Tiger Trap: America's Secret Spy War With China (5 page)

She was the youngest of four children of a dam engineer who traveled a good deal. When she was an infant, her aunt and uncle lost a baby. Her mother, Chen Wu Yueh, offered them Katrina as a replacement, a practice not unknown in China. As a result of the Gilbert and Sullivan-like baby switch, Katrina was raised largely by her aunt, Shuet Ying Young, who was married to her mother's brother.

When Katrina was around three, she moved with her aunt, an older brother, and her grandmother to Hong Kong. "Katrina sleepwalks," according to her husband, Kam Leung, a tall, handsome man with a graying crewcut and cultivated manner. "In Hong Kong they lived on the fourteenth floor, in a penthouse. Her aunt would find her sleeping on the ledge of the balcony of their apartment."
Even at that early age, Katrina was living on the edge; had she rolled over the wrong way, the FBI would have been deprived of its most celebrated Chinese intelligence asset—and, as matters turned out, an unwelcome spy scandal.

Her family background had elements of a soap opera. In the 1930s Katrina's grandfather had immigrated to New York. He opened a laundry on Long Island and eventually owned two restaurants in lower Manhattan. His son, Jimmy Gai Chin, Katrina Leung's uncle and surrogate father, joined him in New York. With his wife back in Hong Kong, the uncle took up with a barmaid and sired two boys. The barmaid moved to England with the children, became ill, and died; the boys, ages six and four, were returned to New York. The uncle, suddenly finding himself a single parent, called on his wife for help, and Katrina, her aunt, and grandmother joined him in Manhattan in 1970. Katrina traveled on a Taiwanese passport that said she was born on May 1, 1954, in Canton, China.

They moved into an apartment at 137 Chrystie Street. "She enrolled in Washington Irving High School, and from three to midnight worked in a sewing factory," Kam Leung said. "She got mugged twice walking home at night."

In 1972, the same year Katrina graduated from high school and became a permanent resident, she was accepted at Cornell University on a scholarship. There she met Kam Leung, a graduate student in biochemistry. He recalled the moment.

"The first weekend I went there I saw a flyer, 'Upper Buttermilk Falls, Chinese Student Association Picnic.' I went, and there was a little girl wearing almond-shaped tinted eyeglasses and pigtails. She said, 'I'm very cold.' So even I could figure that out so I took off my pea coat and gave it to her.

"A week later I found her crying in the lobby of the International Student House. She was lonely and homesick, so that is how we went on our first date. We went to see the movie
Butterflies Are Free.
"

They lived together for three years before marrying in 1975. "I was too poor for a wedding ring so neither of us wear wedding rings."

Kam Leung was born in Hong Kong in 1951;
his father, a graduate of a military school in China, had been posted to a train station near Canton. "When the Japanese invaded, he was in charge of the last train out of China. He rescued the safe of Ho Tim, who founded the Hang Seng Bank in Hong Kong, and probably saved his fortune."

In 1969, when Kam Leung was eighteen, he came to the United States to study chemistry at Sam Houston State University, in Huntsville, Texas. He went on to Cornell in 1972 to earn a PhD in biochemistry.

In lengthy interviews over two days, Kam Leung came across as both astute and sophisticated as he described in great detail his life with Katrina. He was also, to all outward appearances, and despite his wife's infidelities, still hopelessly in love with her.

"She is brilliant," he said. "She was always the head of the class. She is generous to a fault." What had attracted him to her? "She's helpless," he replied. "She is extremely insecure inside. I recognized the little girl inside of her, crying out."

There is, of course, a startling disconnect between Kam Leung's gauzy view of the helpless little girl in pigtails who captured his heart at Cornell and the tough-minded, deceptive, and ambitious woman who ended up earning millions as a double agent and a spy for both the FBI and Beijing.

Katrina Leung graduated from Cornell in 1976, and her husband won a research fellowship at the University of Chicago. "She just followed me and hung around the Chinese student center." But 1976, Kam said, "was the beginning of her troubles. Katrina helped to found the Chicago chapter of the National Association of Chinese Americans. It was considered a pro-Beijing group."

