Sino-American Loyalty

Feinstein was 'mortified' by FBI allegation that staffer was spy for China

By Lukas Mikelionis 

U.S. Sen. Dianne Feinstein fired a staffer a few years back who was part of an effort to spy and pass on political intelligence to the Chinese government.
The staffer, based in the Democrat's San Francisco office, was delivering political intelligence to officials based at the local Chinese Consulate, Politico reported.
The FBI informed Feinstein, the then-chairwoman of the Senate Intelligence Committee, about five years ago about the staffer and allegations that the staffer was a spy.

The source who confirmed the incident to the San Francisco Chronicle said “Dianne was mortified” upon learning about it.
The Chinese spy served as the lawmaker’s driver in California, but took on other roles as well, including helping out in her San Francisco office and being Feinstein’s liaison to the Sino-American community in the state. 

He attended Chinese Consulate events on behalf of the senator.
The spy’s handler “got an award back in China” for his efforts to penetrate Feinstein’s office and pass on intelligence.

The driver was recruited years ago after he being befriended on one of the trips to Asia by someone from China’s Ministry of State Security, the country’s intelligence and security agency, the Chronicle reported.
“He didn’t even know what was happening — that he was being recruited,” a source told the publication. 

“He just thought it was some friend.”
The FBI wasn’t able to charge the individual, possibly because he was passing on political intelligence rather than classified materials – making the prosecution nearly impossible.
“They interviewed him, and Dianne forced him to retire, and that was the end of it,” the Chronicle’s source said. 

“None of her staff ever knew what was going on. They just kept it quiet.”

Sino-American Loyalty

Jerry Chun Shing Lee spy trial: China gave Sino-American agent US$100,000 and promised to take care of him 'for life'

By Raquel Carvalho

China has given accused spy Jerry Chun Shing Lee a US$100,000 cash gift and promised it would “take care of him for life”, according to court documents seen by the Post.
Hong Kong-born Lee, who was a CIA officer between 1994 an 2007, has also deposited hundreds of thousands of dollars more in illicit payments from his Chinese handlers into his personal HSBC accounts in the city.
He is scheduled to be arraigned in a US court on Friday, where he is expected to plead not guilty to one count of conspiracy to gather or deliver national defence information to aid a foreign government, as well as two counts of unlawful retention of national defence information.
The naturalised United States citizen is behind one of the most serious American intelligence breaches in decades, one which led to the death or imprisonment of 18 to 20 US informants in China.

Lee was arrested by FBI agents in January , after landing at John F Kennedy International Airport in New York from Hong Kong, on charges of unlawfully retaining national defence information.
Federal prosecutors initially accused him of having illegally kept notebooks containing sensitive information about CIA operations. 

But, last week, he was accused of a far more serious crime – conspiring to commit espionage.
Lee, 53, was indicted on May 8 by a federal grand jury in Virginia, and is due to be arraigned at 9am on Friday before Alexandria US District Judge TS Ellis III.
Lee, also known as Zhen Cheng Li, has been described by many as a mole at the centre of one of the most serious US intelligence breaches in decades.
The New York Times reported last year that the first signs of trouble that led to the dismantling of the US spy network in China surfaced in 2010. 

After 2010, the FBI and the CIA opened a joint investigation into what had happened.
According to the indictment – which did not touch on the consequences of Lee’s espionage – he met two intelligence officers of China’s Ministry of State Security in Shenzhen, a city bordering Hong Kong, in April 2010.
At the time, they gave him “a gift of $100,000 cash in exchange for his cooperation”, with the promise that “they would take care of him for life”.
In the following month, documents read, Lee began receiving a series of written instructions from the Chinese intelligence officers, some of the envelopes accompanied by gifts.
At least 21 pieces of information were requested from Lee and most of them asked him to reveal sensitive information about the CIA, including national defence information.
The indictment noted that the Chinese intelligence and security agency, and its bureaus, were tasked with conducting clandestine human source operations, of which the US was a principal target.
Lee had worked as a CIA case officer, which meant his primary mission was to recruit clandestine human intelligence sources. 

