Spies: The Rise and Fall of the KGB in America (79 page)

But after World War II began, the Royal Canadian Mounted Police
located him, and Feldman faced internment and possible deportation to
the USSR. He began to cooperate with the RCMP, who informed American authorities. FBI agents interviewed him, and although he held back
a good deal, he revealed some of his activities in the United States. The
most important item Feldman provided was the identification of
Ovakimyan as a senior KGB officer, and one particular he added was that
Ovakimyan had recruited an industrial spy at DuPont. FBI inquiries at
DuPont resulted in company executives disclosing that in 1938 Paul
Lawrence, an employee, had come to them with a story of being approached to spy by someone he would not identify. When the FBI interviewed Lawrence, he admitted that in 1938 William Stapler had contacted him about a job in Russia. Stapler's contact was a man named
"George" at the Rockefeller Institute in New York. (At that time Ovakimyan held a fellowship at Rockefeller, arranged for him by Phoebus
Theodore Levene, a prominent biochemist born in Russia.) Stapler told
Lawrence that he had been selling information for years to "George,"
who was a Soviet agent, because of his long-standing grudge about being
fired in 192o. Although he thought Stapler was spinning a tall tale,
Lawrence informed his superiors but declined to name Stapler, and nothing happened.82

Even though the FBI received this information about Stapler in 1941,
it failed to pursue the matter at the time. Consequently, the KGB reestablished its relationship with him in late 1942. An October 1942 KGB New
York station letter noted: ""Ray" [Stapler] was worried because we hadn't
met with him. He hadn't received money in over a year. When he was told
that now we would be actively working, he was very happy." Stapler continued to work as an industrial spy until 1945. Thomas Black, who served
as his courier for a while, recalled to the FBI that Stapler was a demanding source who complained when his $125-150 payment per report he
had furnished was reduced to $1oo and refused to supply material until he
was compensated for previous handovers. After one blowup, KGB agent
Joseph Katz, Black's superior, took out a wad of cash and gave it to him to
transmit to Stapler, complaining that the KGB was paying too much.83

"Ray" and "Karl," Stapler's cover names, also appeared in the Venona
decryptions, and NSA/FBI analysis identified the real name but redacted
it. However, a 1951 FBI memo noted that nine persons exposed by
Venona had already died. Stapler, who had died in 1947, was on the list.
Along with Black's evidence, that indicates that the blacked-out name in
the Venona deciyptions for "Ray"/"Karl" was William Stapler.84

A retrospective KGB "Memorandum on the Feldman case" mentions
eleven American agents whom the defecting KGB agent had known in
the mid-1930s: "S-1," "S-z," "S-3," "S-7," "Morris," "Sound," "Vit," "Yankee," "Frost," "Zvezda," and "Gadfly." Three of these-"Morris"/Abra-
ham Glasser, "Sound"/Jacob Golos, and "Frost"/Boris Morros-are discussed elsewhere. As for the others, Feldman identified the real names
of only a very few of his American and Canadian sources to either the
RCMP or the FBI. Nonetheless, the FBI uncovered several of the
sources he did not speak about after it came across a check written by
Simon Rosenberg while investigating Feldman's business dealings. When
agents showed up at his Yonkers home, Rosenberg immediately confessed to working for Feldman from 1934 to 1938. Born in Poland, he
came to the United States in 1924 and six years later went to work for
Amtorg. During a sojourn in Russia in 1932, he was, according to his
account, coerced to spy for the KGB by threats against his Russian sister. Rosenberg most likely appears in Vassiliev's notebooks as: "S-7engineer, American citizen, recruited in the Soviet Union. Verified at
work. We are making him a group handler." Simon Rosenberg told the
FBI that among his sub-sources were Stanley Bruno, a designer at
Youngstown Sheet and Tube; Patrick Keenan, an engineer working as a
rolling mill foreman at Carnegie Illinois Steel Company in Chicago; and
John Berger, an engineer for United Engineering in Pittsburgh.s 5

At Ovakimyan's direction Feldman created a business front, Round
the World Trading Company, in New York. Feldman's partner in business was Herman Jacobson. Born in Latvia on zz December 1898, Jacobson arrived in America in 1906. Involved with the Communist Party
from its inception, he was a leader of the Young Communists in Philadelphia in 1922. After moving to New York in 1930, he worked as an accountant for Amtorg. Jacobson organized Round the World in 1935 and
disbanded it in 1938 after Feldman's disappearance. The KGB used the
company's bank accounts to transfer money to Soviet agents throughout the world. Rosenberg recalled sending checks to someone later arrested
as a Soviet spy in Greece and others in Europe and China. In 1937
Moscow sent instructions about using Round the World Trading Company:

