Charles R. Smith
Wednesday, April 16, 2003

James J. "JJ" Smith was the FBI agent in charge of Chinese intelligence assets in Los Angeles. Smith handled one key asset, specifically Katrina Leung. Smith recruited Leung in the 1980s to provide detailed information about the People's Republic of China. Leung's FBI code name was "Parlor Maid."

In the process of "handling" Leung, Smith began to have a "sexual relationship," which eventually led to his downfall. During the 1990s, Smith's sexual relationship with Leung took a turn for the worse.

During sessions of passion, Leung managed to obtain from Smith classified documents detailing FBI operations, assets and personnel engaged in counter-espionage activities against communist China.

Leung copied these documents after taking them from Smith's briefcase and then passed them on to her Chinese superiors in the Ministry of State Security (MSS).

According to the court documents, Smith eventually found out that Leung was copying the classified materials out of his briefcase. He also discovered that Leung was a double agent and that she was supplying the classified information to communist China.

Yet Smith continued to provide Leung access to the secret information despite knowing that she was compromising it. The honey pot succeeded in obtaining detailed information about FBI investigations into ongoing Chinese espionage operations inside the U.S.

Chinese Agent Inside the FBI

"Smith's position as a special agent and later a Supervisory Special Agent of the Los Angeles FBI Chinese FCI (foreign counter intelligence) squad afforded him access to classified materials relating to Chinese FCI matters," states the court affidavit by FBI agent Randall Thomas.

According to the affidavit, the FBI obtained "evidence showing Smith knew Leung had unauthorized contact with the MSS." The evidence included wiretap information about Leung and her MSS contact "Mao," obtained by Smith.

According to sources, former FBI agent William Cleveland Jr. also had a sexual relationship with Leung. Cleveland has been head of security at the nuclear weapons research facility in Livermore, Calif., and is referred to anonymously in FBI affidavits.

The court papers state that Cleveland admitted having a sexual relationship with Leung from 1988 until he retired in 1993, and that he resumed the sexual contacts in 1997 and 1999. He also continued the sexual relationship even after he discovered that Leung had unauthorized contact in 1991 with the MSS intelligence service.

According to the court documents, Cleveland immediately alerted Smith about Leung's unauthorized contacts with her MSS superior, but did not notify FBI officials. Smith later told Cleveland "the problem with Leung's unauthorized disclosures had been addressed."

Cleveland reportedly had security clearances that provided him access to classified information, first at the FBI and later at Livermore, home to some of the most sensitive U.S. atomic secrets.

PRC Gen. Ji

According to several intelligence sources, Leung was sent to America by the MSS and ex-China spymaster Gen. Ji Shengde in order to obtain political access in the U.S. Her primary espionage activities included advanced technology transfers and access to classified documents.

Apparently, Beijing was running two operations to gain influence inside America, designed to penetrate both U.S. political parties. One operation was run by Leung against the Republicans while the other was run by Charlie Trie and Johnny Chung against the Democrats. Both espionage operations were reportedly run out of Gen. Ji's office.

One of Leung's most successful operations led to the MSS compromise of ongoing investigations into the illegal donations made to the Democrat Party. FBI Agent Smith became the primary contact for Johnny Chung, allowing him access to the detailed account records of monies passed by Gen. Ji through Chung into the DNC coffers.

Royal Tourist

Leung also managed to obtain key information about an FBI operation code-named "Royal Tourist," involving a TRW employee Peter Lee. Lee admitted that he passed secret information to the Chinese intelligence services during travel to communist China. In 1997, Lee pleaded guilty to charges of passing secret information.

According to intelligence sources, Leung reportedly is very well-connected in Beijing. One of her closest friends is Indonesian Chinese tycoon Ted Sioeng, whose family was also investigated by the FBI for illegal donations to the Democrats.

Leung had several business-related contacts with companies such as Northern Telecom. Leung has admitted to controlling several Hong Kong-based companies, such as Merry Glory Ltd. and Right Fortune.

She is also a sustaining member of the Hong Kong ASC with her U.S.-based company Glishen Inc. and close friend of Lily Shum of the Hong Kong Tourism Association. Her brother, who runs some of the Hong Kong firms, is Kenneth Mankin Chan.

Northern Telecom and China

Leung's most profitable contact was with Northern Telecom, or Nortel. In 1990, Northern Telecom signed an agreement with Merry Glory Ltd. of Hong Kong to provide DMS-100 switching systems to China. Under terms of the agreement, Leung was to be paid a fee equal to 3 percent of the initial capital of the joint venture.

Canadian-based Nortel Networks has previously worked closely with the Chinese People's Armed Police developing oppressive and intrusive computer systems to monitor, track and prosecute illegal Internet web browsers.

Nortel has contracts with Datang Telecom, a Chinese firm that works closely with the Chinese Ministry of State Security. Nortel has provided its "Personal Internet" suite to the MSS, allowing authorities to monitor and track nearly half of China's individual Internet users.

Nortel is currently working with the communist authorities in Shanghai to build a "Shasta 5000" firewall. The firewall allows the red thought police to monitor and track subscribers who access Internet Web sites judged inappropriate by the communist government.

Nortel is also currently working with Qinghua University on speech-recognition technology for automated tapping of telephone conversations.

It is clear that the details of Leung's penetration of the FBI are a classic example of the expertise of Chinese intelligence operations inside the U.S. Leung was able to pass detailed information on FBI counter-intelligence operations while remaining undetected.

There is a specific type of espionage operation called the "honey pot." Those who encounter a "honey pot" are tempted by its irresistible sweetness and are often ensnared in the sticky web of sin.

According to U.S. federal court documents, FBI Agent James J. Smith fell prey to the honey pot.

Read more on this subject in related Hot Topics:
China/Taiwan

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