CIA Official Pleads Guilty in Fraud Case : Conspiracy: Joseph P. Romello is accused of scheming with others to steal about $1.2 million in agency funds. The inquiry is continuing.

Snooping abroad for clues to illicit plots is one of the CIA’s primary missions, but the agency disclosed Friday that it had discovered a criminal operation embarrassingly close to home.

Joseph P. Romello, 41, an upper-management CIA veteran of 12 years, pleaded guilty Friday to charges that he conspired to defraud the agency and the U.S. government of about $1.2 million, the Justice Department and the CIA announced.

Acting on an anonymous tip to CIA Inspector General Frederick P. Hitz, CIA and FBI investigators discovered that Romello and outsiders conspired between 1990 and 1992 to use government funds to pay for computer equipment and a study that were never delivered.

They then arranged to have the money diverted to their personal accounts, officials said.

Romello’s share of the scheme was said to be $758,000, while most of the rest of the money from the contracts allegedly went to the owner of a subcontracting firm.

The case dwarfs any other attempted frauds uncovered in the agency’s 45-year history, said CIA Director Robert M. Gates, who fired Romello on July 27.

Papers filed in federal court in Alexandria, Va., were relatively sparse in detail about the case--both because of the CIA’s penchant for secrecy and because the investigation is continuing.

They described the scheme this way: Romello and his unnamed co-conspirators persuaded an Oakton, Va., subcontractor--who was not further identified--to bid and bill the agency for supplying $708,000 in computer equipment.

Romello then created a bogus document indicating that the nonexistent equipment was delivered to “an agency in the U.S. intelligence community.”

Romello and others then convinced the subcontractor to wire $558,000 of the funds to Wyoming for Romello’s use, according to the papers.

In addition, the court papers said, Romello “and others” helped the subcontractor land a $485,020 order for “an alternative maintenance study” that was not fully performed.

Last December, Romello directed the subcontractor to transfer $200,000 of the “study” funds to Virginia for Romello’s benefit.

While the investigation is still under way, spokesmen for the CIA and the Justice Department said that there is no evidence so far that other agency employees are involved.

In his plea agreement, Romello agreed to cooperate in the inquiry and to pay the government back the $758,000, including his interest in Wine and Coffee Houses Inc., identified only as a California corporation, and in the BLM Development Corp. of Virginia.