Fri, May 09, 2003 - Page 7 News List

Grand jury indicts former FBI agent

SPY VS SPY A grand jury has expanded the charges against James Smith for the part he played in the game of sex and deceit with alleged double agent Katrina Leung

AP , LOS ANGELES

A retired FBI agent prosecutors say carried on a decades-long affair with his intelligence source was indicted by a federal grand jury for allegedly allowing the woman access to secrets she passed on to China.

The grand jury indictment on charges of gross negligence and wire fraud was returned Wednesday in Los Angeles against James Smith, 59, for his role in the case of alleged Chinese double agent Katrina Leung.

It expands upon charges filed by the government in early April by alleging that Smith schemed to defraud the FBI by having an improper sexual relationship with Leung, failing to make truthful reports about her to the FBI and even convincing other FBI agents to file reports that concealed or omitted negative information about her. It also accuses Smith of mishandling information relating to the national defense.

According to court documents, Smith recruited Leung in 1982 to be an FBI "asset," providing intelligence on China, and also began a sexual relationship with her that year. Prosecutors say Leung then pilfered classified materials from Smith's briefcase when he visited her home and passed the information to Chinese intelligence agents.

Smith spent most of his 30 years in the FBI as a Chinese counterintelligence agent, retiring in 2000. He has been free on US$250,000 bond since shortly after his April 9 arrest on a gross negligence charge.

"We're extremely disappointed that the government is pursuing these charges," said his attorney, Brian Sun. He said Smith is innocent.

Leung, 49, code-named "Parlor Maid" by the FBI, is a prominent Los Angeles socialite and political activist who has been jailed without bond since her April 9 arrest. The government is expected to seek a grand jury indictment against her later this week.

Her attorneys issued a statement Wednesday saying she was being betrayed by the US government she loyally served.

"She is a loyal American who is being stabbed in the back by the people she worked for faithfully for over 20 years," said the statement by attorneys Janet Levine and John Vandevelde.

"We expect her to be exonerated of any charge the government may choose to bring," the statement said.

Both Smith and Leung are married to other people, and the indictment stressed the impropriety of their relationship.

"This sexual relationship violated FBI rules and regulations regarding relationships between handlers and assets," the indictment stated, "in that it deprived defendant Smith of the required objectivity in evaluating the ongoing reliability of Katrina Leung."

The wire fraud charges stem from asset evaluation reports about Leung that Smith sent periodically to FBI headquarters in Washington in 1998, 1999 and 2000.

Two negligence charges allege that Smith improperly removed two classified documents from FBI offices in Los Angeles and allowed Leung access to them.

The six counts carry a maximum penalty of 40 years in prison.

Leung was considered a highly valuable source and was paid US$1.7 million for her information over the years, according to court documents.

She claimed contacts with some 2,100 Chinese officials and frequently visited China, where she was often seen with high-ranking government officials.

Smith was involved in several high-profile Chinese counterintelligence investigations, including allegations that China tried to use campaign contributions to influence US elections in 1996.

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