Cassidy's Run: The Secret Spy War over Nerve Gas

^{CHAPTER: 17} SHOW TIME

For Phil Parker, the tragic death of the two agents was a severe emotional blow. He felt a personal responsibility, asking himself over and over whether he might have been able to act sooner and do more to bring about an arrest. Had he done so, he thought, the accident might never have happened.

Parker had flown to Minneapolis several times to confer with Kirkland. The two had become good friends, a bond strengthened by their shared determination to roll up the PALMETTOS.

But the plane crash was more than a torment for Parker, it was also a catalyst. He had been importuning the Justice Department for more than a year to act on the case, and now he intensified his efforts. The time had come to move, he argued, to close out the operation that had begun almost two decades earlier when Joe Cassidy was first dangled to the Russians on the volleyball court.

Moreover, the fatal accident itself posed a potential danger to the operation. Parker and others were alarmed that the crash of the Cessna might tip off the PALMETTOS to the fact that they were under surveillance. The remote lake in northern Minnesota where the plane had gone down was near where the Lopezes were camping. If the couple heard reports or read news stories about the crash and the loss of the two FBI agents, they might connect it to their presence in the area and try to flee.

Aware of this new danger, Parker made certain that the bureau continued to keep a close watch on the Lopezes. In Minnesota, Dennis Conway took over the PALMETTO case. He and Kirkland had been good friends; Conway had been one of the agents who came to break the news to Julie the night of the plane crash. Conway, who grew up in Sioux City, Iowa, had played football for Notre Dame. “We called him ‘No-Neck’ because he was built like a fireplug,” Phil Parker said. “He was an outstanding agent.”

Parker still hoped, as did Conway, that Lopez would lead the FBI to a spy or spies in the GRU’s network in North America. But it never happened, and the FBI was increasingly frustrated.

“They took some funny trips,” Parker said. “There were some suspicious activities. Their actions on some of the trips they took to northern Minnesota indicated they were watching for surveillance. But we never saw them clear a drop or meet anyone. We don’t know why they were driving to Canada when Mark was killed.”

To move the case forward Parker needed approval at a higher level. Although most Americans probably view the FBI as an all-powerful agency that can arrest spies when it wants to, in fact, in sensitive cases involving national security, the bureau takes its marching orders from the Justice Department.

And in 1977, that meant John L. Martin.

For twenty-four years, until he retired in 1997, Martin was the official who decided which spies to arrest and prosecute. He also orchestrated a number of East-West spy swaps during the cold war. Working in the shadows and unknown outside the closed world of intelligence, Martin chose which espionage cases would be prosecuted and make the front pages and the nightly news. The rest never became public. As head of the internal-security section of the department’s criminal division, he was the official who determined, in effect, whether the spies came in from the cold.

On the couch of his office at the Justice Department, Martin kept a stuffed wolf in sheep’s clothing, a gift from fellow prosecutors. Its meaning was unmistakable; secured to the wolf’s forehead was a red star.

Within the FBI, some officials regarded Martin as overly cautious; they felt he allowed the prosecution only of cases he was sure the government could win. Over his career, however, Martin had cleared the way for some big wins: John A. Walker, Jr., who headed the notorious family ring of navy spies that sold codes to the KGB, convicted and sentenced to life in prison; Jonathan Jay Pollard, convicted of spying for Israel and sentenced to life; Ronald Pelton, a former National Security Agency official who sold secrets to the KGB, sentenced to life; Richard Miller, the first FBI agent to be convicted of espionage, sentenced to life; Aldrich H. Ames, the CIA supermole, sentenced to life for betraying the CIA’s Soviet agents, causing ten to be executed; and Christopher Boyce and Andrew Lee, who sold satellite secrets to the Russians and whose story was told in the book and movie The Falcon and the Snowman—Lee was sentenced to life, Boyce to forty years.

Some got away. Edward Lee Howard, an ex-CIA officer who revealed the secrets of the agency’s Moscow operations to the KGB, escaped to the Soviet Union. And Felix Bloch, a State Department official suspected of spying for the KGB, was subjected to a media circus after a news leak identified him; he was dismissed from his job but never indicted.

