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Pelton Associate Testifies in Spy Trial About Gold Jewelry, Money

May 30, 1986

BALTIMORE (AP) _ A former business associate testified at the spy trial of Ronald W. Pelton today that the defendant returned from a 1983 trip wearing a gold watch, a gold ring and a gold necklace he had purchased while away.

Mark Schulstad said that Pelton, a former National Security Agency employee accused of selling secrets to the Soviet Union, also bought a personal computer which he brought into the office they shared in Bladensburg, Md.

Schulstad, at the time an employee of Safford Marine, where Pelton rented office space, said the defendant had gone away for one to two weeks in the spring of 1983.

After Pelton returned from the trip, Schulstad said, ″He had told me he went to California to do consulting for a defense contractor involving security work for a computer system.″

″He told me he received approximately $40,000,″ Schulstad told a U.S. District Court jury.

Federal prosecutors contend that Pelton, 44, received nearly $40,000 from the Soviets in return for disclosing classified information about U.S. interception of Soviet telecommunication systems. The government contends that Pelton was paid $20,000 following an October 1980 visit to Vienna, Austria, and another $15,000 plus expenses in connection with his April 1983 trip.

Pelton told FBI agents that he picked up expense money the Soviets advanced to him before each trip, from a spot near a pizza parlor in Virginia, according to earlier testimony.

William J. Valois Sr., a Silver Spring, Md., businessman for whom Pelton worked, testified that Pelton ″looked physically shaken″ when he returned from a trip to Vienna, Austria, in April 1985. Pelton had asked for a week off to go to Europe to do consulting work for the CIA.

″He told us he had certain expertise in eavesdropping and communication, and the CIA was employing his services for overseas at some international conference,″ Valois said. ″If they used his services they would pay him $25,000. If they didn’t he would be paid $7,000,″ he said.

But Pelton flew back to the United States because ″he felt the KGB was watching him,″ Valois said.

According to earlier FBI testimony, Pelton said he was unable to meet his Soviet connection during the 1985 trip to Vienna. Pelton told the FBI he apparently was not recognized by the Soviets because he had lost weight.

Schulstad testified that he first met Pelton when he was selling houseboats to Safford, which in turn sold them on the retail market. In 1980 Pelton moved his office into the Safford building, from which he conducted a variety of business ventures and later worked for the company.

Schulstad said Pelton told him ″he was quote ‘chasing the brass ring’ and he wanted to make a lot of money, the usual things a lot of us look for.″

In 1980, Schulstad said Pelton purchased a white Lincoln automobile. ″He said he paid cash for the car,″ Schulstad said.

On Thursday, Jules Dorner, an Internal Revenue Service investigator, testified that in March 1983, Pelton made cash deposits into his bank accounts totaling $11,000.

The government has not proved that Pelton got the money from the Soviets, but tried to strengthen the case against him with circumstantial evidence buttressing testimony by the star witness, FBI Agent David Faulkner.

Defense attorney Fred Warren Bennett, who sought unsuccessfully to suppress statements Pelton made to Faulkner and another FBI agent, on Thursday attempted to show that federal authorities violated Pelton’s rights and tricked him into confessing.

Under cross-examination in U.S. District Court, Faulkner maintained he acted within the law by interrogating Pelton for nearly five hours before advising him of his right to remain silent and arresting him on Nov. 24.

Earlier, Faulkner said that under questioning, Pelton gave the FBI some details about his contacts with the Soviet KGB, but had balked at divulging how much classified information he gave the Russians without receiving guarantees that his statements would not be used against him.

Pelton, 44, a former National Security Agency communications specialist, faces a maximum life prison term if convicted of espionage. He is accused of passing to the KGB secrets about how the NSA collects and analyzes Soviet communications in return for nearly $40,000.

Pelton declared bankruptcy March 23, 1979, four months before he resigned from the NSA, and then failed at several jobs, prosecutors have said.

Ann Barry, Pelton’s girlfriend in 1985, testified that he told her he had jeopardized his ″undercover government work″ by missing an key telephone call in Virginia and a meeting with contacts in Europe.

She said Pelton did not tell her about his spying, but that he became angry when they ran out of gas on the way to a pizza restaurant, where he told her he was to receive an important telephone call.

Pelton told FBI agents he received monthly calls at the restaurant, Faulkner testified Wednesday.

When Pelton missed the call in September, Miss Barry said, he told her: ″That was our money and we are not going to have any.″

Miss Barry also testified that Pelton said he failed to meet with a contact on a trip to a European city in April 1985, although he spent 30 hours waiting in a park there.

Pelton told FBI agents he failed to meet with Soviet agents on an April 10-16, 1985, trip to Vienna, Austria, apparently because he had lost 75 pounds and the Russians did not recognize him, Faulkner said.

Pelton also allegedly admitted that in meetings at Soviet embassies in Washington, on Jan. 15, 1985, and in Vienna, in October 1980 and April 1983, he told the KGB agents secrets he knew from a 14-year career in U.S. intelligence.

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