My Life and Times

January 7, 2005
All Charges Are Dismissed in Spy Case Tied to F.B.I.By JOHN M. BRODER and NICK MADIGAN
LOS ANGELES, Jan. 6 - A federal judge on Thursday dismissed all charges against a Chinese-American woman accused of using a long-running sexual relationship with a senior F.B.I. agent here to obtain national security documents.
The woman, Katrina Leung, a wealthy socialite from San Marino, a suburb of Los Angeles, had faced five criminal counts of unauthorized possession and copying of classified materials. The prosecutors said she removed the files from the briefcase of James J. Smith, a senior F.B.I. agent with whom Ms. Leung had an affair for 20 years.
The prosecutors said they stopped short of charging her with espionage because they could not prove that she had passed the documents to China.
But on Thursday, Judge Florence-Marie Cooper of Federal District Court dismissed the charges because of what she called prosecutorial misconduct. Judge Cooper agreed with Ms. Leung's lawyers that a plea agreement that prosecutors reached with Mr. Smith last spring unfairly prevented Ms. Leung's lawyers from having access to Mr. Smith, a critical witness.
Mr. Smith pleaded guilty to lying to his superiors about the affair. Four other felony charges were dropped, letting him avoid prison time. In exchange, he promised to cooperate in prosecuting Ms. Leung. But the terms of the deal barred contact with the defense team.
She had faced 14 years in prison if convicted.
The couple were arrested in April 2003, a time of heightened sensitivity about security because of the Sept. 11, 2001, attacks and years of accusations, some unproven, of Chinese espionage in the United States.
"Katrina Leung's nightmare is over," the defense lawyers, Janet I. Levine and John D. Vandevelde, said in a statement. "Today, United States District Judge Florence-Marie Cooper granted our motion to dismiss all charges against Katrina because the prosecutors engaged in misconduct, gagging the chief witness against her and then trying to cover it up. You can't do that in America."
The United States attorney in the case, Debra W. Yang, said she disagreed with the decision and was considering an appeal. Ms. Yang denied any misconduct on the part of her office and said the accord with Mr. Smith did not prohibit him from talking to Ms. Leung or her lawyers.
"I stand behind the work of the prosecutors of this case, and I know that they have conducted themselves ethically," she said.
Mr. Smith recruited Ms. Leung as an informer in the early 80's. For 20 years, she was paid $1.7 million to provide information on China. For almost all that time, she and Mr. Smith had an affair.
The authorities had at first said Mr. Smith had let her gain access to secret material that she passed to the Chinese. Justice Department officials said they believed that Ms. Leung was a double agent when the F.B.I. was paying her.
The initial grand jury indictment against Ms. Leung charged her with stealing sensitive national security documents from her lover, but stopped short of charging that she actually engaged in espionage by passing secrets to China. The authorities said that although they believed they had ample evidence that Ms. Leung had unauthorized access to security material, it would be harder for them to track contacts in China. The difficulty of introducing classified evidence in open court could also complicate the case, officials acknowledged.
Judge Cooper admonished the government not only for denying Ms. Leung access to Mr. Smith, but also for trying to conceal the terms of the deal.
"In this case," the judge wrote, "the government decided to make sure that Leung and her lawyers would not have access to Smith. When confronted with what they had done, they engaged in a pattern of stone-walling entirely unbecoming to a prosecuting agency."
Ms. Leung was a prominent businesswoman and political fund-raiser among Chinese-Americans in Southern California. The authorities said they believed that Ms. Leung would "surreptitiously" take secret documents from Mr. Smith's briefcase on his many visits to her.
She was indicted a day after Mr. Smith was indicted on six counts of wire fraud and gross negligence for what the authorities said was letting Ms. Leung take the papers and for lying to his supervisor about their affair and her reliability.
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