Spy in the Sky: Would-Be Israeli Agent Thought He Had Compromised $1 Billion Secret Program

A distinguished scientist accused of attempting to spy for Israel told a federal undercover investigator that he had compromised a classified program—apparently a secret spy-satellite system—that cost the U.S. government $1 billion to develop and deploy. Astrophysicist Stewart D. Nozette, who helped NASA develop an experiment that discovered ice on the south pole of the moon and who worked briefly in the George H.W. Bush White House, told the undercover FBI operative, who was posing as a representative of Israel’s legendary intelligence service, the Mossad, that in return for compromising the billion-dollar U.S. satellite system, he “only wanted a percentage of the development cost, roughly $2 million, as compensation for his espionage,” according to court papers filed by federal prosecutors late Wednesday. The documents were filed in anticipation of a hearing scheduled for Thursday afternoon in federal district court in Washington to determine whether Nozette should be released on bail or remain in pre-trial detention. 

In the documents, prosecutors argue strongly that Nozette should remain in jail pending trial because of the seriousness of the espionage charges against him and because, the government believes, he “has the method and means” to flee the U.S. before trial. Several days after his Oct.19 arrest, the Feds say, the FBI seized a La Jolla, Calif., safe-deposit box maintained by Nozette that contained 55 gold Krugerrand coins worth about $50,000, and $30,000 in savings bonds. They also say investigators have learned that Nozette owns what they describe as “numerous residential properties in several states,” including a home in Chevy Chase, Md., a posh Washington suburb, as well as a vacation property in Merritt Island, Fla.; recent tax assessments set the combined value of those two properties at more than $2 million.

The latest court filings reveal additional details of Nozette’s alleged interactions with the undercover Fed he believed was a Mossad spy, including extended transcripts of conversations between the two. As the investigation neared its denouement, prosecutors say, Nozette’s “Mossad” contact asked him to a answer a list of questions concerning U.S. satellites. The feds say that in mid-September, and then again in early October, Nozette delivered to them, via what he thought was a Mossad “dead drop,” two sets of “answers.” The first set of answers contained what the government claims was information regarding “classified aspects and mission capabilities of a prototype overhead collection system” (in other words, a spy-satellite system, which could gather visual or signals data) that carries the official classification “Secret/SCI” (SCI stands for “sensitive compartmented information”). The second set of answers contained further information that related to spy satellites, but which was classified both Secret/SCI and Top Secret/SCI. According to transcripts of Nozette’s meetings with his “Mossad” interlocutor, during their last meeting earlier this month Nozette proclaimed that he had “crossed the Rubicon” and that he had made a “career choice” to work for Israel under an alias provided to him by “Mossad.” 

At the time they arrested him, the Feds alleged that between 1998 and January of last year, Nozette had acted as a “technical consultant” for an unnamed aerospace company—identified by the Jewish Telegraphic Agency press and U.S. sources as Israel Aerospace Industries (IAI), a major Israeli defense contractor. In connection with this relationship, the Feds said, representatives of the company provided Nozette once a month with what the government described as “proposed questions, or taskings”; in return for the answers to these, the company made regular payments to Nozette, which the government says over the years totaled $225,000. At one point during his more recent discussions with the FBI operative who was posing as a Mossad officer, Nozette said, according to government transcripts: “I thought I was working for you already. I mean, that’s what I always thought; [the foreign company] was just a front.” Despite these official disclosures, U.S. officials have not accused the government of Israel of any involvement in the case. IAI couldn’t be reached for comment, and is not known to have commented on the allegations regarding its alleged dealings with Nozette.

Nozette’s lawyer, John Kiyonaga, had no comment. At an earlier hearing, Nozette reportedly did not enter a plea to the espionage charges. In a side note to a case that is already tangled, the FBI disclosed this week that earlier this year Nozette had secretly pleaded guilty to charges of tax evasion and conspiracy to defraud the government by making false reimbursement claims on government contracts. Records related to the case were sealed because Nozette was working with the Feds on unrelated investigations of government corruption, The Washington Post reported.