Ex-FBI Agent Pleads to a Lesser Charge in Spy Case

One year after his arrest raised the specter of a damaging espionage scandal, a former FBI supervisor in Los Angeles pleaded guilty Wednesday to a far less significant offense: failing to disclose his 20-year sexual relationship with an accused Chinese double agent.

In a 20-minute appearance before U.S. District Judge Florence-Marie Cooper, former Agent James J. Smith acknowledged that he had lied to the FBI in August 2000 when he said in a routine interview that there was nothing in his personal life that would affect his ability to work in counterintelligence, or that could compromise his judgment.

FBI officials would later allege that Smith had not only carried on an affair with his longtime informant, Katrina Leung, but was so careless with classified documents that Leung had surreptitiously viewed and copied the documents -- at great risk to the United States.

Smith’s plea bargain, the product of long negotiations between his attorneys and the U.S. attorney’s office, calls for him to cooperate in the prosecution of Leung on five counts of illegally possessing national security papers. In exchange, authorities agreed to drop one count of mail fraud and two counts of gross negligence in handling classified documents. Sentencing was set for January 2005.

His offense carries a potential prison term of five years, although the effect of the plea agreement is that Smith, 60, will almost certainly serve little or no time behind bars.

“This agreement confirms what we have said all along: that he did not do anything to put the national security at risk,” Smith’s attorney, Brian A. Sun, said after the hearing at the Roybal Federal Building in downtown Los Angeles.

Smith, who was joined in court by his wife and adult son, declined to comment. But his attorney said Smith was grateful for the chance to put the possibility of a trial behind him. “He’s going to move on with his life,” Sun said. “He’s paid a substantial price already.”

Though the U.S. attorney’s office and the FBI would not comment, federal authorities have tried to lower expectations in the case since the highly publicized arrests last year of Smith and Leung. A lengthy investigation, authorities said, had raised concerns about how the FBI’s counterintelligence program had been run, particularly in Los Angeles and San Francisco, where another veteran agent had a long sexual relationship with Leung.

But the FBI’s investigation and other national security checks turned up no hard evidence that secrets had been compromised on a scale comparable to other recent espionage scandals -- most notably, the case of former FBI senior agent turned Russian spy, Robert Hanssen.

Authorities considered Smith’s case an important lesson about the weaknesses of the FBI’s counterintelligence procedures, and acknowledged that it was riddled with problems, including the risk of public disclosure of national security matters in a forceful prosecution of Smith and Leung. As one top federal official said recently: “These are complex cases, and you have to weigh what you are willing to divulge ... against what you will gain” in a prosecution.

Five years ago, that equation proved a vexing one for the government after it had charged Wen Ho Lee, a nuclear scientist at Los Alamos National Laboratory, in an espionage case. Prosecutors later dropped all but one of 59 counts to avoid divulging classified information. Lee, who was represented by attorney Sun and another of Smith’s lawyers, John Cline, has since sued the Energy Department and the FBI.

Former federal prosecutor Myles H. Malman said Wednesday that Smith’s plea agreement sends two messages.

“The first is that the informant is a bigger fish for the government than the corrupt agent, and secondly, that his felony conviction and cooperation is a satisfactory resolution for the government,” said Malman, whose successful prosecutions include that of former Panama dictator Manuel R. Noriega.

“The outcome itself isn’t surprising,” said Malman, now a Miami attorney. “But the message is clear that putting this agent in jail was not a priority for the government ... and the outcome does seem contrary to the stated objective of the Justice Department of ferreting out corruption.”

Though Leung’s attorneys were in court for Wednesday’s proceedings, they declined to comment about the impact of Smith’s plea on their client. Instead, attorneys Janet Levine and John Vandevelde released a statement that said, “We are happy for James J. Smith and wish him well because, as far as we are concerned, he did nothing worthy of a criminal prosecution, and neither did Katrina Leung.

“Although we may have to fight to the end because the FBI has tried to protect its own and shift blame for their mistakes to Katrina, an outsider, a Chinese American and a woman, we are confident that this case is much ado about nothing and Katrina Leung will be vindicated.”

Smith, who joined the FBI in 1970, worked most of his career in Los Angeles and spent all but his first few years in the highly specialized field of Chinese counterintelligence.

As Smith acknowledged in a brief statement to the judge Wednesday, he recruited Leung to work for the FBI in 1983 and soon thereafter began a sexual relationship that continued until December 2002, two years after he had retired from the agency and only a few months before his and Leung’s arrests.

It was during her years working as Smith’s source that Leung, known by the code name “Parlor Maid,” allegedly made unauthorized contacts with Chinese intelligence.

In a 15-page plea agreement, authorities said and Smith admitted that on Aug. 9, 2000, he was interviewed by FBI agents as part of a periodic review to determine if he should continue to have access to classified information. In that interview, Smith said there was nothing in his personal life that would compromise his “suitability” to continue to review classified information. Likewise, Smith said then, he was not concealing any activity or conduct that could be used to influence or coerce him as an FBI agent.

“That statement was false?” Judge Cooper asked Smith.

“Yes,” he said.

“And you knew that was false?”

“Yes,” Smith answered.

Under the agreement, Smith is precluded from discussing the case until there has been a resolution of the charges against Leung, whose trial is scheduled to begin in September.