Spies: The Rise and Fall of the KGB in America (65 page)

Moscow checked its records and instructed its officer to find out what
he could about Graze, including his present situation and his political
views. A week later they met again. Graze indicated he no longer worked
for Vesco and the American authorities were pressing him to testify, but
he had refused. He was working as a consultant for an American company
with a branch in Costa Rica; his sons were now a doctor and a lawyer in
the United States. He mentioned his old friend and fellow KGB asset,
Frank Coe, now a financial expert working for the People's Republic of
China. During another conversation a few days later, Graze admitted that
some of his views had changed over the years ("'the exposure of Stalin's
cult of personality affected him negatively"'). Still, he described himself
as Marxist, and the KGB officer judged:

"He is seeking validation that his convictions are right, and that his help for us
in the past had really served the cause of victory over fascism and the foundation of world peace, rather than having been used only `to destroy the families
of 2o Russian traitors.' To this day, D. ["Dan"/Graze] lives in his past work and
apparently thinks of that period of his life as having caused much personal
misfortune, but at the same time as having been the most interesting, fruitful,
and beneficial to the cause of world peace. It seems that under certain conditions, he would not object to doing what he could to help."

(Graze's reference to "having been used only `to destroy the families of zo
Russian traitors"' was likely a reference to his having given the KGB information on Russians who served with Vlasov's Army and the Soviet
practice of punishing family members.) There were additional meetings
into early 1977, but nothing resulted. Stanley Graze died in Costa Rica in
June 1987, a one-time Communist and Soviet spy turned international
business swindler.25

The KGB's most productive source in the OSS was probably Donald
Wheeler, who grew up in an environment very far removed from the New
York Russian Jewish immigrant world of Stanley Graze. An autobiography he prepared for the KGB in January 1945 explained that he was descended from a Puritan family that had arrived in Massachusetts in the
1630s. At the time of the American Revolution his ancestors lived in upstate New York. His father grew up in Wisconsin and became a bricklayer. A Bellamyite Populist who welcomed the Russian Revolution with out ever joining the Communist Party, his father "`consistently defended
the Soviet regime from the beginning. He has never been disturbed by
purges, by pacts, or by any of the aspects of Soviet policy which have
upset so many middle-class liberals."'26
- - - -- - - -- - - -- -

Wheeler himself was born on an isolated farm in White Bluffs, Washington, in 1913 and grew up with five siblings in a poor economic backwater in the eastern part of the state: "`We lived in a tenthouse: there
was neither electricity, nor running water, nor telephone, and it was a
hard struggle to provide even the least heat in winter. Drifting wood from
[the] Columbia furnished all our fuel, and much of our timber."' He attended Reed College, joined the Communist-dominated National Student League, and won a Rhodes Scholarship to Oxford in 1935. He explained his political development in this fashion:

"My childhood political development was a curious mixture of agrarian radicalism, utopian socialism (from books mainly) and faith in militant trade
unionism. I was taught to admire Eugene Debs along with John Brown, Lincoln, and Lenin; but on the issues of the day I was naturally rather confused. I
supported La Follette in 1924 (at the age of ii) and the Socialist candidates in
1923 and 1932.... Beginning about 1934 I began to lose some illusions and
acquire a better understanding of politics. I met Elizabeth Gurley Flynn and
was much influenced by her.... When I arrived in Oxford in the fall of 1935 I
joined the October Club, the left-wing political organization, which very soon
thereafter was amalgamated with the Labour Club, in accordance with the
People's Front policy. In a few weeks, on my own initiative, I approached
some of the student Party leaders and asked to be admitted to the Party. After
being examined by the secretariat, I was admitted to the CPGB [Communist
Party of Great Britain] I believe in December 1935."

