[ISN] FBI agent, tipster hid relationship

From: InfoSec News (isn@private)
Date: Thu May 25 2006 - 00:41:31 PDT


By Jerry Seper
May 25, 2006 

An FBI counterintelligence agent and his lover -- a "top asset" later
accused of being a Chinese spy -- kept their relationship secret for
nearly 20 years before their arrests in 2003 and after she had been
paid $1.7 million for services that she provided to the United States,
a report said yesterday.
The Justice Department's Office of Inspector General said FBI
supervisors in Los Angeles "did little or nothing" to resolve concerns
about FBI Agent James J. Smith's handling of Katrina Leung, a
Chinese-American, even after she had given classified information to
Beijing without FBI authorization.
Inspector General Glenn A. Fine said FBI supervisors responsible for
oversight of Leung were "deficient," failing to provide adequate
oversight of Smith, who served as the acting supervisor of
counterintelligence squad.
"The numerous red flags that appeared between 1990 and 1996 should
have placed the FBI on notice of serious concerns about Leung's true
loyalties, as well as Smith's relationship with her," Mr. Fine said,
noting that FBI supervisors in Los Angeles and at the bureau's
Washington headquarters "told us they did not have time to read"  
reports on Leung's activities.
"Smith operated Leung with little oversight based primarily on his
status as a top agent in Los Angeles and Leung's status as a top
asset," he said.
In a statement, the FBI acknowledged that the conduct in handling
Leung was in violation of bureau policy and exposed weaknesses in its
asset program, but said it "has made significant progress in reforming
and strengthening its management and oversight of human sources."
Mr. Fine, in a 235-page report, said bureau officials also discovered
that Leung had been romantically involved with FBI Agent William
Cleveland Jr., who also worked counterintelligence cases at the
bureau's San Francisco field office. He retired in November 2000 and
was not charged in the case.
Smith and Leung were arrested in April 2003. Smith pleaded guilty in
May 2004 to one count of making false statements to the FBI and was
sentenced in July 2005 to three years' probation. He also was fined
Leung initially was charged with unauthorized copying of national
defense information with intent to injure the United States and spent
three months in jail after her arrest and 48 months in home detention.  
In January 2005, U.S. District Judge Florence-Marie Cooper in Los
Angeles dismissed the case against Leung for prosecutorial misconduct.
In December, the wealthy Los Angeles-area businesswoman and active
Republican Party fundraiser pleaded guilty to lying to the FBI and
filing a false federal tax return and was sentenced to three years'
probation, 100 hours of community service and a $10,000 fine.
Known under the code name "Parlor Maid," Leung was a frequent visitor
to China and reportedly was seen on numerous occasions with
high-ranking Chinese government officials. Prosecutors said she
provided the Chinese with information from FBI files about Chinese
fugitives, a telephone list of agents involved in an espionage case
and lists of agents serving at overseas posts.
Mr. Fine said the FBI discovered in 1981 that Leung was "engaged in
clandestine intelligence gathering on behalf of [China] and/or may be
furnishing or about to furnish sensitive technological information"  
to the China, although no investigation was authorized and she was
never interviewed.

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