Carin Davis is a rather ordinary young housewife and mother who finds herself in a position that she once would have thought unimaginable, a scene she expected to find only in novels or late-night movies. She has requested, through the Freedom of Information Act, transcripts of several phone conversations she had with her best girlfriend, recorded in an FBI wiretap. The friend–known as Ruby Louise Howell Schuler Harper to the FBI–died on June 22, 1983, of cirrhosis of the liver. She was only 39. Louise Schuler, as she liked to be called, died just a few days after federal agents overheard her explain to yet another girlfriend why she couldn`t leave her husband:
”There`s a reason Jim and I got married that only he and I know. I can`t tell you or anyone else, and I never will.”
Davis knows now that her friend was an alleged spy under investigation by the FBI.
The conversation recorded by the FBI was wide-ranging–part soap opera, part case study in how to fail at business, part spy novel, part recipe service (one of Davis` last calls to Louise was a request for her fettucine recipe). She wants to listen again for a sense of what Louise, between tears over a faithless husband and lies about her drinking, might have been trying to tell her.
Like dozens of others who knew Louise or Jim Harper, Carin Davis isn`t sure, even after she obtains transcripts of those last days` conversations, whether she will ever understand why her friend became a spy. But there is a sense that Louise got caught in something too big and wild to deal with, a kind of second California Gold Rush, the one called Silicon Valley.
Silicon Valley is a state of mind as much as a place. ”If you`re an inventor, it`s heaven,” says one engineer. The valley named for the element from which computer chips are made begins somewhere near San Mateo and the San Franciso airport and stretches south some 40 miles to San Jose, dominating the peninsula that cups San Francisco Bay. The towns–Redwood City, Menlo Park, Palo Alto, Mountain View, Sunnyvale and Cupertino–merge almost seamlessly, vast reaches of lush suburbia cut by freeways and strip-zoned fast-food oases. Its landmarks are the cathedrals of a new age–Hewlett-Packard, Stanford, Intel, Amdahl, Fairchild and Apple.
The landscape is so well known it figured in one of James Bond`s most recent exploits. In ”A View to a Kill,” Bond saves Silicon Valley from a catastrophic earthquake and then finds himself in the odd position of being awarded the highest medals of his enemy, the KGB. When he demands to know why this cluster of high-tech think tanks and electronics manufacturers means so much to the Soviets, his amused archenemy explains, ”Where would Russian research be without it?”
The humor is lost on Washington. Silicon Valley is ”9 1/2 on a scale of 10 in terms of Soviet interest,” says one ranking Washington expert on espionage. ”And the only 10 is Washington.” Silicon Valley was declared off limits to visitors from Soviet Bloc nations in 1983, about the time the FBI first linked Jim Harper to a spy case that was under investigation involving the Polish government.
The State Department concedes, however, that the ban is little more than a tool to reciprocate for Soviet harassment of American diplomats and has rarely been enforced. (One notable exception was when a Russian sports team was barred from playing in the Cow Palace in San Francisco, which technically was off limits.
The reason this area, which used to be famous only for its orchards and for Stanford University, is so strategically critical comes as a surprise to many people, says former CIA deputy director Ray S. Cline. ”Technology
–military or not–has become almost the sole target of Soviet espionage,”
he says. ”They have accepted the idea that science and technology . . . are the main reasons for American power in the world, and they think they have to get hold of it by hook or by crook.”
Silicon Valley is a place on which the Defense Department lavishes more than $4 billion a year; a place where more than 200 companies and 40,000 individuals, from secretaries–like Louise Schuler–to brilliant scientists, have clearances to handle classified military research; a place uniquely at peril in an era when the girlfriend next door could be a spy.
The spy of Cold-War image–the ideologue, the fellow traveler–was better understood, easier to track. Julius and Ethel Rosenberg, the self-professed Communists who were electrocuted in June, 1953, for passing secrets about the atomic bomb to the Russians, were regarded as such ideologues.
