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

by David E. Hoffman

  Had there been a leak? Headquarters insisted not. A check showed that the material on the target recognition system had not been disseminated inside the U.S. government until June, so it could not have caused the April investigation.9 Two years earlier, in August 1981, the CIA had been alarmed about an article in Aviation Week and Space Technology, a magazine that enjoyed good sources in the U.S. government and among defense contractors. The article had taken note of “significant gain in technology” in Soviet military avionics. Quoting unidentified navy intelligence officials, the magazine described “long-range, lookdown/shoot-down capability” in a new fighter. But it seemed quite unlikely that this article had triggered a sudden security investigation in Tolkachev’s institute twenty months later.10

  The Tolkachev letter was given to a headquarters officer, fluent in Russian, who had access to all the files and was asked to interpret the state of mind of the billion dollar spy. The officer was impressed with Tolkachev’s sense of mission and wrote, “There is no doubt whatsoever that cksphere suffered a shock after overhearing the conversations in the head designer’s office, a severe shock in contemplating the imminent possibility of the KGB closing in, however, the shock seems to have sprung not so much from the presumed close brush with the termination of his life as with the termination of his life’s project. Self-preservation per se does not appear to play any great role, in fact, in the very midst of his shock he comes up with the firm resolve ‘to undertake all measures not to fall into the hands of the KGB alive.’ ” According to the headquarters officer, Tolkachev was concerned not with saving himself but with saving his espionage, “a very practical and stubborn determination to weather out the storm and last as long as possible in order to do as much damage as possible to the Soviet government.”

  Tolkachev “exhibits legendary resilience and strength,” the officer observed, “despite the shocking nature of the events and actions that he’s describing, his tone is quite positive and strong. He describes everything almost unemotionally, in a conversational style of narrative, as though talking about how he spent his vacation.” The officer continued,

  He approaches everything objectively, particularly his weaknesses. Although he believes that his conclusions were logical and justifiable, he does admit that his analysis of events was “undoubtedly hasty,” and further intensifies his self-judgment by underlining the words. He impartially dissects his analysis and shows how he was influenced by his one real fear … into reaching a state of near-panic. However, despite the fear and feeling of panic, his subsequent actions were a result of cool deliberation.

  Thus, cksphere destroyed all his equipment and incriminating material not out of fear for his life, because that fear didn’t exist, but as a deliberate attempt to deprive the KGB of even the slightest crumbs of satisfaction aside from those that would inevitably fall their way once he was discovered.

  The officer added, “cksphere shows complete disregard for the fear of death, but he unhesitatingly exhibits his one real fear: to be caught by the KGB unawares … An intense hatred of the KGB permeates the description of all of cksphere’s imaginary ‘dealings’ with it. To this end, although he is forced to exercise restraint and lie low at the moment, it seems that cksphere has also resolved to go on and ‘not to be caught alive.’ ”11

  16

  Seeds of Betrayal

  Thomas Mills was an experienced hand at clandestine operations. Balding and slender, known by many for his mild manner, Mills was chief of the CIA headquarters branch that handled espionage operations inside the Soviet Union. In addition to his other duties, he spent time getting to know young case officers in training, before they left for Moscow duty. They usually came in to the Soviet desk once a week or so to read the message traffic. Mills also participated in the training courses in surveillance and tradecraft for new generations of case officers.

  One evening in late May 1984, Mills and his wife, Joby, were entertaining diplomats from Eastern Europe as guests at their home in Vienna, Virginia. Mills heard an unexpected knock at the door and excused himself.

  At the door was Edward Lee Howard, his face flushed with anger. Howard was a trainee Mills had supervised on the Soviet desk in 1982 and 1983. Howard was preparing to go to Moscow, where he would become the next case officer to handle Tolkachev. But the CIA lost confidence in him, and he had been forced out of the agency.

  Mills walked out to the driveway, and he saw that Howard’s wife, Mary, was with him, holding their toddler. A neighbor of Mills’s, who had been a trainee with Howard, was also there.

