From China With Love
and Written by Michael Kirk
Reported by Jim Gilmore
ANNOUNCER: They use code names. Hers was Parlor Maid.
SMITH, FBI Special Agent, '73-'98: I view her as the classic dragon
lady. She's tough. She's cold. She's manipulative.
ANNOUNCER: Her information about China found its
way to four American presidents.
MAGERS, FBI Special Agent, '69-'02: And I remember one time Parlor Maid met
Chinese intelligence officials, who said, "When you get back, give this
information to the president of the United States."
ANNOUNCER: She was what is known as an
"asset." Her handler was a
free-wheeling FBI agent everybody called J.J.
STOBER, Reporter, San Jose Mercury-News: And J.J. Smith
squired Parlor Maid -- Katrina Leung -- all over Los Angeles.
ANNOUNCER: But now the United States government
has arrested Parlor Maid and claims she was also an agent for China and that
J.J. Smith helped her.
APPEL, FBI Special Agent, '73-'97: Very grave damage, even death or
execution. And it certainly could
result in a compromise of U.S. government interests and U.S. intelligence
interests with regard to China.
ANNOUNCER: But it also seems that over 20 years,
Katrina and J.J.'s relationship became more complicated.
KELLER, Fmr FBI Special Agent, Los Angeles: I think this
is all about sex, quite frankly, free sex at the cost of the government.
ANNOUNCER: Tonight on FRONTLINE, a story of secrets, risk,
patriotism and perhaps a story of love.
NARRATOR: It was early morning, April 9th, 2003,
in Los Angeles when they headed out to arrest Parlor Maid and J.J. The FBI's Chinese counterintelligence
division has only made a handful of arrests in the past 50 years. They worry that they may be losing the
ongoing espionage war with China. Procedure calls for the arresting teams to converge at dawn, when the
suspects are likely to be at home asleep. It's called a "retention."
They had been watching Parlor Maid's house. They knew she was inside. Another team of agents headed out to
J.J.'s house near the San Fernando Valley. J.J. knew the drill. As a special agent, he'd rolled out at down before. But he wasn't expecting this. The government has almost never
prosecuted an agent.
EDWARD APPEL, FBI Special Agent, '73-'97: We
have lost the counterintelligence war against the Chinese intelligence services
because we haven't had major counterespionage successes. I think we have to decide, you know,
what is it we're going to do, from a counterintelligence perspective, to
protect our economic interests, to protect or national security interests? And I think that we simply can't let
them win this game this easily.
NARRATOR: The FBI views the arrests of J.J. Smith
and Katrina Leung as a counterattack in the espionage war with China. The Bureau's version of what they did
can be found in the paper trail of arrest documents and affidavits.
James J. Smith, being entrusted with and having lawful possession and control
of a document, writing a note relating to the national defense"--
Katrina Leung copied, took, made and obtained a document"--
1997 that was classified secret"--
with the national defense, that is"--
gross negligence, delivered to a person in violation of his trust, lost and
it was to be used to the injury of the United States and to the advantage of a
NARRATOR: It was an hour drive down from J.J.'s
house to the Metropolitan Detention Center in central L.A.
BRIAN SUN, Attorney for J. J. Smith: From
J.J. Smith's perspective, and that of others, we think that the Bureau is sort
of reacting and perhaps overreacting to external political pressures, to public
relations nightmares, and that they are being unduly and harshly sanctioned and
punished for-- for conduct which arguably could have been dealt with
administratively or in some other means short of a criminal prosecution.
NARRATOR: J.J. pled not guilty and was released
on $250,000 bail. Katrina also
pled not guilty, but they wouldn't let her leave. A judge denied bail. The government said she was a flight risk.
government came across documents reflecting 16 foreign bank accounts in various
names, including Katrina Leung"--
NARRATOR: The FBI documents state that Katrina
regularly traveled to China.
also has very substantial contacts in the PRC, both family and
business/political. As to the
family connections, defendant's husband's uncle"--
NARRATOR: They contend that she was a Chinese
agent who used the code name Luo.
was acting as an operational asset for the U.S. and an agent for the PRC. Such an arrangement inherently requires
secretive, surreptitious and deceptive behavior. She was lying to the FBI and may well have been lying to"--
NARRATOR: And the government says Katrina had the
financial means to flee.
has been involved in the transfer of money into defendant's domestic accounts
NARRATOR: Much of it provided by the United
I.C. SMITH: She's being paid extraordinary amounts
of money, $1.2 million just for expenses that she incurred over the years, and
then a half a million for information, which in my view, is an imbalance, which
made me think that probably the FBI was probably supporting some of her private
FBI paid Leung approximately $1,097,585 for expense reimbursement and
THOMAS PARKER, Fmr FBI Special Agent, Los Angeles: Most
people don't know what the value of the information was, but it's very unusual
that any information is worth $1.7 million.
for services provided as an FBI asset."