Martin, raised in upstate New York, joined the FBI after he graduated from Syracuse University Law School in 1962. He investigated the mob in New Orleans, then was sent to Mississippi to assist in the probe of the 1964 murder of three civil-rights workers. He left the FBI in 1968 to join a Washington law firm, but three years later went back into the government as an attorney in the Justice Department. When he took over the internal-security section, few spies had been prosecuted; government intelligence agencies feared too many secrets might be revealed. Then, in 1980, Congress passed the Classified Information Procedures Act, which provided for ways to protect secrets in federal trials; under the law, judges can prohibit or limit the introduction of classified information in open court. The law had an impact. Seventy-six spies were prosecuted under Martin, all but one convicted.

“I’m a firm believer in giving them their full constitutional rights and then sending them to jail for a lifetime,” Martin said when he retired.[1]

But the tough-guy stance, as Phil Parker was to discover, did not apply in every instance; if Martin chose not to prosecute an espionage suspect, the public never got to know about the case.

Pushing hard for action against the PALMETTOS, Parker walked across the street from FBI headquarters in the J. Edgar Hoover Building to see Martin, whose office was not in the headquarters of the Justice Department but on Ninth Street. Martin turned the case over to Joseph Tafe, one of his staff attorneys.

A short, chubby man with sandy hair and glasses, Tafe at first seemed receptive to Parker’s entreaties. The FBI man became a frequent visitor to the Ninth Street building. To Parker’s dismay, however, the department seemed to be moving at a glacial pace.

In the spring of 1977, FBI headquarters had asked the Tampa office to find out if Joe Cassidy would be willing to testify in open court and to travel to Washington to confer with Justice Department attorneys. Cassidy agreed to both requests.

If there were any signs that the PALMETTOS were planning to escape, the bureau wanted authority to arrest them. Tafe began drafting a twelve-page criminal complaint to have ready in case the Lopezes tried to bolt. The complaint called on a federal magistrate to issue warrants for their arrests.

On the face of it, the government already had a strong case against the PALMETTOS. There were photographs of Lopez and his wife retrieving films of the documents, many marked TOP SECRET, that Cassidy had placed at the dead drops. And Danilin had assured Cassidy that he had received that material.

But the department was waffling on whether to prosecute on the basis of the copious evidence already in the hands of the government. In the course of the investigation, the FBI had wiretapped and videotaped the PALMETTOS and entered their apartments to place bugs. The Justice Department lawyers could foresee trouble in the courtroom over the bureau’s counterintelligence techniques. The entries, taps, and bugs would surely be challenged on Fourth Amendment grounds by the defense.

John Martin, Parker said, raised additional objections. “John argued there is nothing illegal in picking up a package per se. He said it was just an unusual form of communication; you don’t have to use the post office, you can leave things in rocks. And Martin said the information in the package had been cleared for transmission to the Soviets and therefore was not classified.”

James E. Nolan, Jr., a former high-ranking FBI counterintelligence official, said Martin’s view was that clearing material to pass it to the Soviets “constituted a de facto declassification. He felt that made it unusable for prosecution.”

Legally, however, the question of whether the feed had technically been declassified or not fell into an arcane, gray area. Nobody really knew. An equally strong argument could be made that a document stamped TOP SECRET was exactly that.[2]

“The documents were approved for passage to a hostile government,” Parker pointed out, regardless of whether the feed was classified. “You have the conspiracy charge—it had classified markings on it so you would have to assume the person who picked it up would know he was not authorized to have it.”

The real reason for the Justice Department’s caution, however, was the backstage debate over the wiretaps and entries. The issue was further complicated by the fact that some of the techniques used by the FBI in the PALMETTO investigation had been approved by the attorney general, but some had not.

Despite the legal hurdles, at first Parker was encouraged by the apparent support he received from Martin and Tafe. “At the outset, Tafe said, ‘I think we can do a prosecution on this case,’” Parker asserted. “John Martin said face-to-face to me in his office in the Ninth Street building, ‘Yes, I think we have a case.’”[3]

As the months slipped by, however, it soon became apparent to Parker that nothing was happening. “What we wanted was prosecution. All we got was talk.” Days and weeks went by with little action. “I’m an easy-going guy,” Parker said, “but I was kicking over trash cans.”

The FBI man had run into a bureaucratic brick wall. “I had been fighting with Joe Tafe for eighteen months to give me an answer,” Parker said. “I even spoke to the U.S. attorney in Minnesota, Thor Anderson.” Whenever Parker approached Tafe, he said, the Justice Department attorney would say, “‘I’m busy.’ I could never pin him down.