He had also served in various positions and places overseas, all of which required a top-secret clearance, court documents described.
Intelligence sources said Lee had left the American agency because he felt “frustrated” and “not appreciated”.
It was later determined that the information Lee included in this document was national defence information

US COURT INDICTMENT
Court documents claim that, in May 2010, Lee made a cash deposit of HK$138,000 ($17,468) into one of his personal HSBC accounts in Hong Kong.
“This would be the first of hundreds of thousands of dollars in cash deposits Lee made” until December 2013, the documents read.
Prosecutors mentioned as further evidence a document created on Lee’s laptop that included information on places where the CIA would assign officers, and the location of a sensitive operation.
“It was later determined that the information Lee included in this document was national defence information of the US that was classified at the secret level,” court papers read.
It is also claimed in the indictment that in response to a tasking from Chinese intelligence officers, Lee drew a sketch of the floor plan of a particular CIA facility abroad.
According to court documents, the taskings continued into at least 2011.
Lee is also accused of having made several false statements to the US authorities.
As the Post reported, Lee started working for a cigarette company in Hong Kong in 2007, the same year he left the CIA. 

In 2009, Japan Tobacco International terminated his contract amid suspicions he was leaking sensitive information about its operations to Chinese authorities.
He then set up his own company, also related to the import of cigarettes, which did not succeed. According to court papers, Lee’s business partner in Hong Kong arranged meetings and passed messages from Chinese intelligence officers to him.
From June 2013 to September 2015, the former CIA agent worked for the cosmetics company Estée Lauder.
At the time of his arrest, he was the head of security at the international auction house Christie’s in Hong Kong.
Lee has been held at the high-security Alexandria’s jail without bail and, if convicted, could spend the rest of his life in prison.

Sino-American Loyalty

Jerry Chun Shing Lee Indicted in Dismantling of U.S. Informant Network in China
By ADAM GOLDMAN

Jerry Chun Shing Lee, 53, was indicted on Tuesday on a charge of conspiring to commit espionage.

WASHINGTON — A former C.I.A. officer suspected of helping China unravel the agency’s spy network in that country was indicted on Tuesday on a charge of conspiring to commit espionage.
The officer, Jerry Chun Shing Lee, 53, was arrested by F.B.I. agents in January after federal prosecutors accused him of illegally possessing classified information.

But the new charge reflected a willingness of prosecutors to disclose sensitive details they might have been reluctant to acknowledge publicly.
According to prosecutors, two Chinese intelligence officers approached Lee in April 2010 and offered to pay him for information. 

The intelligence officers “provided Lee with a series of email addresses so that he could communicate covertly with them,” court papers said, and he received instructions from Chinese intelligence officers until at least 2011.
“I can’t comment on the indictment because the government hasn’t filed anything but a press release,” Lee’s lawyer, Edward MacMahon, said on Tuesday.
Lee was at the center of an intensive F.B.I. and C.I.A. investigation into how the Chinese determined the identities of agency informants. 

The dismantling of the C.I.A.’s spy network in China was one of the worst American intelligence failures in years.
Lee joined the C.I.A. in 1994 and left in 2007, moving his family to Hong Kong. 

According to court documents, the F.B.I. lured Lee back to the United States in 2012 as part of a sensitive intelligence operation.
While he was in Virginia and Hawaii, agents secretly searched his belongings and found a pair of notebooks containing sensitive details about C.I.A. operations and the identities of undercover officers and informants.
The F.B.I. interviewed Lee five times but never directly asked him whether he had worked for the Chinese government. 

Investigators let Lee leave the country in 2013 in hopes of gathering more evidence and proving he had committed espionage.
Prosecutors said Lee made “unexplained cash deposits, and repeatedly lied to the U.S. government during voluntary interviews when asked about travel to China and his actions overseas.”

Sino-American Loyalty

Jerry Chun Shing Lee Had Ties to Chinese Spies
By SCOTT SHANE

Jerry Chun Shing Lee, who was arrested in New York this week, had repeated official and unofficial contacts with China’s Ministry of State Security, its main intelligence agency, in the years before he came under F.B.I. suspicion as a possible turncoat.

