Accused spy met 2,100 times with Chinese officials

WASHINGTON -- A politically connected Chinese-American woman accused of being a double agent had 2,100 contacts with Chinese officials during her time as an FBI informant, documents show.

Law enforcement officials are examining whether those meetings compromised investigations into possible Chinese influence on U.S. elections through campaign contributions.

The key question for investigators is whether Katrina Leung, a longtime FBI informant, tipped off potential targets of the investigations or fed the U.S. government false or misleading information from Beijing through her FBI handler, former counterintelligence agent James J. Smith.

"What could have occurred is information she got from him, investigative leads, getting to targets," said Robert Conrad, a former head of the Justice Department's campaign finance task force who now is U.S. attorney in Charlotte, N.C.

Conrad said he did not have any firsthand knowledge of Leung's possible role in the campaign finance investigation because he headed the task force in its later years. But a senior FBI official, speaking on condition of anonymity, said Leung did provide useful information to the FBI through Smith that was used in the agency's investigation.

Court documents say Leung told the FBI she had 2,100 contacts with "various officials" of the People's Republic of China during her 20 years as an informant.

The FBI and two congressional committees conducted lengthy inquiries in the late 1990s into an alleged clandestine effort by the Chinese government to influence U.S. policy by funneling tens of thousands of dollars in campaign contributions through U.S. intermediaries to the Democratic National Committee, congressional candidates and former President Clinton's campaigns.

More than two dozen people eventually were convicted or pleaded guilty, mainly to charges of making illegal contributions. But more than 120 people sought by congressional investigators either fled the country or refused to testify.

Law enforcement officials are reviewing whether any of those people may have been tipped by Leung, who herself offered to "disappear" when interviewed by FBI agents about spying, court documents say.

Leung, 49, is a Los Angeles businesswoman and Republican activist who became an FBI informant code-named "Parlor Maid" in 1982 and was paid $1.7 million for her information on China. At the same time, prosecutors allege, she was carrying on affairs with Smith and with a second FBI agent while feeding information obtained from Smith to Chinese intelligence agents. There is no allegation that she passed on information from the other agent, William Cleveland Jr., who headed some investigations of Chinese spying before his retirement.

Smith, 59, is free on bond on charges of gross negligence for allegedly giving Leung access to classified information. Leung is jailed without bond on spying charges.

So far, prosecutors have identified only a few pieces of information Leung allegedly took from Smith and passed on to the Chinese, such as lists of FBI agents' names and information about certain counterintelligence investigations. It may be months or years before the full extent of the damage done to U.S. national security is assessed.

"The news can't be good," said California Rep. Jane Harman, senior Democrat on the House Intelligence Committee. "At a minimum, a relationship that was supposed to be generating, adding value, was compromised over many years."

Lawyers for Leung and Smith have said they are innocent.

"We think the evidence will show," said Smith's attorney, Brian Sun, "that my client's trust in her loyalty to the United States was well placed, based on her established track record of having provided the government with valuable information over a number of years."

Leung's name does not appear in any public records as an information source or target of campaign finance investigations, although she probably knew many of those involved, Justice Department officials say.

But the officials say she was one of the key sources of information about Ted Sioeng, who along with his family and business associates contributed more than $400,000 to the Democratic National Committee in 1995 and 1996, according to congressional records. Half of that money was wired from bank accounts in Hong Kong. Sioeng also contributed $150,000 to Republican causes.

The investigations never proved whether Sioeng was acting as a conduit for Chinese money. Now, investigators in the Leung case wonder what role she may have played in the decision by Sioeng and 28 family members or associates to leave the United States or refuse to talk after the fund-raising scandal broke.

Another connection between the spy case and the fund-raising investigation involves Johnny Chung, who pleaded guilty to making illegal campaign contributions and cooperated, initially in secret, with the FBI. Chung's FBI handler was Smith and Chung also was represented by Sun.

Chung testified before Congress that after he began cooperating, he received veiled death threats from a man in Beijing who claimed connections to a high-level Chinese intelligence officer. Chung and his family were placed under FBI protection and sent to a confidential location in California.

Court documents in a civil lawsuit filed by Chung against the government say Smith was "frustrated" by the leaks about Chung and believed they were coming from FBI headquarters or the Justice Department. Smith is quoted in court documents as telling Chung he would "cut all contacts with headquarters in D.C."

Valuable evidence about Leung could be contained in the 47 journals Smith kept about what she told him from 1988 until 2000. He kept the journals at home in violation of FBI requirements for classified material, but prosecutors have agreed to give Smith some limited immunity from any charges related to handing over the journals, Sun said.

The next step in the criminal case is for prosecutors to seek an indictment of Smith and Leung, which their lawyers expect will contain additional charges and is likely to occur next week.