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Alleged Chinese double agent indicted

From Charles Feldman and Stan Wilson
CNN Los Angeles Bureau

Katrina Leung faces up to 50 years in a federal prison if convicted.
Katrina Leung faces up to 50 years in a federal prison if convicted.

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An FBI agent who allegedly had an affair with a Chinese woman was indicted on charges of wire fraud and gross negligence. CNN's Charles Feldman reports (May 8)
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LOS ANGELES, California (CNN) -- A former FBI informant recruited by the U.S. government to spy on China and its intelligence services was indicted Thursday on charges that she illegally obtained secret documents from an FBI agent who was her handler and allegedly her lover.

Katrina Leung was charged in a five-count indictment of obtaining, copying and retaining documents connected with U.S. national defense without authorization, but does not face an espionage charge.

The indictment was returned by a federal grand jury in Los Angeles where Leung, 49, of San Marino, California, has been jailed without bond since her April 9 arrest.

The indictment listed three counts of unauthorized possession of documents relating to national defense and two counts of copying documents connected with the U.S. national defense with reason to believe that they would be used to the benefit of another country.

The charges follow a six-count indictment returned Wednesday against Leung's longtime FBI handler, James J. Smith. (Full story)

Federal prosecutors alleged Leung engaged in a 20-year sexual affair with Smith, who recruited her to spy on the People's Republic of China. Another FBI agent has also admitted to having a sexual relationship with her.

Kam Leung, Katrina's husband, said his wife is being treated unfairly. "This is blatantly unfair. This is blatant discrimination against women and the foreign-born.

"For over 20 years, my wife had worked directly under the strict supervision of the FBI and, at the first sign of the two supervisors' sexual improprieties, the government immediately blew her cover, ruined her reputation and threw her in jail, while the two male supervisors are either free or out on bail," he said.

Charges against FBI agent

James J. Smith spent most of his career in foreign counterintelligence focusing on China.
James J. Smith spent most of his career in foreign counterintelligence focusing on China.

Authorities say Katrina Leung surreptitiously photocopied and took handwritten notes of classified material from Smith's briefcase without his permission when the former agent visited her home.

Leung admitted to investigators that she got information from Smith and another FBI agent over several years without their consent and passed it on to Chinese agents.

The indictment against Smith, 59, of suburban Los Angeles, includes charges of wire fraud related to what the government called less-than-honest evaluation reports about Leung sent to FBI headquarters in Washington in 1998, 1999 and 2000.

He was also charged with gross negligence in the handling classified material that he allegedly removed from the FBI office improperly and allowed Leung to obtain. He remains free on $250,000 bond.

Lawyers for Leung argued that FBI agents fed information to her for nearly two decades and encouraged her to give it to the Chinese government in order to obtain the trust of the Chinese in return. From 1983 to 2002, Leung was paid $1.7 million for providing information about China, according to affidavits.

"Katrina Leung is no Mata Hari, as people have suggested," said her attorney, Janet Levine. "She was recruited actively by the FBI because of what she could do and because of what she knew. She did not go out to get this job."

The prominent Chinese-American businesswoman had access to top Chinese leaders including former President Jiang Zemin, former Premier Zhu Rongji and the late President Yang Shangkun, officials said.

Authorities suspect Leung was a "double agent" who routinely stole secret U.S. national defense documents and handed them to China's Ministry of State Security, its intelligence service.

But her husband believes his wife will be found innocent.

"We have faith in the system. We know that the truth will come out. Her contribution to this country's defense will be clear to all of us. We all love her, we support her. We support the fight to the end, and I look forward to the day when I welcome her back to this home free of the FBI's shackles," he said.

The five counts in the indictment against Leung carry a maximum possible penalty of 50 years in federal prison if she's convicted. She remains in jail without bail.

Leung and Smith, who faces up to 40 years in prison if convicted of the charges against him, will be arraigned, separately, May 12. They were both arrested April 9, but Leung has been held without bail.

Smith retired in 2000 after nearly 30 years in the FBI. He worked almost exclusively on foreign counterintelligence focusing on the PRC.

He became the center of a criminal investigation after authorities began secretly monitoring meetings between him and Leung long after his official business association with her ended, according to court documents.

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