JOHN VANDEVELDE, Attorney for Katrina Leung: When
you do the math, what it amounts to is she got paid about $80,000 a year. More than two thirds of that was for
expenses, for trips that she took to China and other places at the direction of
the FBI. The FBI approved and paid
for those expenses. It left her
with an income of something less than $30,000 a year for working full-time for
NARRATOR: Sorting out the web of relationships
between the FBI, the Chinese, Parlor Maid and Agent Smith was further
complicated because Katrina and J.J. were having an affair.
JACK KELLER, Fmr FBI Special Agent, Los Angeles: I
think this is all about sex, quite frankly, free sex at the cost of the
government. The government was
paying for his sex, is what they were doing.
asked whether he was having a sexual relationship with Leung, Smith first
refused to answer the question and then denied having a sexual
relationship. On November 5th,
2002, I participated in FISC-authorized electronic surveillance of Smith and
NARRATOR: With authorization from the secret
Foreign Intelligence Surveillance Court, agents monitored a hotel in the Los
electronic surveillance revealed Smith and Leung having sexual relations."
NARRATOR: Then the agents confronted Katrina.
admitted to first becoming intimate with Smith in the early '80s-- "very long
ago, but I cannot tell you what year."
EDWARD APPEL: When two people are intimate, they're
intimate under either one of two circumstances. Either it's legitimate or it's not. It's either licit or illicit. If it's illicit, in the case of a
person who's sleeping with a married person, then, obviously, there is a
blackmailable offense going on. There is a-- there is an illicit aspect to it that creates, for
counterintelligence purposes, an impossible relationship.
NARRATOR: The relationship was illicit because
J.J. had been married for more than 30 years.
BEE CANTERBURY LAVERY, Friend: Gail, his wife, is a
vivacious, very sparkly woman. And
they were just a really tight-knit family, and to me seemed very happy.
NARRATOR: J.J. considered himself a close friend
of Katrina and her husband, biochemist Kam Leung.
BEE CANTERBURY LAVERY: I had no idea there was anything going
on between Katrina and J.J. I-- I--
if anyone had come and told me that, I would have said, "Well, you're full of
NARRATOR: The government contends that J.J. and
Katrina carried out their affair here, at her upscale home near Pasadena.
from the early 1980s until December, 2002, Smith and Leung had a sexual
NARRATOR: They said a pattern was
established. They would make love,
and then J.J. would leave the bedroom.
has admitted that while Smith was outside smoking or in the bathroom, she would
surreptitiously take sensitive materials out of his briefcase, copy them on her
home copier and replace them in his briefcase."
NARRATOR: Here's what they found in Katrina's
Los Angeles NSD-2 squad telephone directory dated December 20th"--
telephone list relating to an FBI investigation code name Royal Tourist."
secret FBI memorandum regarding Chinese fugitives dated June 12, 1997."
directory dated March 17, 1994.
[www.pbs.org: Read the government's case]
NARRATOR: The FBI spent more than a year trying
to find out what exactly Katrina had transmitted to the Chinese. But in the end, the United States
attorney decided to focus on a narrow charge, having and copying classified
documents. And they charged J.J.
Smith only with providing those documents through gross negligence. Some thought it should have been the
more severe charge of conspiracy to commit espionage, but for 40 years, the FBI
has consistently failed to win those cases.
JACK KELLER: It was carefully indicted to charge him
with gross negligence with regard to the handling of classified defense
EDWARD APPEL: The truth of the matter is, that's a
10-year espionage charge. That's a
part of the espionage statute. So
it's still very, very bad. It's
still a horrible violation of law.
NEWSCASTER: There's a sex scandal emerging at the FBI, and officials say it will
have wide-ranging repercussions for national security.
NARRATOR: By the next morning, it was big news in
NEWSCASTER: --investigation of Chinese espionage--
JUANITA ST. JOHN, Friend: I was devastated. A friend of mine called me and heard it
on the news, and I couldn't believe it. My good friend, Katrina, was arrested as being a double agent for the
BEE CANTERBURY LAVERY: I was shocked. I was just in a state of shock because
I didn't think that J.J. would do anything like that. And I guess that's naive, a woman, to think that. I really had J.J. up on a
pedestal. He was-- he was, you
know, the good guy that was doing-- working for our safety and our government.
NARRATOR: He'd had a great career, straight from
Army intelligence in Vietnam to the FBI.
BEE CANTERBURY LAVERY: He looks like the all-American boy to
me. He has kind of sandy hair and
blue eyes, and he's-- a great sense of humor, and the way he'd talk about
Vietnam and having been there. And
he was, you know, the all-American, patriotic boy.
T. VAN MAGERS, FBI Special Agent, '69-'02: J.J.
was competent, conscientious. J.J.
certainly handled most of the important cases in-- in Los Angeles for a number
NARRATOR: He worked Chinatown, the travel
agencies, tour guides, local politicians, gathering information, picking up
DICK HELD, FBI Special Agent in Charge, San Francisco: The
best agents that I think I ever saw were people collectors. They liked people. They liked all kinds of people. And people liked being around
them. And they did a fantastic job
of being able to elicit information, you know, quite openly, not anything
seductive or-- or illegal. It's
just that they were very good at eliciting information.
