Accused Spy Blames the FBI

Attorneys for longtime FBI informant and alleged Chinese double agent Katrina Leung asserted Monday that she consistently took her orders from bureau agents, one of whom is facing federal charges of allowing her access to government secrets.

But an FBI agent alleged in an affidavit unsealed Monday that Leung’s spying for China has called into question two decades of U.S. counterintelligence investigations that relied on her information.

Characterized by some media as a modern Mata Hari, the 49-year-old Los Angeles businesswoman faces charges that she illegally obtained secret documents for China.

Her lawyers described her as a woman exploited by her FBI handlers, including former Los Angeles Agent James J. Smith, who is charged with gross negligence in allowing her access to classified material. “The FBI controlled everything” Leung did since she became an informant more than 20 years ago, her defense attorneys John D. Vandevelde and Janet I. Levine said in court papers.

But on the eve of today’s bail hearing for Leung, federal authorities alleged that she “deceived the FBI about her relationship with [Chinese] intelligence services for years.”

In an affidavit, FBI counterintelligence Agent Randall Thomas alleged that Leung’s statements to bureau agents during a lengthy investigation proved to be “false and/or not credible.”

The affidavit suggests FBI officials got very worried because the bureau over the years had “acted on her information and used it in the conduct of various foreign counterintelligence investigations, including detecting efforts by the [Chinese government] to clandestinely obtain technologies that have military applications.”

As a result, Thomas said, “The FBI must now reassess all of its actions and intelligence analyses based on her reporting. A central goal of this reassessment will be to determine which foreign counterintelligence investigations have been thwarted or compromised by her communication of information to her [Chinese] handlers, as well as by disinformation she may have provided her FBI handlers.”

Thomas said Leung admitted receiving $100,000 from the Chinese government, saying it had given her the money because President Yang Shangkun “liked her.”

Among the items found in a search of Leung’s San Marino home was a document on Chinese fugitives that was classified secret, two directories of FBI personnel in the United States and overseas, and a document relating to a significant espionage investigation.

In arguing against bail for Leung, the U.S. attorney’s office argued that Leung’s release could pose a danger to the United States and that she might flee to China, which has no extradition treaty with the U.S.

In support of their motion that Leung be held without bail, government attorneys included an excerpt of a cryptic conversation Leung had with FBI Agent Peter Duerst last Dec. 18 during the investigation of her actions.

“You know,” Leung said, “I think the perfect way to end all this, if I just ... disappear, not disappear, oh well, wouldn’t that be nice. I mean, if I don’t exist, if I do not exist anymore? Would it help?”

Duerst responded, “Uh, I don’t know how we can do that [laughs].”

Court papers filed late Monday by the government also detailed Leung’s alleged connections to top Chinese officials. During the 20 years she was an informant, Leung told the FBI that she had more than 2,100 contacts with various Chinese officials and had the personal telephone number of a high-ranking Chinese official in her phonebook, said federal prosecutors Rebecca S. Lonergan and John B. Owens.

Though acknowledging that she told the FBI about many of her trips to China, the government attorneys said records show that Leung -- dubbed “Parlor Maid” by her FBI handlers -- took about 15 unreported international trips between 1989 and 2002.

And although virtually all of Leung’s immediate family is believed to live in the United States, immigration records show that she has relatives in Hong Kong and Australia.

Authorities said Leung and her husband have “immediate access” to $872,000 through several checking and other accounts.

Records, including those seized from Leung’s San Marino home last December, suggest that the couple controlled 16 foreign bank accounts in Hong Kong and China over the past 20 years, said government lawyers. Some accounts had balances as high as $171,300 within the past two years, prosecutors said.

Authorities had acknowledged that Leung, who was considered a prized informant for the United States, was paid about $1.7 million by the FBI over the past 20 years. But Leung’s attorneys said she should be released on $250,000 bail -- the same amount that Smith was released on last week.

Defense lawyers Vandevelde and Levine said Leung is not a flight risk and is willing to be monitored with a global positioning device and remain in Los Angeles. She surrendered her passport last December after being interviewed by FBI agents, her lawyers said.

Government suggestions that Leung, a naturalized citizen, would try to flee to China because she was born there are baseless, her attorneys said.

“The government’s allegations here are such that Ms. Leung would face death or imprisonment if she fled to China,” the attorneys wrote in their bail motion. Moreover, they emphasized that Leung “has lived her entire adult life here” and has strong ties to the United States, including her husband, son and other family members, as well as property worth about $2 million.

Vandevelde and Levine argued that “Leung should be treated no worse than Smith.”

Leung’s lawyers provided a glimpse of what is likely to be a multi-pronged defense: Leung is a loyal U.S. citizen who was used by the FBI as a “double agent,” putting her in great danger; she generated valuable assistance to the U.S. government and she gave information to the Chinese government as part of her attempt on behalf of the FBI to persuade the Chinese Ministry of State Security that she had access to key information.

“The FBI fed information to her and encouraged her to give it to the [People’s Republic of China] in order to obtain the trust of the PRC and obtain information in return.

“Leung had no independent access to any government secrets or documents,” the defense brief said. “She was not an FBI agent; she did not work in any secret or top-secret facilities. Rather, according to [an affidavit submitted by an FBI agent last week], the only secret items she could access were those provided to her or made available to her by her handler, Special Agent Smith.”

The brief also states that Leung “consistently obtained reliable, valuable information from the PRC, resulting in repeated commendations to Special Agent Smith,” a reference to awards that the former agent received because of information he obtained from Leung.

The Justice Department said last week that Leung had affairs with two FBI agents, Smith and an unnamed agent. Numerous sources have identified that person as retired San Francisco Agent William Cleveland Jr., who last week resigned from Lawrence Livermore Laboratory.

Defense lawyers said that although Smith and Cleveland had known since 1991 that Leung had a relationship with China’s Ministry of State Security, they continued to exploit her knowledge and contacts.