Spies: The Rise and Fall of the KGB in America (38 page)

While GRU had had extensive operations in the United States in the 19zos, the KGB's presence had been much smaller, and the early 1930s
were a period of both learning and expansion. In these years there were
as yet only a few professional KGB officers with experience operating in
the country or possessing adequate language skills and understanding of
American culture. While it might appear counterintuitive, the KGB and
GRU in the late 192os and early 193os recruited a number of persons expelled by the CPUSA. Those expelled often considered themselves good
Communists and saw working for Soviet intelligence as a path back into
the Communist movement. Lore was one of these and worked for the
KGB's illegal station in the mid-1930s under the code names "Leo" and
10.

In a report written early in January 1935, "Leo"/Lore was described
as a talent spotter, recruiter, and agent handler who was responsible for
four sources. He had recruited "Gregor," who was supplying economic information early in 1934. He also recruited and handled "Willy," a key
source in the State Department. "Willy" (David Salmon) headed the State
Department's Communications and Records Division and provided
copies of reports sent by American diplomatic personnel overseas (see
chapter 4). During 1934 Lore recruited another State Department
source, "Daniel," who provided "very valuable" copies of stenographic
records of the conversations of high-ranking officials with foreign ambassadors. Additionally, Lore recruited "Albert," described as employed
by an unidentified police agency in New York. The KGB New York station also assigned Lore liaison duties with Thomas Schwartz, a former
German consul living in New York who had become a KGB source. None
of these sources appear to have been primarily motivated by ideology;
they all received generous payment for their work, as did Lore himself.
Lore was the sole link to several of his sources, picked up the information
they produced, and delivered the KGB's stipend.rs

Valentin Markin, chief of the KGB's illegal station, died in New York
in August 1934 either in an accident or a street crime. In the ensuing reorganization of the station, Moscow Center began to express concerns
about "Leo." One Moscow analytic report was "inclined to doubt the existence of the agents Daniel and Albert" and observed about "Daniel"
that "Leo [Lore] handles the connection. The station chief and his assistants have not met with the agent. We checked DOS's directory. The division he works in wouldn't bring him into contact with the documents
that are sent to us." The Moscow Center analysts ventured that likely all
the material actually came from "Willy"/Salmon, who did have such
access. High-ranking KGB officers wondered if Lore had invented "Daniel" and "Albert" "`with the aim of increasing his compensation."'
He received $35o a month, while "Daniel" got $50o and "Albert" $400.
"Willy"/Salmon meanwhile collected $5oo every month, and his product
was judged genuine. Moscow Center suspected that Lore was taking a
portion of Salmon's authentic material and attributing some of it to his fictitious "Daniel," pocketing his stipend. It concluded that Markin's replacement "needs to get to the bottom of this."ry

"Gregor" and Schwartz, two authentic Lore contacts and ones with
whom KGB officers had had direct communications, were broken off
from Lore and liaison transferred to a Soviet officer in September 1934.
Moscow Center instructed Boris Bazarov, Markin's replacement, to verify if "Daniel" existed. Yet the KGB New York station moved very slowly
with its investigation of Lore's suspected fraud. In July 1936 a report
noted that the New York station had direct contact with a senior State
Department official, Laurence Duggan, and used him to find out more
about Salmon. Duggan verified that Salmon existed and had access to
State Department archives. His officer's direct discussion with Duggan
also convinced Bazarov that Lore had been providing some misleading information about Duggan.20

Discovering Lore's deception, however, did not solve the KGB's problem. Lore was still the only contact with Salmon, and Salmon was providing very useful information at a time when the only other State Department source, Laurence Duggan, was of as yet limited utility due to
his focus on South American matters not of priority to Moscow and his
fear of exposure, which made him reluctant to provide documents in
quantity. A direct KGB approach to Salmon was risky because the KGB
did not understand the basis of Lore's relationship with him. Salmon
might become alarmed if approached directly and be lost as a source entirely or even go to security officials. Moscow was particularly concerned
to learn that Lore had gone to see Duggan, ostensibly for aid in getting
a visa for his nephew, a surgeon from Germany. It ordered Bazarov "to do
everything possible to keep `10' [Lore] from having contact with `1g'
[Duggan]." Moscow did not want a potentially valuable source like Duggan to drift into the orbit of a mercenary it no longer fully trusted. But
Bazarov noted that ensuring the two did not connect was likely to prove
difficult, since any admonition might alert either one to the other's link
with Soviet intelligence.21