DAVID LEE, Business Owner, L.A. Chinatown: I have
a travel agency. I used to take
groups to China, come back from there. And he was always invite me for breakfast, sit down and talk, who I met,
what I did, and so forth. So I
give him the same routine report. We usually have the 97-cents breakfast.
NARRATOR: Asset development. In the Bureau, there may be no skill
I.C. SMITH: You were judged-- your promotions and
your performance appraisals, how you were rated, difference between being
exceptional and average would be-- a great deal depended on how well you were able
to develop sources.
BEE CANTERBURY LAVERY: He called me and wanted to have lunch
with me, and we started just having lunch maybe a couple of times a month.
NARRATOR: As chief of protocol for Los Angeles
mayor Tom Bradley, Bee Canterbury Lavery frequently traveled to China. She joined J.J.'s asset list. And so did Katrina Leung. Katrina was born in southern China. When she was 10, she moved to Hong
Kong. At 15, she and her aunt came
to New York. She did well in
BEE CANTERBURY LAVERY: And she could go from Mandarin into
Cantonese and the Fujian dialect and, you know, back and forth. And she was brought up in China knowing
very important leadership-- people in leadership.
NARRATOR: Katrina's immigration papers follow a
trail of addresses.
New York; Chicago, Illinois; Los Angeles, California"--
NARRATOR: In Ithaca, she attended Cornell
University. She received an MBA
from the University of Chicago. Sources close to Katrina say that was where the FBI first recruited her
in the late 1970s. By 1983, she
was living in Los Angeles, had joined some Chinese civic groups, and along the
way had met and become an asset for Agent J.J. Smith.
BEE CANTERBURY LAVERY: She was a little matronly-- you know,
the granny bun, the big glasses. She wore her dresses long, never anything revealing. Who knows what attracts people to each
other? I don't know. We all know looks do and-- to some of my
girlfriends, I said, "How could she end up with him?" You know? It's--
I-- I don't know what it was, but-- but she evidently-- she had a wonderful-- she
has a wonderful personality. She
really does. She's fun to be
around. She's bubbly and upbeat.
NARRATOR: And she had more than personality. A family connection gave her regular
access to Chinese officials, making her a prime asset.
RICHARD SMITH, FBI Special Agent, '70-'95: A
source like that can provide information about Chinese government officials,
intelligence officers, what their goals are, what their objectives are, what
they're trying to accomplish, what the U.S.-- what they're trying to accomplish
in the United States, political information, intelligence, economic,
NARRATOR: And once the information began to flow,
it was very good for J.J.'s career and everyone else in the chain of command.
[www.pbs.org: More on the FBI's human "assets"]
RICHARD SMITH: You have a successful source that's
provided great information and it goes back to the intelligence community in
Washington, and everybody says, "This is terrific" and "That agent's doing a
great job out there in L.A.," or San Francisco or wherever, you know, you have
some-- you got-- you got some chits on your side for a while.
NARRATOR: But one consequence of J.J.'s skill at
asset collection was that he could now get away with being a bit of a maverick.
I.C. SMITH, FBI Special Agent, '73-'98: J.J.
was the kind of guy that seemed to have little regard for wearing the coat and
tie that was very much part of the uniform. And we attributed that to just kind of that Los Angeles attitude,
which-- which was not uncommon out there.
This source allowed him to be almost bulletproof. And what I mean by that is, "I've got
this great source, so I don't have to wear a tie to work. I've got this great source, so I can--
I'm not going to ever be transferred," like 99 percent of FBI agents are. "I've got this great source, so I can
meet this source by myself. I've
got this great source, so that means that I can openly socialize with that
NARRATOR: Then, as J.J. and Katrina courted
agents from the Chinese Ministry of State Security, they began to play what
counterintelligence agents call "give to get."
T. VAN MAGERS, FBI Special Agent, '69-'02: The
problem with developing a source is you have to give a certain amount of information
away in order to get information. Operating a source always is going to be a value judgment of how much
you give the-- the informant in order to get your results from the informant. You try to make sure you give less than
NARRATOR: Giving and getting is a complicated
matter and forms the very heart of counterintelligence. As a U.S. agent, Katrina produced
inside political information in China that made its way to four American
presidents. In return, she was
supposed to deliver to the Chinese carefully calibrated information authorized
by the FBI.
RICHARD SMITH: At some point, you've got to figure out
whether you're giving more than you're getting. If you're being played more than you're playing somebody
else, then it's not worth it.
INTERVIEWER: You figure that's what happened here?
RICHARD SMITH: Yeah, something happened in that-- in
that respect. Something happened
where-- you know, you got two sides, like a game, like a sport, and you know,
you got to win. The idea is to
win, to get information, and not to give information more than you're
getting. So something happened in
that area that I think probably wasn't so good.
NARRATOR: There are those, of course, who take
the dark view, that Katrina was really an agent for the Chinese all along and
that she used her charms and J.J.'s hubris against him.
