Ex-CIA Agent Charged With Betraying U.S.

By JAMES RISEN

April 4, 1998 12 AM PT

TIMES STAFF WRITER

WASHINGTON —

A troubled former CIA officer from the agency’s top secret “black bag” unit that breaks into foreign embassies to steal code books was charged with espionage Friday for tipping off two countries about the CIA’s success in compromising their communications.

Douglas F. Groat, 50, who after a 16-year career was fired in 1996 from the CIA’s Science and Technology Directorate, was indicted Friday in U.S. District Court in Washington and could face the death penalty, prosecutors said.

In a bizarre twist, Groat--a loner who has been living in a Winnebago that he periodically moved--also was charged with attempting to extort $500,000 from the CIA in return for not revealing more information about the agency’s code-stealing techniques. Groat was arrested here Thursday when he went to a meeting to resume negotiations on his demands with FBI agents.

The FBI had been investigating the case for a year, officials said.

Groat was so nomadic, however, that for a time during the investigation the FBI could not find him, according to sources familiar with the inquiry.

U.S. officials released very little information about the Groat case Friday. They refused, for instance, to name the two countries that had allegedly received information from him. That caution reflected the sensitivity of the burglaries in which Groat had participated--and the fact that his betrayal could prove extremely damaging to this nation’s efforts to decipher the communications of its enemies.

He appeared in court Friday wearing a navy blue work shirt and slacks that were perhaps issued to him while in custody. Groat, about 6 feet tall and 190 pounds, has dark brown hair and a beard closely trimmed.

He made no comments to the court, instead allowing his court-appointed attorneys to speak for him. Groat pleaded not guilty on all counts.

He was ordered held until a detention hearing Thursday.

In an age of ever more sophisticated computer and telephonic encryption, the need to steal codes and computer software keys to decipher foreign encryption has become greater than ever, sources said.

The CIA black bag teams, based at CIA headquarters in Langley, Va., fly around the world to break into embassies in other countries and steal code books and other materials needed to break modern encryption methods. Those stolen code materials are then turned over to the National Security Agency, America’s super-secret eavesdropping agency. The NSA analyzes the pilfered materials to help it read the worldwide message traffic of other governments.

The FBI has similar black bag teams that work in the United States, both to break into foreign embassies in Washington and the offices of organized crime figures and drug traffickers.

The CIA teams are run by the agency’s technical division--the Science and Technology Directorate--but they are made up of experts from throughout the intelligence community, including officers of the CIA’s clandestine Directorate of Operations, the NSA and the Defense Department. Once known merely as “lock-pickers,” the black bag teams have evolved into highly technical groups that rely heavily on advanced electronic methods to defeat modern alarm systems and other security devices. Sources said that the teams sometimes plan as much as a year in advance for a break-in.

But the CIA has never publicly acknowledged the existence of its black bag teams because their operations are by nature illegal. And they not only target America’s adversaries but the embassies of friendly powers. Several U.S. intelligence sources said that they do not believe any black bag team ever has been caught inside a foreign embassy.

“This is absolutely the most sensitive thing the agency does,” said one intelligence source. “It’s really out of the movies. They get a call in the middle of the night and they could be going anywhere in the world. They can’t tell their spouses where they are going or what they are doing. It is really tough on marriages. And, in an agency that loves to gossip, they have the most closed-mouth shop in the whole place. They never say a word about work.”

Groat’s is the third major espionage case for the CIA in the last four years, and intelligence officials said that it could cause great damage.

As a GS-14, Groat held the same rank as the biggest spy ever caught inside the CIA: Aldrich H. Ames, who spied for Moscow for nine years before his arrest in 1994 and whose betrayal led to the deaths of at least 10 Russian agents working for the CIA.

In the other high-profile case, Harold Nicholson, a onetime CIA station chief in Romania and instructor at the CIA’s spy training center, was arrested in 1996 after he sold to the Russians the identities of his students as they were going off to spy around the world.

