Photo By Erin Thompson | Richard C. Smith (center) being escorted out of a Virginia courthouse, Apr. 4, 1984... read more read more
by Erin E. Thompson, USAICoE Staff Historian
RICHARD C. SMITH ACQUITTED ON ESPIONAGE CHARGES
On Apr. 11, 1986, Richard C. Smith, a former CI agent with the U.S. Army Intelligence and Security Command (INSCOM), was found not guilty on charges of conspiracy and espionage. Throughout his trial, Smith maintained his activities were directed by the Central Intelligence Agency (CIA).
Richard “Craig” Smith entered the spy world after high school when he became a clerk at CIA headquarters in Langley, Virginia, in the early 1960s. In 1965, he began attending Brigham Young University, before being drafted into the U.S. Army in 1967. He was assigned to one of INSCOM’s predecessor organizations in 1973. Smith retired from military service in 1976 and remained at INSCOM as a civilian case agent overseeing double agents pretending to defect to the Soviet Union.
In 1980, Smith resigned from civilian service and moved to Salt Lake City, Utah, where he opened a video-tape business. While traveling in Japan in 1981, Smith claimed he was approached by two men he believed worked for the CIA. Smith agreed to serve as their courier and, a year later, as a double agent. He was instructed to contact the Soviet embassy in Tokyo offering to sell information about his work with INSCOM, while gathering intelligence on how the Soviets dealt with foreign agents. Smith met repeatedly with Victor Okunev, a Soviet intelligence agent assigned to the Tokyo embassy. Although Smith testified that he provided little information to Okunev, he did receive $11,000, which he claimed to have handed over to the CIA. When he lost contact with his handlers in early 1983, he attempted to reconnect through one of his contacts in the Federal Bureau of Investigation (FBI). The CIA claimed it had no record of Smith or his operations, prompting a year-long investigation. On Apr. 4, 1984, Smith was arrested and charged with one count of conspiracy, two counts of espionage, and two counts of passing classified information to the Soviets.
Smith’s lawyers connected his story to a different case unfolding on the opposite side of the country. Smith was originally told to contact his handlers by asking for a Richard Cavannaugh at a subsidiary of the Honolulu investment firm Bishop, Baldwin, Rewald, Dillingham, and Wong (BBRDW). In August 1983, BBRDW founder Ronald Rewald was arrested on charges of fraud and tax evasion, among other federal crimes. Rewald claimed the firm was a front for CIA operations under the direction of agent Charles Richardson. Declassified documents from 1979 stated that Richardson was using a Hawaiian investment firm and the name Richard Cavannaugh as a cover for his west coast operations. An Internal Revenue Service investigation in 1983 threatened Richardson’s activities at the same time Smith allegedly lost contact with his handlers.
Smith’s trial began on Apr. 7, 1986. The defense argued that Smith believed he was working for the CIA when he approached the Soviets in 1981, and the operation was being run by Richardson. Richardson was called in as a bench witness at the end of the trial. He admitted he was fired from the CIA for his dealings with Rewald but denied knowing Smith. Despite information connecting the CIA to BBRDW, no evidence tied the agency to Smith.
The trial concluded on Apr. 11, 1986. The defense had laid out a convoluted tale about Smith working for a CIA agent performing dubious operations out of a Hawaiian investment firm, a story many counterintelligence experts in the Army, CIA, and FBI found far-fetched. The prosecution maintained Smith, whose video business was near bankruptcy, had sold out his country for money, nothing more, nothing less. After six hours of deliberations, the jury returned a verdict of not guilty on all charges.
For more information on the Smith and Rewald cases, see Scott Klug’s “The Spy Who Was Left Out in the Cold,” https://www.cia.gov/readingroom/document/cia-rdp90-00494r001100710105-2.
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| Date Taken: | 04.04.2025 |
| Date Posted: | 04.04.2025 14:43 |
| Story ID: | 494609 |
| Location: | US |
| Web Views: | 111 |
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