FBI spy suspicions unexamined for years AGAIN

Spy suspicions unexamined for years
Fri Apr 11, 5:44 AM ET
Kevin Johnson USA TODAY

WASHINGTON -- Eight times during the two decades that Katrina Leung was paid about $1.7 million by the FBI to spy on the Chinese government, U.S. agents in California discussed the possibility that she might be a double agent for China. At least once, a report of the agents' suspicions reached FBI headquarters here.

For years, nothing happened. But in late 2001, new FBI Director Robert Mueller ordered an investigation, and on Wednesday, Leung was accused of illegally obtaining classified information for the benefit of a foreign nation. Her FBI handler, retired counterterrorism agent James Smith, was charged with gross negligence in the latest embarrassing example of the bureau's failure in recent years to closely monitor problems in its ranks.

Smith, 59, was released from custody in Los Angeles on Wednesday after posting a $250,000 bond. Leung, 49, remains in custody.

Senior law enforcement officials say Leung, who became a prominent fundraiser for the Republican Party, was never questioned seriously before Mueller's order was issued. Nor was Smith. Meanwhile, authorities now allege, a romantic relationship between Leung and Smith flourished, and Smith allowed Leung access to classified FBI information, including reports on secret operations in China.

The arrests underscored Mueller's emphasis on uncovering bad agents, as well the bureau's lapses in identifying internal problems. Those lapses were evident two years ago, when former counterterrorism agent Robert Hanssen was charged with selling secrets to Moscow. He is serving a life sentence in prison.

Smith's position as a long-time supervisor in the FBI's Los Angeles field office gave him unlimited access to information involving Chinese counterintelligence operations. That led top FBI officials to fear that he could have compromised the identities of all U.S. agents working in China. So far, however, there is no evidence indicating that those agents have been executed or arrested by the Chinese government, law enforcement sources said.

"We are just beginning the investigation," a senior law enforcement official said Thursday. "There is cause for serious concern. We believe that there is precious little he knew that she didn't know."

Smith's attorney, Brian Sun, has said Leung acquired FBI information without his client's knowledge. Court documents say Leung told investigators that that she "would remove (documents) and copy them" when Smith left his briefcase open and unattended.

Leung's attorneys, Janet Levine and John Vandevelde, said she is innocent. Chinese officials in the USA were not available for comment.

Officials said it could take months to assess the damage allegedly caused by Smith and Leung. But it is not believed to approach that of Hanssen's actions, which authorities say led to the deaths of two Russians working as agents for the United States.

Court documents unsealed in Los Angeles this week say that FBI agents found classified bureau reports in Leung's home in San Marino, Calif., and in secret searches of her luggage before she traveled to China last year. In Leung's home, according to the court records, agents found FBI telephone and personnel directories that identify agents assigned to posts around the world. Agents also found a secret FBI memo from 1997 that contained ''national defense information.''

U.S. officials also are reviewing whether Leung intentionally passed false information to Smith about Chinese government operations while she worked as an FBI informant.