Wheeler spent the third year of his Rhodes award at the University of
Paris and worked on behalf of the International Brigades in his spare
time. Returning to the United States in 1938, he taught briefly at Yale
and then joined the Treasury Department, working under Harry White,
before moving to the staff of the Senate Banking and Currency Committee. In October 1941, he transferred to the Office of the Coordinator
of Information, forerunner of the OSS.27

When he first arrived in Washington, Wheeler told the KGB, he was
isolated from party contacts and made the mistake of approaching Martin Chancey, an open CPUSA leader. He believed that this action led to
a Civil Service Commission investigation that threatened his OSS career,
but his boss, Emile Despres, vouched for his loyalty and saved his job.
(Despres had the distinction of intervening on behalf of two hidden Com munists. Later working at the State Department, he also defended Carl
Marzani, unsuccessfully in his case .)28

Wheeler worked on issues of German manpower for the OSS. Franz
Neumann, a co-worker, recommended him to the KGB in 1943 "as someone who was talented and progressive." The New York station checked
the recommendation with Duncan Lee, a senior OSS officer and KGB
source. Lee and Wheeler had both been Rhodes scholars and had met on
the boat on the way to Oxford. They had also been at Yale together in the
late 1930s, Wheeler as a political science instructor and Lee as a law student. In Washington the Lees and the Wheelers socialized. The New York
station reported, "We intend to recruit Wheeler through Sound [Gobs]."29

Golos managed the approach through Victor Perlo. In a report to the
KGB Perlo recalled that Wheeler had been part of a secret but otherwise ordinary CPUSA political unit of government employees but had
dropped out of that group by 1943. Perlo had a member of his apparatus,
Edward Fitzgerald, approach and connect Wheeler with Perlo's unit, but
Wheeler had produced little until the end of 1943, when Perlo himself
"`established contact with him for a special assignment."' Earl Browder
first put the Perlo group in touch with Golos in November 1943, and Elizabeth Bentley had her first meeting with several of its members in March
1944. The KGB moved swiftly, however, to take direct control of the
Perlo group, and by the fall of 1944 Joseph Katz, a veteran KGB agent,
had replaced Bentley as the group's chief liaison.30

Regarding Wheeler's contribution, Victor Perlo in a report to the
KGB, likely prepared in 1945, wrote:

"He has access to excellent material, and once given explanation of what was
wanted, worked hard and bravely to get it. He had planned to leave the OSS because of boredom with work, but when explained why it was important for us, he
wholeheartedly accepted the idea of staying indefinitely, so long as it would be
useful in our judgment. His expressed attitude to the dangers involved is that
our work is the only important thing he can do, and that there is no point in
maintaining his personal security if he doesn't do the work. His actions bear out
this expression. He has not been reckless, but has gotten materials regularly
under security conditions more difficult than those faced by most others."

Late in May 1944 Akhmerov, chief of the KGB's illegal station, sent a
cable to General Fitin about Wheeler's position and availability that was
quickly answered with the news that he was "especially" of great interest.
Wheeler was soon justifying that evaluation. An internal KGB memo
from mid-1944 said of ten documents that he had provided, "all the materials are of interest and all are valuable" and were "`a rich source of ma terial"' on Germany's economic position, and some had been forwarded
to GRU, which had made use of them in evaluating the military-political
situation there. In September a telegram from Moscow Center praised
the "very valuable materials" Wheeler had sent about both the Soviet
Union and Germany. The Center also wrote that it was interested in another report on "`Russia's external economic relations and its interest in
monetary stabilization,"' referenced in Wheeler's material and "`located
in `Izra's [Wheeler's] department."' Moscow instructed: "`Try to get it."131

Up until August 1944 the KGB's only contact with Wheeler had been indirect, via Perlo. At that time Akhmerov reported: "`Izra [Wheeler] has
given us a larger amount of interesting material than anyone else in that
group. Three weeks ago, Myrna [Bentley] met with him for the first time.
He made a very good impression on her. I asked Myrna to tell him to be very
careful and to do everything possible to consolidate his position in the department. He is very brave, it seems, and unconcerned about his position.
He says it doesn't make sense to be afraid-after all, a person only dies once.
He is very critical of his colleagues and considers them all to be featherbrained."' Akhmerov also observed, "'I think he understands full well that
he is helping us. He is undoubtedly the most active one in the group."'32

Perlo detailed several potential threats to Wheeler's position in his
1945 report. In addition to the Civil Service Commission investigation
that he had survived, his brother George, also a secret Communist,
worked for the Foreign Economic Administration and had come under
Civil Service Commission suspicion. Donald's wife was also publicly active in various Communist-linked causes in Washington. (Incredibly, despite these issues, the OSS assigned Donald to investigate security suspects in his division of the OSS!) Donald's wife also worked, and with
three children, Perlo thought the time Wheeler spent on household duties was cutting into his espionage productivity, and he had suggested her
"`quitting her job, and helping him with typing etc.' "33

