Hiskey joined the Chicago Metallurgical Laboratory in September 1943. In May 1944, a message sent by New York KGB to Moscow Venona project was intercepted and decrypted. The message contained information reporting that Bernard Schuster, member of the CPUSA secret apparatus, working for Soviet intelligence, had traveled to Chicago on the KGB's instructions. The message recorded Schuster's description of those he had come in contact with, including Rose Olsen, and stating Olsen had been meeting with Hiskey on the instructions of the organization. In July, it appears Joseph Katz had been assigned to the Hiskey case. On 28 April 1944, Army counter-intelligence observed a meeting between Clarence Hiskey and Soviet Military Intelligence officer Arthur Adams. Hiskey was removed from the Manhattan Project by drafting him into the Army, and stationing him in Canada for the duration of the conflict. While en route, Army counter-intelligence officers secretly searched Hiskey's luggage and found seven pages of classified notes taken from the Chicago Metallurgical Lab. When the officers subsequently performed a follow up search, the notes were no longer with Hiskey.
Investigations
In 1948, the House Un-American Activities Committee established that Hiskey was an active member of the CPUSA and had attempted to recruit other scientists to pass secret atomic data to Soviet intelligence. Congressional investigators concluded:
It became obvious that Hiskey had for some time been supplying Adams with secret information regarding atomic research. Immediately after seeing Adams, Hiskey flew to Cleveland, Ohio, where he contacted John Hitchcock Chapin. Chapin, through the urging of Clarence Hiskey, agreed to take over Hiskey's contacts with Adams.
In June 1953, Hiskey was subpoenaed to testify before the Senate Subcommittee on Investigations. In a closed door session, Hiskey was interrogated by Sen. Joseph McCarthy: Then after some discussion of the Fifth Amendment, The proceeding closed with, The subcommittee did not call Hiskey to testify in public. The recommendations on May 27, 1954 of the Personnel Security Board of the U.S. Atomic Energy Commission investigation into J. Robert Oppenheimer, director of the Manhattan Project at Los Alamos, stated Oppenheimer had been found in the company of "Joseph W. Weinberg and Clarence Hiskey, who were alleged to be members of the Communist Party and to have engaged in espionage on behalf of the Soviet Union." Oppenheimer's security clearance was revoked the following month. With the collapse of the Soviet Union, KGB Archives were made accessible to historian Allen Weinstein and a former KGB officer Alexander Vassiliev. The identification of Hiskey as a Soviet agent cover named RAMSAY which occurs in the Venona papers, corroborated Hiskey's covert relationship with Soviet intelligence.