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Indictment Stops Short of Espionage

Prosecutors allege that Katrina Leung took documents from her FBI handler and paramour but not that she passed them on.

May 09, 2003|David Rosenzweig and Greg Krikorian | Times Staff Writers

A prominent Chinese-born businesswoman was indicted by a federal grand jury Thursday on charges of obtaining, copying and keeping national security documents that she allegedly lifted from the briefcase of an FBI counterintelligence agent with whom she carried on an extramarital affair for two decades.

Katrina Leung was not charged with passing any of those documents to Chinese intelligence agents, despite prosecution claims that she was a double agent who transmitted sensitive information to China's Ministry of State Security while working as a paid FBI informant.

Leung, 49, a U.S. citizen who lives in San Marino, faces a maximum 50-year prison term if convicted on all five criminal charges.

She has been held without bail as a flight risk since her arrest April 9 along with her former FBI handler and lover, James J. Smith, 59, of Westlake Village. He retired as head of the Los Angeles field office's China squad in 2000.

Smith, who is free on $250,000 bond, was indicted Wednesday on four counts of depriving the FBI of his "honest services" and two counts of gross negligence in the handling of national security documents.

Both defendants are scheduled to be arraigned Monday in Los Angeles federal court.

Minutes after the indictment was released, Leung's husband and attorneys stood on the steps of the family's home, predicting that she would be vindicated and denouncing the federal government for its prosecution. They called her a "sacrificial lamb" for the bureau's shortcomings.

"Katrina Leung is no Mata Hari, as people have suggested," said attorney Janet I. Levine, flanked by co-counsel John D. Vandevelde and others. "She was recruited actively by the FBI because of what she could do, because of what she knew....

"She tried to quit many times but was begged by her FBI handlers to stay on. They appealed to her patriotism, her love for the country -- a love she has shown in 20-plus years of service to this country, both through the FBI ... and through the community involvement and her involvement as a loving wife and a mother."

Leung's husband, Kam, accused the FBI of using his wife as a scapegoat.

"At the first sign of these two supervisors' sexual improprieties, the government immediately arrested her, ruined her reputation and threw her in jail while two male FBI supervisors are either free or out on bail," he said. " ... This is blatant discrimination against women and the foreign-born."

Bureau officials and federal prosecutors declined to comment on the accusations.

Smith's attorney, Brian A. Sun, said he wouldn't comment on the remarks, but did lash out at the news media for linking Smith and Leung to various national security scandals. Reports in the New York Times and on ABC News have suggested that Leung might have tipped off China about U.S. efforts to bug that government's embassy, consulates and presidential plane.

"It is wholly irresponsible to suggest, through innuendo and speculation, that she or my client were responsible for all of these perceived or alleged intelligence disclosures to the Chinese intelligence services," Sun said. "There is absolutely no evidence to support those claims."

Smith is accused of violating bureau regulations by concealing his sexual affair with Leung and by vouching for her credibility and usefulness, even after learning in 1991 that the Chinese knew she was an FBI operative.

When taken into custody last month, Leung was charged with a single count of illegally copying a classified document with intent to harm the United States. But an FBI affidavit unsealed at the time of her arrest revealed that she was also under investigation for espionage, a capital offense under certain circumstances.

Papers Seized in Search

The offenses of which Leung was accused Thursday fell short of espionage because they did not include any allegation that China received the documents. The charges involve three documents that were seized during a search of her home.

One relates to an FBI investigation of Peter Lee, a Manhattan Beach scientist convicted in 1998 of giving Chinese scientists classified information that might have aided that country's nuclear weapons program. The document identified a classified location, the indictment said without further elaboration.

The second document was a transcript and summary of intercepted conversations between Leung and her alleged handler at the Ministry of State Security in Beijing in late 1990 and early 1991. She used the code name "Luo." He went by the name of "Mao." An FBI affidavit said they discussed national security matters.

The third document was described only as an FBI electronic communication classified "secret."

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