Disgraced CIA spy Jim Nicholson, serving time for espionage at the federal prison in Sheridan, groomed his son to collect debts from Russia with colorful letters that quoted the Bible, according to court records unsealed Thursday.

"(D)o not gloat over me my enemies!" he wrote last April to Nathan J. Nicholson, quoting from the book of Micah. "For though I fall, I will rise again."

Father and son rose Thursday before a federal judge in Portland, both wearing leg shackles.

Harold James "Jim" Nicholson, a 58-year-old native Oregonian convicted in 1997 of selling classified information to the Russian Federation, is now accused of using his son to collect the debts. His son, Nathaniel James Nicholson of Eugene, a 24-year-old disabled Army veteran, is accused of traveling the globe to collect.

Father and son were indicted Tuesday for conspiracy to act as agents of a foreign government; acting as agents of a foreign government; money laundering; and conspiracy to commit money laundering, which carries a penalty of up to 20 years.

The government unsealed its indictment Thursday before they were arraigned separately before U.S. Magistrate Judge Janice M. Stewart. Both pleaded not guilty to all charges.

"The case was not easy," said David Ian Miller, special agent in charge of the FBI in Oregon. "It wasn't easy to bring allegations against such a worthy adversary."

The new allegations against Jim Nicholson first came to the attention of the FBI in February 2002, when a paralegal at a San Francisco law firm told a strange story about a bank robber serving time at Sheridan.

The paralegal told agents that the inmate, with whom she shared correspondence, had told her that Nicholson was trying to get information or documents to Russia, according to a search warrant affidavit authored by FBI Special Agent Jared J. Garth.

The inmate acknowledged in interviews with the FBI that Nicholson had described his arrangement with Russia as a kind of "pension" and that he planned to repatriate there after his release, Garth wrote.

The government accuses Nicholson of smuggling information out of the prison to the Russian Federation. The former senior CIA officer took steps to prevent that information from getting to U.S. authorities, at one point tearing a typewriter ribbon to bits and flushing it down the toilet, according to the FBI's affidavit.

Nicholson also persuaded a cellmate to take an envelope with him when freed in July 2002, telling him it contained his memoirs. The former cellmate mailed the inch-thick package to Nicholson's parents, Nick and Betty Nicholson of Eugene.

FBI tracks son

For the next few years, Jim Nicholson kept in regular contact with his family from the prison, which rises off a lonely stretch of highway in the shadow of Oregon's coastal mountains. He kept up with his oldest son, Jeremiah, who was in the Air Force in Florida, and his daughter, Astralena, in Beaverton. But Nicholson kept closest contact with Nathan, according to the FBI.

"An analysis of written correspondence between Nicholson and Nathaniel indicates a concerted effort by Nicholson to use Nathaniel as his conduit for contact with representatives of the Russian Federation beginning in the fall of 2006," Garth wrote. Nicholson buoyed his son with phrases from the books of Jeremiah and Micah.

What followed, according to the FBI affidavit, was an odyssey in which agents tracked virtually every move Nathan Nicholson made as he crisscrossed the globe. He met with Russian officials in Mexico, Peru and Cyprus to collect tens of thousands of dollars in cash. Agents watched the younger Nicholson, tapped his phones and Internet service, and planted a tracking device on his 2005 Chevy Cavalier.

On Dec. 13, 2007, Garth and Special Agent John M. Cooney stopped Nathan Nicholson at George Bush International Airport in Houston as he returned from Lima, Peru. Border Protection inspectors detained Nicholson for a secondary search and questioning.

They found $7,013 in cash, most of it inside a PlayStation video game case. Federal authorities detained the young man long enough to secretly photocopy his 80-page notebook and business cards. This provided agents a road map for his alleged communications with Russian officials.

Nicknamed "Batman"

According to the FBI affidavit, notes obtained by the agents suggest that Russian intelligence officials questioned the younger Nicholson about his father's arrest and they acknowledged receipt of the package Jim Nicholson's former cellmate carried out of Sheridan.

Some of Nathan Nicholson's alleged cloak-and-dagger work sounds like that of his father, who earned the nickname "Batman."

From 1980 to 1994, the elder Nicholson was an operations officer for the CIA, assigned to posts across the globe. He spied on foreign intelligence services, including those of the USSR and -- after the Soviet Union's collapse -- the Russian Federation. From 1994 to 1996, he taught CIA trainees at the agency's training center in northern Virginia.

Nicholson used his positions to sell classified national defense information to agents of the Sluzhba Vneshney Razvedki Rossii, or SVRR (successor to the KGB), meeting with them in Malaysia, India, Indonesia, Singapore and Switzerland, court records show. He gave away information about CIA case officers, code names and secret reports.

Russia paid Jim Nicholson about $300,000 for his betrayals. The government arrested him at Dulles International Airport in November 1996. Nicholson carried film canisters that held secret documents, which he planned to hand over to Russian agents in Zurich. He pleaded guilty to conspiracy to commit espionage and was convicted in 1997, when Nathan was 12

Nicholson was serving a 23-year sentence when the latest allegations against him surfaced.

Federal authorities in Oregon said that if the allegations prove true, Nicholson might be the first convicted spy caught twice for betraying the United States.

Nicholson downplayed his espionage in the 1990s by telling a federal court official preparing his pre-sentence report that his criminal conduct stood in "great contrast" to his prior service. Nicholson said he would "greatly appreciate the opportunity to offer some positive example to my children" before he dies.

"At the end of the day," said Oregon FBI boss Miller, "this will prove to be a story of family, trust and betrayal."



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-- Noelle Crombie contributed to this report.



-- Bryan Denson; bryandenson@news.oregonian.com