The Groat case could prove especially embarrassing because of its potential for revealing some of the CIA’s darkest operations.

“In terms of the disruption to the intelligence process, this is awful,” said one source. “This is just terrible for NSA, because this is the kind of thing that will make other countries change their codes.”

Groat has been charged with committing espionage in March and April of last year by “communicating national defense information relating to CIA targeting and compromise of the cryptographic systems of two foreign governments,” according to a statement released by U.S. Atty. Wilma A. Lewis and FBI Assistant Director Jimmy C. Carter. “During Groat’s employment with the CIA, he participated in classified covert operations aimed at the penetration of cryptographic systems of foreign governments,” the statement adds.

Groat had been placed on administrative leave by the CIA in 1993 after the agency decided that he posed a security risk, according to U.S. officials. Groat apparently did not have a substance abuse problem and was not considered mentally unstable but several intelligence sources said that he had become angry and discontented, in part because of his failure to be given desirable jobs in the agency. “There were a lot of concerns about his work and his performance,” said one U.S. official.

Between 1993 and 1996, he continued to receive his $70,000 salary, even while not working, officials added.

Sometime during his period on administrative leave, U.S. officials said, Groat began to make veiled threats to the CIA that he would reveal classified information about the agency’s black bag teams if he were not reinstated. He said that he would try to hire himself out as a “consultant” to foreign governments to explain to them how to defeat U.S. efforts to steal their codes.

“He was in contact with the CIA from time to time while he was on administrative leave and there were discussions about his status, over whether he would return to work and what would happen to him,” said one U.S. official. “He didn’t say, ‘I will spy if I don’t get my job back,’ but he suggested he would offer his services as a consultant to foreign countries about how their materials are compromised by the U.S.”

About a year ago, Groat also approached the Senate Select Committee on Intelligence and made similar veiled threats, sources said. Senate staff members warned him that what he was talking about was espionage and Groat responded that he didn’t care, the sources said.

“He told us that if he couldn’t get a settlement with the CIA, then he would try and get a consultancy with foreign countries and we reminded him that would be a crime,” said one Senate source. “He said, basically: ‘I don’t care, I can do it in such a way that I won’t reveal anything.’ ”

Alarmed, Senate staff members informed the FBI, only to be told that agents had already begun an investigation.

“When he starts talking now, he may claim the same thing that he said to us, which was that he didn’t breach national security, that he’s been screwed by the agency and that he was just trying to make a living,” said a congressional source. “But that’s why the bureau took so long on this case--in order to gather evidence that he did in fact harm national security.”

When Groat was arrested Thursday, he may have believed that the FBI officers he was meeting were CIA officials willing to pursue negotiations on his demands, sources said. Still, congressional sources said, they were frustrated that the investigation had dragged on for so long, given the sensitive information that Groat possessed--and his open threats to the CIA to betray his country.

“He threatened to violate the secrecy agreement he had signed as a CIA employee,” said one source. “I don’t know why that wasn’t enough to build a case against him.”

A former Army captain, police officer and onetime deputy U.S. marshal before joining the CIA, Groat briefly entered the agency’s covert training program for case officers before his assignment to the Science and Technology Directorate. The divorced father of two children was based at CIA headquarters in Langley throughout his career with the agency.

Times staff writers Ronald J. Ostrow and Tom Schultz contributed to this story.

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For CIA, 3 Cases in 4 Years

This week’s arrest is the latest in a series of embarrassing CIA spy cases--three major cases over four years.

Douglas Grant

Arrested: Thursday

Charges: Accused of passing coding secrets to two foreign nations and attempting to extort $500,000 from the United States.

Years with C.I.A: 16

Status: Held without bail; pleased not guilty

Aldrich Ames

Arrested: 1994

Charges: Counterintelligence official sold information to Russia; blamed for at least 10 spy deaths.