I.C. SMITH: J.J.'s the kind of fellow that would
think that he actually seduced Katrina Leung, where in all probability, she
seduced him, if you may draw that distinction.
JACK KELLER, Fmr FBI Special Agent, Los Angeles: I've
described J.J. as being a very confident guy, to a point of being a bit
arrogant. And I think he just went
over the edge. "I am so good. I know how far I can go with this. I've got this under control." And it got away from him. He stepped onto that slippery slope,
and then when he got romantically -- if you can call it a romance -- involved
with her, then he went even further down the slippery slope. And there was no turning around.
NARRATOR: Four hundred miles north of Los
Angeles, there was another agent monitoring Chinese activities. Based at the FBI's primary
counterintelligence outpost in San Francisco, he was one of the Bureau's top
Chinese counterintelligence agents. His name was William Cleveland.
of Arts, William and Mary, juris doctor, William and Mary"--
DAN STOBER, Reporter, San Jose Mercury-News: Bill Cleveland is different than most FBI agents. First of all, his father was an FBI
agent. But also, he's better-looking
than most of them are. He dresses
better than most of them are. He's
more urbane. He's-- he's
soft-spoken. He's seen as an
intellectual. And everybody likes
Chinese, Mandarin, dialects"--
EDWARD APPEL, FBI Special Agent, '73-'97: Bill
Cleveland had many friends in the Chinese community, was always very discreet
and proper, had a-- was a good family man, a very religious guy and a very
supervisor, confidential squad for Chinese intelligence."
I.C. SMITH: If you look at it from the standpoint
of those people that were in the China program, he'd have to be in the top two
NARRATOR: Cleveland had been involved in most of
the handful of Chinese espionage cases the FBI prosecuted. He was put in charge of a case
involving the theft of nuclear secrets, code named Tiger Trap.
T. VAN MAGERS: Tiger Trap represented the first case
where we could definitively say there was targeting of national laboratories.
NARRATOR: The primary suspect in Tiger Trap was a
Chinese-American scientist named Gwo-Bao Min. To build a case, Cleveland led dozens of agents, including a
secret source run by J.J. Smith in Los Angeles, Parlor Maid.
NOTRA TRULOCK, Dir of Intelligence, Dept of Energy,
'94-'99: They have a full counterintelligence investigation on the
guy. They have wiretaps, and so
forth. But the whole thing seems
to come down to-- and Cleveland told me this. He said, "You either have to catch them in the act or they
have to confess." We never caught
him in the act. We had him at the
brink of confessing.
DAN STOBER: You hope and pray for a confession, in
part because that's the easy way. You don't have to worry about losing classified information in a court
setting, being disclosed. You get
a confession, you're home free. That's the hope.
I.C. SMITH: Cleveland told me one time that he
thought that he had a confession almost-- he was almost to the point that-- he
almost had Min to the point of making a confession, when suddenly, he stepped
[www.pbs.org: Explore more about "Tiger Trap"]
NARRATOR: Gwo-Bao Min never did confess and was
never charged. And so the Tiger
Trap case was effectively closed.
EDWARD APPEL: Bill Cleveland was extremely
disappointed, and I think anybody who interrogated an espionage subject and
didn't get them would be extremely disappointed.
NARRATOR: The old China hands say the United
States has never fully understood how the Chinese wage the espionage war.
JAMES LILLEY, Ambassador to China, '89-'91: The
Chinese have done espionage and spying and intelligence work very well since
the beginning. They use different
techniques. You don't find the
case officer in a trenchcoat on a corner making a pass with an agent or laying
down a dead drop, necessarily. What you find is the massive collection technique, the vacuum cleaner.
DICK HELD: The Chinese are enormously methodical
and very patient. They didn't have
to score a touchdown every time they got the ball. In the United States, we like to think every time we get the
ball, we can score a touchdown. And the Russians engaged in their operations more like us than the
JAMES LILLEY: It's a different technique. They rely much more on contacts,
persuasion. Only a small
percentage is for actually clandestine work. They do that, but a very small percentage. And it's very frustrating for people
like the FBI, who are looking for the classical intelligence man.
EDWARD APPEL: But by and large, they rely on a large
number of what they call "overseas Chinese" and a few non-Chinese to provide
them with information basically because of the relationships they build over
[www.pbs.org: More on how China spies]
NARRATOR: In 1990, the Bureau decided to give
Cleveland a change of scene, a temporary assignment to the place he loved.
I.C. SMITH: We actually landed in Beijing on
November the 28th of 1990. Cleveland was just absolutely tickled to death.
NARRATOR: To this day, there are questions about
what Agents Smith and Cleveland were actually doing in China. From the beginning, however, they
discovered they were being tailed by more than the usual number of Chinese
I.C. SMITH: And I thought at the time that this was
a little bit unusual, but then I said, "Well, maybe they recognize me or Cleveland
or something from the past"-- you know, whatever reason. But I can remember thinking that I
thought that the surveillance was a little bit more than I had anticipated.