WASHINGTON — Jerry Chun Shing Lee, the former C.I.A. officer arrested this week in New York, had repeated contacts with Chinese intelligence, both on an official basis while working for the agency in Beijing and afterward under circumstances his business associates found deeply suspicious, according to a former colleague who worked closely with him.
The new information suggests why American investigators suspect Lee, who has been charged with mishandling classified information, may have played a role in the dismantling of the C.I.A.’s networks of agents in China starting in 2010.
The former colleague, who worked with Lee at Japan Tobacco International, said he was viewed at the company with mistrust and was fired as a result, before he came under intense F.B.I. scrutiny as a possible turncoat.
Executives at Japan Tobacco informed the F.B.I. of some of Lee’s suspicious contacts in 2010, the former colleague said in an interview.
But it is unclear when and whether F.B.I. counterintelligence agents learned all the details of his multiple contacts with Chinese spies.
The destruction by Chinese security agencies of the C.I.A.’s operations inside the country, including the imprisonment or execution of a dozen Chinese nationals secretly working for the United States, is considered one of the most devastating intelligence setbacks for the agency in recent decades.
With Lee’s arrest and the continuing investigation, inquiries at the C.I.A. and the F.B.I. into how it unfolded and what mistakes were made are likely to go on for years.
Lee, 53, a naturalized American citizen who was born in Hong Kong, joined the C.I.A. in 1994 after serving in the Army and earning two business degrees at a Hawaii university.
He worked under diplomatic cover in Asia and at C.I.A. headquarters in Virginia.
By 2007, he was growing frustrated by his lack of advancement and decided to leave the agency.
He was hired by Japan Tobacco International and joined that company’s team of investigators who tracked cigarette smuggling and counterfeiting.
Lee told his new employer that his last government assignment had been as the agency’s official liaison in Beijing to Chinese intelligence, according to the former colleague, who did not want to be swept into the media storm over the case and spoke on the condition of anonymity.
While some of Lee’s meetings with Chinese officials would have been approved and carefully documented, former officials say there were some concerns at the time that he might not have been fully forthcoming with superiors about his unofficial contacts.
After a year or so in the new job, he came under suspicion from superiors at Japan Tobacco who thought he might be tipping off corrupt Chinese officials about the company’s investigations of cigarette smuggling and counterfeiting.
Cases that he was informed about often fell apart, so his bosses stopped updating him about their inquiries, said the former colleague, who was directly involved in the operations.
After such suspicions prompted his dismissal by the Japanese company in mid-2009, a Chinese official warned the company that Lee was again talking with Chinese intelligence officers, falsely telling them that the company’s investigations unit in Hong Kong, where he had worked, was a C.I.A. front, the colleague said.
Japan Tobacco officials passed the information to the F.B.I.
By October 2010, looking for business for a new company he had created, Lee was accompanied to a business meeting by Chinese intelligence officers, who vouched for him, Japan Tobacco was later told by people at the meeting.
Lee was taken into custody on Monday after arriving at Kennedy International Airport and charged with a single count of retaining classified information.
The charge, which carries a maximum sentence of 10 years, related to Lee’s possession in 2012 of two notebooks that contained the identities of Chinese nationals working for the C.I.A. and other highly classified details.
Lee’s repeated contacts with Chinese intelligence would be of great relevance to the question of whether he may have been recruited by China and played a role in the betrayal of C.I.A. secrets.
During the early years of the investigation into the loss of sources in China, there were disagreements between the C.I.A. and F.B.I. over whether Lee was the likely source of the breach. Some investigators believed China might have penetrated the C.I.A.’s covert communications or sloppy tradecraft.
Lee does not yet appear to have a lawyer, though he was represented by a federal public defender during a court appearance this week.
He has not been charged with espionage, and no evidence has publicly emerged linking him directly to the deaths of the C.I.A. sources in China.
The colleague, who was formerly a senior manager with Japan Tobacco and worked closely with Lee there, said the company had good reason to believe Lee’s claim that he had been the C.I.A. liaison to the Ministry of State Security, though he declined to give details.
He said the company also believed the later report that Lee was meeting in 2010 with Chinese intelligence, which came as a tip from a Chinese official to a veteran investigator with Japan Tobacco, a former Hong Kong police investigator who had handled many tobacco cases.
Lee’s reported false claim that Japan Tobacco investigators were actually working for the C.I.A. alarmed company officials, who thought it would put at risk every company investigator who traveled in China.
He said the claim had no basis in fact, and that any perception of an association with any foreign intelligence service was carefully avoided because it would have been dangerous for Japan Tobacco employees in China.
Company officials thought the false C.I.A. claim was an act of revenge for Lee’s firing.
For months, the company banned all travel to the rest of China by Hong Kong-based investigators, said the former colleague.
“We took it as payback from Jerry,” the colleague said.
In addition, at the time of his firing, Lee told senior Japan Tobacco officials that other company security employees were carrying out kidnappings and torture in their hunt for smugglers, the former colleague said.
Those claims were never substantiated, but they roiled the company and led to the breakup of the Hong Kong investigative unit, which was later reformed with mostly different personnel.
But Lee’s contacts with the Chinese Ministry of State Security did not end there, the former colleague said.
After Lee was fired, he joined with a former Hong Kong police officer to form a small investigations firm and sought tobacco companies’ business.
In October 2010, Lee appeared at a meeting of the Guangdong Province branch of the Chinese state tobacco company accompanied by Ministry of State Security officers, people at the meeting told Japan Tobacco officials.
Lee was seeking business for his new investigations firm, and the intelligence officials were there to support his appeal, Japan Tobacco was told.
Lee co-owned the investigations firm, FTM International, with Barry Cheung Kam Lun, according to corporate records.
Cheung was a former Hong Kong police officer, according to Lee’s former colleague.
Lee’s wife, Caroline Lee, served as the sole director of FTM, the records show.
Though the investigations firm, called FTM International, evidently did not thrive and eventually went out of business in 2014, Lee was later hired by Estée Lauder, the cosmetics company, and Christie’s, the global auction house, which suspended him after his arrest.
But the former colleague said Japan Tobacco never heard from Lee or his prospective employers.
He said he did not know about the F.B.I. investigation until Lee was arrested.
An internal announcement of his hiring by Christie’s as director of security for Asia described him as having “considerable domestic and international experience of managing complex security issues” and said he spoke Cantonese and Mandarin as well as English.
In a statement, Lavina Chan, head of corporate communications for Christie’s Asia, confirmed that Lee had worked in the job for the past 20 months and had been suspended after his arrest pending the outcome of the investigation.
The colleague recalled other details of Lee’s two years with Japan Tobacco.
While reticent with superiors, he was more loquacious with local Chinese employees, who described him as frequently talking about the money he was making or wanted to make.
When the firm discovered a $15,000 shortfall in a cash fund used to pay informants on cigarette smuggling cases, Lee came under suspicion.
His bosses feared he might also be taking money to pay informants who did not exist, the colleague said.
He was married with two daughters, appeared to be devoted to his children and did not live a flashy lifestyle, the colleague said.
But he was unpopular at work, widely seen as untrustworthy, and when he left, “none of us ever wanted to see him again.”

