The onetime head of the FBI's Chinese counterintelligence unit in San Francisco has resigned a sensitive post at the Lawrence Livermore National Laboratory after authorities said he acknowledged a longtime affair with an alleged Chinese double agent.
The resignation of ex-FBI supervisor William Cleveland Jr. came one day after federal agents in Los Angeles arrested a retired colleague, James J. Smith, and businesswoman Katrina Leung in an espionage-related case Wednesday.
While Cleveland has not been charged with any wrongdoing, court documents and interviews assert that the former FBI agent, like Smith, carried on a romance with Leung that spanned years. During that time, Cleveland has acknowledged to FBI investigators, he had suspicions that Leung, a prized FBI informant, was passing classified information to China's intelligence service.
Cleveland raised his concerns with Smith, who he knew had recruited Leung, but took no other action, according to court documents. And both he and Smith continued their romantic involvement with Leung, who FBI investigators allege not only passed on information to China but was found with classified FBI documents at her home in San Marino.
Those documents included a secret memorandum about Chinese fugitives, a telephone list of the FBI's National Security Division squad in Los Angeles and a directory of the FBI's legal attaches overseas.
Smith, free on $250,000 bail, has not commented about the case. Cleveland did not return phone calls or e-mails seeking comment Friday.
Leung, who has been jailed at the federal Metropolitan Detention Center in Los Angeles since her arrest, attended a brief court session Friday in which U.S. Magistrate Victor Kenton discussed procedural matters with prosecutors and defense lawyers in preparation for the defendant's bail hearing Tuesday.
Afterward, defense lawyer Janet I. Levine told reporters that Leung had been "abused" and "manipulated" by the FBI, not the opposite, as claimed by federal prosecutors.
"When the facts are revealed, we are confident that Ms. Leung will be shown to be a patriot of this country who did what she was told to do, and she will be exonerated," Levine said.
Levine said the government's complaint distorts Leung's role as an FBI asset. Referring to Leung's FBI handlers, the defense lawyer said that her client "was used by them to do what they wanted done.... She did what they wanted her to do." Levine declined to be more specific.
Throughout the FBI, details of the investigation remained closely held, with even veteran agents voicing surprise at the secrecy of the inquiry. One indication of the case's sensitivity was the fact that agents recruited for the investigation were given polygraph tests before, during and after their work on the case.
At Lawrence Livermore, spokeswoman Susan Houghton said, "It's very important to reiterate that the FBI has not provided us with any information that would make us think that lab security in any way has been compromised. That's why we're really treating this as a personnel matter."
The case is a further embarrassment for the University of California, which manages Livermore and its sister nuclear weapons facility, Los Alamos, on a long-standing contract for the Energy Department.
In recent months, with strong evidence of financial fraud, theft and other problems at Los Alamos, UC's management and business practices at the labs have come under intense federal scrutiny. The Energy Department has said it will decide by April 30 whether to break the contract.
On Friday, UC spokesman Michael Reese said the university, in conjunction with lab officials, had acted as quickly as it could to limit possible damage.
"As soon as we heard about it, his personal and computer access to the lab was immediately suspended and we requested that the [Energy Department] revoke his security clearance," Reese said. "What we've also undertaken, here and at the lab, is a thorough review of his work, to make sure there have been no compromises of security."
In Cleveland's Monterey neighborhood of single-family homes, residents expressed shock. Cleveland and his wife, a schoolteacher, were described as extremely friendly. "We exchanged cookies at Christmas," said one neighbor. "They're run-of-the-mill people, just like we are."
Just as with Smith's arrest on charges of gross negligence in handling U.S. secrets, former colleagues of Cleveland said Friday that they were stunned by disclosures that he was romantically involved with an informant now charged with illegally obtaining classified documents for China.
"Bill was probably as well respected an agent and supervisor as I worked with in San Francisco," said retired FBI Agent Rick Smith, who served as supervisor of the office's Soviet counterintelligence squad. "He had the utmost respect from field agents as well as the hierarchy ... excellent knowledge of the work and was just a good man."
