Spying Case Tossed Out

Charging prosecutors with willful and deliberate misconduct, a federal judge on Thursday dismissed all criminal charges against a former FBI informant accused of serving as a Chinese double agent.

In a sharply worded ruling, U.S. District Judge Florence-Marie Cooper blasted the U.S. attorney’s office for “conduct unbecoming a prosecutorial agency.”

Attorneys for Chinese American businesswoman Katrina Leung had accused the government of illegally and unethically exacting a commitment from her former FBI handler that barred him from talking to the defense.

The pledge was contained in an agreement that retired agent James J. Smith reached with the government last year, allowing him to plead guilty to a reduced charge of failing to report his 20-year-long sexual affair with Leung.

Under long-established rules, prosecutors are prohibited from obstructing a defendant’s access to witnesses.

At a hearing before Cooper last month, Assistant U.S. Atty. Michael Emmick disavowed any intent to prevent Smith from speaking to Leung’s defense team. He blamed “inartful” language in Smith’s plea agreement.

But Cooper cited a Nov. 18 e-mail message to Emmick from Robert Wallace, senior trial counsel in the Justice Department’s counterintelligence section in Washington, saying that the wording was aimed at “preventing Smith from being interviewed by Leung’s counsel because he is a repository of classified information.”

“In the face of that e-mail,” Cooper wrote, “anything short of an admission and apology on the part of the government is hard to imagine. Mr. Emmick did neither. Rather, he chose to ignore the e-mail.”

The plea agreement clause in dispute specified that Smith would engage in “no further sharing of information relating to this case with Leung, counsel for Leung or the employees of counsel for Leung.”

Cooper said the evidence was abundantly clear that the clause was intentionally placed in the agreement to prevent Smith from talking to the defense. And to make matters worse, she said, the prosecution subsequently engaged in a series of explanations and denials that “compounds the problem by undermining the court’s confidence in the integrity of the process.”

She accused the prosecution of misrepresenting to the court its true intentions in drafting the “no-further-sharing” clause.

“While a certain amount of shading of the truth may be tolerated, even in judicial proceedings, prosecutors are subject to constraints and responsibilities beyond those which apply to other lawyers,” the judge wrote.

“In this case, the government decided to make sure that Leung and her lawyers would not have access to Smith. When confronted with what they had done, they engaged in a pattern of stonewalling entirely unbecoming a prosecutorial agency.”

U.S. Atty. Debra W. Yang issued a statement denying any prosecutorial misconduct. “I stand behind the work of the prosecutors of this case and I know that they have conducted themselves ethically,” she said.

Yang said her staff was analyzing the ruling and would consider an appeal.

Leung’s lawyers, John D. Vandevelde and Janet I. Levine, said in a statement that they were gratified by the dismissal.

“Katrina Leung’s nightmare is over,” they said. “The courts have again made sure that truth and justice are not mere platitudes.”

They described their client as a loyal American who dedicated her life to serving her adopted country for 20 years. “She looks forward to moving on with her life as a loyal and patriotic citizen.”

Leung, a naturalized citizen, was recruited by Smith during the early 1980s to gather intelligence for the FBI during her frequent business trips to China, where she ingratiated herself with high-ranking government officials.

But starting about 1990, prosecutors said, she began working for the Chinese as well, feeding sensitive, unauthorized information about the FBI to her handler at the Chinese Ministry of State Security.

Smith, who had an extramarital affair with Leung for two decades, learned about her activities but covered it up and continued to vouch for her reliability, he admitted in his plea deal.

Leung was not charged with espionage but with illegally copying and possessing classified documents that she could have used to harm the interests of the U.S. government. The documents were seized during a search of Leung’s San Marino home.

According to an FBI affidavit, Leung allegedly lifted the papers from Smith’s briefcase during his many visits to her house.

Through her attorneys, Leung denied any wrongdoing and insisted she had acted at all times at the direction of Smith and other members of the FBI’s counterintelligence squad.

An FBI spokesperson declined to comment on the ruling Thursday.

Smith, who retired from the FBI in 2000, was initially charged with gross negligence in handling classified documents and faced a possible 10-year prison term. Under terms of his plea agreement, the prosecution could recommend that he receive no time in jail.

In her ruling Thursday, Cooper said that Smith still has “everything to lose” by talking to the defense.

“Suspended over his head, like the proverbial Sword of Damocles, is the sure knowledge that if he violates any of the terms of his plea agreement, the deal is canceled and his future returns to its former bleak state.”

Consequently, the judge said, Leung has suffered substantial prejudice as a result of the prosecution’s due-process violation.

Reaction to the dismissal among leaders in the Chinese American community was marked by a mixture of relief and continuing concern.

Assemblywoman Judy Chu (D-Monterey Park), who knew Leung well and had worked with her, said: “I am glad for Katrina, certainly. But I am terribly disturbed by the prosecutorial misconduct involved in the case. Katrina’s life has been turned upside down. And I fear that the outcome was anticlimactic, compared to the charges that were leveled against her.”

“The community asked for a fair trial and restrained its judgment when this case first broke,” Chu said. “I am glad that the justice system worked in responding to that request.”

David Ma, chairman of the Chinese American Rights Organization in Monterey Park and a sometime critic of Leung, said the case had damaged the image of Chinese Americans regardless of the dismissal.

“The legal part is one thing, because you need to prove 100% that she is guilty,” he said. “From the point of the view of a loyal Chinese American, I feel very painful about this incident, because people like Katrina are taking advantage of this country.”

Stewart Kwoh, president of the Asian Pacific American Legal Center of Southern California, said: “This is a very unfortunate matter that really required a fair trial to find out the truth.” With the dismissal, he said, “we may never know what really happened.”

Lily Lee Chen, former mayor of Monterey Park, said: “It would have been better if we knew exactly what had happened. The damage has been done not only to herself, in terms of her reputation, but for the Asian American community.”

Loyola University law professor Laurie Levenson said Cooper’s decision contained a clear message for prosecutors: “Candor to the court is Job 1.”

Levenson, a former federal prosecutor, noted that Cooper dismissed the case on two grounds -- that there was a constitutional violation, and under the court’s inherent supervisory powers.

Given that, she said, the government will face “an uphill battle” if it appeals.

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Times staff writers Henry Weinstein, Connie Kang and Greg Krikorian contributed to this report.