russian man. The birthday cake was fake, with a top that looked like a cake but concealed a device underneath created by the CIA’s technical operations wizards. Plunkert hoped the device would give him a means of escape from KGB surveillance.

  The device was called the Jack-in-the-Box, known to all as simply the JIB. Over the years, the CIA had learned that KGB surveillance teams almost always followed a car from behind. They rarely pulled alongside. It was possible for a car carrying a CIA officer to slip
around a corner or two, momentarily out of view of the KGB. In that brief interval, the CIA case officer could jump out of the car and disappear. At the same time, the Jack-in-the-Box would spring erect, a pop-up that looked, in outline, like the head and torso of the case officer who had just jumped out.

  To create it, the CIA had sent two young engineers from the Office of Technical Service to a windowless sex shop in a seedy area of Washington, D.C., to purchase three inflatable, life-sized dolls. But the dolls were hard to inflate or deflate quickly. They leaked air. The young engineers went back to the shop for more test mannequins, but problems persisted. Then the CIA realized that given the distance from which the KGB followed cars in Moscow, it wasn’t necessary to have a three-dimensional dummy in the front seat, only a two-dimensional cutout. Illusion triumphed, and the Jack-in-the-Box was born.2

  The device had not been used before in Moscow, but the CIA had grown desperate as weeks went by, with no contact with the agent. A skilled disguise expert from headquarters was sent to the Moscow station to help with the device and to bring Plunkert some “sterile” clothing that had never been worn before, to avoid any telltale scents that could be traced by KGB dogs or any tracking or listening devices that could be hidden inside.

  As the car wound through the Moscow streets, Plunkert took off his American street clothes and put them into a small sack, typical of the kind Russians carried about. Wearing a full face mask and eyeglasses, he was now disguised as an old Russian man. At a distance, the KGB was trailing them. It was 7:00 p.m., well after nightfall.

  The car turned a corner, briefly out of view of surveillance. The chief of station slowed the car with the hand brake to avoid illuminating the rear brake lights. Plunkert swung open the passenger door and jumped out. At the same moment, the chief of station’s wife took the birthday cake from her lap and laid it on the front passenger seat where Plunkert had been sitting. Plunkert’s wife reached forward and pulled a lever.

  With a crisp whack, the top of the cake flung open, and a head and torso snapped into position. The car accelerated.

  Outside, Plunkert took four steps on the sidewalk. On his fifth step, the KGB chase car rounded the corner.

  The headlights caught an old Russian man on the sidewalk, then sped off in pursuit. The CIA car still appeared to have four persons inside. With a small handle, the station chief moved the head of the Jack-in-the-Box back and forth, as if it were chattering away.

  The JIB had worked.

  Plunkert felt a momentary rush of relief, but the next few hours would be the most demanding of all. The agent was extraordinarily valuable, not just for the Moscow station, but for the entire CIA and for the United States. Plunkert shouldered a heavy personal burden. One small error, and the operation would be forever lost. The spy would face execution for treason.

  No one at the CIA knew why the spy had disappeared. Was he under suspicion? He was not a professional intelligence officer; he was an engineer. Had he made a careless mistake? Had he been arrested and interrogated and his treason revealed?

  Alone, Plunkert walked the Moscow streets, a frigid tableau of slick ice and inky shadows. He thought it was just about perfect for espionage. He talked to himself a lot. A practicing Catholic, Plunkert prayed—little, short prayers. Every time he exhaled under the mask, his eyeglasses fogged up. He stopped after a while, removed the mask, and donned a lighter disguise. He took public trolleys and buses in a roundabout route to the rendezvous point. He watched for KGB surveillance but saw none.

  He had to find the spy. He could not fail.

  1

  Out of the Wilderness

  In the early years of the Cold War between the United States and the Soviet Union, the Central Intelligence Agency harbored an uncomfortable secret about itself. The CIA had never really gained an espionage foothold on the streets of Moscow. The agency didn’t recruit in Moscow, because it was just too dangerous—“immensely dangerous,” recalled one officer—for any Soviet citizen or official they might enlist. The recruitment process itself, from the first moment a possible spy was identified and approached, was filled with risk of discovery by the KGB, and if caught spying, an agent would face certain death. A few agents who volunteered or were recruited by the CIA outside the Soviet Union continued to report securely once they returned home. But for the most part, the CIA did not lure agents into spying in the heart of darkness.

  This is the story of an espionage operation that turned the tide. At the center of it is an engineer in a top secret design laboratory, a specialist in airborne radar who worked deep inside the Soviet military establishment. Driven by anger and vengeance, he passed thousands of pages of secret documents to the United States, even though he had never set foot in America and knew little about it. He met with CIA officers twenty-one times over six years on the streets of Moscow, a city swarming with KGB surveillance, and was never detected. The engineer was one of the CIA’s most productive agents of the Cold War, providing the United States with intelligence no other spy had ever obtained.

