Alleged Russian spies arrested in NY & NJ

June 28, 2010 8:18:18 PM PDT
The FBI has arrested 10 people for allegedly serving for years as secret agents of Russia's intelligence service, the SVR, with the goal of penetrating U.S. government policymaking circles.

According to court papers unsealed Monday, the FBI intercepted a message from SVR headquarters, Moscow Center, to two of the defendants describing their main mission as "to search and develop ties in policymaking circles in US." Intercepted messages showed they were asked to learn about a broad swath of topics including nuclear weapons, U.S. arms control positions, Iran, White House rumors, CIA leadership turnover, the last presidential election, the Congress and political parties.

After a secret multiyear investigation, the Justice Department announced the arrests Monday in a blockbuster spy case that could rival the capture of Soviet Col. Rudolf Abel in 1957 in New York.

There was no clue in initial court papers how successful the agents had been, but they were alleged to have been long-term, deep cover spies, some living as couples. These deep-cover agents are the hardest spies for the FBI to catch because they take civilian jobs with no visible connection to a foreign government, rather than operating from government jobs inside Russian embassies and military missions. Abel was just such a deep cover agent; he was ultimately swapped to the Soviet Union for downed U-2 spy pilot Francis Gary Powers in 1962.

The court papers described a new high-tech spy-to-spy communications system used by the defendants: short-range wireless communications between laptop computers - a modern supplement for the old-style dead drop in a remote area, high-speed burst radio transmission or even the hollowed-out nickels used by Col. Abel to conceal and deliver microfilm.

Eight of 10 were arrested Sunday for allegedly carrying out long-term, deep-cover assignments in the United States on behalf of Russia. Two others were arrested for allegedly participating in the same Russian intelligence program within the United States. An 11th defendant, who allegedly delivered money to the defendants, is at large.

The court papers cited numerous communications intercepted in the FBI probe that spelled out what the 10 allegedly were trying to do.

The timing of the arrests was notable given the efforts by Presidents Barack Obama and Dmitry Medvedev to "reset" U.S.-Russia relations. The two leaders met just last week at the White House after Medvedev visited high-tech firms in California's Silicon Valley, and both attended the G-8, G-20 meetings over the weekend in Canada.

Intelligence on Obama's foreign policy positions, particularly toward Russia, appears to have been a top priority for the alleged spies.

In the spring of 2009, the documents say, alleged conspirators, Richard and Cynthia Murphy, who lived in New Jersey, were asked by Moscow for information related to Obama's impending trip to Russia that summer.

They were asked to learn about the U.S. negotiating position on the START arms reduction treaty as well as Afghanistan and the approach Washington would take in dealing with Iran's suspect nuclear program, the documents said. They were also asked to send background on U.S. officials who would be traveling with Obama or involved in foreign policy.

"Try to outline their views and most important Obama's goals (sic) which he expects to achieve during summit in July and how does his team plan to do it (arguments, provisions, means of persuasion to 'lure' (Russia) into cooperation in US interests," Moscow asked, according to the documents.

Moscow indicated that it needed intelligence reports "which should reflect approaches and ideas of" four sub-Cabinet U.S.

foreign policy officials.

One intercepted message said Cynthia Murphy, "had several work-related personal meetings with" a man the court papers describe as a prominent New York-based financier who was active in politics.

In response, intelligence headquarters in Moscow described the man as a very interesting target and urged the defendants to "try to build up little by little relations. ... Maybe he can provide" Murphy "with remarks re US foreign policy, 'roumors' about White house internal 'kitchen,' invite her to venues (to major political party HQ in NYC, for instance. ... In short, consider carefully all options in regard" to the financier."

Each of the 10 was charged with conspiracy to act as an agent of a foreign government without notifying the U.S. attorney general, which carries a maximum penalty of five years in prison. Two criminal complaints outlining the charges were filed in U.S.

District Court for the southern district of New York.

Nine of the defendants were charged with conspiracy to commit money laundering, which carries a maximum 20 years in prison on conviction.

The papers allege the defendants' spying has been going on for years.

One of the defendants living in Massachusetts made contact in 2004 with an unidentified man who worked at a U.S. government research facility.

"He works on issues of strategic planning related to nuclear weapon development," the defendants' intelligence report said of the man.

The defendant "had conversations with him about research programs on small yield high penetration nuclear warheads recently authorized by US Congress (nuclear 'bunker-buster' warheads)," according to the report.