Identifying today`s spies, however, baffles experts used to tracking
”pinkos.” The wheeler-dealer ex-Navy man, John Walker Jr., who may have enlisted almost his entire family in his endeavors to steal ultrasensitive submarine codes, or the FBI`s overweight, anxiety-ridden Mormon father of eight, Richard Miller, who bumbled into a liaison with an attractive Russian and allegedly passed information to her–they don`t fit the McCarthy-era mold. Why do otherwise seemingly patriotic citizens become traitors? One State Department psychiatrist shrugs and says, ”I wouldn`t overlook the profit motive.”
Unfortunately, that`s what makes Silicon Valley run. And it`s one factor that makes spying here so simple. As San Jose Mercury News columnist H. Bruce Miller puts it, ”In Silicon Valley, the spy who`s driven by a simple craving for bucks has the perfect camouflage.”
There is a bit of a slump now in Silicon Valley, but for a time it seemed as if money was as abundant as air. This is a place where nobody thinks twice if one week you are in patched jeans, driving a Benz the next.
”People literally stand in line here to throw money at you if you have a good idea,” says Roy Martens, a Wilmette native and 30-year veteran of Silicon Valley who once worked for Jim Harper. Martens skipped the family celebration planned by his parents when he graduated from Northwestern University and hit the road for California. ”It`s like a fever, as if you had a dozen eggs and the miners hadn`t eaten in a week–you could auction them off to the highest bidder. A lot of people make a lot of money very fast here.”
Anyone in Silicon Valley can tick off the stars and statistics as readily as a Baptist preacher can quote the Scriptures:
— The ”Stevie Wonders”–Jobs and Wozniak–and Apple Computer Inc., a gleam in their eyes in 1976 as they tinkered in a garage, a $1.5-billion company by March, 1985, its two founders ”$100 millionaires.”
— Adam Osborne and Osborne Computer Co., launched July, 1981, 19 months later producing annual revenues of $100 million.
— Dennis Burnhart, a founder of Eagle Computer (another kiddie-brain-trust startup), launched May, 1982, which netted the founders $37 million 13 months later when its stock was snapped up by a public eager to cash in on the boom.
Each success story fuels the boom; the melodramas and tragedies merely become part of the lore. Steven Jobs may have been forced out of Apple. Dennis Burnhart may have died the day his company went public, when his new red Ferrari careened off the road (his 592,000 shares netted him $9 million that day). Osborne may have gone bankrupt. What matters is that they made it once. And their example seems to say, ”What`s wrong with you?”
”Look at the daguerreotypes,” says cultural historian Kevin Starr, author of two highly praised books on the state, ”California and the American Dream” and ”Inventing the Dream.”
”Behind their whiskers, those `49ers are the same type of young men. Both the Gold Rush and Silicon Valley attracted the same speculative personalities, the same kind of eccentrics, people who had failed at two or three things but could say, `Well, I failed at A, B and C, but I`m going to make it this time.` ”
This story isn`t about two who made it but about two who did not: a pretty blond from Mobile, Ala., who worked as an executive secretary in Silicon Valley and a small-town high school football hero who built and lost two companies in Silicon Valley. Jim Harper invented the digital stopwatch but ended up bankrupting his company and losing the rights to his invention. He then saw his watch on the wrist of nearly every little kid in America.
On Oct. 15, 1983, when the FBI came to Jim Harper`s Mountain View, Calif., apartment complex to arrest him for espionage, other residents initially thought they were real estate agents. When they took away the tall athletic man in his shorts and jogging shoes, they were incredulous. ”Him?
Him? He looks like a coach.”
His wife, Louise, was dead by then. In the aftermath of Harper`s arrest and conviction, as the enormity of what he and Louise had done (one federal agent likened them to the Rosenbergs) and the vulnerability of the nation`s secrets became apparent, Silicon Valley shook hard. Using Louise`s security clearance, the Harpers copied 200 pounds of classified documents and reportedly sold all or part of them to Polish agents for a total of $250,000. Harper, now 51, was sentenced to life in prison.
Astonishingly, the reaction was not all negative in Silicon Valley. Mixed with the shock was some titillation.