  Howard stood five feet eleven inches, with brown eyes and wavy black hair. His mood was dark and agitated.

  Mills could not invite Howard inside; it would disrupt the dinner. He told Howard it was not a good time to talk.

  Howard was brimming with resentment. He begged Mills to help him, to listen to him, perhaps to reverse the CIA’s decision. Mills again said he could not talk.

  Howard shot back with profanity—the CIA had fucked him!

  Mary fought back tears.

  Mills went back inside, unsettled by the encounter. Howard had been a lousy trainee. Mills was glad he was not being sent to the Moscow station. The CIA wanted nothing more to do with Howard. The psychiatrists said there should be a clean break, no coddling, no hopes of return. Howard’s appearance at the door was a bad sign.

  Howard possessed some of the CIA’s deepest secrets. He washed out of the agency, and that was difficult enough. Now he was becoming unhinged.1

  Edward Lee Howard was an air force brat. His father was a sergeant, a technician on guided missile electronics, and his mother came from a Hispanic family with deep roots in western New Mexico. As a boy, Howard explored his grandfather’s cattle ranch in Alamogordo while his father was serving abroad, and later he saw the world, moving with his parents every two or three years to a new military base. After graduating from the University of Texas with a business degree, he volunteered to serve in the Peace Corps in Colombia, although he wasn’t particularly happy there. Howard subsequently worked for the Agency for International Development, managing loan programs in Peru. He received a master’s in business administration from American University in Washington and then became head of the Chicago office of an environmental consulting firm. In 1976, Howard married another Peace Corps volunteer, Mary Cedarleaf, whom he had met in Colombia. He was in a management position at his company, Ecology & Environment Inc., and bought a house in the Chicago suburbs.2

  Everything was fine, except Howard was bored. He drank too much and quarreled with Mary about the drinking. He longed to go back overseas. In 1979, he filled out a job application for the Central Intelligence Agency. He was twenty-eight years old, had traveled the world, showed some language abilities, was of Hispanic descent, and worked in businesses. The CIA had broadened its recruiting beyond the Ivy League networks of the past, seeking to compete with private business for the best and brightest young people. Howard was put through a battery of exams and a security investigation. In December 1980, he was offered a position in the clandestine service. His interest was in economics, and he hoped to get a nice assignment in Europe—perhaps collecting economic intelligence in Switzerland.3

  Howard reported for duty at CIA headquarters in January 1981 and passed a routine polygraph test. He acknowledged drinking and using cocaine and marijuana in Latin America, but this did not disqualify him. He was warned not to use drugs again or he would be dismissed. Soon, he was deeply enmeshed in the basic career trainee program and appeared to be headed for Europe and a first assignment in East Germany.

  In February 1982, he was unexpectedly offered a position in Moscow. It is not known why, but the author David Wise suggests that another candidate had pulled out and Howard was a quick substitute.4 By his own account, Howard “never had any interest” in going to the Soviet Union, but he accepted the new assignment, figuring it would be “a rung up the CIA career ladder f
or me.”5 He began studying Russian at Georgetown University and on Saturdays would go to CIA headquarters to read the message traffic.

  Howard was on the Soviet desk from February 7, 1982, until April 30, 1983. He had access to the day-to-day operational cables from the Moscow station, in which Tolkachev was identified as cksphere. It is not known whether Howard learned Tolkachev’s true identity. But Howard was in the “pipeline” for Moscow, preparing to work with Tolkachev, so he might have read more deeply into the operation, including Tolkachev’s 1978 letter to the CIA revealing his identity and profession.6

  Mary also joined the CIA and went through the training courses. Her role in Moscow would be to support his operational forays, primarily as a lookout for surveillance. Both of them took the CIA’s rigorous training in “denied areas” operations, learning how to detect and evade KGB surveillance. The course involved weeks of demanding exercises on the streets of Washington. FBI special agents posed as KGB surveillance teams, forcing the young case officers to sharpen their skills. Mills, who had gone through the exercises a generation earlier with his wife, sometimes participated in the training. He saw Howard in action one day and thought he was slow. Mills also noticed that Mary was shy and frightened. An exercise involving a simulated ambush by gun-wielding FBI officers reduced Mary to tears.

