Justices to Hear Case on Secrets and Spies

The CIA says a lawsuit by a former Soviet bloc couple could expose classified information.

By Greg Miller

Los Angeles Times

January 9, 2005

WASHINGTON — It was enough to make the CIA salivate. At the height of the Cold War, a senior diplomat from a Soviet bloc country approached a U.S. Embassy official and said he and his wife wanted to defect to America.

Instead, the CIA swooped in and offered a deal: Stay in place, spy for us, and when the time comes we'll set you up for life in the United States.

The couple kept their end of the bargain but said the CIA did not. And nearly two decades after the agency helped them relocate to Seattle — providing financial support for several years but refusing to resume payments when the husband lost his job — the former spies are pursuing a very American remedy. They want to take the CIA to court.

In most lines of work, that wouldn't be a problem. But the spy world has rules all its own. Doctrine that dates from the Civil War has barred suits over disputes between the government and its spies. The reasoning is simple: Clandestine contracts are supposed to remain clandestine.

But to the dismay of the CIA, the couple have won important rounds in their legal fight, including a 2003 victory in the 9th U.S. Circuit Court of Appeals in San Francisco. The final round is set to open Tuesday, when the U.S. Supreme Court hears oral arguments.

The high court is not weighing the merits of the couple's claims, but rather the question of whether such a lawsuit should be allowed to proceed.

CIA officials fear a loss in the Supreme Court could open the way to an avalanche of suits by former spies seeking to cut better deals. If that were to happen, current and former officials said, it is all but inevitable that secrets would spill out. Undercover operatives' identities, assignments and methods could be exposed.

Even if the plaintiffs who bring the suits are safe in the United States, exposing even minor details of their service as spies could place others at risk, officials said. It could help their home countries figure out how they were recruited, what they revealed and whether others were involved.

"What it puts at risk is the whole manner in which the CIA deals with its spies," said Jeffrey H. Smith, former general counsel at the CIA, who has no direct connection to the case. "These are issues in the shadows that just can never be litigated."

The agency has always felt a "moral obligation to the people who spy for us," Smith said. "But I'm not aware of any obligation, legal or moral, that says when we bring someone into the United States they become a perpetual ward of the state."

The CIA declined to comment on the case.

For the former Soviet bloc diplomat and his wife, their lawsuit is a matter of fairness. They risked their lives and betrayed their country to provide valuable information to the United States. In return, they say, the agency abandoned them when they most needed help.

The couple's names, country of origin and other details have been withheld from their public filings. In their lawsuit, they are listed as John and Jane Doe, and as former residents of a nation "then considered to be an enemy of the United States." They are now U.S. citizens.

Lawyers for the Does have been reluctant to speak publicly about the case before Tuesday's hearing, but issued a statement in response to questions from The Times.

"This case is about reaffirming the role of the courts to protect the constitutional rights of individuals," attorneys Steven Hale and Elizabeth Alaniz said in the statement. "A complete jurisdictional bar is not consistent with basic constitutional principles."

If they win, it would clear the way for a separate lawsuit to move forward. Hale and Alaniz stressed that the pending suit did not demand that the CIA give their clients more money, only that it provide a "fair, internal, confidential agency process" to resolve the dispute.

The case has been a source of embarrassment to the CIA, calling attention to its handling of former spies and defectors at a time when the agency is beset by criticism.

Intelligence failures surrounding the Sept. 11 attacks and the war against Iraq have prompted some to question whether the CIA is failing at its core mission of recruiting spies. Some agency officials worry that the job could become even more difficult if the CIA finds itself confronting a parade of disgruntled litigants, and if potential recruits have to worry that their secrets might someday be exposed in American courts.

But in some ways, the CIA's reputation could be bruised even if it wins, because that could send a signal to future recruits that if someday they were to feel wronged by the agency, they would have no legal recourse.

The case provides a rare glimpse into how the CIA dangles resettlement in the United States as an incentive for potential spies, and how it goes about creating new lives for informants and their families when their careers in espionage are over.

The CIA has special authority to bring as many as 100 people into the United States each year under Public Law 110, a provision of the 1949 Central Intelligence Agency Act that enables the agency to bypass ordinary immigration requirements.