”Selling secrets would be so easy, especially if you aren`t one of the six-figure executives, if you are struggling to get by here on your lowly salary,” says Stephen Scheck, a Silicon Valley veteran who worked for Harper and has been involved in eight startup companies since. (He now sells emergency evacuation chairs and litters.) ”Everyone dreams of making it big. Atari went from a candle to a rocket overnight. The feeling here is, `My God, why can`t it happen to me? I`m not piggish. I`ll settle for $1 million.` ”
There were some who said the tale of Louise and Jim Harper was a particularly Silicon Valley sort of love story. She loved him. He loved success, or his own crazy illusions of success, and used her to get it.
”It`s a study in greed,” says John Gibbons, a former assistant U.S. attorney who helped prosecute Harper. ”Silicon Valley is a petri dish for greed. It`s the `me generation.` Everybody`s going for the Golden Ring. Everybody wants to go public and drive a Maserati.”
Jim Harper was the kind of character you`d expect to find in a Horatio Alger story, not one by John Le Carre. A self-made man, by all accounts a brilliant designer of transformers and power supplies, he was a natural Mr. Wizard without much, if any, formal training. (He gave friends the impression, however, that he had graduated from college and hung what appeared to be diplomas on his office walls.)
He and a brother were brought up by their mother in Fairfield, Calif., then a small farming community of about 3,500 people. No one recalls ever hearing him speak of his father. His high school best friend, Fred Pryor, remembers him as a brainy kid who got straight A`s ”or close to it without ever cracking a book.” He also starred on the football field, and when he hurt his knee and couldn`t play in his senior year, he was voted honorary captain of the team.
Pryor, a resident of nearby Dixon who went on to become a county sheriff, hadn`t seen Harper since an Armijo High School class reunion in 1972, yet the night the news of Harper`s arrest was broadcast, he turned to his wife and said, ”Well, Jim got caught.”
He chuckles when he can`t really explain why the news seemed inevitable, maybe even overdue. ”The thing about Jim–even though he was a very likable individual and intelligent–he was always out for Jim,” Pryor says. ”You just had to know where you stood.”
When Harper was arrested, the odd memories began to surface in the minds of friends who previously had thought of him only as the football hero who had married another hometown kid, Colleen Anderson, and gone on to success.
One woman remembers: ”If he didn`t want to do something, he just didn`t do it.”
Another friend recalled, ”His brother once told me, `If Jim had seven alternatives, he would always take the riskiest and craziest one.` ”
And someone dug out the 1952 Armijo High School annual, which showed the flat-topped senior mugging with his buddies for the camera, and read the class will. Harper bequeathed to his next-door neighbor ”my ability to spot black police cars at great distances while driving around town.”
The worst thing anyone could remember him doing was having an occasional beer with the guys before he was of age.
After high school Harper enlisted in the Marines. Pryor says, ”I thought he was patriotic. Hell, he enlisted. But it was more because of girl problems than anything else. His Marine career was short. Much shorter than an average enlistment. I don`t know what kind of discharge he got. He was a good talker. A very good talker.
”One of the last times I saw Jim was in 1964. He offered me a job in a company he had started, Harper Magnetics . . . He was just going to keep it a couple of years and then sell it or go public. I didn`t take the job.”
Bob Smilo was a consultant to Harper`s company and remembers those years. ”Jim was brilliant,” he says, ”one of the best magnetics engineers in the valley. When he was president of Harper Magnetics, he felt he really had the system working for him. But then he seemed to go over the crest and start sliding.”
Harper Magnetics didn`t last long. ”He literally drank the business away and (the board of directors) pulled the rug out from under him,” says Neil Schuler, another Silicon Valley veteran.
