One Year Ago — The Bizarre Story of ex-CIA Jerry Chun Shing Lee

“Misunderstandings and neglect create more confusion in this world than trickery and malice. At any rate, the last two are certainly much less frequent.”

Goethe — The Sorrows of Young Werther (1774)

“Some former officials who reviewed the evidence described the case against Mr. Lee as strong but circumstantial, not bulletproof. Some at the C.I.A. argued that officials were too quick to suspect a mole — especially a Chinese-American — when there were other explanations.”

New York Times

“Mr. Lee is not a Chinese spy, he’s a loyal American who served his country in the military and in the CIA.”

Edward MacMahon — Jerry Lee’s attorney

March 7 2018 — A former Central Intelligence Agency officer was arrested at JFK airport on — Monday night — January 15 2018. According to the charges, Mr. Jerry Lee illegally retained highly classified information. But the FBI suspects a bigger crime. The Bureau believes that Lee betrayed the identities of several CIA assets in China.

Although US media have already widely accepted that explanation and most predict that Lee will eventually be charged with treason, I am very skeptical at this point. Firstly, the theory is not satisfactory as it does not, and cannot, explain all the facts. Secondly, alternative explanations — Do you remember the blunders of CIA Operation MERLIN? –appear far more convincing. Thus, I predict that Lee will NOT be charged with treason/espionage.

At an initial appearance in the US district courthouse in Alexandria, Magistrate Judge Ian Davis ordered Lee detained before his preliminary hearing, which was set for March 19 at 2 p.m.

UPDATE May 10 2018 — According to a DOJ Press Release (dated Tuesday, May 8, 2018), Lee has admitted preparing a document containing secret information in response to taskings from Chinese Intelligence officers. Follow us on Twitter: @Intel_Today

RELATED POST: One Year Ago — CIA’s Strategy in the Face of Emerging Challenges

RELATED POST: Former CIA Jerry Lee Case — Why the Disinformation?

RELATED POST: CIA Debacle in China — Former CIA Official : “We Buried the Truth”

RELATED POST: CIA Debacle in China — The Search for “PATIENT ZERO”

UPDATE (March 7 2019) — On May 18 2018, Jerry Chun Shing Lee Case pleaded not guilty  in a Virginia federal court on charges of conspiracy to commit espionage and unlawful retention of classified information.

Judge T. S. Ellis III set a trial date for Jerry Chun Shing Lee for February 12, 2019. Why on earth has no one reported about this trial? Where is Jerry lee? What happened to him?

Interesting details about this case emerged in November 2018, when the UK National Archives declassified a document regarding Barry Cheung Kam-lun.

Lee’s business partner Cheung, who had been a superintendent with the former Royal Hong Kong Police Force, could have been a detainee-turned-middleman for China.

A file among documents declassified by the UK National Archives, titled “Hong Kong Residents Detained in China,” says a Hongkonger bearing the same name as Cheung was intercepted in Shenzhen across the border on June 11, 1992, and transferred to a detention center in Quanzhou in the southeastern province of Fujian, when Cheung was working for the Michigan-based private security company Pinkerton.

The reason for Cheung’s arrest was an investigation he had been commissioned to conduct by Kodak a year earlier to monitor manufacturers of counterfeit Kodak film in Fujian.

Cheung was injured in prison fights after his fellow inmates in a Quanzhou prison were asked by the warden to “treat him well,” according to the file.

In a forced confession after more than a week of interrogation about his work and family background, Cheung stated that his investigation “was done out of lack of respect for the Chinese authorities.”

Back in Hong Kong, Stephen Bradley, political adviser to the colonial authorities, persuaded the government to mount an operation in a bid to rescue Cheung, and even contacted the Hong Kong office of the Xinhua News Agency, which was then Beijing’s de facto consulate in the British colony.

Cheung’s employer Pinkerton also sent people directly to Quanzhou to negotiate for his release.

Cheung was then allowed to return to Hong Kong on June 22, 1992, albeit with a reminder from the local national security bureau that he must remember what to do for the sake of his family members living in China.

Copies of declassified files about Cheung’s detention in China and the colonial Hong Kong government’s internal memos.