Possibly reflecting the as yet limited number and capacity of the professional KGB officers at his command, Bazarov, despite his mistrust of
Lore, continued to use him. But by early 1937, Moscow Center had had enough. It lectured Bazarov that his suggestion that Lore be used to cultivate several of the State Department leads that Laurence Duggan had
suggested was unacceptable: "`Even though many of 19's [Duggan's] leads
are known to 1o [Lore], it is nevertheless to our disadvantage to have 1o
recruit them, because that would mean having to depend on him even
more. 1o will just keep them for himself, rather than pass the connection
on to us. Therefore we consider it necessary to refuse to have 19's opportunities or leads realized through 1o."' Moscow Center was increasingly convinced that Lore had ties to the hated Trotskyists and was enraged by the increasingly anti-Stalinist tone of his public lectures and
newspaper columns, telling the KGB New York station: "Leo's [Lore's]
anti-Soviet speeches must be stopped." It ordered Bazarov to insist on
direct meetings with Salmon and "Daniel" and to place them under surveillance. The illegal station chief replied that he had assigned "six people and three cars" for the surveillance and asked Hede Massing and her
husband Paul, veteran Soviet agents, to investigate Lore's activity. In her
1951 autobiography, Massing reported being assigned to surveil Lore in
early 1937. There is no report on exactly how or when the KGB cut its ties
with Lore, but there is no mention of him after April 1937. Vassiliev's
notebooks, however, also contain excerpts from the 1984 book Station
Chief Gold, an internal KGB summary of the career of its illegal officer,
Iskhak Akhmerov, used as an instructional textbook at the Andropov Red
Banner Institute, a KGB training school when Vassiliev was a student
there. One passage indicates that in 1937 Akhmerov saw to it that "shady
agents and those without prospects, such as `Leo' [Lore] and his group,
had to be weeded out. Suspicion of fraud."22

Interestingly, after the KGB cast Lore out, GRU considered picking
up some of the pieces. His GRU superior told Whittaker Chambers that
Lore had been connected to a Soviet intelligence apparatus but "something stupid" had happened. He instructed Chambers to talk to Lore and
see if he would hand over any of his former contacts. (Chambers was unclear about the date, but it appeared to have been in 1937.) Chambers
met with Lore; the two got along well and reminisced about Russians
with whom they had worked. But despite months of friendly conversations and promises, Lore never gave Chambers any contacts. GRU was
not the only agency that approached Lore. Later the FBI did so as well,
and he gave it a partial account of his knowledge of Soviet networks in the
United States but avoided recounting his own work as a Soviet spy or the
sources he recruited, such as David Salmon, in the State Department.
One Soviet agent he did identify, however, was Whittaker Chambers, and it was Lore's information that led the FBI to its first interview with Chambers in 1941. Lore died in 1942.23

Unlike Lore, Robert S. Allen had no history of involvement with Communist causes. Born in Kentucky in 1goo, he served in the army during
World War I by lying about his age. He graduated from the University of
Wisconsin, joined the Ku Klux Klan to write an expose, and at the time
of Hitler's abortive coup was studying in Munich, where his reporting enabled him to become a foreign correspondent and then Washington bureau chief for the Christian Science Monitor. A hard-nosed reporter with
a large dose of skepticism about American intervention in Latin America
and angered by his paper's refusal to publish damaging inside stories
about Washington, Allen recruited Drew Pearson, a neophyte reporter
for the Baltimore Sun, and they anonymously wrote Washington MerryGo-Round, published in 1931, a sensational and nasty expose of the
Hoover administration. It sold over 18o,ooo copies. After the authors
were identified, both were fired from their jobs. They quickly produced
a sequel in the fall of 1932, More Merry-Go-Round, and capitalized on
their fame by starting a syndicated newspaper column the following year.
Although Pearson was smooth and conciliatory and Allen abrasive and
bullying, their styles meshed, and the column, carried by Scripps Howard, became a powerful force in American journalism. Both men were
ardently pro-Roosevelt and sympathetic to liberals in the administration
like Harold Ickes and Sumner Welles, who frequently fed them inside
gossip and leaks. Unbeknownst to his partner, for a time Allen was also
providing information to Soviet intelligence.24