  Howard’s training also included preparations for crawling into the manhole and servicing ckelbow, the underground cable tap outside Moscow. The training involved a ten-mile hike with a thirty-five-pound backpack, to simulate the experience of replacing the data recorder clandestinely. Usually, for training, the backpack was weighted with stones, but Howard cheated, stuffing cardboard into the backpack instead. The incident was known to the trainers but not reported to superiors at the time.

  Howard and his wife were also taught the Jack-in-the-Box procedure for escaping surveillance and practiced jumping from a car at just the right moment. Howard’s jump was rehearsed on a grassy strip near the Kennedy Center in Washington.7

  By early 1983, Howard seemed to be on track for Moscow. To improve his cover as a budget officer in the U.S. embassy, he took a course sponsored by the State Department to train diplomats. He received a commission signed by President Reagan and Secretary of State George Shultz, dated March 11, 1983, confirming he was a new officer of the U.S. diplomatic service. That same month, his first child, a son, Lee, was born. The family’s passports were sent away for multiple-entry diplomatic visas to the Soviet Union. They were scheduled to leave for Moscow in late June. For the CIA, Howard was to be a deep cover officer, a rookie selected in part because he was young and clean and would hopefully be overlooked by the KGB.8

  Before leaving, Howard was required to take a routine lie detector test. After the test was conducted in April, he recalled, the examiner shook his hand and wished him well. But there were anomalies in the results that caught the attention of security officials. Howard was asked to take a second polygraph. The results indicated deception about some crime in his past. Howard admitted that once, when drunk, he had filched $40 from a cosmetic kit left on the seat next to him by an airline passenger. He was asked to take a third polygraph and was so nervous about it that he swallowed a tranquilizer beforehand, infuriating the examiner. Then he was asked to take a fourth lie detector test, on April 29. The tests repeatedly showed deception about some criminal act and in Howard’s responses to questions about drug and alcohol abuse. Within days, the CIA decided not to send Howard to Moscow, and a panel of top agency officials was convened to decide his fate. The CIA could have sidelined him into a nonsensitive job, but instead the panel decided he should be immediately forced out. David Forden, who was chief of the division while Howard was in training, recalled that the panel, on which he served, made a quick decision. Describing Howard as a “loser,” Forden added, “I said let’s get rid of this guy. He was a bum.”9

  On May 3, at headquarters, Howard was told he would not be going to Moscow. He was presented with an ultimatum: resign from the CIA or be fired. The CIA did not explain why. His wife, Mary, then on maternity leave as a CIA employee, demanded to know why, and the CIA would not say. Howard told his wife “they were convinced I was lying.”10 He was correct. The CIA did not think they could trust a trainee who had just failed four consecutive polygraph tests with their most sensitive operations in the Soviet Union. The CIA director has the power to unilaterally remove the security clearances of an employee, effectively ending his or her employment. Howard signed the resignation paper. But before he could be escorted out of headquarters, he made a photocopy of his CIA access badge, bearing his photograph and a number, and copied some notes to take with him.11

  The CIA said he would be kept on the payroll for six weeks and should visit the agency’s senior psychiatrist, Bernard Malloy, and report for a physical examination.12 The agency also prepared a résumé he could use for future employers, saying he had spent two and a half years as a “foreign service officer” at the State Department. It didn’t mention the CIA.13

