Former FBI Agent Given Probation

A former FBI counterintelligence officer was sentenced to three months of house arrest Monday for lying about his 20-year extramarital affair with a suspected Chinese double agent.

“I have nobody to blame but myself for my being here today,” retired agent James J. Smith told U.S. District Judge Florence-Marie Cooper. “I stand before you ashamed and humiliated.”

Eyes welling with tears, Smith turned to his wife and son seated in the spectators gallery and apologized to them as well.

Smith, who headed the FBI’s China squad in Los Angeles, pleaded guilty last year to lying during a routine security interview when asked if he was concealing anything that could be used to coerce or compromise him.

In exchange for leniency, he agreed to cooperate with the government in its prosecution of Katrina Leung, his longtime lover and a prize FBI informant.

Leung was charged with illegally copying and possessing three FBI documents that she allegedly filched from Smith’s unlocked briefcase during some of his many off-duty visits to her San Marino home.

Citing prosecutorial misconduct, Cooper dismissed the case against Leung earlier this year. The Justice Department is appealing the ruling.

Smith’s plea deal called for him to receive a sentence ranging from probation to six months behind bars. His house arrest is part of a three-year probationary sentence. He was also fined $10,000.

In court Monday, Assistant U.S. Atty. Rebecca Lonergan argued for a two-month prison term, saying Smith seriously endangered national security by his affair with Leung. In doing so, she said, he left himself open to blackmail by foreign agents.

Lonergan also complained about Smith’s responses to many key questions put to him by intelligence officers during about 100 hours of interrogation following his plea agreement. She said he could not remember what, if anything, he told Leung about a number of national security investigations.

Although she acknowledged that Smith’s lack of recall may well have been genuine, she told the judge that intelligence agents “will be scrambling for years to come to determine what damage was done here.”

Defense co-counsel Brian Sun fired back, accusing the prosecutor of trying to “backdoor” the national security issue into the case. Smith’s plea agreement, he said, contained no such admission, and the government signed off on the deal.

“This case has been largely driven by politics, image, Washington and saving face for all concerned,” Sun said, without elaboration.

Sun, who represented physicist Wen Ho Lee against espionage charges, also sought to dispel any notion that Smith might have withheld information during his debriefing sessions in Washington. Smith, he said, was asked questions going back 20 years. Any suggestion that Smith was not forthcoming “does not pass muster,” he said.

Smith retired from the FBI in 2000, capping a 30-year career during which he received numerous commendations, many for his supervision of Leung, whom he recruited in 1983 as an FBI operative, code-named Parlor Maid. Their sexual liaison began about that time.

A business consultant who traveled frequently to China, Leung ingratiated herself with top officials in Beijing and with high-ranking Chinese diplomats in Washington and Los Angeles. The information she brought back was considered first-rate, according to FBI documents filed in court.

In 1991, an intelligence communication intercept revealed that Leung was feeding unauthorized information about the FBI to the Chinese Ministry of State Security. FBI intelligence officials held an urgent meeting in Washington to decide what to do.

According to one participant, Smith was directed to confront her about the discovery and to decide what course of action would follow. During a tearful confrontation in her kitchen, Leung allegedly admitted giving information to the Chinese, but she insisted that she acted under duress after being unmasked as an FBI spy. Smith opted to continue using her as a paid informant, vouching for her honesty and reliability. They also continued their affair.

No further action was taken until 2002 when, for still undisclosed reasons, the FBI launched an internal affairs investigation into their relationship.

The charges against Leung were based on three FBI documents that investigators found during a search of her home. Prosecutors charged that she intended to use them to harm U.S. interests, a claim she steadfastly denied.

One document contained the names, phone numbers and office addresses of FBI agents assigned to investigate Peter Lee, a TRW physicist who later pleaded guilty to giving Chinese scientists classified information.

Also seized was a copy of a seven-page communique from the FBI’s legal attache in Hong Kong, discussing China’s intelligence-gathering activities.

The third document was a verbatim transcript of two telephone calls and summaries of six others between Leung and her alleged handler at the Chinese Ministry of State Security in 1990 and 1991. The pair talked about an FBI agent’s upcoming trip to China, a flight to the United States by relatives of a Chinese defector and the travel to China by the subject of an FBI counterintelligence investigation.

Smith received a copy of the transcript in 1991 from his counterpart in the San Francisco FBI office, William Cleveland, who also had a sexual affair with Leung. Cleveland has not been charged in the case.

In January, Cooper threw out the case against Leung, accusing the U.S. Attorney’s office of willful and deliberate misconduct. She ruled that prosecutors acted unethically by exacting a commitment from Smith that barred him from talking to Leung’s defense team. Prosecutors are prohibited from obstructing a criminal defendant’s access to witnesses.