In 1933 Adolf Hitler gained power in Germany. In 1934 Dickstein established the first congressional committee to investigate subversive activities in the United States. John William McCormack was named chairman and Dickstein vice-chairman. Most of the major figures in the American fascist movement were called to appear before the Special Committee on Un-American Activities. Dickstein personally questioned each witness. According to Gary Kern: "Dickstein's bellicose behaviour as its vice-chairman undermined it. The chairman, John McCormack, wanted nothing more to do with it, and no one wanted anything more to do with Dickstein."

In December 1937, Samuel Dickstein had a meeting with the Soviet ambassador Alexander Troyanovsky  Troyanovsky reported back to Moscow: "Congressman Dickstein... let me know that while investigating Nazi activities in the U.S., his agents unmasked their liaison with Russian Fascists living in the U.S." Dickstein promised to inform on these "fascists" but "he would need 5-6 thousand dollars".

Nikolai Yezhov instructed Troyanovsky to cut a deal with Dickstein. However, there was a dispute over money. Dickstein demanded $2,500 a month but initially, the NKVD was only willing to pay $500. After lengthy negotiations, Dickstein agreed to a compromise monthly payment of $1,250. Of course, this assistance came "out of sympathy toward the Soviet Union". Most agents not only did not ask for money, but refused it when offered. To show its disgust, the NKVD gave Dickstein the codename ZHULIK (CROOK).

Peter Gutzeit became Dickstein's handler. He reported on 25th May, 1937: "We are fully aware whom we are dealing with. CROOK is completely justifying his code name. This is an unscrupulous type, greedy for money, consented to work because of money, a very cunning swindler... Therefore it is difficult for us to guarantee the fulfillment of the planned program even in the part which he proposed to us himself."

HUAC

On 26th May, 1938, the United States House of Representatives authorized the formation of a successor to the McCormack-Dickstein Committee, by a 191 to 41 vote "for the purpose of conducting an investigation of (1) the extent, character, and object of un-American propaganda activities in the United States, (2) the diffusion within the United States of subversive and un-American propaganda that is instigated from foreign countries or of a domestic origin and attacks the principle of the form of government as guaranteed by the Constitution, and (3) all other questions in relations thereto that would aid Congress in any necessary remedial legislation."

The first chairman of the Un-American Activities Committee (HUAC) was Martin Dies. Dickstein did not manage even to gain a seat on the new committee. Walter Goodman, the author of The Committee: The Extraordinary Career of the House Committee on Un-American Activities (1968), argued: "Despite this setback, no cause took more of Dickstein's energies or his passion, than the creation of a committee to investigate subversive activities. If any man deserves the title of Father of the Committee, it is Representative Dickstein. He earned the distinction by relentlessly trying to create such a committee from 1933 to 1938 and had the rest of his life to regret it."

The NKVD was disappointed when Dickstein was not appointed to the HUAC. Peter Gutzeit wrote that Dickstein "won't be able to carry out measures planned by us together with him." 

He did provide transcripts of its hearings, lists of American Nazis and details of the war budget, but this was not enough to justify his handsome salary. Dickstein told Gutzeit: "If there was no trust, it was impossible to work. For illustration, he told that for some years he had worked for Poland and everything was OK. He was paid money without any questions. A couple of years ago he worked for the English and was paid good money without any questions. Everything was delicate and on the sly. Our case is only trouble... Apparently, he really managed to fool the Poles and the English -i.e., to promise something substantial and to limit himself to rubbish."

Gutzeit complained that Dickstein had been unable to obtain grand jury interrogations of suspected German agents. Gutzeit reported that when he told Dickstein in July 1938 that his information did not justify his monthly payments: "He blazed up very much, claimed that if we didn't give him money he would break with us ... that he is employing people and he must pay them, that he demands nothing for himself." Gutzeit reminded Dickstein that his other arrangements involved only money while with the NKVD "he is guided by ideological considerations, by the necessity of struggling against a common enemy - fascism."

Finally, the Un-American Activities Committee began to concentrate on communists in the United States. According to Allen Weinstein, the author of The Hunted Wood: Soviet Espionage in America (1999): "In response to Peter Gutzeit's request in September 1938, the Congressman publicly denounced the Dies Committee's focus on Communist groups and their allies. Dickstein also provided his Soviet associates with the names of several informants within the ranks of fascist organizations in the United States whom he argued could provide useful information. He even turned over transcripts of alleged tape-recorded hotel room conversations between American Nazi leader Fritz Kuhn and his mistress, the latter a Dickstein snitch. By then, the New York Democrat had begun to speak out in favor of terminating the Dies Committee."

WALTER KRIVITSKY

Walter Krivitsky was invited to appear before Martin Dies and the House Committee on Un-American Activities (HUAC) on 11th October, 1939. Dies asked Krivitsky if Soviet intelligence agencies cooperated with German and Italian agents and therefore faced with "a combined espionage problem?" Krivitsky admitted that even before the signing of the Nazi-Soviet Pact the Soviet Union and Nazi Germany had been co-operating. He argued that an "exchange of military secrets and information, as well as other forms of collaboration, is indispensable to both Hitler and Stalin." After the session, he provided additional information in closed chambers on Soviet agents working in the United States.

Peter Gutzeit asked Dickstein to obtain a copy of Krivitsky's testimony in the closed session of the HUAC. He was unable to do this and instead produced a vague summary. He also insisted that Krivitsky had presented no concrete evidence of espionage on its part in the United States. The NKVD agents, however, found Dickstein's report suspicious when they recognized that portions of it strongly resembled news accounts and Krivitsky's public speeches. Dickstein did agree to attack Krivitsky and he dismissed the hearings as ridiculous and described Krivitsky as "nothing but a phony".

Dickstein contacted James Houghteling, the commissioner of immigration at the Department of Labor (DOL) suggesting that Krivitsky should be deported: "My attention has been called to the activities of a certain Russian General, alias Ginzberg, who entered the country as a temporary visitor, supposedly for the purpose of doing some academic research work at an American university... and instead of doing the research work he claimed he came here to do, he is traveling around the country making all kind of statements which as a visitor in this country he has no right to make."

NKVD decided that Dickstein was a hopeless spy and in memo to Moscow from Peter Gutzeit concluded that Dickstein's only possible future use was in giving speeches in Congress under NKVD direction, receiving for each from $500 to $1,000. The following month NKVD reported: "According to all datat, his source can't be a useful organizer who could gather around him a group of liberal Congressmen to exercise our influence and, alone, he doesn't represent any interest. On the other hand, (Dickstein) refuses to give documentary materials and refused to switch to per-piece pay (i.e., for speeches) and we are not going to pay thousands for idleness. Therefore, we decided to break with Dickstein." 

Dickstein resigned from Congress on 30th December, 1945 and served as a Justice on the New York State Supreme Court until his death in New York City on 22nd April, 1954 at age 69.