To have been a part of a startup company that went under carries no shame in Silicon Valley. In fact, so many people there have survived business failure it is almost a rite of passage. Harper rapidly found a job as a salesman with the same large firm, Hamilton Avnet Electronics, where Schuler worked, and the two became friends. ”When he wanted to be, he was a brilliant guy,” Schuler says. ”Away from the drawing board, it was Jekyll and Hyde.” It seems to be the nature of Silicon Valley that the lives of those who were there in the beginning are interwoven in a mesh of companies–and spouses –that have come and gone as the boom rolled on. Neil Schuler, for example, became Louise Schuler Harper`s first husband. Indeed, some residents take perverse pride in Silicon Valley`s reputation for having among the highest rates for marriage, divorce, business startups, bankruptcy and BMW and Mercedes ownership in the nation.
One of the firms Harper called on as a salesman was Kaiser Aerospace. In the purchasing department was a young woman from Mobile who was new to Silicon Valley, Louise Howell. She and Jim Harper became an item–on Harper`s expense account. One of her later lovers says, ”Jim Harper was her first real love.” ”When you are in sales, you take the people in purchasing out,”
explains Neil Schuler, who did not then know Louise or know of the affair. Harper was a handsome, charming, high-living and married man. ”Louise broke it off.” Schuler says. ”She said he spent his time drinking. It was impossible to have a relationship with him.”
Harper was married to his high school sweetheart during that time. It was a rocky, on-again off-again marriage–she divorced him twice–but it produced four daughters who were athletes like their dad. They were the inspiration for the company, Harper Time, that gave him a second chance at the Golden Ring and for the invention that should have made him famous–the digital stopwatch.
Software-publisher Martens, who was Harper Time`s public relations consultant, relates, ”He (Harper) actually came up with his stopwatch because he got so frustrated trying to time his teenaged daughters` swim meets. It was a good story, and we used it.”
To Martens, the company seemed viable, Harper knowledgable and the product a natural. ”Few people had tried digital electronics . . . I was so caught up in it . . . It sounded so good to me . . . It seemed so plausible.” Bert Nelson, founding editor and publisher of Track & Field News, was another early convert. ”In our business we are very interested in
stopwatches. Everything is timed. When Harper and one of his business associates, Tony Halekakis, first came to see me, I was thrilled by it. Their watch was a tremendous improvement over old analog watches. I was ready. Too ready. I loved the idea of that watch.”
Stephen Scheck was recruited to be vice president of sales for Harper Time. He, too, was a convert, both to the watch and to Silicon Valley. Now, looking back on the go-go `70s, he can still conjure the excitement he felt then.
”You have to understand Silicon Valley to understand how I felt,” he says. ”There are so many startling instant successes here. So much money to be made by a startup. There`s an overabundance of capital to be spent on new ideas. Tremendous money to be made on stock when a new company goes public. Everybody wants to become the millionaire of the future. It all started with companies like Hewlett-Packard and Fairchild, and it`s just expanding, expanding, expanding . . . .
”I had been an athlete at the University of Maryland and was a runner. I knew how critical timing was and how antiquated every other product was–I came out of the watch industry. There were digital watches on the market, but his was a stopwatch–not a wristwatch at first but a timer for sporting events. In those days, only really big events like the Olympics had electronic timers. Omega was the biggest company, but its system was expensive–15K, 25K, and a couple of K`s just to rent it. He took the technology of digital watches and introduced split timing to time more than one person. We could sell it for $55 or $65 wholesale.
”When I heard about the product, I got so excited. This was the first major change in a hundred years. I felt like, `I`m here. At the right time. In the right place. With the right product.` ”
There was a euphoria throughout the company. It was ”more like a family than a factory. There was never any separation between the lowest assembler making three bucks an hour and the president,” Scheck remembers. ”We were building the future together, and the future couldn`t have looked brighter. We all invested in the company. Everybody had something to lose.”
Neil Schuler came on board about then. ”I thought long and hard about joining Harper Time,” he says. ”I knew his (Harper`s) earlier company had failed. But then I`d seen Jim really make something of his territory as a salesman at Hamilton Avnet. This was 1973. Louise and I had already separated. That`s when the offer came. It was taking a chance. They had cash-flow problems, but it`s not unusual for a startup to have cash-flow problems. In fact, it`s likely.”