"We are developing a plan to provide a connection between our organizations
and center in the event of war. We therefore need the following information:
1. All information and regulations regarding the organization of a steamship
society in America, so that this society's steamships can sail under American
flags in European waters. z. All information about small steamship companies
(2-4 steamships of average tonnage built in the last 1o-15 years) in Norway
Sweden, and Denmark, with an established name, which can be acquired at an
inexpensive price. It would be desirable to get this information in Brit's [Feldman's] company's name, or in the name of some other American organization.
3. Report whether Brit's company can obtain several freight ships of average
tonnage (3,000-4,000 tons) and guarantee that they can be utilized without
loss in European waters under an American flag."

A 1933 memo on agents in the American station identified Jacobson as
KGB agent S-1: "S-1. An American citizen by the name of Jacobson. Currently unemployed. S-II was recruited through him. Robert wanted to
make him a bookkeeper in the accounting office. In Robert's opinion,
S-1 is a recruiter with prospects. S-II. A secretary in the U.S. Department of Aviation. Gave blueprints. Recruited through S-1." ("Robert"
was an officer at the KGB New York station named Rosenstein.)"'

As for Jacobson's recruit, "S-II" (more often rendered "S-z" and "S/z°"
in KGB documents), her real name was not given in any documents and
has not been identified. She did, however, provide information of value
to the Soviets. The 1933 report referred to her working at the "U.S.
Department of Aviation," but there was no such agency at the time. A
1934 KGB report more precisely described where she worked: "S-2secretary in the Aviation Division of the Department of the Navy. Gives
valuable materials." A 1944 KGB cable detailed a meeting among Semenov, a KGB technical-scientific specialist, Jacobson, and "S-z." The
only detail about "S-z" in the cable was that she was then forty-five years
old. But the NSA/FBI footnote to the Venona decryption was redacted,
indicating that a real name had been attached to "S-2." In 1950 during a
follow-up interview, Feldman admitted that Jacobson had given him information he had received from a relative who worked at the Navy Bureau of Aeronautics in Washington. Feldman remembered that she was
a typist or stenographer and the only Jewish woman in the office. This information apparently enabled the FBI to identify her, and it is probable that she cooperated with the Bureau, resulting in the redaction.87

In 1936 the U.S. Navy arrested Lieutenant Commander John
Farnsworth for selling naval secrets to Japan. (He was convicted and imprisoned in 1937.) Farnsworth's arrest prompted a tightening of security
at "S-z's" office, and the KGB New York station reported:

"Upon her return from vacation, the source was shown, `for her information
and guidance,' an order to the agency regarding the `vigilance' of all its employees (in light of exposed espionage cases. (This pertains to a group of
Japanese intelligence agents who were arrested in Los Angeles and to the
naval officer Farnsworth (a Japanese spy), who was arrested in Washington.)
In accordance with this order, it is forbidden for typists and secretaries not
named in the order to type up top-secret documents in their divisions.

The order names only three typists who can be used by division leaders to
type top-secret documents. We regret to inform you that our source was not
among those three. But departmental bureaucracy is not an easy thing to overcome, and for now-order or no order-the division leaders continue to use
their own secretaries (whom they have at hand) to type things up.

The source thinks that everything will remain as it was. Much talk in the
division about the espionage cases, but our source is calm enough. We also
gave the source corresponding directives regarding vigilance. Meetings are to
be scaled back to once a month."