One message back to Moscow from the defendants focused on turnover at the top level of the CIA and the 2008 U.S. presidential election. The information was described as having been received in private conversation with, among others, a former legislative counsel for Congress. The court papers deleted the name of the counsel.

In the papers, FBI agents said the defendants communicated with alleged Russian agents using mobile wireless transmissions between laptops computers, which has not previously been described in espionage cases brought here: They established a short-range wireless network between laptop computers of the agents and sent encrypted messages between the computers while they were close to each other.

The papers also said that on Saturday an undercover FBI agent in New York and another in Washington, both posing as Russian agents, met with two of the defendants, Anna Chapman at a New York restaurant and Mikhail Semenko on a Washington street corner blocks from the White House. The FBI undercover agents gave each an espionage-related delivery to make. Court papers indicated Semenko made the delivery as instructed, but apparently Chapman did not.

FBI agents arrested the defendants known as Richard Murphy and Cynthia Murphy at their residence in Montclair, N.J.

A neighbor, Louise Shallcross, 44, said she often saw Richard Murphy at the school bus stop.

"We were all very excited to have a stay-at-home dad move in," Shallcross said.

Three other defendants also appeared in federal court in Manhattan - Vicky Pelaez and a defendant known as "Juan Lazaro," who were arrested at their residence in Yonkers, N.Y., and Anna Chapman, who was arrested in Manhattan on Sunday.

A federal magistrate ordered Richard and Cynthia Murphy, Juan Lazaro, Vicky Pelaez and Anna Chapman held without bail. The defendants - most dressed in casual clothes like blue jeans, shorts and T-shirts - answered "Yes," when asked if they understood the charges. None entered a plea.

"The evidence is truly, truly overwhelming," said Assistant U.S. Attorney Michael Farbiarz. Another hearing was set for Thursday.

Pelaez is a Peruvian-born reporter and editor for El Diario/La Prensa, one of the country's best-known Spanish-language newspapers, for several years. She is best known for her opinion columns, in which she often criticizes the U.S. government.

A senior editor at the newspaper confirmed the arrest but declined to comment on the allegations. The editor, who spoke on the condition of anonymity, was not authorized to speak for the company.

In January 2000, Pelaez was videotaped meeting with a Russian government official at a public park in the South American nation, where she received a bag from the official, according to one of the criminal complaints filed in the case.

An attorney for Chapman, Robert Baum, argued that the allegations were exaggerated and that his client deserved bail.

"This is not a case that raises issues of security of the United States," he said.

The prosecutor countered that she was a flight risk, calling her a highly trained "Russian agent" who is "a practiced deceiver."

Two other defendants, known as Michael Zottoli and Patricia Mills, were arrested at their residence in Arlington, Va. Also arrested at a residence in Arlington, Va., was Mikhail Semenko.

Zottoli, Mills and Semenko made their initial appearance before Magistrate Theresa Buchanan early Monday afternoon in U.S. District Court in Alexandria, Va., according to a spokesman for the U.S.

attorney's office. The hearing was closed because at that point the case had not yet been unsealed in New York. The three did not have attorneys with them at the hearing, spokesman Peter Carr said.

In Arlington, where Zottoli and Mills lived in a ninth-floor apartment of a high-rise building, next-door neighbor Celest Allred said her guess had been that "they were Russian, because they had Russian accents."

Two defendants known as Donald Howard Heathfield and Tracey Lee Ann Foley were arrested at their residence in Cambridge, Mass., on Sunday. They appeared briefly in Boston federal court on Monday afternoon. A detention hearing was scheduled for noon Thursday.

In Moscow, calls to the Foreign Ministry and the Foreign Intelligence Service (SVR) were not answered early Tuesday.

The two most prominent cases involving the SVR in the past decade may have been those of Robert Hanssen, the FBI counterintelligence agent who was convicted of passing along secrets to the agency, and Sergei Tretyakov, deputy head of intelligence at Russia's U.N. mission in 1995-2000.

Tretyakov, who defected in 2000, claimed in a 2008 book that his agents helped the Russian government steal nearly $500 million from the U.N.'s oil-for-food program in Iraq before the fall of Saddam Hussein. He said he oversaw an operation that helped Saddam's regime manipulate the price of Iraqi oil sold under the program and allowed Russia to skim profits.


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