“We’d been talking for months…. I go into his office, and I said, ‘We’re ready to go, are you going to make a decision on it?’ He said, ‘Damn, I just haven’t been able to get to it.’ That’s when I kicked over the trash can rather than hit him in the head. Tafe said, ‘Calm down!’ and I yelled a little bit.”

Parker decided on the spot it was time to confront the Lopezes. As the case supervisor, he had the authority to do that much, with or without the Justice Department’s approval. Once he did so, he knew, the case would be over, one way or another. Either he would get a confession and win permission from the department to make an arrest, or he would at least have the satisfaction of knowing he had done all he could. Parker had a few parting words for Tafe. “I said, the hell with it, I’m going out to Minneapolis to do an interview. Probably we should have done it before.”

It was late May 1978. The Justice Department officials led Parker to believe that if Lopez confessed, there could be a prosecution after all. “Talking to Tafe and Martin, it was, like, ‘If we get an admission, you’ll authorize an arrest?’ And they said, ‘Yes.’”

Tafe had concluded there might be a way to pick his way through the legal minefield. With a confession, the government would have a clean case—it would not have to rely on electronic evidence. There was a great deal of other evidence, such as the photographs of the Lopezes clearing drops in Florida, that was not obtained through wiretaps or similar means. And Cassidy was willing to testify in open court.

Parker’s decision to fly to Minnesota meant that the criminal complaint would have to be at the ready. On May 24, a teletype went out from FBI headquarters to Tampa and Minneapolis advising those offices that Tafe would fly to Tampa with the complaint, which was to be filed in court if the subjects attempted to flee. Tampa was instructed to warn Joe Cassidy that his name might be about to be made public and to make arrangements to protect him.

The next day, the text of the complaint was teletyped to the FBI office in Tampa for its information. Headquarters advised that if the Justice Department filed the complaint, it would do so in the United States District Court in Tampa before Magistrate Paul Game, Jr., since the alleged criminal acts had been committed in that part of Florida. The complaint was entitled United States of America v. Gilberto M. Lopez and Alicia C. Lopez, and charged them with violation of Section 794(c) of Title 18 of the U.S. criminal code, the key espionage statute that prohibits the transmittal of defense information to a foreign power. The law provides the same punishment for conspiracy to violate the statute.[4]

The criminal complaint named Mikhail I. Danilin and Oleg I. Likhachev as “co-conspirators but not defendants.” Since the two Soviets had diplomatic immunity, they could not be arrested. The complaint charged that the four “did conspire to communicate, deliver and transmit to a foreign government, to wit, the Union of Soviet Socialist Republics… information relating to the national defense of the United States, with intent and reason to believe that the said information would be used to the advantage of said foreign government.”[5]

The complaint then said that Joseph Cassidy “was acting as a double agent for the FBI…. The FBI has been aware of and has supervised Mr. Cassidy’s activities as an apparent agent of the USSR during the course of the events stated herein.” The complaint listed the details of all of Cassidy’s meetings with Danilin and Likhachev, as well as the clearing of the drop sites in Florida by Lopez, sometimes accompanied by his wife. It ended by asking the magistrate to issue “a warrant for the arrest of defendants Gilberto M. Lopez and Alicia C. Lopez.”

To all appearances, the espionage complaint and Parker’s flight to Minneapolis were being carefully coordinated for the likely arrest of the PALMETTOS. According to Jack O’Flaherty, Cassidy’s case agent in Tampa, the FBI office there was instructed to make a hotel reservation for Tafe. “I personally went over on lunch one day and made the reservation at the Sheraton, one block from the FBI office in Tampa.” All the ducks were in a row.

But the bureaucratic wheels slowly turning in Washington mysteriously ground to a halt. With no explanation, O’Flaherty was told to cancel Tafe’s hotel reservation. “I canceled it on Memorial Day weekend,” he said.

Despite the about-face in Washington, Parker flew to Minnesota as scheduled, still determined to get a confession. At the same time, he arranged for Aurelio Flores to meet him in Minneapolis. “The undercover agent was there for a couple of reasons,” Parker recounted, “mainly because of the shock value, and because he spoke Spanish.”

Carmen Espinoza, an FBI agent from New York who was also fluent in Spanish, flew out to Minnesota to interview Alicia Lopez. Both Lopez and his wife spoke good English, but Parker was covering all bases.

When there are two suspects in a case, police and FBI agents normally try to interview them separately. One might break even if the other does not, and separate interviews make it more difficult for suspects to coordinate their answers to questions.