Sino-American Loyalty

Hunting a C.I.A. Mole, Agents Gambled and Let a Suspect Return to China

By MATT APUZZO and ADAM GOLDMAN

Fears of a mole grew when the C.I.A. noticed in late 2010 that its spies were disappearing.
WASHINGTON — Face to face with a former C.I.A. officer in 2013, federal agents took a calculated risk.
They did not confront him about the classified information they had found in his luggage.
And they did not ask what they most wanted to know: whether he was a spy for China.
It was a life-or-death call.
The Chinese government had been systematically picking off American spies in China, dismantling a network that had taken the C.I.A. years to build.
A mole hunt was underway, and the former officer, Jerry Chun Shing Lee, was the prime suspect.
The F.B.I. could have arrested him on the spot for possessing classified information. 

But inside a secretive government task force, investigators argued against it, former American officials recalled. 

If Lee were a turncoat, arresting him on an unrelated charge would tip off the Chinese and allow them to cover their tracks. 

If he was not the mole — and some argued strenuously that he was not — an arrest might allow the real traitor to escape.
So the F.B.I. allowed Lee to return to Hong Kong, court papers show, where he hastily resettled with his family. 

The agents, working out of an office in Northern Virginia, gambled that by watching patiently, they might piece together how China had decimated the United States’ spy network, and determine whether Lee had helped.
Nearly five years later, when Lee made a surprise return to the United States this week, the F.B.I. made its move. 