  The operation was a coming-of-age for the CIA, a moment when it accomplished what was long thought unattainable: personally meeting with a spy right under the nose of the KGB.

  Then the operation was destroyed, not by the KGB, but by betrayal from within.

  To understand the significance of the operation, one must look back at the CIA’s long, difficult struggle to penetrate the Soviet Union.

  The CIA was born out of the disaster at Pearl Harbor. Despite warning signals, Japan achieved complete and overwhelming surprise in the December 7, 1941, attack that took the lives of more than twenty-four hundred Americans, sunk or damaged twenty-one ships in the U.S. Pacific Fleet, and thrust the United States into war. Intelligence was splintered among different agencies, and no one pulled all the pieces together; a congressional investigation concluded the fragmented process “was seriously at fault.” The creation of the CIA in 1947 reflected more than anything else the determination of Congress and President Truman that Pearl Harbor should never happen again. Truman wanted the CIA to provide high-quality, objective analysis.1 It was to be the first centralized, civilian intelligence agency in American history.2

  But the early plans for the CIA soon changed, largely because of the growing Soviet threat, including the blockade of Berlin, Stalin’s tightening grip on Eastern Europe, and Soviet acquisition of the atomic bomb. The CIA rapidly expanded far beyond just intelligence analysis into espionage and covert action. Pursuing a policy of containment, first outlined in George Kennan’s long telegram of 1946 from Moscow and later significantly expanded, the United States attempted to counter Soviet efforts to penetrate and subvert governments all over the world. The Cold War began as a rivalry over war-ravaged Europe but spread far and wide, a contest of ideology, politics, culture, economics, geography, and military might. The CIA was on the front lines. The battle against communism never escalated into direct combat between the superpowers; it was fought in the shadows between war and peace. It played out in what Secretary of State Dean Rusk once called the “back alleys of the world.”3

  There was one back alley that was too dangerous to tread—the Soviet Union itself. Stalin was convinced the World War II victory over the Nazis demonstrated the unshakability of the Soviet state. After the war, he resolutely and consciously deepened the brutal, closed system he had perfected in the 1930s, creating perpetual tension in society, constant struggle against “enemies of the people,” “spies,” “doubters,” “cosmopolitans,” and “degenerates.” It was prohibited to receive a book from abroad or listen to a foreign radio broadcast. Travel overseas was nearly impossible for most people, and unauthorized contacts with foreigners were severely punished. Phones were tapped, mail opened, and informers encouraged. The secret police were in every factory and office. It was dangerous for anyone to speak frankly, even in intimate circles.4

  This was a forbidding environment for spying. In the ea
rly years of the Cold War, the CIA did not set up a station in Moscow and had no case officers on the streets in the capital of the world’s largest and most secretive party-state. It could not identify and recruit Soviet agents, as it did elsewhere. The Soviet secret police, which after 1954 was named the KGB, or Komitet Gosudarstvennoi Bezopasnosti, was seasoned, proficient, omnipotent, and ruthless. By the 1950s, the KGB had been hardened by three decades of experience in carrying out the Stalin purges, in eliminating threats to Soviet rule during and after the war, and in stealing America’s atom bomb secrets. It was not even possible for a foreigner to strike up a conversation in Moscow without arousing suspicion.

  The CIA was still getting its feet wet, a young organization, optimistic, naive, and determined to get things done—a reflection of America’s character.5 In 1954, the pioneering aviator General James Doolittle warned that the United States needed to be more hard-nosed and cold-blooded. “We must develop effective espionage and counter-espionage services and must learn to subvert, sabotage and destroy our enemies by more clever, more sophisticated and more effective methods than those used against us,” he said in a top secret report to President Eisenhower.6

  The CIA faced intense and constant pressure for intelligence on the Soviet Union and its satellites. In Washington, policy makers were on edge over possible war in Europe—and anxious for early warning. Much information was available from open sources, but that wasn’t the same as genuine, penetrating intelligence. “The pressure for results ranged from repeated instructions to do ‘something’ to exasperated demands to try ‘anything,’ ” recalled Richard Helms, who was responsible for clandestine operations in the 1950s.7

  Outside the Soviet Union, the CIA diligently collected intelligence from refugees, defectors, and émigrés. Soviet diplomats, soldiers, and intelligence officers were approached in third countries. From refugee camps in Europe, the CIA’s covert action unit recruited a secret army. Some five thousand volunteers were trained as a “post-nuclear guerilla force” to invade the Soviet Union after an atomic attack. Separately, the United States dropped lone parachutists into the Soviet bloc to spy or link up with resistance groups. Most of them were caught and killed. The chief of the covert action unit, Frank G. Wisner, dreamed of penetrating the Eastern bloc and breaking it to pieces. Wisner hoped that through psychological warfare and underground aid—arms caches, radios, propaganda—the peoples of Eastern Europe might be persuaded to throw off their communist oppressors. But almost all of these attempts to get behind enemy lines with covert action were a flop. The intelligence produced was scanty, and the Soviet Union was unshaken.8