8 JUNE WASHINGTON POST ARTICLE, "U. S. SECURITY WORKERS FILE FOR BANKRUPTCY"

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88B00443R001904450071-4
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 6
• Document Creation Date: December 22, 2016
• Document Release Date: March 7, 2011
• Sequence Number: 71
• Publication Date: June 9, 1986
• Content Type: MEMO

Sanitized Copy Approved for Release 2011/03/07: CIA-RDP88B00443R001904450071-4
EXECUTIVE SECRETARIAT
12 1 Compt
21
22
ROUTING SLIP
SUSPENSE 13 June R6
Date
Remorks
To 6: As requested, please provide DCI info re how
we both monitor situations that may prove d'fficult
and provide advice to employees/retirees f
Qil-
able assistance.
9 June 1986
Date
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Executive Regist,
86. 2544
MEMORANDUM FOR: Deputy Director for Administration
FROM: Director of Central Intelligence
SUBJECT: 8 June Washington Post Article,
"U. S. Security Workers File for
Bankruptcy"
Would you take a comprehensive look at what we do to bring to our
attention and advise or otherwise assist employees and retirees who fall
into the predicament outlined in this story in yesterday's Post. This
has already come up on the Hill in connection with opposing members of
the Privacy Act and otherwise. What can practically be done to focus
on this and tell retirees in exit interviews what is available as a
method of learning about these situations and being in a position to
help when possible.
William J. Casey
Attachment:
Article mentioned above
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 Sanitized Copy Approved for Release 2011/03/07: CIA-RDP88B00443R001904450071-4
Office of Current Production and Analytic Operations Support
Center
News Bulletin ? The Washington Post, Front Page 8 June 1986
Item No. 1
U.S. SWorkers
File for Bankruptcy
Agencies Rarely Learn of Financial Troubles
By Molly Sinclair
and Bob Woodward
W.shtn6ton Post Su(f Wnters
intelligence or other national secu-
rity or sensitive military positions.
Awareness of the financial diffi-
culties of persons working in sen-
sitive security areas has been
heightened by the case of convicted
spy Ronald W. Pelton, who filed for
bankruptcy before quitting his job
as a middle-level NSA analyst in
April 1979. He subsequently began
selling secrets to the Soviets, and
testimony at his trial indicated that
his actions were in response to his
debt problems.
The potential susceptibility of
people in difficult financial straits
poses a dilemma for the govern-
ment, particularly in a society that
prides itself on simultaneously pro-
tecting national security and per-
sonal freedoms. A credit union, for
instance, is barred by law from dis-
closing bankruptcy information
about members, even to inquiring
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A $33,000-a-year analyst at the
National Security Agency has filed
for personal bankruptcy three times
in his 17 years as a signals intelli-
gence specialist with a top secret
clearance, most recently six months
ago. Only after his second bankrupt-
cy did NSA learn that he was in fi-
nancial trouble.
A middle-level intelligence officer
at the CIA filed for bankruptcy in
1983. Yet the officer, who handles
top secret intelligence, said in a re-
cent interview that he does not be-
lieve that anyone at the CIA knows
of his bankruptcy.
A review by The Washington
Post of 2,536 bankruptcy files in
federal court in Baltimore since
1981 turned up 56 cases of U.S.
government employes who work in
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int~li gence agencies, unless there
is V::mvestiga:ton under way.
Jnder the federal privacy act of
198. an employer cannot inquire
about a worker's personal finances
un)rrss the person is under active
inv -stigation or the records have
be.n subpoenaed by a court or
grx,1 jury. But some intelligence
offtrlals are concerned about gov-
errlrnent employes wha know vital
and sen=itive secrets and are in fi-
nancial trouble. "They're sitting
duo~:> for the KGB," said one senior
int.hlhgence official in a reference to
the Soviet secret intelligence office.