Since the end of the Cold War, the bulk of those brought into the United States under Public Law 110 have been from such countries as Iraq, North Korea, China, Pakistan, Iran and Syria. But throughout the Cold War, resettlement was one of the CIA's most powerful lures for spies from the Soviet Union and other communist states.

After being whisked to a CIA safe house, the former Soviet bloc couple agreed to spy and performed "highly dangerous and valuable assignments" over a period of years abroad before the agency moved them to the United States in 1987, according to their court declaration. The couple allege they were "promised lifetime support" and a permanent "safety net."

Once in the United States, the agency provided medical benefits and money — as much as $27,000 a year. It also created a "cover" life for them, paid for the husband's schooling and furnished him with a fresh resume that allowed him to land a job at a Seattle bank.

As the husband's income grew, the agency cut off the stipends. But in 1997, when he was in his late 50s, he was laid off, and the couple asked the agency to start the payments again.

The CIA balked, replying in a June 1997 letter that it was "sorry to learn" he was let go, but that it was unable to help him, "due to budget constraints."

The couple say they are penniless, forced for a time to live with relatives in "a former Eastern Bloc country," until the husband was frightened by an encounter with a former member of the country's state police.

Through their attorneys, the couple have tried to pursue internal appeals, but say they could never get a fair hearing. Finally, the couple turned to Hale, a former agency attorney, and sued.

The CIA cited the ban on such suits. At the start of the Civil War, President Lincoln hired a publisher of railroad guides, William A. Lloyd, to spy on the Confederacy and promised to pay him $200 a month. But when Lincoln was assassinated, Lloyd lacked proof of the contract and couldn't collect.

After Lloyd died, the administrator of his estate, Enoch Totten, sued the government for the $9,753 Lloyd was owed. But in a landmark 1876 ruling, the Supreme Court denied the claim. "Both employer and agent must have understood," the court ruled, "that the lips of the other were to be forever sealed."

The so-called Totten ruling has guided the handling of such cases ever since. But lower courts considering the Does' case have begun to chip away at the agency's shield.

Most significantly, the 9th Circuit ruled 2 to 1 in 2003 that blocking the Does from a legal hearing would deny them due process. To do so would encourage "both executive overreaching and a corrosive appearance of inequitable treatment of those who have undertaken great risks to help our nation," wrote 9th Circuit Judge Marsha S. Berzon.

The CIA appealed to the Supreme Court.

The case has cast fresh light on the long history of trouble between the CIA and its former spies, particularly those recruited during the Cold War. In the late 1980s, Congress was alarmed enough by Soviet defectors' complaints that it held hearings on the matter. Even in recent years, ex-Soviet spies have accused the CIA of reneging on promises.

Among them is Victor Sheymov, a former KGB major and encryption expert who defected and helped the U.S. try to break Soviet spy codes. Sheymov went public with his complaints that the CIA never paid him the $1 million he said he was promised. He later settled with the agency, but remained bitter, saying many other defectors shared his sour opinion of the CIA.

"I have never met anyone who was satisfied with them or has even a neutral opinion about them," Sheymov said. "Everybody feels cheated, humiliated and dealt with very badly."

CIA veterans dispute such characterizations.

"The agency from the earliest days has tried to do the best possible thing" in its handling of defectors and former spies, said Milt Bearden, who supervised such resettlements when he served as chief of the CIA's Soviet and East European division.

Even in the 1980s, he said, it was common for the agency to spend $1 million or more on each resettlement, including relocation, healthcare, education and long-term financial support. Often the arrangements would be spelled out in written memorandums to make sure each side understood the terms.

But keeping former spies happy is difficult, Bearden said. The transition to a new society and language is daunting. Low-level spies learn of richer deals claimed by the likes of Sheymov and become jealous. And sometimes, the same psychological traits that caused them to become profoundly disillusioned with their home countries cause them to sour on the CIA.

"We're talking about dozens and dozens of people who have to be happy for the rest of their lives," Bearden said. "The chances of that coming to pass are about nil."