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Mueller: FBI spy hunter incident to be investigated

Former agent's alleged security breach called 'isolated event'

Robert Mueller, FBI Director, left, with Sen. Judd Gregg, R-New Hampshire, before Thursday's Senate subcommittee hearing.
Robert Mueller, FBI Director, left, with Sen. Judd Gregg, R-New Hampshire, before Thursday's Senate subcommittee hearing.

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WASHINGTON (CNN) -- The case of a former FBI agent charged with allowing a female Chinese double agent access to government secrets was "an isolated event," but the Justice Department will investigate the matter, FBI Director Robert Mueller told a Senate panel Thursday.

Mueller's testimony before the Senate Appropriations Committee followed his written statement late Wednesday, calling the Los Angeles arrest of counter-intelligence agent James J. Smith "a sad day for the FBI."

In January, a task force of 30 agents was formed to investigate and conduct intensive surveillance after Mueller first learned of the potential loss of classified information, the FBI director testified.

"I cannot minimize the problems in the Los Angeles program but we have moved firmly to correct those problems and, quite obviously, I believe that to be an isolated event," Mueller said.

Smith, who had been responsible for tracking Chinese spies, is accused of having an affair with suspected Chinese double agent Katrina Leung, 49, and allowing her access to classified material. (Full story)

In 1991, Smith allegedly became aware that Leung was providing information to China, but allowed her access to classified material until he retired in 2000.

Smith and Leung were arrested Wednesday and remain in custody.

Smith, who had retired from the FBI in 2000 after a 30-year career, appeared in court Thursday and was formally charged with gross negligence in handling documents related to national defense.

Leung was charged with the unauthorized copying of U.S. secrets with intent to provide them to the People's Republic of China.

Smith recruited Leung as an FBI informant in the 1980s and served as her "handler."

Leung became a prominent Republican fund raiser in California in the 1990s, officials said. Smith assisted with the FBI's investigation into whether China tried to influence U.S. elections in 1996, officials said.

Mueller said the Justice Department's inspector general's investigation will explore why safeguards failed to detect the misconduct sooner and where accountability lies.

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