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The FBI's secret hunt for a KGB mole
The bureau spent decades scouring its ranks for a Russian spy — and pretends it never happened
 
The mole was always just a shadow for the FBI.
The mole was always just a shadow for the FBI. (Courtesy Shutterstock)

ONE SPRING NIGHT in 1962, a short, stocky Russian walked into the FBI office in Midtown Manhattan and offered his services as a spy for the United States. Aleksei Kulak, then 39,

was working undercover as a science official at the United Nations. He said he was unhappy with his progress at his true employer, the KGB.

Kulak was taking a huge risk by entering the FBI office. The building was just three blocks from the Soviet U.N. mission, which provided cover for dozens of KGB agents. "Aren't you worried they may be watching the FBI building?" an FBI agent asked.

"No," Kulak replied. "All of our people are out covering a meeting with your guy, Dick."

Your guy, Dick.

The Russian was clearly saying that the KGB had a mole inside the FBI. With those three words, he set off an earthquake inside the bureau that reverberated for decades — and remains unsettled even now.

Kulak became the FBI's Bureau Source 10, with the code name FEDORA. (Behind his back, agents called him Fatso.) The FBI assigned the code name UNSUB Dick, "UNSUB" being the term for "unknown subject," to the mole that Kulak said was hidden inside the bureau.

Kulak had scarcely left the FBI building that evening before the bureau launched a mole hunt that "shook the foundations of the bureau," says David Major, a former FBI counterintelligence agent. Over the course of three decades, hundreds of agents' careers fell under the shadow of the investigation. In terms of corrosive effect, Major cites only one comparable event in U.S. intelligence history: the notorious mole hunt James Jesus Angleton conducted within the CIA, which paralyzed the agency's Soviet operations and destroyed or damaged the careers of as many as 50 loyal CIA officers between 1961 and 1974, when Angleton was fired. "You know how Angleton ripped apart the agency," Major, who retired from the FBI in 1994, told me. "Well, the same thing happened to the bureau. Dick ripped the bureau apart. But it never became public."


1967. | (Bettmann/CORBIS)

THE BUREAU'S FIRST task was to ensure that it didn't assign the mission of finding Dick to Dick himself. To reduce that risk, the hunt was given to two trusted senior counterintelligence agents, Joseph J. Hengemuhle and Joseph J. Palguta, who were good friends as well as colleagues. Hengemuhle was "a big, burly guy, over six feet, brash — cuss words were every other word," recalls Michael J. Waguespack, another seasoned FBI counterspy. "He was the Soviet program in New York." Palguta had taught himself Russian from Berlitz recordings and was fluent in the language. According to John J. O'Flaherty, another former counterintelligence agent, his accent was convincing enough that he would sometimes pose as a Russian.

Armed with little more than a name — and uncertain whether it was the target's real name or a KGB code name — Hengemuhle and Palguta set out to catch a mole.

With a thousand agents, New York was the FBI's largest field office. "There were about six or seven Soviet squads," says an FBI counterintelligence agent assigned to New York at the time. "Some were looking at the U.N., some were looking at Americans the Soviets contacted. Plus lookout squads and a squad that did surveillance. There were maybe 50 people combined on each squad, so with six or seven squads there were over 300 agents looking at the Soviets — which means everyone on those squads was a potential suspect." Including FBI agents working against Eastern European targets, the number of logical suspects totaled about 500.

Of course, everyone named Dick had to be investigated. "Dick McCarthy became the first suspect, because of his name," says Walter C. "Goose" Gutheil, a New York FBI counterintelligence agent. Richard F. McCarthy, who worked on a squad that targeted the GRU, Soviet military intelligence, assumed the mole hunters investigated him but says they never interviewed him. "I hope I was a suspect — they had to look at people with the first name," he says.

About the only other thing the mole hunters knew was that on the night Kulak walked into the FBI office, he said Dick was out meeting with the KGB. That reassured Kulak that he wasn't talking to the mole, whose identity and appearance he didn't know, and gave Hengemuhle and Palguta a clue, however slight. They could try to narrow the field of suspects by determining who was on the street at that hour. "You'd want to see who worked that day based on timecards, when did they sign in, what was on their timecard," says former FBI agent Edwin L. Worthington.

ALTHOUGH HENGEMUHLE AND Palguta held their mission closely, word got around as they delved into counterintelligence agents' backgrounds, the cases they handled, and their possible vulnerabilities to recruitment by the KGB. For security reasons, the mole hunters worked from a windowless back room in the New York FBI office, in an area set apart from the rest of the floor. "It was supposed to be secret, but everyone knew about the search," Major says. James A. Holt, a counterintelligence agent in New York at the time, says the mole hunt shattered morale: "There was consternation in the New York office because everybody knew they were under the gun, that they were being looked at."

