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Agent in Spy Saga 'Was One Of Us'
FBI Colleagues Admired Espionage-Case Suspect

By Rene Sanchez
Washington Post Staff Writer
Sunday, April 20, 2003; Page A01

LOS ANGELES -- The retirement party the FBI threw James J. Smith three years ago drew a large and admiring crowd. So many people were sorry to see him go. He may not have been the classic G-man -- he never liked wearing a tie, for one thing -- but he was an easygoing old pro who had worked with distinction here for decades, and some younger agents and staffers had come to regard him as a father figure.

Smith -- "JJ" to everyone who knew him -- had been in no rush to call it quits. By all appearances, he still loved the work. He had become supervisor of the FBI's counterintelligence squad in Los Angeles a few years earlier and was handling one of its most valued informants on the Chinese government, a local entrepreneur named Katrina Leung. But he had no choice. He was 57, the mandatory retirement age for FBI agents.

Dozens of current and former agents came to his farewell. CIA officers with whom he had worked over the years were there, too. And so was Leung, wielding a video camera, even though filming active intelligence agents and officers was a breach of protocol. Smith had invited her.

That was puzzling. Had someone else brought an informant, there might have been smirks or whispers. But not JJ. He was a family man. A patriotic Army veteran. A team player wrapping up a long, reputable career. You could trust him.

"He was one of us," said Jack Keller, a former FBI agent who worked with Smith.

Now, with Smith and Leung the focus of a sordid espionage case that federal investigators say may have tainted two decades' worth of intelligence work on the Chinese government and compromised national security, the strange scene at his send-off and other unusual episodes involving the pair over the years are hardly seen in the same harmless light.

In court documents, federal prosecutors allege that Smith and Leung, who were both arrested here this month, had been having an extramarital affair for almost as long as she had been providing the FBI intelligence on the Chinese government. Prosecutors are accusing Leung of being a double agent, supplying Smith with information at the same time she was giving the Chinese copies of classified FBI documents that he blithely left unguarded in her presence.

Smith, 59, has been charged with gross negligence on the job and is free on $250,000 bond. Leung, 49, has been charged with illegally obtaining classified documents for the purpose of aiding a foreign power and is jailed; a federal magistrate last week refused to release her on bail. Prosecutors say Leung may have provided Chinese officials with confidential details on FBI personnel, a range of secret intelligence cases and spying tactics that agents and their informants use. Leung's attorneys have denied the charges, and say she has made "heroic contributions" to the United States.

But she was allegedly such a prominent informant, so close to seats of power in China, that federal investigators say they will have to review -- and possibly rethink -- every intelligence case involving China in recent years, including several that pertain to nuclear weaponry secrets, as well as the purported attempt by the Chinese government to contribute hundreds of thousands of dollars illegally to American political campaigns in the 1996 election.

The emerging case is another black eye for an agency recovering from the embarrassing crimes of Robert P. Hanssen. The longtime FBI counterintelligence agent in the Washington area was sentenced to life in prison last year for giving Russian officials a mother lode of highly sensitive national security information in exchange for large sums of cash and lavish gifts.

Smith's alleged misconduct has devastated the FBI's office in Los Angeles. It was rocked by similar charges in the late 1980s, when a counterintelligence agent named Richard W. Miller was caught and later convicted of passing government secrets to Russian officials through his lover.

Miller's corruption shocked few of his colleagues. He had long been perceived as a flake and a grumbler, forever distracted by personal problems and plagued with a bad attitude.

But Smith? In the office he was loose and at times outspoken, agents say, a burly guy who favored casual attire, but never someone who seemed to have any grudges on the job or problems at home. A supervisor of Chinese counterintelligence in the FBI's Los Angeles office -- one of the bureau's capitals of such operations -- is no small fish. He was a proven, steady hand.

Smith was the lead agent assigned to interrogate Johnny Chung, a major figure in the FBI probe of the Chinese government's alleged attempt to influence U.S. elections in 1996.

"He was very well respected," said Tom Parker, a retired FBI agent who had led the bureau's criminal division in Los Angeles. "He always seemed diligent in his work, sociable. He's the kind of guy you wouldn't mind having a cup of coffee or beer with."

He was certainly nothing like Hanssen, whom many agents considered odd and reclusive. But I.C. Smith, a former FBI counterintelligence official who was part of a 1990 trip to China that Leung allegedly compromised, said James Smith could be "kind of an arrogant guy."

"He had that L.A. attitude," said Smith, who is not related to the suspect. "He was the kind of guy who never wanted to wear a tie, wanted to follow his own rules, that sort of thing."

James J. Smith joined the FBI straight out of the Army, where he had served in military intelligence for a year in Vietnam during the height of the war. He was assigned to Los Angeles in 1971 and never left, spending more than two decades in the shadowy world of counterintelligence and earning commendations from the FBI and CIA for his work -- which included investigating Miller.

Intelligence agents are often a breed apart from their brethren in the bureau's criminal division. They can spend years cultivating an informant on a vague and open-ended assignment, with little reward. The job requires tact, patience, a feel for foreign affairs and the willingness to pore over cryptic or arcane documents. Some FBI criminal investigators view them as eggheads.

"But JJ definitely was not an intel geek," said an FBI official here who asked not to be named. "He never set himself apart as somebody special or more sophisticated than other agents. You just sort of got a nice dad vibe from him."

Smith has been married since 1966. His wife, Gail, has been a stay-at-home mom who occasionally tutors students in English and was president of the parents' club at her son's college. The family lives in Westlake Village, a well-tended suburb just north of Los Angeles, and has long been a stalwart at the neighborhood Fourth of July celebration. One neighbor told reporters last week that the Smiths "were like the Cleavers," a reference to the wholesome family on the old television show "Leave It to Beaver."