A supplementary report from "S-z" the next month indicated that the security tightening had blown over: "S/z reported that documents are still
typed up in every division, including hers." In 1940, with Europe at war,
things got more serious. The New York station told Moscow Center that
her courier, Jacobson, had reported: "S-z works in the Department of the
Navy. S-1 [Jacobson] said that because of the Spy-mania campaign and
the activities of the Dies Committee [House Special Committee on UnAmerican Activities], she is temporarily refusing to bring out documents.
She isn't breaking off with us and will start working again at the first opportunity." The report added, "She is willing to have us stop paying her
allowance," indicating she did not expect to receive her usual monthly
stipend during a period of non-performance. She continued to be in
touch with the KGB into 1944, but it is not clear if she returned to her
earlier status as a productive source.ss

The most valuable material "S-z" stole from the Navy involved Robert
Goddard's rocket experiments (the Navy funded part of Goddard's pioneering work on liquid-fueled rockets). In 1935 Abram Slutsky, chief of KGB foreign intelligence, prepared a special report on the material, stating that his officers had

"obtained through agents in the U.S. a report by the well-known Amer. scientist Dr. Goddard, who has been working for a number of years on a liquid-fuel
rocket. The report is addressed to the U.S. Navy Department and sums up the
results of Goddard's io years of work on a liquid-fuel rocket. In addition to
covering certain phases of the work that has been done, the report contains a
whole host of specific data on the rockets that the author has developed (dimensions, thrust, fuel consumption, etc.) and test results. The final section of
the report comments on the prospects for the practical use of liquid-fuel rockets: i) as an engine for super-speed planes; z) as an engine for apparatuses
sent to explore the upper reaches of the stratosphere (up to 16o km); 3) as an
engine for aerial torpedoes (so-called "gunless" artillery). It is clear from the
subsequent correspondence that Goddard's work was funded by private individuals. Now, however, liquid-fuel rockets have come under the Navy Department's authority and have been classified as secret defensive weapons.

Soviet organizations that work in the same field are highly interested in
G.'s work, but so far they have not been able to obtain reliable information
about his work. According to a preliminary expert examination, this material is
very valuable. The material is being sent to Cde. Pavlunovsky, the head of the
chief mil.-mobilization administration of the NKTP [People's Commissariat of
Heavy industry], which has jurisdiction over the jet-propulsion institute, for
his use."89

Another scientific source exposed by Ovakimyan's arrest was one of
the KGB's more mercurial recruits. While under FBI surveillance in December 1940, Ovaldmyan met with Dr. Maurice Bacon Cooke. Shortly afterwards, Cooke showed up at an FBI office in New York, said he knew
the Russian, and gave agents a list of questions on national defense that
Ovakimyan had given him to answer, including queries on high-grade
gasoline and camouflage at oil plants. Cooke explained that he had first
met Ovakimyan in 1934 through contacts at Amtorg and eventually became an industrial spy. Over the years he had given him information from
the TVA on phosphoric acid and, in 1940, on "catalytic cracking," a then
groundbreaking oil-refining process, in return for more than $14,000. He
also admitted turning over details about gasoline-refining plants that he
had stolen from M. W. Kellogg Company.

Cooke was an accomplished, if controversial, chemical engineer, born
in New Jersey in 1893. After graduating from Bucknell, he had worked
at DuPont, the U.S. Bureau of Mines, Kellogg, and Alco Products Company (as director of research). He had first contacted Amtorg in 1933 and visited the Soviet Union that year and in 1936. One FBI memo reported
that he had obtained a $12 million contract with Amtorg to build four
aviation gasoline plants. The FBI memo summarizing his visit noted that
he seemed unstable. Two months later the president of Kellogg reported
that Cooke had come into his office crying and that he'd "practically confessed to stealing processes" and giving films to someone in February.
Cooke talked to the FBI again and "fainted several times" during the interview. He admitted giving several rolls of Leica film to Ovakimyan on
17 February 1941, despite denying it earlier, and accepting money. He
also spoke of suicide. In 1942 J. Edgar Hoover informed Assistant Attorney General Thurman Arnold that Cooke was working for the East Texas
Petroleum Company, which had been barred from access to certain
patents because it employed him. Later that year he somehow got a job
with the War Production Board as a consultant, claiming to be a sworn
counterespionage agent of the FBI. As soon as Hoover found out, Cooke
was fired; one report on the incident called him "psychopathic."90

Cooke appeared in KGB reports in 1938 as a technical intelligence
source of the KGB New York station with the cover name "Octane." ("Octane" also appeared in deciphered Venona cables, but analysts were never
able to identify his real name.) It took some time before the KGB realized that he had talked to the FBI. In April 1941 a report on intelligence
in the United States still listed him among the most valuable sources in
the New York station. It was not until August 1941 that the KGB New
York station told Moscow: ""Octane"-Dr. Cooke, according to "Sound"
[Gobs], was turned by the FBI. `We lost him.' In connection with the
case with "Gennady"[Ovakimyan]."9'