NARRATOR: Then, in a remote section of China, on
the North Korean border, the agents got a big surprise.
I.C. SMITH: We get to the hotel, and Bill is going
to stretch his legs. And he walks
back in a few minutes, and he looked at me, and he said, "I.C., you won't
believe whom I just saw." "Bill,
who did you see?" He said, "Well,
I just saw Gwo-Bao Min."
NARRATOR: Cleveland, who was already concerned
about being tailed, now was stunned to run into Gwo-Bao Min.
I.C. SMITH: Ten or fifteen minutes in Shenyang,
China, you got Bill Cleveland, who was the case agent for the Tiger Trap case,
meeting the principal suspect in a hotel in Shenyang, China. What are the odds of that
happening? Well, I viewed it
mathematically as something that probably couldn't even be calculated. And that's how we kind of viewed that
at the time.
NARRATOR: Agents Cleveland and Smith wondered
whether the Chinese were sending them a no-so-subtle signal.
I.C. SMITH: And sometimes these things happen,
though I should add that-- that in the counterintelligence business, sometimes
we look on coincidences with a jaundiced eye. We don't always-- we don't always, you know, believe in
NARRATOR: When he returned, Agent Cleveland found
out how the Chinese knew he was there. The Bureau had received a classified intercept tape, and it was played for
secret source provided an audio recording of the conversation between Luo and
Mao, transcriptions and/or summaries of which"--
DAN STOBER, Reporter, San Jose Mercury-News: The tape presumably comes from U.S. eavesdropping. And it comes from the NSA or possibly
the FBI, the CIA. And they play it
NARRATOR: On the recording, made in the fall of
1990, a woman whose code name is Luo tells her Chinese controller, named Mao,
information that compromised Cleveland's trip to China. After listening to it, an astonished
Bill Cleveland called I.C. Smith.
I.C. SMITH: He said that they knew we were coming
before we even left. And he
mentioned the Los Angeles source being J.J. Smith.
NARRATOR: The woman's voice was well known to
Cleveland. She had helped him
during the Gwo-Bao Min case. It
was one of the FBI's prized assets, Parlor Maid.
DAN STOBER: But you can imagine him listening to
this tape and thinking-- standing in a room with other people, "Oh, my God. Oh, my God. What am I going to do? What am I going to do? What
do I say? This is very bad." And just-- his mind spinning ahead to
the possible consequences of all this because if there's really a problem with
Parlor Maid, he's got a problem, too. And how do you handle that? What do you do? Here's a
guy, as far as we know is honest, but has got himself into this tangled web
NARRATOR: A tangled web because for the past
three years, Bill Cleveland and Katrina Leung had been meeting secretly. They were lovers.
DAN STOBER: Now, the question is, does Bill know
J.J.'s sleeping with Katrina, and does J.J. know Bill's sleeping with
Katrina? And if so, when?
NARRATOR: It is perhaps the great unknown of this
I.C. SMITH: Certainly, I would think that J.J.
would have known that Katrina Leung knew Bill Cleveland, and Bill Cleveland
knew that-- obviously, that Katrina Leung knew J.J. because he was the
handler. I can't imagine that
either one of them knew the other one had a personal relationship with
him. But then, I've been surprised
former FBI SSA immediately notified Smith in Los Angeles"--
NARRATOR: Agents J.J. Smith and Bill Cleveland
had a problem.
traveled to San Francisco from Los Angeles"--
NARRATOR: Katrina was clearly in control. It looked like either J.J. had lost her
or they had never had her.
was visibly upset at the news of Leung's unauthorized communications with the
MSS. The former FBI SSA relied on
Smith as Leung's"--
NARRATOR: FBI procedure demanded the agents turn
Parlor Maid in, but in doing so, they each risked exposure of their
relationship with her.
about May, 1991, defendant Smith traveled to FBI headquarters in Washington,
NARRATOR: Bill Cleveland also came to headquarters.
JACK KELLER, Fmr FBI Special Agent, Los Angeles: The
bells and whistles were going off. The flag was going up. It
would have been a real high-profile type of meeting, a lot of puckering going
on in that meeting, a lot of concern about the validity of the allegation.
DAN STOBER: I try to see Smith and Cleveland in
this meeting, trying, as good citizens, to tell the truth as best they can, at
the same time, never saying that they're sleeping with this woman. And speaking of two lives-- I mean, that's
just got to be torture. It's just
got to be very hard. And so you
wind up with Cleveland, great guy though he may be, is lying continuously by
omission or commission. You can't--
every time he filled out a report about what he's doing, he should be saying,
"I'm sleeping with an informant," and he's not saying that. And of course, he's not telling his
wife that. He's not telling his
friends that. And when-- I can't
imagine that he's in that meeting in Washington and telling the truth. He's got to be lying.
NARRATOR: But headquarters didn't probe too
deeply. Apparently, no one was
aware of the personal relationships. So they handed the matter back to J.J. Smith.
