- The Washington Times - Thursday, May 8, 2003

ASSOCIATED PRESSA federal grand jury indicted a retired FBI agent yesterday on charges of gross negligence and wire fraud.James J. Smith, 59, is accused by a Los Angeles grand jury of letting his longtime intelligence source and adulterous lover, Katrina Leung, have access to secrets she passed on to China.Court documents say that Mr. Smith recruited Mrs. Leung in 1982 to be an FBI asset providing intelligence on China and that the two began a long-lasting affair that year. Both Mr. Smith and Mrs. Leung are married.Prosecutors say Mrs. Leung pilfered classified material from Mr. Smith’s briefcase when he visited her home and that she passed the information to Chinese intelligence. Mr. Smith spent most of his 30 years in the FBI as a Chinese counterintelligence agent, retiring in 2000. He has been free on $250,000 bail since shortly after his April 9 arrest.Mrs. Leung, 49, code-named “Parlor Maid” by the FBI, is a prominent Los Angeles socialite and political activist who has been jailed without bail since her arrest the same day. She is expected to be indicted later this week.The indictment against Mr. Smith charges him with four counts of “honest services” wire fraud, meaning he deprived the United States of his honest services by failing to disclose an improper relationship with Mrs. Leung, failing to describe the full extent of her contacts with China and mishandling classified information.For example, the indictment charges, Mr. Smith never told FBI officials that Mrs. Leung refused in 1991 to take a lie-detector test concerning her reliability. Instead, he filed a report indicating she had taken the test.The wire fraud charges stem from asset evaluation reports about Mrs. Leung that Mr. Smith sent periodically to FBI headquarters.Two negligence charges claim that Mr. Smith improperly removed two classified documents from FBI offices in Los Angeles and allowed Mrs. Leung access to them.The six counts in the indictment carry a maximum penalty of 40 years in prison, prosecutors said. Attorneys for Mr. Smith and Mrs. Leung have denied the accusations.

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