Wednesday, May 24, 2006

Informants and Spies—Katrina Leung

Back in , we mentioned a couple of stories about FBI’s use of informants, including one person, Katrina Leung, who turned out to be a Chinese . The US Department of Justice’s Inspector General, Glenn A. Fine, has just released an internal review that states that the FBI missed a number of opportunities to discover that Ms. Leung was allegedly violating national security criminal laws such as passing to China without FBI authorization.[1] As a reminder, Ms. Leung was one of the FBI’s highest paid assets (receiving $1.7 million over 18 years), who was purportedly involved in an intimate romantic relationship “with her handler of 18 years, Special Agent James J. Smith” and with Special Agent William Cleveland.[2]

The full report is classified, but the Executive Summary is available and it’s interesting to see what Mr. Fine discovered. The Office of the Inspector General [hereinafter OIG] “reviewed and analyzed more than 300,000 pages of material from the FBI and other Intelligence Community agencies,” and more than 100 people were interviewed, including “much of the hierarchy of the FBI’s Counterintelligence Division.”[3]

Ms. Leung’s “career” with the FBI began in the early 1980s, shortly after the FBI began conducting a “full espionage investigation” of the business where Ms. Leung was the general manager.[4] For roughly a year, the company was investigated out of two FBI field offices, one in Los Angeles and the other in San Francisco, but when Ms. Leung left her job, the FBI closed the case on her without attempting to interview her, a decision which Mr. Fine calls “incomprehensible.”[5] Standard practice in the FBI is “to determine whether the subject posed a threat to national security or had asset potential, [and] the most logical way to resolve this objective is often through an interview of the subject.”[6]

In any event, by 1982, the FBI knew about her contacts with people of interest, including a pro-China activist, so Special Agent Smith “decided to re-open the investigation of [Ms.] Leung in the hope that she could provide information.”[7] Based on her assistance, Ms. Leung was “converted from the subject of an investigation to an FBI asset” by December of that year.[8] By August of 1983, Special Agent Smith and Ms. Leung had begun their sexual relationship, which he rationalized would not compromise the investigation, and there was no indication that anyone in the FBI suspected that they had such a relationship.[9]

In 1984, a decision was made to use Ms. Leung as bait; by encouraging her to flaunt her contact with the FBI and her high-profile status in the Chinese community, the FBI hoped that the Chinese would try to recruit her as an agent of China.[10] She was eventually recruited by China’s Ministry for State Security.[11] As she rose through the ranks in both the United States and in China, the FBI missed a few incidents “that should have caused the FBI concern.”[12] In 1987, Ms. Leung asked a Chinese Consulate official in San Francisco to call her from a pay telephone, which “impl[ied] that she had something to tell him that she did not want others to hear”; though the LA field office investigated the matter, there was documentation in the file to indicate whether there was authorization for Ms. Leung to contact that official, nor was there any indication of a resolution.[13] During the late 1980s, Ms. Leung and William Cleveland began their sporadic love affair.[14]

The most troubling time-frame of Ms. Leung’s work as an asset was between 1990 and 1996. In June 1990, the FBI was notified that she had disclosed to Chinese officials “the existence and location of a then-active sensitive technical operation that remains classified, as well as aspects of a highly classified FBI counterintelligence program.”[15] The FBI’s response to this disclosure was “inadequate,” and the paperwork was often misplaced because it was often mis-captioned.[16] 10 months later, the FBI discovered that Ms. Leung was “using an alias to communicate with her [Chinese] handler” and during those conversations, she “disclosed details concerning ongoing FBI operations and investigations.[17] The FBI response there was also inadequate.[18] These and other problems turned up in a review in 2000, and a full investigation of Ms. Leung and Special Agent Smith was opened.[19]

In conclusion, Mr. Fine recommends that the FBI:
  • continue the new FBI asset validation review process,
  • create a new subsection in asset files for red flags and other anomalies,
  • require a more thorough periodic background reinvestigation for long-term assets,
  • maintain a record of all documents passed to or discussed with assets,
  • require alternate case agents to meet with assets on a frequent basis,
  • limit the time an agent can handle an asset
  • fully implement the policy regarding counterintelligence polygraph examinations, and
  • prohibit blanket exemptions to the asset handling rules.[20]
By doing so, Inspector Fine believes that the FBI will be able to avoid such serious problems in the future.


[1] Mark Sherman, , AP (via Yahoo!), May 24, 2006.
[2] Glenn A. Fine, 1, US DOJ, May 2006. (PDF)
[3] Id.
[4] Id. at 4.
[5] Id.
[6] Id.
[7] Id. at 5.
[8] Id.
[9] Id. at 6.
[10] Id.
[11] Id.
[12] Id. at 7.
[13] Id.
[14] Id. at 8.
[15] Id. at 8-9.
[16] Id. at 9.
[17] Id.
[18] Id.
[19] Id. at 17.
[20] Id. at 23.

posted by McNabb Associates, P.C. @ 9:43 AM