In September 1944 the KGB suddenly feared a more serious peril.
Akhmerov passed along from Bentley that Duncan Lee "`told us some
very unpleasant news about `Izra's' [Wheeler's] official situation in his department. The news is that he was included on a list of several employees who allegedly provide us with information from their department., "
Bentley noted that Lee might be forced to fire his old friend Wheeler.
(Lee did not know that Wheeler was a fellow KGB source.) Follow-up
messages based on information from Lee showed that not only was Donald Wheeler on the list, but so also were two other KGB sources: Maurice Halperin and Irving Goff. But subsequent messages indicated that the problem was not quite as bad as the initial report. The OSS security
list identified Wheeler as a suspected Communist and Halperin as a sympathizer, but the only persons suspected of passing information to the Soviets were two OSS officers who had served with the International
Brigades, Manuel T. and Michael A. Jiminez, and David Zablodowsky, a
hidden Communist with links to Whittaker Chambers's mid-193os GRU
network. Further, OSS officials, reflecting General Donovan's policy of
tolerating Communists, had decided to take measures against these individuals only "if they side with the USSR against the USA in the future."
Nonetheless, as a security measure, Moscow Center ordered a temporary cessation of contact with both Wheeler and Halperin and insisted
that it had to approve any recontact.34

Anatoly Gorsky, Washington KGB station chief, met with Harold
Glasser in December 1944 and noted that Glasser knew Wheeler and referred to him as "`temporarily in quarantine."' Glasser was also a member of the Perlo group, and, typical of the relaxed security and lack of
compartmentalization of the CPUSA-based networks, evidently Glasser
and other members knew contact with Wheeler had been temporarily
suspended. By March 1945 Wheeler was being cautiously reintroduced
to espionage work. Explaining that his group needed better facilities for
photographing their material, Perlo told the KGB that Wheeler had
-a well equipped shop, and is skillful in handling it."' He proposed that
Wheeler become his group's "`technical specialist, and be given responsibility for jobs of this sort."' He also suggested that the KGB pay
Mrs. Wheeler to assist the group's work "`if and when"' she quit her regular job, a suggestion echoed by Joseph Katz, who proposed paying her
$75 a month. Gorsky, however, was unenthusiastic about overburdening
Wheeler, a prime source of OSS documents, with additional duties as a
covert photographer. Instead, in April 1945 he told Moscow Center that
another KGB agent in Washington, Gerald Graze, was photographing
the material produced by Wheeler, Perlo, and Edward Fitzgerald (then
a KGB source at the War Production Board).35

By the end of 1944 the KGB had pushed Bentley to the side and in
1945 began taking direct control of the Perlo and Silvermaster groups.
Moscow Center wanted the networks restructured, instructing Gorsky:
"Take note of how the probationer [agent] network is formed so as to
guarantee security. The most prudent thing-to form small probationer
groups of 2-3 people ... I) the most guidance for each worker, 2) maximum secrecy in work." In the process of reorganization Moscow Center
emphasized Wheeler's importance. Vassiliev's notes show that Moscow told Gorsky to put Wheeler in a three-person subgroup: "Probationers
[sources] in "Cabin" OSS "Cautious" [Julius Joseph]-in the Japanese
Section: U.S. policies in the Far East, in China and Korea, leads on individuals. "Izra" [Wheeler] gives valuable materials. The main thing-secrecy. "Muse" [Helen Tenney]-Russian Section of "Cabin." Erratic behavior in day-to-day life ... could get noticed by counterintelligence. C.
[Center] proposes giving "Izra" and "Muse" to "Cautious"-a reliable
and experienced probationer who will impart secrecy skills to them." Another Moscow Center message repeated the point: ""Cautious's' subgroup. Handles `Izra' and `Muse.' Use the utmost caution when working
with this subgroup and especially with `Izra.' `Vadim' [Gorsky] should
meet with `Izra' personally once every two or three months." '36