Scheck says, ”When Jim worked, he worked hard. When he played, he played hard. He was known to drink too much, known to get into a lot of altercations at bars. He was a mean drinker. (Friends recall that he frequently made vulgar remarks to women at bars and ended up in a fight with the women`s companions.) But it was just part of his personality. Jim Harper. I don`t think anybody could play psychologist to him. He wouldn`t answer to anyone.”
Early in 1974 Harper took samples of the watch to a major international watch and jewelry fair in Basel, Switzerland. From then on his already unstable behavior changed for the worse. ”Jim shaved his head, and on his office walls, next to the decorations and diplomas, he hung all kinds of strange things, like 30 or 40 pictures of nude women,” one coworker recalls. Says Scheck, ”You see, Jim met a gal in Switzerland. A lot of funds were going for travel back and forth to Europe. Jim was very opinionated. Nobody could argue with him. It was a case of `I may not be right, but I`m president.` Things started to slide when Jim started to be absent from the company. Finally he brought the woman back and set her up in an apartment. I don`t know what shape his marriage was in then, but this woman was a real-life mistress in the old-fashioned sense of the word.”
Schuler recalls, ”When Harper arrived from Switzerland with her, they showed up unannounced at my apartment at 7:30 a.m. with all these gifts for me. Leaded-glass goblets and other things. Now why would Jim give me presents? I didn`t know until it was time for me to go to work. They wanted to use my apartment.”
”Jim`s trip to Switzerland had been budgeted at $4,600. It cost $18,000. The second trip cost more than $20,000. The girl who handled the books would write a check to whomever Jim said. I got the feeling the company was going to go down the tubes, and I already had given notice when I had my automobile accident.”
That was May, 1974. Schuler was in a coma 41 days and is paralyzed below the waist. ”The insurance company was going to refuse to pay. I have to give it to Jim; he went down there and fought them for me.”
The company was, in fact, in a ”real cash crunch,” Scheck says. ”I remember Tony Halekakis (Harper`s next in command) scrambling around everywhere trying to get investors. Twenty or 30 of us guaranteed loans for the company, put our houses on the line. Everybody, except maybe one or two secretaries, did whatever they could. We all had something to lose. A lot of vendors who called on us were enamored of the company and guaranteed loans. Finally somebody got suspicious and had the auditors take a look at the books.”
”We built a case,” Halekakis says, ”and we called him (Harper) in. It was ironic. It was the same summer, just about the same day that Nixon was supposed to resign. Jim was supposed to be at the board meeting, but he was out listening to his car radio. We kept telling him to get inside, and he`d say, `Hey, what`s the big deal? The President is in real trouble.` ”
Harper was fired, and the company went under soon after. The patent rights to the digital stopwatch were considered a company asset and were sold to two entrepreneurs in the wake of the bankruptcy.
Track & Field News founder Nelson and his wife lost more than $50,000, according to federal bankruptcy records, and he looks back on the experience with a kind of wishful chagrin. ”The digital stopwatch was really a breakthrough. Now everybody has one. In those days when we talked about putting it on the wrist, everybody laughed. Nobody thought we could do it.”
The experience didn`t sour Scheck. ”I can even smile about it now,” he says and smiles for the record. ”That`s all you can do if you live in Silicon Valley. I saw it as a very valuable lesson in startup companies. We were a very successful failure.
”Over the years I`d bump into other Harper Time employees. We`d always ask, `What do you hear about Jim?` He was always doing something, consulting work usually, it seemed.”
Between 1974, when his second company failed, and 1979, when Louise Schuler again entered his life, Harper did work as a freelance design consultant for several Silicon Valley firms, but he also had a very special sideline and one very exclusive customer, the Polish arm of the KGB.
”He cornered me one day in 1975,” says former Harper Time associate Halekakis. He had this incredible scheme to sell information to the Poles. I said, `Jim, are you crazy? You are going to wind up dead or in jail. Besides, we are talking about treason.` ”
Harper ended that conversation with a line of Bogart`s from the movie
”Treasure of the Sierra Madre.” He said, ”Don`t worry, Tony. Nobody gets the goods on Fred C. Dobbs.”
(Continued on PART TWO.)