THOMAS PARKER, Fmr FBI Special Agent, Los Angeles: If
there are no strong managers in that meeting on the managerial side and the
tough questions are not asked, many times a meeting like this will end up in
giving the benefit of the doubt to those agents or to the agent that was on the
JACK KELLER: And there's no reason to distrust
him. Apparently, nobody-- the
thought never occurred to somebody that maybe something is untoward here with
regard to their personal relationship.
THOMAS PARKER: What you have then set in is the FBI
culture, the good old boy network, the fact that both J.J. and Bill Cleveland
are well-respected, well-liked guys. No reason for any suspicions between the two of them.
NARRATOR: Agents Cleveland and Smith had
contained the problem in Washington. Now it would be up to J.J. to deal with Katrina. He would confront her in Los Angeles on
you-- you asked me, like, the worst day of my life, that must be the day that,
you know, J.J. confronted me."
NARRATOR: She had an excuse for J.J. The Chinese had discovered she was
working for the FBI. They
threatened her. So she promised to
provide Mao with information about the FBI. J.J. believed her. He told Katrina she could continue as his asset.
still go on, and he did not want me to quit. And he'd keep telling me things.
didn't look like he was taking anymore precautions. He still treated you like he did before, after the event,
believe so. I mean, I do not
really see any big difference as my"--
BRIAN SUN, Attorney for J.J. Smith: Seems
like something right out of a novel, but in essence, the Chinese thought they
had recruited her, but in essence, she was really working for us, and
therefore, that would make her a double agent for us. So as convoluted as this terminology is, the essence is the
FBI always truly thought that Katrina Leung was in their camp.
NARRATOR: So the FBI had given J.J. the benefit
of the doubt, and now he was willing to do the same with Katrina.
T. VAN MAGERS, FBI Special Agent, '69-'02: You
develop a vested interest in your-- in your sources because sources are so
important to successful operations, you want your source to be-- to be
good. You-- you know, maybe that's
an incentive to-- not to look too closely.
NARRATOR: Then J.J. brought Katrina north to face
Bill Cleveland. In the official
FBI transcript, Cleveland's name has been blacked out, redacted by the FBI.
apologized to [redacted], and I said-- I got to have apologized that I'm sorry
[redacted]. It might be something
like this, OK? I'm sorry,
NARRATOR: Cleveland accepted the apology. Their secret affair continued.
[redacted] then treat you the same way after he and J.J. confronted you about
he's the same way because he would still come down here. He would still talk to me on the phone."
NARRATOR: It was 1991, and for the next few
years, the counterintelligence division would be working a number of
significant cases. At the center
of them was Bill Cleveland: the case of a nuclear scientist named Wen Ho Lee,
another case code-named Royal Tourist, involving a nuclear scientist named
trying to figure out if he talked to you about the cases, too. But when you went up sometimes to San
Francisco or [redacted] came down, did you ever meet him privately in a hotel
room or anything?
remember meeting him. I can tell
you right now, I do not remember [redacted] ever carrying a briefcase."
ever show you documents, like J.J. did, where he would black things out?"
cannot remember. To me at that
time, it-- you know, it's not important because I got plenty of cases that he
run by me."
DAN STOBER, Reporter, San Jose Mercury-News: Nobody that I know thinks there's any chance that Bill Cleveland is a
traitor to his country. However,
he's working with an informant he trusts, and he's talking shop in his pillow
talk. And Cleveland is deeply
involved in Gwo-Bao Min. He's
deeply involved in Wen Ho Lee. He
is involved in the Peter Lee case.
NOTRA TRULOCK: I think Bill probably knew more about
the status of the Wen Ho Lee investigation, of the Peter Lee
investigation. If there is
something that would truly be at risk, maybe it would be information on the
status of the investigations. And
things got very squirrely during that period. They got very squirrely with Peter Lee. They got very squirrely with Wen Ho
Lee. I don't know.
DAN STOBER: If Cleveland is talking to Katrina
about these things and she's telling the Chinese, then the Chinese, you know,
theoretically, could be telling their sources at the labs, "Look out. Look out."
NOTRA TRULOCK: My heart tells me that it wasn't
Bill. I hope that someone is
pursuing that, you know, because if-- if you're going to do a responsible
counterintelligence investigation inquiry, you know, surely those would have to
be questions that would have to be posed to Bill. I hope he didn't do it.
NARRATOR: In government documents, Bill Cleveland
says he ended his affair with Katrina Leung when he retired from the FBI in
1993 and took a job as head of security at the top-secret Lawrence Livermore
RICHARD SMITH, FBI Special Agent, '70-'95: He was
very happy there. Anybody that
would hire him would be-- you can't help but admire what he-- what he could
accomplish. And you know, I'm sure
he was very successful there.
NARRATOR: During this time, Cleveland helped the
FBI and J.J. Smith with that case, Royal Tourist, involving the scientist Peter
Lee from Lawrence Livermore.
Washington Post," May 11, 2003] "The
officials said Energy Department agents were disturbed as they closed in on Lee
in 1997 because he seemed to know what we were going to do."