He stepped off a Cathay Pacific flight at Kennedy International Airport on Monday and was waved through customs. 

A waiting F.B.I. agent, Kellie O’Brien, called out his name, according to court records. 

Lee answered, and was arrested.
His apprehension, on the same single charge that could have been brought years ago, is the latest development in one of the most damaging affairs in modern C.I.A. history. 

But it does nothing to settle the question of how or whether Lee was involved. 

For years, he was the prime suspect in a mole hunt, but officials disagreed over whether he was actually to blame.
One government official said there was no plan at the moment to charge Lee with espionage, handing over American secrets to the Chinese or anything beyond the one felony count of illegally possessing classified information. 

That would leave open the mystery of how China managed to unravel the C.I.A.’s web of informants.
Neither the F.B.I. nor the Justice Department would discuss this high-stakes back story on Wednesday. 

“This is an example of the system working,” said Ian Prior, a Justice Department spokesman. 

“The defendant arrived in this country, we apprehended him and he has been charged with an extremely serious offense.”
In an email, Lee’s college-age daughter declined to discuss the case and said that no lawyer or family member was available to speak on his behalf.
The New York Times revealed the decimation of the C.I.A.’s network last year, citing 10 current and former government officials, who were not authorized to speak publicly about the investigation. Several of them identified Lee as the key suspect at the time.

Lee, 53, took an unremarkable path through the C.I.A. 

He became a United States citizen and, after four years in the Army, studied international business management at Hawaii Pacific University. 

He graduated in 1992 and received a master’s degree in human resource management the next year.
From there, he joined the C.I.A., posing as an American diplomat while serving as a clandestine case officer. 

From old address records, he appears to have served in Tokyo from about 1999 to 2002. 

Officials say he also worked at the East Asia Division at C.I.A. Headquarters and the agency’s Beijing station before he left in 2007 and took a job in Hong Kong.
When the C.I.A. noticed in late 2010 that its spies were disappearing, suspicion did not immediately turn to Lee.

But as fears of a mole grew, the government set up a secret task force of C.I.A. officers and F.B.I. agents. 

A veteran F.B.I. counterintelligence agent, Charles McGonigal, was assigned to run it, former American law enforcement officials said.
As the disappearances continued, analysts concluded that Lee, even though he had been out of the C.I.A. for years, had known the identities of many of the those who had been killed or imprisoned. 

He showed all the indicators on a government matrix used to identify potential espionage threats.
But warning signs can be wrong. 

At the C.I.A., top officials ruefully remembered the treatment of Brian J. Kelly, an agency officer who in the 1990s was wrongly suspected by the F.B.I. of being a Russian spy. 

More recently, the Justice Department’s efforts to unearth Chinese spies have suffered embarrassing setbacks, including dropped charges against prominent Chinese-Americans.
In Lee’s case, other possible explanations existed. 

Some investigators believed that China had cracked the C.I.A.’s system for communicating with its informants. 

The spy agency had encountered similar problems in other countries, and some investigators believed the technology was too clunky to stand up to China’s sophisticated computer specialists.
Another group accused C.I.A. officials in Beijing of being sloppy and allowing themselves to be identified when meeting with their informants. 

It was an acrimonious dispute, and some officials conceded that a combination of factors could account for the damage.
Some former officials who reviewed the evidence described the case against Lee as strong but circumstantial, not bulletproof. 

Some at the C.I.A. argued that officials were too quick to suspect a mole when there were other explanations.
The F.B.I. was watching in August 2012 when Lee returned to the United States with his family. Agents secretly entered his hotel rooms in Hawaii and Virginia and discovered two small books with handwritten notes that contained classified information, including the identities of undercover C.I.A. officials, court papers show.
The information the books contained, including details about meetings between C.I.A. informants and undercover agents, as well as their real names and phone numbers, matched documents that Lee had written while at the C.I.A., according to court documents. 

It was not clear whether any of the people identified in his documents were part of the Chinese roundup of C.I.A. sources.
Agents spoke with him repeatedly in the following months. 

