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FBI Agent To Testify in Spy Trial

October 8, 1998

ALEXANDRIA, Va. (AP) _ Masquerading as a South African intelligence agent, Douglas Gregory lured a suspected dormant spy to New York for a meeting that would cap years of investigation, the FBI agent told a jury Thursday.

Gregory, a specialist in foreign counterintelligence, testified that he was called in to flush out three former campus radicals, accused of spying for East Germany but looking for a new master after the Cold War’s end left them out in the cold.

``She considered this to be her raison d’etre ... her reason for being,″ the FBI agent testified, referring to former Pentagon lawyer Theresa M. Squillacote, on trial with husband Kurt A. Stand. The couple is charged with conspiring to commit espionage, attempting espionage and illegally obtaining national defense documents.

Squillacote and Stand deny none of the spy tale full of code names, secret transmitters and safe houses that federal prosecutors have laid out in their case, their defense attorneys have said.

But they deny they acted criminally, arguing the only illegal acts the two committed were for the U.S. government after a meeting with agent Gregory.

``The only entity that made her get classified information was the U.S. government, not East Germany, Russia or South Africa,″ defense attorney Lawrence Robbins said in his opening statement earlier Thursday.

Any work the couple did for foreign agents, Lawrence said, involved only unclassified material, such as reports on political figures like Jesse Jackson.

Squillacote, 40, and Stand, 43, a former labor union representative, are accused of spying for the former East Germany, the former Soviet Union and Russia and for agents they thought were from South Africa.

Assistant U.S. Attorney Randy Bellows told the jury Wednesday that Squillacote, Stand and James M. Clark _ a friend from college days at the University of Wisconsin-Milwaukee and a confessed spy who will testify against them _ were ``dedicated communists″ who hated the U.S. government. Clark, 50, pleaded guilty in June to conspiracy to commit espionage and will be sentenced next month.

On Thursday, Gregory recounted how he was brought onto the case for a ``false flag″ operation, a sting aimed at tricking Squillacote into betraying the trio’s past espionage activities.

Through months of wiretaps and several searches of the Squillacote-Stand residence, the FBI had learned that Squillacote had written to a Communist Party official in the South African Defense Ministry, Ronnie Kasrils, praising a book he had written and the new South African government of Nelson Mandela.

She signed the letter with a phony name, ``Lisa Martin,″ and gave her address as a post office box she had rented under that name. The FBI interpreted the letter as part of her search for a new country to spy for.

FBI agents concocted a letter _ falsely attributing it to Kasrils _ telling Squillacote, ``We need help to achieve the changes we seek.″

This letter led to the meeting in New York in October 1996, at which, according to Gregory, Squillacote described more than a decade of work the couple did for the East German intelligence service and said she feared that Western intelligence services were trying to identify such agents in the United States.

She claimed she had broken U.S. espionage laws ``lots and lots,″ and that she wanted ``to try to make a contribution″ to South Africa’s interests.

At their next meeting, she gave Gregory four classified documents: three from the Defense Department and one from the CIA.

The trial in U.S. District Court is expected to last more than two weeks. Conviction could bring a maximum sentence of life in prison.

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