In the early 1980s, in a step that would come to define his career, Smith recruited Leung to be what the FBI calls an intelligence "asset" or secret agent. She seemed to be quite a catch: a young Chinese American woman, also married with a son, who had been educated at Cornell University and the University of Chicago and was fluent in English, Mandarin and Cantonese. She also was beginning to make a name for herself in the large Chinese American community in Los Angeles, had blossoming business interests in China and knew how to work a room with her charm. The FBI put her on the payroll and gave her the code name "Parlor Maid."

Working with Smith, who filled dozens of notebooks with the intelligence she provided, Leung became such a valued source of information on the Chinese government that the FBI paid her $1.7 million in expenses and fees for her service.

But the relationship she and Smith had was not all cloak-and-dagger. At times, it was in plain view. Some community leaders recall seeing them together at public events or social receptions at her home. That was unusual. But to agents here, that was just JJ going the extra mile. He knew how to stroke a source.

Well-Connected

Get close -- but not too close.

That's the first rule FBI counterintelligence agents working with informants are supposed to learn. "You always have to be careful of the bonding that goes on with an informant," Keller said. "All the secret meetings can be exciting stuff."

And so much can go wrong. Working an informant, agents say, requires great care and constant skepticism. Some of them prove to be hustlers looking for easy money and expert at telling their handlers exactly what they want to hear. The FBI usually has a second agent check up on a handler and informant to make sure the relationship is healthy. It is not clear whether that happened with Smith and Leung.

But her background was quite reassuring. She lived in the moneyed Los Angeles suburb of San Marino. Her husband had a doctorate degree. And she was emerging as a local political player, raising money for many Republican candidates in California and constantly participating in civic events in the Chinese American community. She had a reputation to uphold.

"She appeared to be very well-connected," said Ada Chan Wong, president of the Los Angeles Chinese Chamber of Commerce. "She was very good at always knowing who's who."

Leung regularly presided over banquets and receptions welcoming visiting dignitaries from China, including the country's premier. Over the past 16 years, according to court documents filed in the espionage case, she also traveled to China 71 times, purportedly for business.

"She was very outspoken about her connections to the People's Republic of China," said Michael Woo, a former city councilman in Los Angeles who knows Leung. "She would imply in a friendly way that she could be very helpful in providing connections for business or other reasons."

The FBI had seemed to hit the jackpot. Leung was bright, savvy and had ties to power in China. And Smith was a veteran of the game.

But investigators say the pairing apparently went awry from the start. In a court document filed in the case, they say Leung admitted last year during questioning that she and Smith became intimate "very long ago."

According to the documents, she also said that the two of them met frequently at her home and that he often left his briefcase open and unattended, which allowed her either to take handwritten notes of classified information or surreptitiously photocopy it.

There were other signs of trouble. A decade ago, according to court documents, an FBI counterintelligence supervisor in San Francisco who also was having sexual liaisons with Leung alerted Smith that an informant had passed along evidence suggesting she might be a double agent.

The revelation prompted Smith to travel to Washington in May 1991 for a meeting with his superiors at FBI headquarters. A decision was made to leave the matter to Smith to solve, and he was allowed to continue using her as a counterintelligence source, according to officials and court documents. That decision did not appear to follow normal investigative protocols.

Smith chose not to break either his professional or personal ties to Leung, and apparently kept giving her access to classified information.

Court documents contend that at one point in the late 1990s, Smith took the highly unusual step of removing top-secret information from a vault in the FBI's Los Angeles office and not returning it until a day or two later. FBI investigators say that a search of Leung's home during the espionage investigation turned up copies of top-secret documents that had been stored in the vault.

The couple's illicit romance, investigators say, included secret, unauthorized trips to London and Hong Kong that Smith initially denied during questioning last year.

Then this small fact: On Smith's last day of work, his wife did not pick him up. Leung did.

Attorneys for Smith, who could face 10 years in prison if convicted, contend the case against him is overblown and "nowhere near espionage." They say he was duped and betrayed by a trusted informant, and that he is a loyal citizen and was a dedicated agent.

Some of his former colleagues say they no longer know what to believe.

Maybe he was just seduced by a cunning operative. "There are times when the agent is a family-oriented guy, and a well-trained, astute person can figure out how to capitalize on that," Parker said.

Or maybe, Keller said, "he was a guy leading two lives."

Holding On

November 2002. Smith had been retired for two years, dabbling in private investigative work. He no longer had access to classified FBI documents and had no reason to be in touch with Leung. But he was.

By now, the FBI's investigation of the couple was nearly a year old. Before she boarded a plane to China that month, agents secretly searched her luggage. In court documents, they say they found a faxed cover sheet from Smith to Leung attached to another page bearing photos of a few FBI agents based in Los Angeles who work in community affairs. They were taken at a local meeting of the Society of Former Special Agents of the FBI and published in the group's newsletter, which is typically filled with grip-and-grin snapshots from luncheons and news of golf outings.

Hardly top-secret stuff. But investigators say that when Leung returned from China, another secret search of her luggage showed that she no longer had the papers. Why had Smith allegedly given her such fairly useless information, and why was she allegedly peddling it?

Some agents here say the incident is revealing. A subtle sign, perhaps, of desperation to keep the relationship alive.

"That tells me he was just feeding her anything so she would stay interested," Keller said, "and that she was still playing him."

Staff writer Dan Eggen in Washington and special correspondent Kimberly Edds in Los Angeles contributed to this report.

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