Both the attorney general at the time, Eric H. Holder Jr., and Robert S. Mueller III, then the F.B.I. director, were personally briefed on the investigation and pledged whatever resources were necessary. But senior government officials said they cannot recall any serious push to arrest Lee at the time or to try to charge him with espionage in connection with the lost Chinese informants.
So in June 2013, the agents let Lee leave. 

Current and former officials have said that the C.I.A.’s losses had ended by late 2012, so there is no evidence that the decision allowed more informants to be captured or killed.
At least once in recent years, according to a government official, Lee returned to the United States without attracting the F.B.I.’s attention. 

It was not clear how or why he did so.
At some point the Justice Department decided that if it had the chance, it would charge Lee. 

Officials suspected that opportunity might come later this year when Lee’s daughter graduated from college, an occasion that might draw him back to the United States.
When Lee surprised the government recently by booking a trip to New York, prosecutors hurried to file the charge that they had kept waiting for years.

Sino-American Double Loyalty

Ex-CIA officer Jerry Chun Shing Lee spied for China
by KEN DILANIAN, PETE WILLIAMS and ROBERT WINDREM

A former CIA officer who was charged Tuesday with unlawful possession of secrets is suspected of a much worse crime: betraying U.S. informants in China, sources familiar with the case told NBC News.
The former officer, Jerry Chun Shing Lee, 53, was arrested Monday after flying into New York on a Cathay Pacific flight from his home in Hong Kong, federal authorities announced.
Lee, who is a naturalized U.S. citizen, was charged with a single count of unlawfully possessing national defense information, based on a 2012 search that found him to be in possession of two notebooks containing the true names of CIA assets and covert facilities, which are some of the agency's most closely guarded secrets.
He is suspected of funneling information to China that caused the deaths or imprisonment of approximately 20 American agents, in one of the worst intelligence breaches in decades.
The New York Times reported last year that the Chinese government systematically dismantled CIA spying operations in the country starting in 2010, killing or imprisoning more than a dozen sources over two years and crippling intelligence gathering there for years afterward.
The lobby of the CIA Headquarters Building. 

CIA and FBI officials were mystified and mortified as one after another of their best agents in China were jailed or executed.
It was considered the worst intelligence catastrophe since the 1990s, when Aldrich Ames and Robert Hanssen, formerly of the CIA and the FBI, provided secrets to Moscow for years that led to the deaths of multiple agents. 

Both men are serving life terms in federal prison.
The Times story described a debate over a suspected mole, a former CIA case officer now living in an Asian country.
An FBI task force launched an investigation and began to focus on Lee, sources tell NBC News. 

It's unclear how the FBI lured Lee back to the U.S. but officials say there have been several undercover attempts to incriminate him, and at least one confrontational interview during which he denied being a spy.
In 2012, one source said, the FBI lured Lee back to the U.S. with a phony job offer, but no charges were filed and he returned to Hong Kong.
Officials familiar with the case say it is unlikely that Lee will be charged with espionage, which can carry the death penalty. 

It may be that the government doesn't have the proof required for such a charge, or that it doesn't want to air secrets in an open courtroom.
But sources say Lee was the subject of an intense — and extremely secret — counterintelligence investigation. 

That included searches of his hotel rooms in Hawaii and Virginia in 2012, according to the court records filed Tuesday.
"A review of photographs taken during the August 13, 2012, search in Hawaii and the August 15, 2012, search in Virginia revealed that, during his stay in both hotels, Lee possessed two small books (the "books") best described as a datebook and an address book," the arrest affidavit said, adding that the books contained classified information.
"The datebook contained handwritten information pertaining to, but not limited to, operational notes from asset meetings, operational meeting locations, operational phone numbers, true names of assets, and covert facilities," the affidavit said. 

"The address book contained approximately twenty-one pages. The address book contained true names and phone numbers of assets and covert CIA employees, as well as the addresses of CIA facilities."
Some who investigated the case believed the Chinese had hacked the communications the CIA was using to get in touch with its assets in China. 

A source familiar with the case said such a hack was possible, but that it was also clear Lee was spilling secrets to the Chinese.
Court documents say Lee had been a CIA case officer since 1994. 

He graduated from Hawaii Pacific University in 1992 with a bachelor's degree in International Business Management and in 1993 received a master's degree in Human Resource Management, according to court documents, which do not list a lawyer for him.