Feds try to gauge damage by alleged double agent

LOS ANGELES -- Katrina Leung was a Republican political activist, a prominent Southern California businesswoman and an FBI informer paid $1.7 million for her work and expenses over two decades.

It was in the latter role, authorities allege, that she developed sexual relationships with two FBI counterintelligence agents and stole U.S. secrets for the Chinese government.

As the suspected double agent now sits in a federal detention center, authorities are trying to determine just how much damage she did to U.S. intelligence efforts and weapons programs.

"This is not a pretty story about our intelligence community," said Michael Greenberger, a former Justice Department official in the Clinton administration who is now a law professor at the University of Maryland Center for Health and Homeland Security. "If this is the quality of intelligence going on, it raises real questions."

Court documents accuse Leung, 49, of a list of security breaches, including tipping off Chinese authorities to U.S. agents looking for nuclear secrets in China.

FBI director Robert Mueller has said the handling of intelligence assets needs to be overhauled to prevent such breaches in the future. And court documents filed by the U.S. attorney's office say the FBI will have to reassess all of its actions and intelligence analyses involving Leung's activities.

"A central goal of this reassessment will be to determine which foreign counterintelligence investigations have been thwarted or compromised by her communication of information to her People's Republic of China handlers as well as by disinformation she may have provided her FBI handlers," according to the documents filed by the U.S. attorney's office.

Among the accusations against Leung is one that she gave Chinese officials the name of an FBI agent who went to China in 1992 after investigating a nuclear espionage case in this country in the 1980s.

"Such surveillance could well reveal FBI counterintelligence techniques and persons of interest to the FBI," the court documents state.

The documents do not name the man, but several law enforcement officials confirmed to The Associated Press that he was William Cleveland Jr., the lead FBI agent in an investigation that targeted an alleged attempt by China to steal neutron bomb secrets. Cleveland had been having an affair with Leung since 1988, according to the records.

The court filings contain limited details about the extent of Leung's activities. But in denying her bail, U.S. Magistrate Judge Victor B. Kenton said Leung could be a flight risk because she had access to about $872,000 in U.S. bank accounts and perhaps millions more in foreign banks.

Leung was arrested April 9 and charged with unauthorized copying of national defense information with the intent to injure the United States or benefit a foreign nation.

Her lawyers said she was a loyal American who was given documents by the FBI to pass on to China as part of an intelligence strategy. "There's no reason to believe she was doing anything other than what the FBI told her to do," attorney Janet Levine said.

Leung's family and friends accuse the FBI of using her as a scapegoat in order to cover up the misdeeds of its own agents.

Leung had been recruited to work for the FBI in the early 1980s and soon began an affair with her handler, former supervisory special agent James J. Smith. It's unclear whether Smith and Cleveland knew about each other's affair at the time.

According to court documents, Cleveland, then an FBI counterintelligence supervisor in San Francisco, called Smith after he recognized Leung's voice on a 1991 tape provided by a source in which she discussed classified U.S. information with a Chinese contact.

FBI sources, speaking on condition of anonymity, confirmed a meeting was held at FBI headquarters in May 1991 about the allegations against Leung. The FBI is reviewing what, if anything, was done at the time.

The New York Times on Sunday quoted an unidentified former FBI official who was at the 1991 meeting as saying officials were willing to accept the risk that Leung was a double agent because she was producing valuable information for the agency. The official said any information she gave to China was essentially worthless.

Cleveland resigned from his security position at the Lawrence Livermore National Laboratory on April 10 after acknowledging the affair with Leung. He has not been charged with any crime and is cooperating with the FBI. He could not be reached for comment Friday.

No evidence has surfaced to indicate Cleveland allowed Leung access to any classified material from the lab, which develops nuclear weapons.

Smith, 59, posted $250,000 bail after being charged with gross negligence in handling documents related to national defense. He and Leung each face a maximum of 10 years in prison if convicted.

Smith's attorney, Brian Sun, could not be reached for comment. He has previously declined to discuss the case in detail, but said the court documents say Leung "basically stole stuff from him."

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Associated Press Writer Curt Anderson in Washington contributed to this story.