- The Washington Times - Monday, October 31, 2011

The FBI rounded up a network of deep-cover Russian spies last year after the group came close to placing an agent near a Cabinet official in the Obama administration, a senior FBI counterspy said Monday as the bureau released once-secret documents on the case.

Frank Figliuzzi, assistant FBI director for counterintelligence, did not identify the Cabinet official, but other U.S. officials said it was Secretary of State Hillary Rodham Clinton.

Mr. Figliuzzi said in an interview that the FBI decided to end its more than 10-year-long counterspy investigation of the network because of concerns that the spies were “getting very close to their objective.”

“These 10 Russian officers were sent to the U.S. on a specific mission to get close to U.S. policymakers and leaders in our government,” he said, noting that one had developed a friendship with someone close to a Cabinet official.

Mrs. Clinton’s spokesman at the time the case broke, P.J. Crowley, sought to distance her from the case, but did not deny that she was the person mentioned in court papers. “There is no reason to believe that the Secretary of State was a special target of this spy ring,” Mr. Crowley said in an email.

The spy who triggered concerns about high-level infiltration was Cynthia Murphy, later identified as Russian Foreign Intelligence Service (SVR) officer Lydia Guryev. Court papers say she met several times with a prominent New York-based financier active in political fundraising and described as a “personal friend” of a Cabinet official.

It was later disclosed that the financier was Alan Patricof, director of the venture capital firm Greycroft LLC and a donor to Democratic candidates, including Mrs. Clinton when she was a U.S. senator from New York.

Mr. Patricof said last year that he met Gureyev, whom he knew only as Cindy Murphy, several times and that she had been hired to do personal bookkeeping.

Additionally, the spy ring’s reports to Moscow revealed that the group was providing important data on the international gold markets, U.S. foreign policy toward Russia and Asia, and the identities of people applying for positions at the CIA, Mr. Figliuzzi said.

“We said they were getting too close to their objective. We’ve made the case on 10 of them. We identified all 10 of them, we can take it down,” Mr. Figliuzzi said.

He said a key break in the case developed in the mid-2000s after the FBI was able to decipher coded electronic communications between Moscow and the deep-cover spies. The communications were used to unravel the network, ending the FBI probe that began more than a decade ago.

Breaking the electronic codes used by the “illegals,” as the Moscow spies are called, was a milestone in the case that allowed FBI agents to pose as the spies’ handlers and identify the spies.

“Ultimately, at the end of the case, we were able to become the Russians,” Mr. Figliuzzi said. “The point where we decrypted the communications allows us to basically own the network.”

FBI agents posing as Russians fooled spies Anna Chapman and Mikhail Semenko into giving up valuable information about the ring. They were the last two people in the ring to be confirmed as SVR officers, Mr. Figliuzzi said.

“They finally confirmed to us that, yup, they were engaged in a spy ring,” he said.

Chapman, a red-haired beauty who became a focus of news coverage of the case, at one point gave an FBI undercover agent the computer she used for clandestine communications with Moscow to repair, saying she had problems with it. The FBI agent took the computer, which technicians likely used to break the codes.

Ten of the Russian agents were arrested on June 27, 2010. An 11th, the group’s spymaster Christopher R. Metsos, escaped arrest while in Cyprus.

The agents had been sent by Moscow to the United States to obtain government secrets and to influence the U.S. government while posing as Americans or other foreign nationals in Washington, New York and Boston.

Twelve days after the arrests, the 10 agents were exchanged for four Russians who had been imprisoned in Russia as foreign spies in a prisoner swap not seen since the Cold War.

The FBI’s release of documents, photographs and videos used in the probe code-named Ghost Stories is “unprecedented,” coming as it did so close to the end of the case, Mr. Figliuzzi said. It was released in response to Freedom of Information Act requests, he said.

The documents and videos reveal how the FBI conducted the investigation and show the spies meeting with undercover FBI agents posing as Russians and the signals used before meetings.

One black-and-white photograph taken from a surveillance video shows a “brush pass” of a bag between a Russian intelligence officer and one of the female agents. Another shows an empty brown glass bottle used as a signal marker and a duct-taped package left in a “dead drop.”

The case shows “the absolute resolve of a foreign intelligence service to penetrate,” Mr. Figliuzzi said. “You can see the degree to which [the Russians] were starting to do it and the even greater resolve of the FBI to stop that from happening.”

The breaking of the communications took place about halfway through the case, around 2004 or 2006. “This allowed us to get complete transparency into the network,” Mr. Figliuzzi said.

He declined to comment on how the FBI first learned of the network.

Other intelligence officials said the spies were uncovered with the help of a defector from Russia’s SVR, Col. Alexander Poteyev, who worked secretly for the United States in Moscow.

Col. Poteyev was sentenced to 25 years in prison in absentia by a Moscow court in June.

The verdict stated that Col. Poteyev told his wife on June 25, 2010 — two days before the FBI arrested the Russian spies — that he was going on a business trip to Minsk, Izvestia newspaper reported.

The next day, he sent a text message to his wife stating: “Treat this news calmly. I have gone away not on a business trip but forever. Don’t turn the children against me. I will help them as far as I can. I will try to start my life over again.”

Mr. Figliuzzi said the case was significant but that rounding up one network does not mean there is no longer a foreign intelligence threat.

“To think that, just because we took down one network, that there are no more, or to think that we’ve seen everything there is to see would be foolhardy,” he said. “The bottom line is spying has been around with us since the Old Testament. It’s with us now and it will be with into the foreseeable future as long as the United States has what other nations want.”

David Major, a former FBI counterintelligence agent, said the case was an extraordinary success for the FBI. “This is perfect CI,” he said in an interview, referring to the acronym for counterintelligence.

“The release of the FBI documents, photographs and surveillance video today by the FBI on the Russian illegals arrested in June 2010 code-named Ghost Stories illustrates once again the how serious the Russian Foreign Intelligence Service is to maintain a robust intelligence collections capability in the USA,” Mr. Major said.

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