Espinoza, later an assistant U.S. attorney in Connecticut and a Superior Court judge in Hartford, was bilingual, born in Puerto Rico, and a graduate of Brown University and George Washington University Law School. “They needed a Spanish-speaking female agent,” she recalled. “My name popped out of the computer.” Espinoza had joined the bureau only two years earlier, and she was intrigued at the prospect of participating in her first espionage case.

In Minneapolis on June 3, Flores checked into the Sheraton Ritz and called the professor. Parker had scripted the scenario.

Flores sounded casual on the telephone. “I said, ‘Hey I’m in town, come on over.’ So he said, ‘I will.’ He came over to the room. He was glad to see me.”

“What are you doing here?” Lopez asked.

“I’m on a business trip, just passing through town.”

Parker and Dennis Conway were waiting in an adjoining room. After a minute, they knocked on the door. Flores let them in.

“Gilberto,” Flores said, “this is Phillip Parker and Dennis Conway, and we are all FBI agents.”

Lopez looked stunned.

“We showed him our credentials,” Flores said. “He turned pale. He looked like he was going to faint. We told him someone was talking to Alicia at this moment.”

Agent Conway read Lopez his rights. He was told he would be interviewed about his and his wife’s espionage activities.

Lopez stared at Flores. “He said, ‘How long have you been an agent? You just got a job with them?’ He may have thought the bureau somehow found out about him and approached me to help them. ‘No, Gilberto,’ I said, ‘I’ve been an agent since the first day I met you.’ That’s when he sat down.

“He said, ‘From the very first day that I met you, you were an agent?’ I said, ‘Yes. We knew you were a Soviet agent, and we made an effort to get close to you, and that was me.’ He kind of went into shock.”

Parker picked up the story: “He didn’t say anything at first. He was sweating. We said, ‘We know you’ve been working for the Soviets.’ He didn’t respond.

“We continued talking. Most of the talking was done by Flores, in English and Spanish. We used all the interview techniques—good guy, bad guy. Flores was being sympathetic, we want to get your side of the story. I was the bad guy. Aurelio was expressing sympathy for the plight of Hispanics in Mexico and in the U.S.”

Parker had come armed with FBI surveillance photos of Lopez and his wife clearing dead drops. He spread them out on the table. “We showed him the photographs after about twenty minutes. We wanted him to know we knew everything he’d been doing over the past seven years. We showed him surveillance logs, to persuade Lopez we’d been watching him for a long time.” The agents also showed Lopez three-by-five-inch bureau index cards listing the radio transmissions he had received from the Soviets. But it was the photos that seemed to do the trick.

“Soon after that he said, ‘Yes, I have worked for the Russians, I am working for the Russians, and I will.’”[6]

According to Flores, Lopez admitted he had been active in three countries. “He said he had been working for the Soviets, that he had worked for them in Mexico, the United States, and Calgary, Canada.”

Parker pressed Lopez for a motive. “He said, ‘It’s not that I love the Russians, it’s that I hate the United States.’” Lopez, Parker said, explained he had spied for the Russians “because of how the United States has treated Mexico, throughout history. And because of the way Chicanos are treated in the U.S.” Mexico, Lopez said, was a puppet of the United States; he had spied for the Russians because any enemy of the United States was his friend.

“He admitted it was him in the pictures,” Parker said. “He never admitted meeting Danilin in Washington. We talked to him about three hours. Some of it was, how do you like Minnesota, the weather. We would change the subject.”

Conway said the bureau hoped to turn the PALMETTOS. Once Lopez confessed, instead of being arrested, he might agree to work for the FBI against the Russians, becoming a double agent for the United States. Or as Conway put it: “Our main purpose was to try to flip the guy. We were trying to give him a break. We gotcha: You can go to jail, or you can work with us. It was a little more sophisticated than that, but that was the bottom line.”

It is a classic maneuver in spy cases and has often worked. In questioning an espionage target, the FBI will attempt—without making any actual promises—to lead a suspect to think he might be able to avoid prison by confessing or acting as a double agent. And sometimes such cooperation does get the suspects off the hook. In this case, Parker encouraged Lopez to talk but offered no guarantees.

“We would not say if he became a double for the bureau he would not be prosecuted. It would depend on the extent of his cooperation. If he turned over to us half a dozen recruitments by the GRU, there was a good possibility he’d walk.

