- The Washington Times - Wednesday, September 7, 2011

Stewart Nozette, once a prominent scientist for NASA who served on the Space Council under President George H.W. Bush, pleaded guilty Wednesday to attempted espionage, a case that attracted widespread notice but began as a seemingly routine fraud investigation.

“Today, he is a disgraced criminal who was caught red-handed attempting to trade American secrets for personal profit,” said Ronald C. Machen Jr., U.S. attorney for the District, after Nozette, 54, pleaded guilty to giving classified information to an undercover FBI agent.

But when the federal investigation into Nozette began back in 2006, there was no hint he was capable of selling U.S. secrets, according to court records.

Instead, NASA’s office of inspector general began looking into Nozette because of questions about the finances of a nonprofit organization he ran called the Alliance for Competitive Technology, which charged NASA for work he was performing for the space agency.

The numbers weren’t adding up. While NASA said the alliance invoiced the agency for Nozette’s $141,718 salary, records showed the nonprofit group reported less than $20,000 in salary expenses on its 2004 report to the Internal Revenue Service. When reviewing the nonprofit organization’s bank records, an agent for the inspector general uncovered numerous personal expenses.

The investigator found payments for utilities, three mortgages, nine credit cards, the La Jolla, Calif., Tennis Club, pool cleaning and the Mercedes-Benz Credit Corp.

In 2006, The Washington Times reported that federal authorities had subpoenaed bank records from Nozette’s nonprofit group.

The Justice Department, filing papers on behalf of the inspector general, said Nozette’s organization didn’t comply with a request for bank records and tax documents.

That was around the time the investigation took a sharp turn.

When federal agents later raided Nozette’s house, they found classified documents that led them to a 2002 email in which Nozette threatened to take a classified program on which he was working to an unnamed foreign country or to Israel.

The FBI then launched a separate undercover investigation into Nozette over potential espionage.

An undercover agent posing as an Israeli intelligence officer called Nozette on Sept. 3, 2009, and set up a meeting that day in front of the Mayflower hotel in Washington.

Over the next few weeks, FBI agents gave cash to Nozette in exchange for information he provided on a classified satellite, weapons-system research and other secret national security matters.

Nozette met with the undercover agent again in October at the Mayflower and asked for more money, according to exchanges of the meeting released by prosecutors.

“So, uh, I gave you even in this first run, some of the most classified information that there is,” Nozette said. “Now the, uh, so I think when I said like fifty K, I think that was probably too low. … The cost of the U.S. government was $200 million … to develop it all. Uh, and then that’s not including the launching of it. … Uh, integrating satellites.

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