Authorities: Prison cell in Oregon didn't stop ex-CIA spy

WASHINGTON — Harold Nicholson, the highest-ranking CIA officer convicted of espionage, has been locked up in a federal prison in northwest Oregon since 1997.

But even as federal inmate No. 49535-083, Nicholson never really retired as a Russian spy, federal prosecutors say. In an indictment unsealed Thursday, Nicholson and son Nathan, 24, were charged with having used prison visits, coded letters and clandestine overseas meetings to sell more secrets to the Russians in the past three years, in a scheme Nicholson hatched from his prison cell. The two were accused of conspiring to act as agents of a foreign government and money laundering.

"You have been brave enough to step into this new unseen world that is sometimes dangerous but always fascinating," Harold Nicholson wrote to his son in July, the indictment says, in what apparently was an allusion to the scheme.

The elder Nicholson pleaded guilty in 1997 to selling the Russians the identities of fellow CIA officers for $300,000. According to prosecutors, he "trained and tasked" his son in spycraft from his prison cell beginning in 2006 and helped his son meet with Russian handlers in Mexico, San Francisco, Peru and a T.G.I. Friday's restaurant in Cyprus to pass on information intended to help current Russian agents evade detection, prosecutors said.

Prosecutors said Nathan Nicholson, of Eugene, Ore., a former Army paratrooper, returned from his visits with the Russians with at least $35,000 in cash, much of it in $100 bills sometimes tucked inside a PlayStation video-game case.

The money was designed in part to settle an unclaimed "pension" Harold Nicholson said was owed him from his days as a CIA spy for the Russians in the 1990s before his arrest in 1996, the prosecutors said.

The charges offered a compelling reminder, officials said, that the spy wars between Russian and the United States did not stop with the end of the Cold War and the collapse of the Soviet Union in 1991.

"The beat goes on, and the Russians have been as aggressive as ever, perhaps more so, since the end of the Cold War," said John Martin, a former Justice Department official who ran the counterespionage unit and oversaw the Nicholson prosecution in 1997. The new charges that Nicholson was able to continue espionage work from a prison cell "are really unprecedented" and show the continued threat, Martin added.

The affidavit says the FBI first received information in 2002 that Nicholson might be trying to get back in touch with his Russian handlers. While the FBI was pursuing that lead, Nicholson used his son as a conduit, passing information to him during prison visits, the document says.

Nicholson admitted in 1997 that he had sold the Russians the names, identities and missions of numerous CIA employees, including scores of young trainees he had instructed at the agency's school for spies. He was the CIA's deputy station chief in Malaysia before returning to agency headquarters in 1994 in a senior counterterrorism post.

In pleading guilty, Nicholson avoided a possible life sentence and was given 23 years in federal prison.

At his sentencing, he told the judge he had become a Russian spy for the financial benefit of his three children, and he said he knew his children would forgive him.

He had sole custody of his three children after a divorce. The children, including Nicholson's youngest child, Nathan, then 12, went to live with their grandparents in Eugene after their father's imprisonment. Nicholson asked to be imprisoned near his family so he could see them and was moved to the medium-security lockup in Sheridan, Ore.

Nicholson's mail at the prison was heavily monitored, and officials said he initially sought to use other inmates to pass messages to the Russians through their outside mailings.

In February 2002, the FBI first learned Nicholson apparently was trying to use his fellow inmates to communicate with the Russians, according to an affidavit filed in federal court in Oregon by Jared Garth, an FBI agent on the case.

That led the FBI to interview a cellmate who told investigators that Nicholson had confided to him a concern that the information he had from his days at the CIA would become "stale" and "no longer have value to a foreign government." He also reportedly said he had a "pension" awaiting him in Russia and planned to repatriate there after his release from prison.

Nicholson's attempts to pass information through other inmates apparently went nowhere. So, authorities said, he turned to his son beginning in late 2006.

The FBI investigation showed that letters between the father and son became much more frequent in fall 2007, according to the affidavit. Sometimes, the father would cite biblical verses, telling Nathan in one letter during their planning: "Do not gloat over me my enemies! For though I fall, I will rise again."

One of the most critical pieces of evidence, federal officials said, was an 80-page notebook Nathan Nicholson kept, including contact information in foreign countries and methods of communicating with his Russian handlers by e-mail and in person.

It also contained what federal officials described as questions the Russians had given Nathan Nicholson to pose to his father, including some about the events leading up to his 1996 arrest.

"The Russians clearly were interested in finding out how he got caught," said a government official who described the questions as attempts to learn how other Russian agents might avoid detection. The official spoke on condition of anonymity.

It is not clear whether the information the Nicholsons provided to the Russians was significant. The charges made public Thursday do not include any allegation that that the information was secret, but the government official cautioned that, "We don't necessarily know at this point everything that was passed."

However, an intelligence official who also spoke on condition of anonymity downplayed the threat, noting that Nicholson had not been in the CIA since 1996 and that any information he provided to the Russians was of limited use. "This just shows that the Russians are either sentimental or stupid," the official said.

The Russians, for their part, wouldn't discuss the charges. "We never give comments on such issues. That's just our policy," said Yevgeniy Khorishko, spokesman for the Russian Embassy in Washington.

The Associated Press contributed to this report.