NOTRA TRULOCK: They have a full counterintelligence
investigation on the guy. They
have wiretaps, and so forth.
DAN STOBER: They got a FISA warrant. They put a microphone in an
air-conditioning duct in his house, which his wife eventually discovers when
she's dusting, of all things.
[www.pbs.org: More on the Peter Lee investigation]
NARRATOR: But as has happened in almost every
Chinese counterintelligence case, the outcome was not as definitive as many
NOTRA TRULOCK: Everyone expects that, you know, he's
going to get a little more than a slap on the wrist, and at the end of the day,
he gets a year in a halfway house in Anaheim and, you know, basically, gets off
with nothing more than a slap on the wrist. So it was-- it's very puzzling, I think, to a lot of people.
NARRATOR: Lee, who pled guilty to revealing
classified information, maintains they were merely technical violations. It was during the Peter Lee
investigation that Bill Cleveland and Katrina Leung rekindled their
DAN STOBER: What starts it up again in '97 and '99--
both times when sort of interesting things were happening vis-a-vis China.
former FBI SSA further stated that the affair continued in 1997 and 1999."
NOTRA TRULOCK, Dir of Intelligence, Dept of Energy,
'94-'99: 1997 was a critical year in the Lee investigation. A coincidence? I don't know. But how is it that this woman who lives in Los Angeles, you
know, gets hooked up again with Bill, who lives up, you know, in Monterey? I mean, that's-- that's not sort of
hopping down to the local bar. I
don't know what to make of it. I
just-- the coincidence of the dates bothers me.
NARRATOR: And one of the documents Katrina had at
her house was about the Peter Lee case.
searching a shelf in a bookcase to the left of the desk on the second floor"--
I.C. SMITH: That's extraordinary.
telephone list relating to an FBI investigation code-named Royal Tourist"--
I.C. SMITH: The fact that she would have a document
associated with an ongoing investigation-- no, you know, that's extraordinary.
FBI memorandum regarding Chinese fugitives"--
I.C. SMITH: That should not have been allowed to
happen, is that-- and something like that could not have been authorized, in my
NARRATOR: Katrina contends none of the documents
in her possession came from Bill Cleveland.
DAN STOBER: Bill Cleveland was lost in the
counterintelligence world. When
you're in this world, where everything's secret, you can't even talk to other
FBI agents about it. Who are you
going to talk to about your life and about your work? You're going to talk to other people in the same world. You're going to talk about your
marriage problems to-- to counterintelligence people at Los Alamos, for
example. And you're going to talk
about the frustrations of your marriage and your work to maybe an FBI
informant, maybe Katrina Leung. And if she starts asking you about your life, it's a safe person to talk
to. It feels safe. She's in the same world, where they all
don't have any secrets from each other over here.
NARRATOR: J.J. stopped serving as Parlor Maid's
handler when he retired from the FBI in November of 2000.
acknowledged that Leung and not his wife had picked him up on his last day of
work. Smith also acknowledged he
had invited Leung to attend his FBI retirement party in November, 2000. He also acknowledged that he had
permitted Leung to videotape the party, even though FBI agents and CIA officers
were in attendance. When asked
where the tape was, Smith stated, 'At home.' "
JACK KELLER: I don't care if the Chinese have a
thousand pictures of me. It
doesn't make any difference. But I
wasn't an espionage agent, either. But I-- some agents who were might have some reservations or would have
some reservations about that.
NARRATOR: And then J.J. and Katrina came under
the scrutiny of the government. Shaken by a spy scandal involving FBI agent Robert Hanssen and
intelligence failures on September 11th, a formal investigation was ordered.
has revealed that Smith continued to provide information about the FBI and FBI
agents to Leung after he retired. On November 11, 2002, he participated"--
NARRATOR: After J.J. retired, Katrina took
another trip to China. This time,
the FBI used their warrant, the FISA, to covertly search her luggage.
Leung's luggage, there was a facsimile cover sheet from Smith to Leung. A second page bore six photographs from
a meeting of the Society of Former Special Agents of the FBI held in October,
2002. Two of the photographs were
of active duty special agents."
NARRATOR: The FBI also searched Katrina's luggage
upon her return. Now the
photographs of the agents were not there.
BEE CANTERBURY LAVERY, L.A. Chief of Protocol, '72-'92: And if
that's true, that's-- that's unforgivable, to out someone. I remember back in the days-- in the
'60s, when some magazine came out and outed all the CIA agents, you know, and
some of them were killed. And you
know, that's a terrible thing to do. That's-- that's something that I-- I couldn't forgive her for.
I.C. SMITH: And if you was to ask Katrina Leung,
"Who are you really working for?" I suspect she would have difficulty answering that question. I suspect that she was using the
Chinese, to a degree, just like she was using the FBI. And the only person that she was really
working for was Katrina Leung, the classic dragon lady. She'd do anything she needed to
accomplish her own goals. She
became very wealthy doing that.
