Imprisoned Spy, His Son Indicted on Charges of Acting as Russian Agents, Money Laundering

By Carrie Johnson
Washington Post Staff Writer
Friday, January 30, 2009

From a prison cell in Sheridan, Ore., one of the highest-ranking CIA officials ever to plead guilty to espionage allegedly tried to pull off another daring feat of tradecraft.

Through a series of meetings, phone calls and letters filled with encouraging words, Harold J. Nicholson enlisted his youngest son to travel the world and collect cash from Russian agents as a "pension" for his past services, federal officials said yesterday.

A former instructor at the agency's Northern Virginia-based training school, known as "the farm," Nicholson already had admitted to giving the Russians the identities of some of his CIA pupils and the station chief in Moscow in the 1990s in exchange for $300,000.

But even after Nicholson reported to prison in 1997, the former CIA operative allegedly kept up his clandestine activities, attempting to recruit inmates and their friends to serve as go-betweens with Russian officials. Nicholson apparently was after a "kind of retirement 'pension' available to him in Russia," according to court papers filed by the FBI.

Those allegations helped lead to new criminal charges against Nicholson and his son Nathaniel of conspiracy, money laundering and acting as a foreign agent, in what Oregon U.S. Attorney Karin J. Immergut called "a sinister and continuing scheme."

Harold and Nathaniel Nicholson pleaded not guilty in a brief court appearance yesterday and were held pending further court proceedings.

Nathaniel Nicholson, now 24, once served in the U.S. Army and worked part time at a saw company and a Pizza Hut restaurant. He allegedly met with Russian representatives in San Francisco, Mexico City and Lima, Peru.

Last month, he traveled to Cyprus, where he rendezvoused with foreign agents at a T.G.I. Friday's restaurant, according to the indictment unsealed yesterday. He arranged the Dec. 10, 2008, meeting through coded e-mail messages, investigators said.

As part of the plot, the FBI said, he pretended to write to a girlfriend, "Nancy," saying "It looks like I will still be able to go on that vacation! . . . Well hon, I just thought I'd say 'hi' since I had the time!"

Nathaniel collected $35,000, which he distributed to his siblings and grandparents to help cover car repairs and household needs, according to instructions from his father, government filings reported.

FBI agents won court approval to listen in on Nathaniel's cellphone, to intercept Internet searches and e-mail messages, to place a tracker on his 2005 Chevrolet Cavalier and to surveil his apartment in Eugene, Ore. They also said they watched him at the Houston airport in December 2007, while Customs and Border Protection inspectors searched him upon his arrival from Peru.

Authorities secretly photocopied the contents of his notebook and business cards at the airport, uncovering handwritten notes that mentioned the address of the Russian embassy in Mexico City, the FBI affidavit said. The composition book also contained explanations for the code he used to communicate with the foreign officials, including entries that read "Friends -- Nancy" and "My name -- Dick," as well as a question about his father's capture that would allegedly interest the Russians, "What hints were given showing that the interrogators-knew about the relations before the interrogations?"

More notes said that "Grandparents know the situation. They are trustworthy, and will help-w/cover up."

Among the information that Nathaniel shared with Russian intelligence figures were detailed family histories and clues that helped the FBI catch his father in 1996. His father was arrested while attempting to board a flight to Zurich, where he planned to meet a Russian agent, according to a sworn statement by FBI case agent Jared J. Garth.

Father and son communicated frequently, in writing and in person, authorities said.

Nicholson also referred to the Second Chance Act, signed into law in April 2008, and two other laws that could shorten his 23-year prison sentence, in correspondence that the FBI said was intended for Russian handlers. Prosecutors said they suspect Nicholson, 58, was trying to arrange for a passport in the event he won early release from prison.

Nicholson turned to his son after attempts to recruit prison inmates and their relatives failed, government officials said. Authorities reported yesterday that they had focused intensely on the former CIA agent since 2002, when he tried to get someone with ties to an Oregon inmate to communicate with Russian operatives.

Separately, Nicholson's former cellmate said that he was asked to deliver a manila envelope to Nicholson's parents upon the cellmate's release from prison. Nicholson took great care with the project, according to the FBI affidavit. He typed the contents of the package then "ripped or tore up the ribbon into small pieces and flushed it down the cell toilet," which the cellmate said he vividly remembered because he had to unclog the commode.

© 2009 The Washington Post Company