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Espionage suspect had guilty plea in fraud
Records say scientist sought to avoid jail for overbilling NASA

By Del Quentin Wilber
Washington Post Staff Writer
Monday, October 26, 2009

Stewart D. Nozette, the Chevy Chase scientist accused last week of attempted espionage, pleaded guilty in January to overbilling NASA and the Defense Department more than $265,000 for contracting work, according to court records unsealed Friday.

Nozette, 52, was arrested last week by federal authorities and accused of selling sensitive government secrets for $11,000 to an FBI agent posing as an Israeli intelligence operative. He faces a sentence of up to life in prison if convicted of attempted espionage.

It is not the first time Nozette has faced legal jeopardy. In 2006, the NASA inspector general began investigating allegations that Nozette's nonprofit firm, the Alliance for Competitive Technology, was overbilling the space agency. Nozette was the founder, president and treasurer of the firm, which he ran from his Chevy Chase house.

According to the unsealed court documents, Nozette was charged with defrauding the government and tax evasion and pleaded guilty in January to overbilling the government $265,205 for work he and an employee did for NASA and the Defense Department between 2000 and 2006. Nozette admitted that he used that money to help pay personal credit card bills, car loans and maintenance costs for his swimming pool. He faced at least two years in prison under federal sentencing guidelines, according to the plea papers.

The documents were sealed because Nozette was cooperating with authorities in unrelated investigations of government corruption, court records show.

Last year or early this year, Nozette told a colleague that he would flee to India or Israel if the government tried to put him in jail in the fraud case, according to law enforcement officials. He told the colleague that he would share "everything" he knew with Israeli and Indian officials, the authorities said.

The colleague tipped off federal investigators, who were concerned because Nozette had ties to an Israeli aerospace firm and was working on a lunar project being run by the Indian government. Authorities soon launched a sting operation. By September, the FBI agent was meeting with Nozette and exchanging cash for information through a U.S. post office box in the District, federal officials have alleged.

Federal authorities said Nozette turned over sensitive information about the government's defenses and its defense strategy. The Justice Department has stressed that Israel was not accused of crimes tied to Nozette.

Nozette's attorney, John Kiyonaga, has declined to comment. Nozette has a detention hearing scheduled for Thursday.

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