There are no indications what-
soever that any of the people who
filt~d for bankruptcy in the cases
exprnmed he The Post are engaged
in -espionage. In addition to the
case examined in Maryland, about
9(1~) files were reviewed in federal
co0rts in the District and Virginia.
according to the survey of files in
M0r}land, the District and Virginia,
these filing for bankruptcy included:
sic NSA employes; three Defense
Department employes based at
Fort Meade, Md., the NSA head-
qucr ters: three Na' technicians at
Fart Meade; 11 other Defense De-
pa'tment employes; three CIA em-
pl4yes, and one State Department
er pioye.
me examples are:
^ An executive secretary to an as-
si$ant secretary of the Navy deal-
inA with highly sensitive informa-
tt(11, who filed in March and listed
ot?standing debts totaling $61,024.
a ?% systems analyst at NSA who
filed for bankruptcy in 1983 and
reef~orted an annual income of nearly
S4i).000 the previous year and
delbts totaling more than $75,000.
? }A U.S. Navy cryptological tech-
niaan at Fort Meade, who filed for
bankruptcy in 1981 listing debts of
$6,100. His clearance-top secret
crypto-gave him access to the
mo.t sensitive national security ma-
terials designed to ensure secure
coi' munications within the military
and among the highest government
officials.
^ An analyst at NSA for 25 years
wto listed debts of $27.000 when
he filed for bankruptcy five years
ago, citing "insufficient funds" and
business debts. His salary at the
titre was $23,400.
'The alarm has been sounded
wtthtn the intelligence community
because of the spy case of Pelton,
the former NSA signals intelligence
specialist who sold top secret infor-
mation tv the Soviets for $35,000
after declaring bankruptcy and re-
signing from a $24,500-a-year job.
U.S. officials have said he divulged
details of at least five top secret
U.S. intelligence projects.
A review of existing privacy laws
and procedures followed by the in-
telligence agencies demonstpates
that if an employe files for bank-
ruptcy it is unlikely his'or her agen-
cy will find out.
"We've had to cite the privacy act
a number of times" to CIA officials
who asked financial questions about
employes, according to Juri Valdov,
the general manager of Northwest
Federal Credit Union, which serves
thousands of current and retired
CIA employes. But, he said, "it's the
law and we comply." He added that
CIA officials, once informed of the
law. always have complied.
Valdov said that his credit union
is "low on the scale of all federal
credit unions for the number of
bankruptcies." Nevertheless, he
estimated that Northwest becomes
involved in three or four new bank-
ruptcies each year.
Tower Federal Credit Union,
which serves an estimated 61,000
members, including those working
at NSA and retirees there, has an
average of two or three members
file for bankruptcy each month, ac-
cording to manager Robert Byroad.
"There is nothing unique" about
the bankruptcies of the Tower
members, Byroad said. "They get
into a financial bind" like other peo-
ple and have to file for bankruptcy,
he said.
Sources have said that one of the
tragedies of the Pelton case was the
absence of any warning that Pel-
ton-or anyone like him with
knowledge of important U.S. se-
crets-needed financial help.
Michael G. Rinn, a Baltimore
lawyer who handled the 1983 bank-
ruptcy case for the CIA intelligence
officer, said that the personal bank-
ruptcy filings by individuals repre-
sent only a fraction of the people
who are caught in a financial
squeeze. For each case actually
filed, he said, there are many people
in equal or more serious trouble.
"From the security area, I'd rath-
er have someone file bankruptcy,"
Rinn said. it keeps the creditors at
bay. They can't be bouncing around
putting prey,ure? on sor:t :;c.. . .
The most securit% risk'. art t!-
that have trouble and don't gr:
or have a plan" worked out b'. thL
bankruptcy court.
Intelligence sources said recen:!
that there is no evidence tha: the
KGB or other hostile in:elhgen;r
services operating in the United
States have active recruitment pr(,-
grams aimed at people with f:; ra-
cial problems. Generally spew::;
the sources said, the KGB wary t r
an approach, as in the case of Pt.,..
ton, who just phoned the Sit ie: E:: -
bassy and then walked in the nex:
day, in January 1980.
Informed of the number of bank-
ruptcies found in a single court la.t
week, a senior intelligence official
said, "That illustrates the scope of
the potential problem ....