Another American spy, 1st Lt. Lewis J. Castigin, operated in a manner that was similar in some ways to the modus operandi of modern-day defense attaches. The British captured Castigan in January 1777 and subsequently paroled him. He then went to New York City, where he was permitted to move around freely. Castigan reported to Washington and other American military leaders on what he observed concerning British military strength and positions. Through social activities with British officers, he was able to glean advance information on their campaign plans. Washington spoke highly of Castigin's reporting.

Washington also ran several agent networks in British-occupied Philadelphia. Major John Clark managed these networks, which used such names such as "old lady" and "farmer" to describe individual agents. Lydia Darragh, acting as a lone agent, had members of her family carry information to Washington. Her social position gave her access to senior British officers, and her elicitation skills resulted in reliable advance notice of British troop movements. An entry in Washington's official expense account, dated 18 June 1778, listed $6,170 spent for secret services in Philadelphia.

In addition, Washington utilized individuals as spies for single, specific missions. One such agent, John Honeyman, was personally recruited by Washington to report on enemy capabilities at Trenton, New Jersey. Honeyman, an Irish immigrant and a weaver by trade, had previously informed the American leader that he was willing to assist the Revolutionary cause. In autumn 1776, Washington asked Honeyman to move to New Brunswick, New Jersey. Honeyman did so, entered the cattle business there, and supplied meat to British forces in the area. Washington arranged for him to be publicly denounced as a British sympathizer.

In mid-November, Washington tasked Honeyman to report on British activities around Trenton. Through his business dealings with the British and the Hessians (British-employed mercenary soldiers from the Hesse region in what is now Germany), and by underscoring his service on the British side in the French and Indian War, Honeyman was able to develop close relationships with—and elicit intelligence information from—British officers in Trenton, including their commander.

In mid-December 1776, Washington directed American forces to seize Honeyman; the order was implemented on 22 December. The "arrest" enabled Washington to debrief Honeyman on enemy activities and intentions in the Trenton area without compromising the fact that he was an American agent. He was also given false information to pass to the British after his "escape" from the Americans.

Honeyman reported that British troops had been sent to New York City for the winter, leaving only Hessian forces in Trenton. He also noted that the Hessian commander, Col. Rall, was an arrogant individual, contemptuous of American forces. The commander was lax about defensive preparations, had not ordered his men to build fortifications, and had a serious drinking problem. Honeyman also provided a map showing all enemy locations around Trenton.

After his "escape", Honeyman told the Hessians that he had seen the American winter quarters and found no signs of any troop movements. Washington, acting on Honeyman's intelligence and having sown the seeds of deception through Honeyman's remarks to the Hessians about American inaction, moved his forces across the Delaware River on Christmas night and launched a surprise attack the next morning. The Hessians were hung over from their Christmas partying, had no time to organize, and were quickly forced to surrender. While a minor triumph in military terms, the victory at Trenton came at a critical time for the American side and was a strategic victory in political and morale terms—thanks in large part to excellent intelligence work.

John Jay: America's First Counterintelligence Chief

At the start of the Revolutionary War, American counterintelligence efforts focused on detecting and arresting Tories and Tory sympathizers—especially those viewed as conspirators, spies, or potential spies. Personal rivalries and business feuds among the colonists often were the real causes of such counterintelligence actions and accusations. Even so, genuine supporters of the Crown were numerous in the American colonies. Less than a third of the populace appears to have actively supported the drive for independence. In fact, the colonials serving in the British Army far outnumbered those in the American Army.

Future Chief Justice John Jay's first venture into the counterintelligence arena occurred in the summer of 1776. Jay, a member of the New York legislature, chaired a legislative committee that was investigating a Tory plot to recruit people to sabotage defense and infrastructure targets in New York City and its environs. The Tory goal was to pave the way for British occupation. The conspiracy was well organized and amply financed. It was directed by the British Royal Governor of New York, William Tryon, and New York City's Mayor, David Matthews.

The British recruitment effort even extended to the personal bodyguard of George Washington; the goal was to capture or kill the American leader. An investigation led by Jay in June 1776 exposed the entire scheme. One of the bodyguards, Thomas Hickey, was executed for his involvement. Numerous other plotters were arrested, and Mayor Matthews was jailed. Governor Tryon avoided arrest by taking up residence on the British warship "Duchess of Gordon" in New York harbor.

Discovery of this conspiracy prompted the Americans to intensify their efforts to develop a larger, better organized counterintelligence program, focusing primarily on the strategic Hudson Valley area north of New York City. This came at a time when the British were on the offensive in the region. General Sir Henry Clinton's forces seized New York City in autumn 1776, after which Clinton launched an aggressive campaign to enlist Tory sympathizers in the area surrounding the city. He offered land and money to those colonials willing either to join the British forces or to work as spies in a contested area along the Hudson River, providing information on American activities.

American counterintelligence efforts against these Tory operations were conducted under the auspices of the "New York State Committee and Commission for Detecting and Defeating Conspiracies," which Jay headed until mid-February 1777. While in this post, he conducted hundreds of counterintelligence investigations, arrests, and trials. Most of the suspects were influential businessmen and political figures with longstanding ties to the Crown.

Jay also stationed prison ships on the Hudson River to house the more dangerous of the loyalists arrested by American forces. The "Committee and Commission" investigated, tried, and sentenced suspects outside the established legal system. In May 1777 Jay proposed that civilian courts be established to handle cases of treason, insurrection, and violation of oaths of allegiance. He maintained that such courts would conduct more objective investigations and trials than those that had prevailed under the "Committee and Commission." Subsequently, however, American military courts gradually took over the judicial process for such cases.

Jay employed at least ten counterintelligence agents in conducting his investigations. Among the better known of these operatives were Nathaniel Sackett, Elijah Hunter, and Enoch Crosby. Elijah Hunter was Jay's favorite agent. Hunter supervised a network of counterintelligence agents operating in the Fishkill area. He later worked for the American side as a spy and double agent in New York City.