Alleged Chinese double agent indicted

LOS ANGELES -- A federal grand jury Thursday indicted alleged Chinese double agent Katrina Leung on charges that she illegally took, copied and kept secret documents obtained from an FBI agent who was her chief contact and alleged lover.

The five-count indictment, however, did not charge Leung, 49, with espionage. She has been jailed without bond since her April 9 arrest.

The charges follow a six-count indictment Wednesday against Leung's longtime FBI handler, retired counterintelligence agent James J. Smith. He was charged with wire fraud for allegedly filing false reports to FBI headquarters about Leung's reliability and with gross negligence for allegedly allowing her access to classified material.

Leung's indictment was immediately denounced by her husband, Kam, who noted that a second retired FBI agent has admitted an affair with his wife.

"I want to emphasize that for over 20 years she was under the strict supervision of the FBI," Kam Leung told reporters outside their elegant home in wealthy San Marino. "At the first sign of the two supervisors' sexual improprieties, the government immediately blew her cover, ruined her reputation and threw her in jail. This is blatantly unfair."

Defense attorney Janet Levine said the treatment of her client was "insulting, degrading and sexist."

She denounced the government for portraying Katrina Leung as a Chinese Mata Hari and said that the woman was convinced to keep working for the FBI even when she wanted to end their association.

"She tried to quit many times but they told her they needed her," Levine said. "They appealed to her patriotism, her love for this country ... she was begged by her FBI handlers to stay on."

She said that at some point the FBI knew that the Chinese had identified her as an American agent.

"The FBI played a dangerous game knowing that Katrina was the one in harm's way if something went wrong," Levine said.

Calls seeking comment from two assistant U.S. attorneys involved in the case were not immediately returned.

Arraignments for Leung and Smith, who is also married, were set for May 12. Smith's attorney, Brian Sun, also has insisted on his client's innocence.

Prosecutors say Leung, a valuable FBI source of Chinese intelligence for 18 years, was simultaneously passing secret information obtained from Smith to the People's Republic of China. The breach has raised questions about every Chinese FBI counterintelligence investigation or operation from 1982 to 2000.

Leung, a socialite and political activist, was paid $1.7 million by the FBI for her information as an intelligence asset code-named "Parlor Maid."

The indictment against Leung charges her with two counts of copying classified documents with the intent to use them to benefit a foreign nation. The documents were allegedly taken from Smith when he visited Leung at her home.

One document contains details of "Royal Tourist," an FBI investigation into Peter Lee, a TRW Inc. employee who pleaded guilty to spying for China in 1997. Another document is described only as a June 1997 secret FBI electronic communication.

The other three charges say Leung kept those documents without authorization, as well as another document detailing FBI intercepts of Leung's conversations with her Chinese intelligence contact, known only as "Mao."

Leung faces up to 50 years in prison if convicted on all counts, while Smith faces up to 40 years behind bars.

The indictment against Smith stressed the impropriety of the relationship and said the agent should have disclosed it in the 19 reports he filed with FBI headquarters about her.

Leung claimed contacts with some 2,100 Chinese officials and frequently visited China, where she was often seen with high-ranking government officials. The FBI said it learned in 1991 that she had passed information to a Chinese intelligence officer but the matter was left to Smith to handle.

In his subsequent reports to FBI headquarters, Smith allegedly vouched for the validity of her information and said she had been verified in part by use of a lie detector. In fact, Leung refused to take a lie detector test.

The government says Leung provided the Chinese with information from FBI files regarding Chinese fugitives, a telephone list of agents involved in an espionage case, lists of agents serving at overseas posts and other classified information.

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Associated Press Writer Curt Anderson in Washington, D.C., contributed to this report.