And it was in Chicago that Katrina met and became a close friend of Hanson Huang, a smooth graduate of Harvard College and Harvard Law School who had landed a job in that city with Baker & McKenzie, a prestigious international law firm. Huang, who was born in Hong Kong in 1951, and Katrina Leung were both active in support of China in the Diaoyutai Islands student movement.

The islands—in Chinese,
diaoyutai
means "to catch fish"—are a string of eight barren and uninhabited isles in the East China Sea about one hundred miles northeast of Taiwan. They are claimed by China, Japan, which calls them the Senkaku, and Taiwan. During the 1970s, Chinese students around the world joined in a movement to protest Japan's claims to the islands.
^*

In 1976 Kam Leung completed his PhD and moved to Cincinnati to take a job at Procter & Gamble. Katrina remained behind and earned a master's in business administration at the University of Chicago. Kam visited her on weekends.

In 1980 the couple moved to Los Angeles and took a studio apartment in Azusa, in the foothills of the San Gabriel Mountains east of downtown. Kam went to work as a research scientist for a medical equipment company. "I was killing mice, fifteen hundred mice a week for the lab, injecting them." Katrina got a marketing job with an HMO.

Before that, however, she briefly worked as general manager of an import-export company. The FBI investigated the firm because it was suspected of illegally transferring technology to China. Early in 1981 the FBI began a full field investigation of Katrina
herself, who was "believed to be engaged in clandestine intelligence gathering on behalf of the PRC." That investigation languished in the FBI bureaucracy and the case was closed, with no action taken, in November of that year.

At the same time, the bureau learned that Katrina Leung had a close relationship with the target of another case of suspected technology transfer to China, this one in San Francisco. William Cleveland was the case agent; in Los Angeles, J.J. Smith was assigned to the investigation.

A year later, in August 1982, J.J. knocked on the door of the apartment in Azusa. He identified himself as a special agent of the FBI.

It was the beginning of the dance, an intelligence tango that sometimes ends with the recruitment of a useful source. It might seem astonishing, even reckless, that the FBI would try to recruit someone who it believed might be spying for China. But in "the wilderness of mirrors," as counterintelligence is often called, it was not entirely strange. The recruiter looks for a person who already has contacts with the target. And calculates the risk.

Over the next four months, J.J. interviewed Katrina several times. By December, she had accepted J.J.'s offer.

Soon afterward, according to Kam, "We were sitting by a lake. She said, 'I'm going to quit my job to work for the FBI.'"

Chapter 4

DOUBLE GAME

T
HERE ARE TIMES
when a single act can be a turning point in a life. Everything else that happens flows from that moment. J.J. Smith's recruitment of
PARLOR MAID
was just such a pivotal juncture. He had been a special agent of the FBI for a dozen years. He was thirty-eight; Katrina Leung had just turned thirty-one a month earlier.

J.J. was a big man, almost six feet, stocky and muscular, proud of his blue-collar background. His father was a bricklayer for forty-five years. His grandparents on his father's side were German farmers; his maternal grandmother, who was Mexican, had married a Scotch-Irish fireman.

He and his wife, Gail, a former Daffodil Queen in Washington State, were married in 1966. In the summer of 1967, after graduating from the University of Puget Sound, he was about to be drafted when he encountered a buddy, Doug Walker, who had an idea.

"Let's sign up for Army Intelligence," Walker suggested, "and we'll both end up drinking beer in Germany." Instead, they were trained as intelligence officers and sent to Vietnam. J.J. was assigned to the 515 Military Intelligence Group in Quang Ngai, a Viet Cong stronghold, running double agents in a program code-named 97
CHARLIE
.

Back at Fort Bragg, North Carolina, a local FBI agent in Fayetteville recruited him for the bureau, which he joined in 1970. He wound up in Los Angeles, and by 1975 he was handling Chinese counterintelligence cases.

Foreign counterintelligence, or FCI, in bureau terminology, was not a popular career path inside the FBI. "Young agents out of Quantico, all full of piss and vinegar, they wanted bank robberies, criminal cases," said John L. Hoos, a former FBI agent who worked with J.J. "But J.J. was a rare duck, he went into FCI
and stayed in FCI."