NARRATOR: Katrina, in fact, had prospered during
her years as an asset. Her
contacts in China helped her business clients and personally enriched her. She passed some of the wealth along as
a contributor to Republican candidates. And in January of 2001, Katrina and J.J. traveled to the nation's
GEORGE W. BUSH: I, George Walker Bush, do solemnly
swear that I will faithfully execute the office of president of the United
NARRATOR: --where, by chance, The Washington
Post took their picture at the inauguration of the 43rd president of
the United States.
The investigation would take nearly two years, and in the
spring of 2003, a case was prepared for the arrest of Katrina Leung and Agent
EDWARD APPEL: You do it to do the right thing. You do it to clean up messy
operations. You do it to set a
standard for the future. And you
do it because somebody did a wrong thing and should be put in jail for that
RICHARD SMITH: They've got to take some action. They've got to take it right now. You can't fool around with that because
you're responsible. And once you
become aware of the situation, if you don't do anything about it, then you're--
you got a problem yourself.
EDWARD APPEL: When the FBI says counterintelligence
is it's number two priority, I think it makes it very clear that next to
terrorism, this is the most important thing the FBI does. And the real reason is because it's
only the FBI that does this.
NARRATOR: The media started calling it "The
Parlor Maid case," and some of the coverage began to question how effective the
FBI could ever be, given its failure to follow the correct procedures in using
JAMES LILLEY, Ambassador to China, '89-'91: The
Leung case is just a travesty of what an operation is supposed to be all
about. There was no real
INTERVIEWER: What do you see wrong with that case?
JAMES LILLEY: I would say contamination of the sexual
factor, which clouded objective vision. I would say the willingness to grab what sounded like good information
and pump it up the line and say, "We've done what other people can't do." Competitive collection.
NOTRA TRULOCK: I think-- you know, look, they are
important. Human resources, human
intelligence is important, but it is not the only source of intelligence. And unless you're doing all-source
intelligence and sort of vetting the information you're collecting against
other sources of intelligence, then you are being set up for a fall. And that's what I see as being a major
problem for the Bureau. They don't
know how to do intelligence. And
you know, we've seen that. We've
seen that post-9/11.
NARRATOR: Right now, the FBI is reexamining every
piece of information about China it has gathered since Parlor Maid, J.J. and
Bill Cleveland worked together.
EDWARD APPEL: Very grave damage could have been done,
very grave damage, partly because of her ability to manipulate, her ability to
elicit information and the possibility that, as charged, she's actually copied
very highly sensitive documents and turned them over to the other side. That could result in compromise of
sources and methods. It could
result in even death or execution. And it certainly could result in a compromise of U.S. government
interests and U.S. intelligence interests with regard to China. So this could be extremely damaging.
JACK KELLER: As to what she gave up in the way of
value, we're talking years, and reams of information. I think it's more of a question of, "What about the stuff
that we got from her that she's bringing back from the mainland over these last
15 or 20 years?" Is this stuff
righteous, or is it fictitious? So
that's really the question. We may
have thought we had some very valuable intelligence information that may turn
out to have been made up by the Chinese just to keep this whole thing going, to
feed us and, in turn, try to get information out of us.
NARRATOR: The stories of Bill Cleveland, J.J. and
Katrina are no less complicated, and the outcomes of their cases no more
definitive. Bill Cleveland has
been cooperating with the FBI. He
has not been charged in the case. He resigned from Lawrence Livermore lab when the news of J.J. and
Katrina's arrest broke.
I.C. SMITH: I've never been in Bill Cleveland's
house, but I'd be willing to bet that if one walked in it, it would be filled
with fine art, porcelain, things like this, from China. He was a fellow that seemed to be more
ingrained in the culture than most of us. And my feeling is the problems that's associated with him today, the
personal relationship with Katrina Leung and what have you, assuming all these
allegations are true, that great affinity that he had developed for China and
the culture, something like that, influenced him in that regard. If I had to make a bet.
NARRATOR: J.J. is waiting for trial. He and Katrina are not allowed to see
one another. His attorney won't
let him be interviewed but did let us take these pictures. J.J. and his wife, Gail, are still together. Friends say he contends he and Katrina
were always working for America, that their only crime was to fall in love.
Katrina was ultimately released on $2 million bail. Her husband, Kam, is standing by
her. Her attorneys' office is one
of only a handful of places she's allowed to go. Her defense will argue that Katrina is being punished for
actions the FBI once condoned and encouraged. Katrina's attorneys didn't want her to answer questions, but
they helped her with this statement.
KATRINA LEUNG: I can walk with my head held high
because I know I'm innocent of the charges in this case. I have been and I am a loyal American. I'm very confident that I'll be found
innocent. But that is not
enough. I will not rest easy, I
will not be satisfied until my name, my family's name is cleared. That is what I want here.
NARRATOR: The government will present its case at
trial, now scheduled for the fall of 2004.
PRODUCED AND DIRECTED BY
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ANNOUNCER: This report continues on our Web site,
where you'll find an analysis of this case's impact on U.S. national security,
an overview of China's espionage tactics and techniques, more on how the FBI
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