In January 1933 a KGB New York station message called Moscow
Center's attention to reports it was sending

"that came from the newly recruited source Sh/147, who in our opinion is of
great interest.

Robert Allen ... is a journalist by trade. In 1931 he wrote the book "Washington Merry-Go-Round," in which he described official Washington. The
characters he depicts in the book are a reflection of the pettiness and emptiness of many of Washington's current Republican congressmen and Cabinet
members. When this essentially malicious lampoon of unscrupulous Washington politicians was published, Hoover insisted that he be fired from the magazine where he was working. In 1932 he released a second book of the same
type. He personally knows most of the lawmakers and Cabinet members and also has extensive contacts in all of the departments. He personally knows
Mole; Roosevelt's chief adviser, and also knows Roosevelt himself, as well as
the Democratic majority leader in the Congress. Sh/147 is a valuable contact,
especially bearing in mind Roosevelt's future administration."

New York noted that it had put Allen on a $1oo-a-month stipend ($1,6oo
in 2008 dollars).25

The notes about Allen's supplying the KGB with information were
dated January and February of 1933. He provided political gossip about
potential appointments to the incoming Roosevelt administration, including the news that Sumner Welles would be appointed undersecretary
of state (he actually became an assistant secretary), accounts about the
Japanese fortifying Pacific islands, and information attributed to Senator
William Borah about FDR's plans for diplomatic recognition of the USSR.
There is no indication that ideological fervor motivated him. Whether he
simply needed the money or even knew exactly with whom he was dealing is not clear from the documents in Vassiliev's notebooks, although the
references to him as a recruited source are unambiguous; nor was Allen a
naif who would have misconstrued his covert paid relationship with gentlemen interested in information on matters of military and diplomatic interest to the USSR. Since he had no official access to government secrets
and supplied no government documents, he was violating no law that existed at the time. (In 1938 enactment of the Foreign Agents Registration
Act criminalized covert relationships with agencies of a foreign power.)
Given the lack of any reference to him after the first two months of 1933
it is likely the relationship did not last more than a few months. There is
no indication of whether he or the KGB ended their association.26

Two other journalists assisting the KGB in the early 1930s were John Spivak and Frank Palmer. Neither man ever openly admitted his Communist affiliation, much less his work for Soviet intelligence, but both were
KGB agents who provided valuable material about potential enemies and
suggested possible recruits to the KGB.

Born in Connecticut in 1897, John L. Spivak started his journalism
career as a police reporter. By the end of World War I, he was working
for a Socialist paper, covering labor unrest in West Virginia and ferreting
out company spies. He quickly made a career for himself as an investigative journalist, muckraker, and exposer of far-right extremism. Spivak achieved some fame in 1932, when he published Georgia Nigger an expose of abusive conditions in the mostly black prison labor chain gangs of
the deep South. He began to investigate anti-Semitism in 1934 and, after
consultation with contacts at the Anti-Defamation League (ADL), visited Frank Prince, an expert on anti-Semitism hired by Jewish organizations and a consultant to the U.S. House Special Committee on UnAmerican Activities, called the "McCormack-Dickstein Committee" by
the press. Spivak used his tips to launch investigations of pro-fascist
groups throughout the country, many involving wealthy or politically connected individuals. His subsequent articles in the Communist-aligned
New Masses (collected and published as Plotting America's Pogroms) garnered additional attention. Spivak passed some of his information to
Prince, who gave it to the McCormack-Dickstein Committee. He later
published exposes of intrigues by agents of imperial Japan in the United
States (Honorable Spy) and of the populist anti-Semite Father Charles
Coughlin (Shrine of the Silver Dollar).27