OS ANGELES, April 16 — It was no secret in political and social circles here that Katrina Leung, a long-time F.B.I. informer who is accused of being a Chinese double agent, liked the good life.Posted on 04/17/2003 12:32:42 AM PDT by sarcasm
OS ANGELES, April 16 — It was no secret in political and social circles here that Katrina Leung, a long-time F.B.I. informer who is accused of being a Chinese double agent, liked the good life.
Ms. Leung, a 49-year-old businesswoman who was arrested last week, dressed impeccably, gave lavish parties at her home in San Marino, owned various businesses and property, and frequently flew overseas.
But the extent of Ms. Leung's assets, which the authorities have described as "enormous and complex," has begun to emerge in recent days, although a full accounting may never be known.
At a bail hearing for Ms. Leung on Tuesday, federal prosecutors said that she and her husband, Kam Leung, had access to at least $872,000 in bank and retirement accounts in the United States and that the couple might have had millions of dollars in foreign accounts under different names.
United States Assistant Attorney Rebecca Lonergan said Ms. Leung could use these assets if she chose to flee the United States. The prosecutor said Ms. Leung, a naturalized American citizen, had not reported hundreds of thousands of dollars in overseas earnings on her United States tax returns.
In addition, Ms. Leung claimed mortgage interest deductions on a California residence that was not in truth mortgaged, Ms. Lonergan said.
Citing her "significant foreign assets" as a flight risk, Federal Magistrate Victor B. Kenton on Tuesday ordered Ms. Leung held without bail until trial on charges of illegally obtaining secret documents from her Federal Bureau of Investigation handler, with whom she had a sexual affair.
The magistrate said that despite the best efforts of the authorities, "there is much about the defendant's financial wherewithal that has not been revealed in the court."
In a statement released today, Ms. Leung's lawyer, John Vandevelde, asked that the public "not jump to any conclusions" regarding the government's portrayal of his client's assets.
"Information is being withheld from us, and the government has only shown the tip of the iceberg," Mr. Vandevelde said. "When all the information is out it will show that for 20 years the F.B.I. controlled everything and knew everything that Ms. Leung did. Her overseas activities furthered her role for the F.B.I."
Ms. Leung, who is said to have extensive contacts in the Chinese government, was recruited by James J. Smith, an F.B.I. agent who was her main handler and lover for 20 years until his retirement in 2000.
Mr. Smith has been charged with gross negligence in his handling of national security documents that officials say Ms. Leung copied and passed on to the Chinese government. Mr. Smith was released last week on $250,000 bond.
At the bail hearing for Ms. Leung, her lawyers argued that the F.B.I. was fully aware of their client's every action and approved them.
They said Ms. Leung's home in San Marino, a rich suburb just east of Los Angeles, was equipped with built-in microphones and video cameras that allowed American agents to spy on her Chinese house guests.
"The F.B.I. fed information to her and encouraged her to give it to the People's Republic of China in order to obtain the trust of the P.R.C. and obtain information in return," according to the documents filed by Ms. Leung's lawyers.
Underscoring what prosecutors said was Ms. Leung's vast wealth, she and her family had offered to post bail for as much as $2 million in property to secure her release. Her husband, brother and sister, all attended the hearing but declined to be interviewed.
Ms. Leung, who wore a green windbreaker jacket and navy blue sweat pants, was escorted into the courtroom in shackles. Her hair pulled back in a long ponytail, Ms. Leung appeared relaxed and confident. She often smiled when looking back at her relatives.
Prosecutors provided some details of the sources of Ms. Leung's assets and the complex financial schemes they said she used to hide them.
For starters, they said Ms. Leung had received $1.7 million for work and expenses as an informer for the F.B.I. in which she provided the agency with secret material on the Chinese government over 20 years.
Ms. Leung, who is fluent in Cantonese, Mandarin and English, also was paid $1.2 million in 1995 and 1996 for negotiating a deal that allowed Nortel Telecommunications to do business in China, prosecutors said.
As Nortel's representative, Ms. Leung, who used the business name "Merry Glory" for the deal, received 3 percent of any contract that she obtained for Nortel, they said.
Prosecutors said a review of Ms. Leung's personal tax returns showed that she reported neither the F.B.I. payments nor the Nortel payments as income on her on federal income tax filing, as required by the Internal Revenue Service.
According to an affidavit filed by federal prosecutors in connection with the bail hearing, Ms. Leung admitted to the authorities that she had two bank accounts in Hong Kong under the name Merry Glory and Right Fortune.
The accounts were used "to create the appearance of a separate creditor to which she made mortgage payments when in fact she was paying herself," the document stated.
Ms. Leung bought her home in San Marino about 12 years ago for $1.4 million, prosecutors said. She made a down payment of half that amount and financed the balance.
She deposited payments from Nortel in her Right Fortune account and used the money to pay off the balance of her mortgage. "This created the appearance she had refinanced with another company and enabled her to falsely claim mortgage interest deductions for her residence after she had in fact paid her mortgage in full," the affidavit said.
Nancy Mathis, a spokeswoman for the Internal Revenue Service in Washington, said that because of privacy laws that protect all taxpayers the agency could not comment on whether it would investigate Ms. Leung in connection with tax fraud.
Logic would seem to dictate that naturalized citizen would be more of a security risk than a native born citizen with extensive ties to the United States.
But I guess thats just not "politically correct" now is it?
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