J.J., he added, "was very likable, with a good sense of humor, he was very dedicated to his work, respected by the other agents. He was well versed in Chinese counterintelligence—a walking encyclopedia on cases, procedures. If you had a question, ask J.J."

By the time J.J. recruited
PARLOR MAID
in 1982, he had achieved an unusual degree of independence within the FBI field office. His supervisors indulged him and deferred to his expertise on matters Chinese. Although FBI agents are often moved around, because of J.J.'s stature he was able to remain in Los Angeles. With his wife, Gail, and their young son, Kelly, J.J. settled down in Westlake Village, a comfortable suburb.

Although at first Katrina Leung was only an IA, the FBI's designation for an informational asset, J.J. quickly realized her potential as a bureau source. It did not take long for their professional relationship to turn personal. By August 1983 they had hopped into bed.

One of the reasons that J.J. had recruited Katrina was her friendship from Chicago days with Hanson Huang, who had gone to China to work for Armand Hammer and the Occidental oil company. Although Huang was a loyal pro-PRC activist, the Chinese authorities had, ironically, begun to suspect him, perhaps because of his curiosity about the location and size of the country's oil reserves, matters considered state secrets in China. He was arrested, and in June 1983 convicted of espionage in a Beijing court
and sentenced to fifteen years.

J.J.'s interest in Huang, and the FBI's, was based on more than Huang's activism in the Diaoyutai Islands student movement. For Hanson Huang had emerged as a key figure in
TIGER TRAP
, involving nuclear weapons, which Bill Cleveland was actively pursuing in San Francisco with the help of J.J. in Los Angeles. Now that Huang had run afoul of Chinese intelligence, perhaps he might be willing to help the FBI.

As J.J.'s first major assignment for Katrina,
he instructed her to go to China and try to wangle her way into the prison where Huang was being held. It was a tall order. In a tightly controlled Communist state, how could a foreigner manage to visit a prisoner serving time for espionage? That she accomplished that feat might have been expected to raise an eyebrow both with J.J. and the bureau. It did not; J.J.'s first reporting to headquarters from
PARLOR MAID
was a summary of what she had learned on her prison visit.

I. C. Smith, who was not related to J.J., was then working in the China unit at FBI headquarters in Washington. "J.J. had sent me an airtel and she, Katrina Leung, had all this reporting on her first trip to China in 1983 about Hanson Huang, who was in jail. I said this was a bunch of crap because it's got sex and intrigue and everything but intel. I said, 'Dammit, J.J., where's the fucking beef?'"

"Don't worry, it's coming," J.J. assured him.

I.C.'s annoyance may have been partly rooted in the fact that J.J. seemed to walk on water in the bureau. "J.J. had an LA attitude," I.C. said. "He flaunted the rules. He could get by without wearing a coat and tie. He had this great source, and it made him bulletproof."

By this time,
PARLOR MAID
had graduated to the status of an OA, or operational asset in FBI jargon. As an IA, she provided information to the bureau; as an OA she was given specific tasks. At the same time, Leung was solidifying her contacts in the Chinese American community in Los Angeles.

In March 1984, with J.J.'s help to speed up the paperwork, she became a US citizen. That year, or soon after, Katrina moved into the big leagues as a full-fledged DA, or double agent. The bureau's plan was to let the MSS think she was working for China, while in fact she was directed and controlled by the FBI.
^*

Toward that end, she was encouraged by J.J. to advertise to China her contacts with the FBI and in particular her friendship with him. She was authorized to approach the MSS in Beijing, pretending to be loyal to China. No sensitive information was supposed to be given to her by the FBI, since she was not an employee and would have had a difficult time explaining her access to bureau secrets. But the Chinese, who have been spying for at least twenty-five hundred years, since Sun Tzu wrote the book on espionage, would have quickly understood that she had been recruited by the FBI and dangled to the MSS. And anyone who had a relationship with the FBI was of great interest to the MSS.

On her visits to China,
PARLOR MAID
was also encouraged by J.J. to boast to the MSS and other officials about her growing status in the Chinese American community, since that, too, made her an attractive source for the Chinese intelligence service.

PARLOR MAID
was usually accompanied on her trips to China by her husband and their young son. On her very first trip to Beijing, according to Kam Leung, "she knocked on the door of the MSS.
She was tasked to do this."