Zach Dorfman
One day at the dawn of the 1980s, an FBI agent in his 30s named Rick Smith walked into the Balboa Café, an ornate, historic watering hole in San Francisco’s leafy Cow Hollow neighborhood. Smith, who was single at the time, lived nearby and regularly frequented the spot.
As he approached the oak wood bar to order a drink he suddenly spotted a familiar face — someone Smith had met about a year before, after the man had walked into the Soviet Consulate in San Francisco. He was Austrian by birth, but a denizen of Silicon Valley, an entrepreneur who operated as a middleman between American tech companies and European countries hungry for the latest hi-tech goods.
The Austrian had visited the consulate to drum up business behind the Iron Curtain. The tech entrepreneur may not have put much thought into how closely the building was being watched by FBI spy hunters. And why should he? At the time, there wasn’t necessarily anything suspicious about trying to conduct commerce with the Soviets. In 1979, for instance, there was $4.5 billion in legal trade between the U.S. and Soviet Union; about $200 million of that was in high-tech goods. But bureau counterintelligence routinely blanketed the consulate with surveillance. And their interest was piqued. After the FBI clocked the Austrian’s visit to the consulate, Smith had reached out.
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