One reason for the apprehension is that many agents worried that the investigation might uncover other sins that would get them in trouble — a drinking problem, an extramarital affair. An agent who lived through the mole hunt recalled hearing about "one guy who used to go to a bar every morning before he reported to work."

The investigation seemed to be getting no closer to its target. The mole hunters decided to try something new — a "dangle" operation, in which they would send an FBI agent posing as a turncoat to offer his services to the KGB, in the hope that any conversations that resulted would elicit some clues to the identity of UNSUB Dick.

A former FBI agent explained how the dangle worked: "A watcher for us, a street agent, walked into the apartment of Boris Ivanov, the KGB rezident in New York. Ivanov slammed the door, but not before our agent said he would meet them at such-and-such time and place."

In fact, a KGB agent showed up at the appointed time and place. "We ran the operation for six months; there were three or four meetings," the ex--counterintelligence agent says. "We hoped their questions might lead us to Dick, the questions they asked and the questions they did not ask — because that would imply they had a source already in those areas. That might give us a clue to the identity of Dick." But the KGB "never asked the right questions," and the operation proved fruitless.

With so many agents to investigate, there seemed to be no end to the mole hunt. "It went on for years," a former head of the Soviet section at FBI headquarters says. "It drove us crazy."


1967. | (Bettmann/CORBIS)

AS THE INVESTIGATION persisted, it magnified a question that had arisen the moment Aleksei Kulak presented himself to the FBI: Was he a true "agent in place" for the FBI, or a double agent planted by the KGB? If he was a double agent, could his warning about UNSUB Dick be trusted? Some FBI agents argued that Kulak was simply playing mind games with the bureau, that Dick was a phantom. Like the hunt for UNSUB Dick, the argument about Kulak went on for decades, compounding the mistrust in the New York office and tensions within headquarters. One former counterintelligence agent, an assistant chief of the Soviet section at headquarters, says he periodically changed his mind. "I certainly had access and read through the FEDORA file. When I retired in 1988, it was 92 volumes," he says. "I believe that the information from FEDORA was probably good. There were those, myself included, who sometimes questioned Bureau Source 10's bona fides. Depends on which side of the bed I got up."

Others who have doubted that Kulak was working for the United States point out that when he returned to Moscow in 1976 he was not executed — unlike the GRU officer Dmitri Fedorovich Polyakov, who provided valuable information to the CIA and the FBI for 18 years until the CIA mole Aldrich Ames betrayed him in the 1980s. Kulak survived his homecoming, they note, even though American media reports had hinted that the FBI had a KGB source in New York. In a 1978 book, author Edward Jay Epstein went so far as to publish the code name FEDORA and describe him as a KGB officer working undercover at the U.N. and specializing in "science and technology." But Kulak was never arrested, and the agency eventually received word that he died of natural causes in the early 1980s.

On the question of whether the KGB had a mole in the FBI, Oleg Kalugin, a major general in the KGB, says yes, it did. Kalugin worked in New York undercover for the KGB for five years starting in 1958. Kalugin said he had actually paid the FBI agent for his services to the KGB, more than once and in person. "I paid Dick, but I didn't know his true name," Kalugin says. He did not say how much he paid.

The FBI paid Kulak $100,000 over 15 years, but he may have had more than money on his mind. One agent says Kulak worried that UNSUB Dick would find out that he was spying for the FBI and tell the KGB about him. "That's why he dimed him out," the FBI man said. Kulak, he said, "kept telling the bureau to find him."

Over time, the mole hunt faded. In the mid-1980s, however, an FBI analyst named Robert H. King concluded that he had identified UNSUB Dick. Through Kulak, he learned both that the KGB had a source who had retired from the FBI and lived in Queens, N.Y., and the initial of that source's last name. He checked the name of every FBI agent who lived in Queens in the 1960s — and found a match when the initial was translated from Cyrillic to English. The agent had a host of problems, including alcohol abuse, which could have made him a target for recruitment by the KGB. He had retired young on a medical disability around 1964. An FBI agent was sent to interview the suspect. He denied he was a spy.

In 1973, Kalugin was in Moscow, serving as chief of KGB worldwide counterintelligence. "There was one file on our man in the FBI," Kalugin told me. "He was retired and living in Queens." That man, he said, was the mole Kulak had warned about, the one the FBI had dubbed UNSUB Dick.

To this day, the FBI is maintaining its silence on UNSUB Dick. In response to several requests for comment, a spokesman said none would be forthcoming, and that "the assistant director for counterintelligence will not confirm or deny such a case."


©2013 by David Wise. From a longer article originally published in
Smithsonian magazine.

 

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