“We’re not after you, we’re after the people who are running you. If you’ll cooperate with us, things will go easier for you. We didn’t promise him he would walk. We did not say we were going to arrest him.”

The FBI agents, Parker said, asked Lopez “when and how he was recruited and by whom. He would not say. He seemed on the verge of cooperation at various points, and we did what we could to make him roll over.”

While the FBI men were questioning Lopez at the hotel, Alicia Lopez was simultaneously being interviewed by Carmen Espinoza and an agent from the Minneapolis office. The two agents had moved in as soon as Lopez had left for the hotel.

“They lived in a town house,” Espinoza said. “We rang the bell, she answered. I went in, and we spoke in Spanish. We told her they were caught. We showed her surveillance photos of them making the drops, some with their child. She was hard as a rock. She was a tough cookie. She said we had fabricated the photographs. She didn’t believe it. She wasn’t going to say anything, and we’re making all this up.”

When Espinoza reported that Alicia Lopez was stonewalling, Parker decided to bring the PALMETTOS together. “We had told Lopez his wife was also being interviewed,” Parker related. “At that point, we suggested he call his wife. We were at an impasse. He agreed to call his wife and ask her to come to the hotel.

“She showed up about half an hour later. She and her two kids were brought over by Carmen Espinoza and the other agent.” Now there were nine people in the room, five agents and four Lopezes. “When Alicia walked in, her husband said, ‘They know everything.’”

“Don’t say anything,” Alicia shot back.

Recognizing Flores, she embraced him. “She gave me a hug and a kiss,” he recalled. “She said, ‘¿Qué pasa? What is this all about?’”

The PALMETTOs, of course, knew what it was all about. It was Parker’s move. “We decided to leave them alone in the hotel room, and we went to eat,” he said.

Parker wanted the Lopezes to have time together to talk over their predicament. But Parker was apprehensive; he had checked the windows in the room, which was on the fourteenth floor, and knew that they could be opened. “I was worried about a suicide pact,” he said. “They’re in the room, and they’re saying, ‘Oh shit, what are we going to do?’ and they go out the window. That is not a nice thing to happen.”

As soon as Parker had left the hotel, he went across the street to the FBI office and called Gene Peterson at FBI headquarters to report that Lopez had confessed. “I briefed him on what Lopez had said…. He said, ‘OK, get it into a 302,’ which is an interview report. I said, ‘When do we get the authorization to arrest?’ He said ‘We’ll get back to you.’”

In less than an hour, Peterson called back, having talked to the Justice Department. Parker shook his head at the memory of that moment. “Pete said they wouldn’t authorize it.”

Parker was crushed and furious. His disappointment was shared by Peterson, who had supervised the case for so long. The bureau had by then worked the overall operation for twenty years—the longest espionage case of its kind in the history of the cold war. Two FBI men had died. The Justice Department had refused to move unless Parker got a confession, and he had just gotten it. But still the answer was no.

The FBI agents returned to the hotel, but the Lopezes declined to say more. “Lopez said, ‘What are you going to do to me?’ We said we don’t know yet, or words to that effect.” Parker then told the Lopezes they could go.

Aurelio Flores said the news seemed almost disappointing to the couple. “They wanted to be martyrs, to go on trial. He [Lopez] said, ‘We want our kids sent back to Mexico, and we want to stand trial.’ They wanted the publicity.

“Alicia said, ‘Why are you letting us go, we could have a trial.’ She said, ‘Is this like a spy swap? The Soviets have somebody they are going to exchange for us?’ She said to Gilberto in Spanish, ‘Ask Aurelio, why are they letting us go?’” There may have been another reason why the Lopezes were scared, Flores said. “I think she was worried about what might happen when they got back to Mexico and had to explain to their handlers what had happened. She didn’t say that, but I felt that.”

Espinoza, too, remembered that the Lopezes were reluctant to leave, though for another reason. “They thought they were going to be killed if they walked out the door,” she said. “They didn’t want to leave. I had to convince them it was OK. Finally, they walked out and left.”

Parker knew the spies were slipping out of his grasp, but he was not ready to give up just yet.

The FBI continued to watch the couple. “The Lopezes were under surveillance from the time they left the hotel,” Parker said. Two days later, Parker got word that the Lopezes were leaving for the Minneapolis–St. Paul airport.

