China Doll
Katrina Leung was a temptress, beguiled by the world of intrigue, but was she an agent of influence for Beijing, as prosecutors now charge?
In November 2002, when Leung traveled to China, it was the FBI's turn to search her bags, as part of a surveillance. They found a faxed cover page from J. J. Smith and six photographs of current and retired FBI agents. Smith, the court papers say, gave Leung the photographs after he retired. When FBI agents searched her bags on her return to the United States, the photographs were gone.
Circumstantial evidence? Perhaps, but in videotaped interviews, Special Agent Thomas wrote in court papers, Leung has "generally admitted to surreptitiously taking and copying documents from Smith." Leung allegedly stole the documents from Smith's briefcase after he "debriefed" her in her home, then stepped away to use the restroom or to smoke outside. Leung told the FBI, according to Thomas, that "although Smith sometimes allowed her to review classified documents, he never permitted her to retain them."
Smith recruited Leung in 1982, when she was just 28, the same year she filed papers to become a naturalized U.S. citizen. U.S. News has learned that the FBI helped Leung get her citizenship. Sources say Leung attracted the FBI's "distant eyes" in the late 1970s, when the bureau was trying to track and recruit Chinese students who came to the United States after normalization. When Leung moved to Los Angeles, sources say, Smith interviewed her as part of an investigation into whether a Lawrence Livermore lab physicist sold neutron bomb secrets to China. Smith passed Leung on to Cleveland, who was leading the inquiry.
Party time. The relationship between Smith and Leung, by any measure, was unusual. Smith decided early on in his handling of Leung "to appear with her frequently and publicly as an FBI agent," Special Agent Thomas wrote. "She came to his retirement party, for God's sake," says I. C. Smith. "They were seen at parades. These are things you just don't do."
Forget about appearances--the security implications were huge. J. J. Smith permitted Leung to videotape his retirement party, according to court records, capturing for posterity the faces of the FBI agents and CIA officers there. Smith was the only agent in the L.A. field office to check out classified documents overnight between 1997 and 2000, an FBI clerk told Thomas. And Smith and Leung met at L.A. hotels. They also met twice in Hong Kong and once in London. "China has an active intelligence operation in London," says Wortzel, "and everything in Hong Kong is completely penetrated by the PRC"--the People's Republic of China.
Numbers help to tell the story. Leung had 2,100 contacts with Chinese officials over 20 years. She made 71 overseas trips and failed to tell the FBI about 15 of them, including the two to Hong Kong after Smith retired. She also vacationed with Smith, including one trip to Hawaii. Leung told the FBI that China gave her $100,000 because "President Yang Shangkun liked me." But that was peanuts compared with what the FBI paid her--a staggering $1.7 million. "Those kinds of payments are really for me, almost unbelievable," says retired FBI official Thomas Parker. "I've made huge payments to criminal sources, Mafia guys, but nothing ever added up to that." Seventy percent of the $1.7 million was for Leung's operating expenses--nearly $1.2 million, all tax exempt. She got another $521,000 for passing on information, but she failed to pay any tax on it. Moans one counterintelligence official: "They were paying for her parties." Sources say that it's likely that with so much "blue-slipping," as such cash transactions are called, the FBI doesn't have a full accounting.
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