That doesn't mean that it is kept on file.
From the State Department Website regarding passport applications.
"When applying for a U.S. passport in person, evidence of U.S. citizenship must be submitted with Form DS-11. All documentation submitted as citizenship evidence will be returned to you. These documents will be delivered with your newly issued U.S. passport or in a separate mailing."
Defectors typically have American passports if they have any passports at all.
State Department issues passports to non-citizens quite regularly ~ particularly to defectors.
I've met several people over the years who defected and were given American passports. One gentleman was immediately reposted to his country of origin as an officer in our embassy. He'd formerly been an officer in Sukarno's revolutionary army.
Back in the world, at a later time, he held a party in his home where I recall meeting Obama's mother Stanley!