Lopez may have thought there was safety in numbers. Arturo Madrid, the chairman of the Spanish department, got a frantic call from Manuel Guerrero, Lopez’s colleague and friend. “He said, ‘Arturo, I need you to meet me at the airport.’” With another professor from the Spanish department, Madrid sped to the airport, where he met Guerrero. “Manuel said, ‘I can’t explain right now. I need you to come to the gate with me. Gilberto is leaving on a plane for Mexico City right now.”

The FBI agents conducting the surveillance had followed the Lopezes to the airport. With several other agents, Parker also drove to the terminal.

He found a telephone and called William O. Cregar, the assistant director of the FBI in charge of the intelligence division.

“They’re in the terminal,” Parker said. He pleaded with his superior in Washington to try to reverse the decision. “I’ll call back later,” Parker said.

“No, they’re not going to authorize,” Cregar replied.

Parker watched the Lopezes get on the plane.

As the airliner taxied toward the runway, he called Cregar again.

“We’ve got one chance,” Parker said. “They’re going to land in San Antonio. It’s not too late.”

“Forget it,” Cregar said.

It was clear that the conversation was over. Parker added, “I was not in a position to question Bill Cregar.”

Totally frustrated, Parker watched until the plane carrying the Lopezes was only a speck in the distant sky.

He alerted the FBI’s San Antonio office, where Edward J. O’Malley was the assistant special agent in charge. “O’Malley had two of his biggest, toughest guys board the plane. One of the agents leaned over and said, ‘Have a good trip, Mr. Lopez.’ As the agents got off the plane, Lopez threw up.”

Professor Rolando Hinojosa-Smith, the new chairman of the Chicano studies department at the University of Minnesota, was startled to get word that day that Professor Lopez had vanished. “I went to work one day, and all of a sudden I was confronted with a missing professor,” he said.

No accurate explanation was given to Lopez’s students for his mysterious departure. Another faculty member took over his classes.

Among the faculty, there was a good deal of buzzing over the unexpected, fast exit of Lopez and his family. Hinojosa-Smith reported Lopez’s abrupt departure to Frank J. Sorauf, an eminent political scientist then serving as dean of the College of Liberal Arts. But Sorauf had apparently already learned something about what had happened, according to Arturo Madrid. Along with a few other colleages, Madrid knew that Lopez had been confronted by the FBI. Madrid recalled speaking with Hinojosa-Smith at the time.

“I remember saying to Rolando we really must protest this, this is outrageous,” Madrid said. “And Rolando said, ‘Well, I’ve already taken it up with the dean, who has informed me that Gilberto was operating as an agent of a foreign power.’”

In the days that followed, word spread among Lopez’s closer associates on the faculty that he had somehow been involved with Cubans. It was a cover story encouraged by Lopez himself.

Arturo Madrid remembered running into Lopez a year later in Mexico. “I was in Guadalajara, and I saw Gilberto Lopez at a conference I was at,” Madrid said. “He came up and thanked me profusely for having come to the airport that day. I kept Gilberto at a distance. I remember talking to my friend Jorge Bustamente…. I said, ‘Be careful, he [Lopez] was acting as an agent of a foreign power.’ Years later, Jorge told me what happened” the day Lopez and his wife fled to Mexico. “He said he had got a call from Lopez from San Antonio saying, ‘It’s a life-or-death situation, meet me at the airport in Mexico City.’ He came off the plane white as a sheet, scared to death, looking all around, and they drove him to his father-in-law’s house. He told Jorge he had been a courier for the Cubans and the FBI had shown him incriminating photos in which he was giving or receiving something from somebody from the Cuban mission to the UN, or the Cuban office in Washington.”

When Gene Peterson had relayed the disappointing word from headquarters on June 3, Parker recalled, he said the Justice Department attorneys, in refusing to authorize the arrest, “had alluded to the entries in Austin.” Yet the department’s internal-security lawyers had known of the taps, bugs, and videos of the PALMETTOS before Parker ever went to Minneapolis to confront the Lopezes.

The decision to let the spies go was due in part to the complex legal issues involved but also to a confluence of external political factors. The PALMETTO case came at a time when the law governing electronic eavesdropping in espionage cases was evolving, and the government’s power to intrude in the life of the individual for purposes of national security was being reexamined by Congress and the courts.

