Special Report
By Grant F. Smith
Dr. Stewart D. Nozette pled guilty to tax evasion, conspiracy to defraud, and attempted espionage against the United States on Sept. 7, 2011. Nozette attempted to sell missile defense and nuclear secrets to an undercover FBI employee posing as a Mossad officer during a sting operation. On March 21, 2012 U.S. District Court Judge Paul L. Friedman sentenced Nozette to 13 years in prison, recommending that the celebrated NASA scientist be confined as close to Washington, DC in the “least restrictive” conditions possible.
The Nozette espionage investigation reveals the damaging tradeoffs the FBI has learned to make in order to successfully combat ongoing Israeli espionage. This compromised approach in turn raises grave questions about whether—with the U.S. Congress continuing to reward the true criminal targets—U.S. taxpayers are being forced to subsidize foreign espionage against critical American industries.
Stewart Nozette received his Ph.D. in Planetary Sciences from MIT in 1983 and worked on the White House National Space Council from 1989 to 1990. According to a former colleague, Nozette also worked on the Reagan-era “Star Wars” missile defense program at Lawrence Livemore National Laboratory and held top-level Defense Department clearances to access “critical nuclear weapon design information.” Nozette’s best known civilian work was on the Clementine satellite bi-static radar experiment that discovered water on the south pole of the moon.
In 1998 Nozette incorporated a nonprofit called the Alliance for Competitive Technology (ACT), which he ran out of his Chevy Chase, Maryland home. He signed consulting contracts that gave him access to secure facilities and computer networks at the Navy Research Laboratory, Defense Advanced Research Projects Agency (DARPA) and NASA installations in and around Washington. Even though he was no longer a government employee, Nozette continued to have access to top secret secure compartmentalized information until March of 2006, when the U.S. government abruptly revoked his security clearances.
In 2007 the FBI obtained a sealed warrant to search Nozette’s home. Agents obtained evidence that ACT was engaged in tax fraud and overbilling the U.S. government. But they also discovered volumes of classified U.S. government files unlawfully stored on Nozette’s home computer. One document named “Proposed Activities for 2005-6” ominously contained a section titled “Penetration of NASA” on behalf of a foreign client. The FBI soon discovered that for the decade between 1998 and 2008 ACT had received $225,000 in “consulting fees” from Israel Aerospace Industries. IAI tasked Nozette to obtain “technical data” beginning in November of 1998. Nozette complied with IAI’s requests in exchange for “regular payments,” according to criminal complaints.
Given its history and future plans, that IAI was running Nozette to obtain valuable U.S. secrets comes as no surprise. In the 1950s the state-owned IAI was established and led by Adolph “Al” Schwimmer, an American felon convicted for serially violating U.S. arms export controls to arm Israel’s war of independence. Using Jewish Agency funding, Schwimmer fraudulently obtained surplus U.S. aircraft from the War Assets Administration.
Unable to build the necessary economies of scale for world-class aerospace development, IAI has long sought out well-placed Jewish foreign agents to steal critical systems designs. In the 1960s it obtained stolen French Mirage 5 jet fighter plans from a sympathetic Jewish contractor in order to build its own copycat Kfir fighter. In the 1980s IAI relied on America’s pro-Israel lobby to win U.S. funding for the development of the doomed Lavi jet fighter. The Lavi program was shut down in 1987 after growing U.S. opposition to Israeli technology transfers to China. The U.S. has also paid for half of the jointly developed IAI/Boeing Arrow Anti-Missile system since 1988. Since 2007 the American Israel Public Affairs Committee (AIPAC) has ramped up intense lobbying for hundreds of millions in additional U.S. taxpayer funding for the new Arrow III, beyond the $3 billion in military aid already provided to Israel annually. As the weaker joint venture technology partner, IAI has strong incentives to build up its intellectual capital by any means possible in order to claim a larger share of future U.S. Arrow III funding.
The FBI’s suspicions that Nozette was spying for IAI were confirmed when he left the U.S. on Jan. 6, 2009 with two computer “thumb” drives. Customs and Border Patrol agents searching Nozette’s luggage upon his Jan. 28 return could not locate the drives. Nozette brazenly bragged to a colleague that if the U.S. ever tried to “put him in jail” he would move to Israel or Singapore and “tell them everything” he knew. Nozette took the extra precaution of hiding his large cache of classified information on hard drives in a safe deposit box in California.
The IAI/Nozette operation yanked the FBI back into a familiar predicament. During Al Schwimmer’s post-WWII smuggling days, criminal indictments of a large group of smuggling network members identified by the FBI were derailed even before they could be handed down. The Israeli government tasked such elite Israel lobbyists as Abraham Feinberg and Jewish Agency legal representative Nahum Bernstein to “squash…forever” the indictments, according to Justice Department files declassified in 2011. During investigations into the diversion of weapons-grade uranium from the NUMEC plant in Pennsylvania to Israel in the 1960s, the FBI could not convince the CIA—reluctant to expose its overseas assets to a “roll up”—to track the smuggling line back to the atomic spymasters in Israel in order to gather evidence for U.S. prosecutions.
