Despite the potential breaches in national security, the FBI is confronting the possibility that Smith and Leung could walk away with relatively light punishment, if they are convicted. Indeed, sources say, Smith may be in greater legal jeopardy than Leung, because he was the custodian of the classified documents and allegedly breached the government's trust. Neither Smith nor Leung has been charged with espionage on behalf of a foreign power, which can carry the death penalty. Smith faces five counts related to having improper sexual relations, gross negligence, and filing false reports about Leung's reliability. Leung is charged with five counts of stealing and copying classified documents. "It's a clear flag," says a counterintelligence veteran, that "they have no evidence of espionage."
Chump. Guilty verdicts, in other words, are hardly a given. Chances of "flipping" Smith--persuading him to implicate Leung and testify against her, sources say, also are "highly unlikely" because it would require Smith to admit he was a chump, not a Lothario, and accept substantial jail time. "The saying `If nobody talks, everybody walks' is true in spades in this case," says the counterintelligence veteran. "If Smith and Leung don't talk, there's a better than even chance they both will not go to jail." If Smith were to plead guilty or be convicted, Leung's attorneys, undoubtedly, would try to tear him apart on the witness stand, and a jury might not believe him. Leung's attorneys are unlikely to spare Cleveland, either. Prosecutors say Leung continued to provide Cleveland information after they became involved and met Cleveland "many times" in Los Angeles and San Francisco, "often in the company of Smith." FBI officials have looked at the possibility of collusion between Cleveland and Smith, but officials say they have found no evidence to support such a conclusion. "Katrina is in the catbird seat," says a veteran counterintelligence official. "An L.A. jury with a case as dirty as this would have a tough time coming out with a unanimous verdict because the government looks worse than Leung." FBI Director Mueller has ordered an examination of the bureau's entire China program, all FBI assets, and the entire human intelligence program.
Mueller was confronted with a host of challenges in deciding how to handle the Smith and Leung cases, not all of them evidentiary. Because the bureau's internal-affairs unit is under investigation in an unrelated matter, Mueller had to reach out to Justice Department lawyers for assistance on the cases. Despite its many difficulties, however, Mueller and Attorney General John Ashcroft, both of whom assumed direct control of the cases, decided they had no choice but to prosecute. "Courageous people made courageous decisions," said a senior FBI official. "I think it's important to understand that we can take a direct look at ourselves and do the right thing, no matter how hard it is." Even so, the scandal is proving so vexing, says one veteran counterintelligence official, that "even Mueller wants it to go away. But this is going to be yet another turd floating in the FBI's punch bowl."
The investigation of Leung began in November 2000, after a CIA analyst on loan to FBI headquarters noticed some anomalies in Leung's asset file. A naturalized citizen, Leung, in many ways, is an enigmatic figure--highly personable, those who know her say, but hardly the type of person to carry on extramarital affairs, much less engage in international derring-do. Her personal background, the FBI contends, is unclear, because of the many allegedly false statements she made to immigration officials, including on her 1982 citizenship application form. Evidently, she was born Che Wen Ying in Guangzhou, China, and came to Hong Kong as a toddler with her aunt, Susan Chin, who raised her like a mother but whom Leung reportedly has seen only once in 20 years. Leung met her husband, Kam, at Cornell University, where he obtained a Ph.D. in biochemistry. Leung entered Cornell as a graduate student in engineering but later switched to home economics. Leung told the Los Angeles Times in 1997 that her connections to Chinese officials dated to 1972, the year President Nixon made his historic visit to China. She had just graduated from high school. In New York, Leung said, she helped employees at China's newly opened United Nations mission. "China remembers old friends," she told the Times. "All these people I entertained became big shots."