Probably no murkier area of law existed at the time than that surrounding wiretaps, bugs, and surreptitious entries in foreign-intelligence cases. The FBI’s use of these methods reflected the long and continuing tension in America between liberty and security. The Constitution was designed to protect against government intrusions and violations of the rights of the individual. The FBI, with responsibility for catching spies and terrorists, focused primarily on its mission. And the courts tended to give the bureau more latitude in counterintelligence investigations against foreign targets than in ordinary criminal cases.

In 1936, President Franklin D. Roosevelt authorized J. Edgar Hoover to collect intelligence on domestic “subversive activities.” In 1940, Roosevelt approved warrantless wiretaps in such cases, as well as against spies. Wiretaps can be installed from outside a building, but installing bugs to pick up room conversations normally requires entry into the premises. Hoover, a bureaucratic master at protecting himself, pressed the Justice Department for permission to plant bugs in national-security cases, authority he finally won in 1954. In 1965, however, Lyndon Johnson’s attorney general, Nicholas Katzenbach, changed the rules; from then on, the attorney general would have to give written approval in order for the FBI to plant bugs.

Under Hoover, the FBI had carried out literally hundreds of “black bag” jobs—illicit entries—many to install bugs. Hoover ostensibly banned the practice in 1966 after a subordinate pointed out that burglaries were “clearly illegal,” but the break-ins continued. In any event, the prohibition did not apply to break-ins to plant bugs against or search premises of foreign targets.

Two years later, Congress passed the Omnibus Crime Control Act of 1968, which required court warrants for wiretaps and bugs in criminal cases. Congress said nothing, however, about national-security targets, a loophole that allowed such practices without a warrant in spy cases. The law also contained a disclaimer that said the statute did not limit the powers of the president to authorize whatever was necessary to collect foreign intelligence or to protect against foreign spies.

In 1972, the Supreme Court in United States v. United States District Court for the Eastern District of Michigan, known as the Keith case, barred warrantless wiretaps for domestic-intelligence purposes, but it was and has remained silent on the use of taps in foreign-intelligence cases. Between 1971 and 1976, when the various techniques were used against the PALMETTOS in Salt Lake City, Austin, and Minneapolis, the law was unclear on the status of warrantless wiretaps, bugs, and entries in espionage cases. During the early 1970s, the approval of the attorney general was required by Justice Department policy but not by law or presidential executive order.

In 1976, President Ford issued an executive order on foreign counterintelligence requiring the attorney general, then Edward H. Levi, to issue guidelines allowing warrantless taps and bugs in espionage cases with the approval of the attorney general. The guidelines were classified. In 1978, President Carter issued a similar executive order.

Finally, in 1978, Congress attempted to dispel some of the legal fog by passing the Foreign Intelligence Surveillance Act (FISA) and creating new machinery to govern eavesdropping and entries by the government in espionage cases. Since October 1978, when FISA was signed into law, wiretaps or break-ins to place bugs to eavesdrop on agents of foreign powers must be authorized by a special court.[7] This judicial machinery did not exist, however, when the PALMETTOS and IXORA were subject to electronic surveillance.

In the PALMETTO case, it was not entirely clear why the Justice Department raised questions about the FBI’s entries at the eleventh hour, after Lopez had confessed. “The Justice Department knew everything about the case all along,” Parker said. “I talked to Tafe about the entries.”

Because some of the FBI’s actions in the case had not been approved by the attorney general, Parker said, “we all knew it might be a problem. We knew that from the beginning, but we were willing to go to court with it. If DOJ [the Department of Justice] wasn’t, why didn’t they say that at the start?” Given the fuzzy state of the law at the time, Parker felt the department might well have prevailed had it chosen to prosecute.

In meetings with the Justice Department lawyers, FBI officials insisted that there had not even been any unauthorized entry in Austin. Some weeks before the confrontation in Minneapolis, Peterson recalled, he and Parker met with John Martin. “We told Martin unequivocally that nothing was acquired from any unauthorized techniques. There was no trespass.”

Peterson’s argument rested on the unusual physical circumstances in Austin, where a camera had been installed in a crawl space that was above but not part of the PALMETTOS’ duplex. But the camera’s pinhole in the ceiling, however minute, could be regarded as an “entry.”[8] And the bureau’s agents had gone into the Lopezes’ house when they were away. On the other hand, since Lopez had freely sent a key to Aurelio Flores, it could also be argued that the entry was consensual. But a defense attorney would certainly maintain that the key had not been given to Flores so that his associates could copy Lopez’s code pads and remove his shortwave radio.