Going after IAI—or even embarrassing the Israeli government in order to prosecute Nozette—clearly was out of the question for the Justice Department. This would have incurred the wrath not only of an army of Israel lobbyists, with attendant public accusations of anti-Semitism, but of members of Congress and possibly even Boeing executives protecting their share of the Arrow. The FBI hatched the only politically feasible counterintelligence operation. It gave Nozette multiple opportunities to incriminate himself on surveillance video, but hermetically sealed off Israel and IAI from the investigation.
An undercover FBI agent posing as a Mossad intelligence officer recruited Nozette in September of 2009. Nozette quickly agreed to supply U.S. secret information to his new “Mossad” handler in exchange for an Israeli passport under an assumed name and generous cash payments. According to court filings, he even expressed surprise at the more direct approach, telling the undercover FBI agent, “I thought I was working for you already. I mean, that’s what I always thought, Israel Aerospace Industries was just a front.”
Nozette offered to sell his fake Mossad handler classified U.S. national defense information about nuclear weaponry, military spacecraft, satellites and other major American weapons systems. To gather incriminating evidence following IAI’s own modus operandi, the FBI paid Nozette $9,000 for “answers” to a set of written questions. Nozette quickly produced top secret information about American satellites, early warning systems, communications intelligence and U.S. national defense strategies.
“SMILE, YOU’RE ON CANDID CAMERA”
The Justice Department has now publicly released Nozette’s damning videotaped sessions with the undercover agent in which the spy for Israel casually discusses payments and his intention to leave his wife and escape to Singapore if any law enforcement problems ever developed. Nozette bragged that the secrets he was selling had cost the U.S. government between $200 million to $1 billion to develop. He asked for only 1 percent of the lower estimate—or $2 million—as his fee for his entire stash of U.S. secrets. Nozette also confirmed to the FBI agent that he had already passed some classified information to Israel. Even when presented this golden opportunity, the FBI did not attempt to “flip” Nozette in order to run him against IAI.
After Nozette’s indictment and arrest, the U.S. attorney general imposed severe “special administrative procedures” to limit his communications with the outside world. In a rambling pre-sentencing memo, Nozette attempted to recast his activities as pursued entirely in defense of Israel. “Many Jews in this country are proud and public supporters of Israel and have high respect for the Mossad, an agency that is well-known to have played a crucial role in the nation’s survival,” he claimed. “Indeed, support across the political horizon for the State of Israel and, by implication, an agency as central to its collective psyche as the Mossad, was heartily reaffirmed by the reception given Prime Minister [Binyamin] Netanyahu in his address to the U.S. Congress last year…”
In another pre-sentencing memo Nozette annexed color images of the Clementine satellite, as if to warn Judge Friedman against throwing away such a key member of NASA’s intellectual capital base. Government prosecutors brusquely responded that Nozette’s pleas for a lighter sentence were “absurd” and “devoid of even the slightest expression of remorse.”
Even as the FBI and Justice Department worked to place Nozette safely behind bars, AIPAC’s mandatory disclosures reveal it continued to quietly lobby for additional IAI Arrow III funding from Congress. Israel’s determination to maintain itself as a top 10 global arms exporter and technological innovator means that it will continue to spy aggressively on its biggest benefactor. The Congressional Research Service has documented Israeli officials bitterly complaining about “sealed box” U.S. military aid projects that do not allow Israeli developmental and maintenance participation and direct access to underlying technology. The Defense Department has prohibited Israeli access to the cutting-edge F-35 jet fighter’s source code, software and electronic systems. Israel continues to claim that—although it may obtain up to 75 of the advanced fighters entirely at U.S. taxpayer expense—it must be granted access to such sensitive design information in order to successfully integrate Israeli weapons systems.
There is little indication that the U.S. Department of Justice will unleash the FBI to aggressively pursue Israeli espionage. On May 4, the author confronted U.S. Attorney Ron Machen on public radio that his public statements that the Nozette prosecution thwarted leaks of classified information to Israel were demonstrably false. Even as Machen ducked the question, Israeli subsidiaries, front companies, lobbying organizations and lone-gun foreign agents continue penetrating America’s military-industrial infrastructure. The FBI’s capacity to field politically sensitive counter-espionage operations will likely be tested to the limit. Less than a month after Nozette’s sentencing, IAI subsidiary ELTA Systems announced it would soon open a 100-person operation in Maple Lawn, Maryland.
Grant F. Smith is director of the Washington, DC-based Institute for Research: Middle Eastern Policy. Declassified files referred to in his article, as well as U.S. v Nozette court documents, may be browsed at the Israel Lobby Archive, <www.IRmep.org/ila/>.