And Brother Makes Three

By John E. Yang.

Code names such as "D," "S" and "K" are sprinkled throughout. There are tales of a booby-trapped floor vault fortified with concrete, stacks of silver bars stashed in a safe-deposit box, hints of meetings in Europe and the Far East, and canes that become guns and daggers. There is even a woman who turns in her former husband. In hundreds of pages of documents, unsealed last week in Norfolk, Va., authorities describe how three members of a naval family allegedly schemed to supply U.S. military secrets to the Soviet Union, resulting in what Defense Secretary Caspar Weinberger calls a "serious loss" for the country.

Last week a federal grand jury indicted John Walker, 47, a private detective and retired Navy communications specialist, and his son Michael, 22, an operations clerk aboard the U.S. aircraft carrier Nimitz who had been arrested the week before and charged with espionage. The next day the FBI arrested John Walker's brother Arthur, 50, a retired Navy lieutenant commander who once taught antisubmarine tactics and has been working as an engineer for a defense-contracting firm in Chesapeake, Va. He was charged with supplying to his brother classified documents for delivery to Soviet agents.

According to the court documents, John Walker began spying for the Soviets in 1968, when he was a communications watch officer for the commander of the Atlantic submarine fleet in Norfolk. The FBI said that Arthur became involved in 1980, when he passed along documents and photographs he was able to obtain with his "secret" security clearance. Michael, who helped out at his father's detective agencies before joining the Navy, has been involved in the family spy business at least since 1983, after he had finished boot camp and was assigned to the Oceana Naval Air Station in Virginia Beach. When Michael mentioned to his father that he had seen some classified material, say prosecutors, the elder Walker replied that there was money to be made if he could deliver it. Says FBI Spokesman Bill Baker: "We don't see ideological motives. All we see is cash." John Walker's ideology, if he has one, was further muddled by a revelation by the Anti-Defamation League that he apparently recruited on behalf of the Ku Klux Klan in 1980.

The FBI began investigating the family late last year, after John's former wife (and Michael's mother) Barbara told agents that nearly 15 years ago she saw John put a classified document into a trash bag and leave it near a tree at the side of a road in the Washington area. An FBI source presumed to be Barbara, who is now a shop employee on Cape Cod, also revealed that John was seen retrieving $35,000 in cash that had been left for him in a garbage bag near Washington. The FBI kept John under continual surveillance for six months, patiently waiting for him to make an overt move. Finally, on May 19, they observed him staging a drop-off, similar to the one described by his ex- wife, in Maryland's Montgomery County.

Among the material the FBI recovered from John's drop-off point last month was a three-page "Dear friend" letter. "Storage is becoming a problem," it began, going on to discuss a situation "we once faced in Hong Kong." The storage problem presumably referred to the hiding of stolen material. The letter also described the activities of persons referred to only as D, S and K. It reported that S was providing "a large quantity of material" and "making a career decision in the Navy" where "good access is possible." Authorities have identified S as son Michael. K is described by the letter writer as being "involved in carrier and amphibious ship maintenance planning" -- which is also a description of brother Arthur's duties for VSE Corp., where he has worked since 1980. The identity of D, the author of two "Dear Johnny" letters also found in the bag, remained a mystery. Authorities have indicated that he is an ex-Navy man living in Northern California.

Searches of John's two-story brick-and-wood home in Norfolk, as well as his houseboat, single-engine plane, camper, two cars and the offices of his three private-detective agencies, turned up a collection of gadgets and paraphernalia worthy of both Inspector Clouseau and James Bond. It included a clerical collar, fake IDs and business cards, a .357 magnum pistol, a walking cane that contains a gun, another that conceals a dagger and yet a third that holds hidden vials. When authorities opened his safe-deposit box, No. 257 at a Norfolk branch of the Bank of Virginia, they found ten 100-oz. silver bars, currently worth some $6,000.

The Navy has established a panel of intelligence and operations specialists, led by Naval Intelligence Chief Rear Admiral John Butts, to determine what sort of intelligence the Walkers might have given the Soviets. So far, the best guess is that most of the information dealt with codes and, more important, with the way the U.S. keeps track of Soviet ships and submarines. U.S. and Soviet subs, armed with nuclear missiles, play a constant game of undersea hide-and-seek. If one side were to learn precisely how the other tracks the enemy, it might be able to develop techniques for avoiding detection. Simply knowing what details the U.S. had about how to locate Soviet submarines, which is apparently part of what the Walkers provided for a decade, would have offered Moscow an invaluable advantage in the sensitive strategic struggle. Says Britt Snider, director of security policy at the Pentagon: "They sold information that is worth to us millions, if not billions, of dollars."

The Navy reportedly has already revised the codes it uses for top-secret messages. "They operated for some years," Weinberger said of the Walkers, "and we will have to change some of our systems." The FBI, meanwhile, is on the trail of other suspects, including some employees of John's private- detective agencies and the ex-Navy man believed to be in California, the mysterious agent known only as D.

With reporting by Anne Constable and David Halevy/ Washington