Peterson said Martin was noncommital in response to his arguments and indicated he would take the matter under advisement. On June 3, Peterson said, after receiving word from Parker that Lopez had confessed, he went to see Martin again. “Martin said he could not approve prosecution because of the entry in Austin. Martin said something about the political climate not being right to prosecute where the use of the techniques is going to come out. John Martin had never lost an espionage case. That was a factor.”

Bureaucratic confusion also played a part in the department’s refusal to authorize the arrest of the PALMETTOS. In 1971, a message went out from FBI headquarters to Tampa and Salt Lake City informing both offices that President Nixon’s attorney general, John N. Mitchell, had authorized an entry into the Lopezes’ apartment at the University of Utah to install a microphone. Mitchell, Nixon, and the president’s national security adviser, Henry A. Kissinger, were all briefed regularly on the progress of the PALMETTO case.

As a result of this message, the FBI agents who tapped and bugged the Lopezes in Salt Lake City believed they were acting under the authority of the attorney general. The message, however, was in error. There is no record in the FBI’s files that the request for approval by the attorney general ever left the bureau.

In retrospect, it is clear that several external events, and politics, played at least as great a role in the department’s decision as any points of law. It was the post-Watergate era; six years before, Richard Nixon had tried to use the CIA and the FBI to coverup a burglary at Democratic National Committee headquarters. Then, in 1975, the Senate intelligence committee headed by I daho Democrat Frank Church had revealed abuses by then ation’s intelligence agencies—drug testing on unsuspecting subjects, assassination plots, and mail opening by the CIA, and “black bag” jobs by the FBI. The intelligence agencies were on the defensive.

In April 1978, less than two months before Parker flew to Minneapolis to interview the Lopezes, a federal grand jury had indicted two senior FBI officials, Mark Felt and Edward Miller, for authorizing break-ins to search the homes of relatives and acquaintances of fugitive members of the Weather Underground.[9] “The government has to speak with one voice,” said a Justice Department attorney who worked on the PALMETTO case. “We’re prosecuting somebody at a high level in the FBI for illegal activities, then we’re going to go prosecute a case where the bureau was doing the same thing?” The searches in the Felt-Miller case did not take place as part of a foreign counterintelligence investigation, however. But from a political viewpoint, prosecution of the PALMETTOS might have appeared inconsistent.

Finally, the espionage convictions in May of Ronald L. Humphrey, an employee of the United States Information Agency, and David Truong, an anti–Vietnam War activist, also influenced the department’s response. Attorney General Griffin Bell had authorized the use of a video camera in Humphrey’s office and a bug in Truong’s apartment in Washington, both without warrants, but the attorney general had not approved the camera in Austin.[10]

Some weeks after the PALMETTOS had fled to Mexico, the Justice Department sent formal notice to the FBI of its decision not to prosecute the Lopezes, citing the wiretaps and entries as the chief reasons. The case had been reviewed by the deputy attorney general, Benjamin R. Civiletti. By that time, however, the horse was long since out of the barn.

There remained several unexplained aspects to the way the Justice Department handled the case at the end, allowing the two spies to escape. Phil Parker never found any of the department’s explanations either satisfactory or clear. Nor was he told why the criminal complaint was never filed in Tampa. The bottom line was that the government permitted two Soviet spies to escape. For Parker, it was particularly galling.

Even two decades later, the Justice Department’s decision to let the Lopezes go still rankled inside the FBI’s National Security Division, which has responsibility for counterintelligence. John F. Lewis, Jr., who retired in 1998 as assistant director of the FBI in charge of the division, was blunt in his assessment. “Despite the years of intense investigation, a confession from the male PALMETTO, photographs of both subjects receiving classified information, and the loss of two special agents’ lives, the PALMETTOS were allowed to board a plane in Minneapolis bound for Mexico on June 5, 1978.”

After watching the PALMETTOS’ plane disappear into the Minnesota sky, a gloomy Phil Parker drove back to town. There was one more chance to gather additional evidence against Lopez. “We wanted a search warrant for his apartment,” Parker recalled. “The owner of the apartment said the commode was stopped up. We immediately thought Lopez had been getting rid of stuff.”

But Parker and the other FBI agents were spared the indignity of delving into the Soviet agent’s toilet. It was catch-22: “DOJ wouldn’t authorize a search warrant,” Parker said, “because there was no plan for prosecution.”