  Howard was “dumbfounded.” He later recalled, “I was disoriented by the way they had pulled the rug out from under me—and angered by the callous way they had fired me and thrown me out on the street.”14 He decided to return to New Mexico, and he managed to get a job with the Legislative Finance Committee of the state legislature as an economics analyst, estimating oil and gas revenues. Howard told people who asked that he was being prepared for an assignment in Moscow by the State Department but did not want to go with a baby, so he had quit.15 He bought an adobe-style ranch house at 108 Verano Loop in Eldorado, south of Santa Fe, and prepared to “pick up the pieces and start a new life,” Mary recalled.16

  Howard had signed a secrecy oath and was expected to keep his secrets forever—even after being forced out of the CIA. The CIA could end his employment but had no power to carry out law enforcement inside the United States. If Howard became a security risk, that was a counterintelligence matter, under the purview of the FBI. At the time, the CIA did not inform the FBI that a trainee who had access to secret operational files had been forced out. The CIA’s approach was to keep its troubles in the family. However, even if the CIA had alerted the FBI at this point, it is not clear the bureau would have taken any action.17

  Howard was seething, gripped by a desire to exact revenge on the CIA. In the weeks after he was forced out, he walked into the consulate of the Soviet Union, located on Phelps Place NW, in the Kalorama neighborhood of Washington, and left a note on the desk of the receptionist. The note was signed “Alex.” It also contained the photocopy of his CIA badge, mentioned that he had been headed to the Moscow station, and said he had information to sell for $60,000. Howard left instructions for meeting him at some later date at the U.S. Capitol, and he included a random number code. Howard told his wife, Mary, that it was safer to leave a note at the consulate than at the Soviet embassy, located on Sixteenth Street NW, because there were no FBI security cameras monitoring the consulate, as at the embassy.18

  Howard set the meeting with the Soviets for an upstairs bathroom at the Capitol on October 20, 1983. From his training, he knew the FBI is prohibited from entering the Capitol; they could not spot him there. The Capitol also offered many areas thronged with tourists. Howard spent several hours sitting outside the Soviet consulate, in a park, pondering what to do, but eventually decided against going to the Capitol for the meeting. On coming home, he told Mary that he just could not do it.19 Victor Cherkashin, the second-ranking KGB officer in Washington at the time, said the KGB had received Howard’s letter but also decided not to go to the Capitol meeting, fearing that it might be an FBI setup.20

  Howard began making strange phone calls to Moscow. Late at night, often drunk, he called a U.S. phone number he had learned at the CIA, a special tie-line to the Moscow embassy that allowed diplomats to make calls back and forth to the United States without going through decrepit Soviet landlines. The tie-line was not secure, probably monitore
d by the KGB, and intended for personal calls and official calls that were routine. One evening, when it was already morning the next day in Moscow, Howard called the embassy, and a marine guard answered the line. Howard began reeling off a series of numbers from a sheet of paper and then hung up.21 Another time, he identified himself by name and asked to leave a message for the Moscow station chief that he was “not showing up for his physical.” There was no reason for Howard to make the call about his physical; the station chief already knew he wasn’t coming. The chief reported the call to headquarters, which summoned Howard and lectured him about the calls.

  In fact, Howard was attempting to use the phone line to alert the KGB. “My call to the CIA station chief about the physical effectively revealed to the Soviets that my job was to have been a deep cover CIA officer,” Howard later wrote, saying he “made that call deliberately and in anger.”22 Another time, Howard used the phone to call Moscow and ask for Raya, a tall, blond Russian woman who worked in the U.S. embassy, in charge of such things as getting visas for diplomats, housing, and hiring Soviet employees. She told embassy officials about the call and undoubtedly told the KGB, too. “The important thing was to let them know how he could be located,” said one CIA official who reviewed the record. Howard “was being very cool, operationally.”

  In the fall of 1983, Howard wrote an open letter to the Soviet consulate in San Francisco. The letter appeared to be an ordinary one from a citizen, expressing concern about U.S.-Soviet relations. Howard signed his own name. He told Mary that he wrote it as a “tease,” assuming that the CIA or the FBI would see it and become upset at his direct contact with the Soviets.23