A letter sent by Pinkerton to ‘express sincere appreciation and gratitude’ to Stephen Bradley, political adviser to the colonial Hong Kong government, after Cheung’s release.

More than two decades later, it transpired that Cheung had been acting as Beijing’s intermediary and was heavily involved in Lee’s case since the two founded a detective agency in Hong Kong in 2009, two years after Lee ended his tenure as a CIA case officer.

Cheung conveyed to Lee letters and gifts from Beijing as well as its interest in the CIA’s operations, and arranged a dinner for him to meet Chinese agents in Hong Kong in 2010.

In return, Lee had been feeding Beijing names and US defense intelligence, as well as floor plans of a vital CIA facility outside the US, according to Lee’s indictment.

But Cheung has not been charged by the US Department of Justice, while Lee’s case will be heard in February. (MENAFN – Asia Times)

END of UPDATE

The Affair

The case is thought to be linked to the crippling of the agency’s spy operation in China. The affair ranks among the worst intelligence failures in U.S. history.

Between 2010 and 2012, some 20 CIA informants in China have been killed or jailed. In 2012 the FBI and the CIA began investigating the disappearance of CIA agents in China.

And now, the FBI has concluded — and US media already ‘know’ — that the ex-CIA agent betrayed the Agency. The Bureau believes that Jerry Lee gave the identities of local informants to the Chinese, who then carried out a systematic and deadly operation to break the network.

“There are many CIA officers, current and former, cheering this news tonight. But it may be a very difficult case to prove.”  [Shane Harris, WSJ]

The Evidence

In August 2012, Lee and his family travelled from Hong Kong to Virginia and Hawaii. FBI agents searched his hotel rooms and found two small books containing handwritten notes that contained classified information.

The books include true names and phone numbers of assets and covert CIA employees, operational notes from asset meetings, operational meeting locations and locations of covert facilities.  [US DOJ release]

According to an anonymous FBI investigator:

“The disclosure [of this information] could have caused exceptionally grave damage to the national security of the United States.”

The Arrest

Mr. Jerry Lee, a U.S. citizen who was living in Hong Kong, used to maintain a top-secret clearance and began working for the CIA in 1994. He was held at JFK airport on January 16 2018 as he arrived in the US from Hong Kong.

“Affidavit in case against former CIA agent Jerry Lee says he wasn’t immediately arrested as he arrived at JFK from Hong Kong Monday.

Looks like FBI tried questioning him first. Questioning a suspect in customs would be legally dicey unless Mirandized.

Seems like FBI waited, hoping he’d solve some of the mysteries of his case for them.” [Josh Gerstein, Politico]

Lee has not been charged with espionage but for “unlawful retention of national defence information.” Still, the former CIA officer faces a maximum penalty of 10 years in prison, if convicted.

“One government official said there was no plan at the moment to charge Mr. 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.” [NYT]

So for now, keep in mind that Lee is NOT charged with treason or espionage. We have been ‘there’ before…

In the 1990s, Brian J. Kelly — a CIA officer — was wrongly suspected by the F.B.I. of being a Russian spy. FBI agent Robert Hanssen was later apprehended and convicted of spying against the United States. Kelley was then exonerated and eventually  received the Distinguished Career Intelligence Medal for his service.

And, as noted by the NYT,  the Justice Department’s efforts to unearth Chinese spies have suffered “embarrassing setbacks”, including dropped charges against prominent Chinese-Americans.

Other Possible Explanations

China may have cracked the C.I.A.’s system for communicating with its informants.

“The agency has encountered similar problems in other countries. Some investigators believed the technology is/was too clunky to stand up to China’s sophisticated computer specialists.”

CIA officials in Beijing may have been sloppy.

 “They could have been allowing themselves to be identified when meeting with their informants.”

And of course, a combination of these — and other — factors could account for the damage.

Questions

In court filings, the DOJ doesn’t mention any breaks in the case since 2012. So if there wasn’t enough to arrest Lee then, why was he arrested now?

Why wasn’t Lee immediately arrested as he arrived at JFK from Hong Kong?

He was charged with crimes far less serious than what he is suspected of. So how confident are investigators that Lee was a mole? Will the charges be increased at a later date?

The CIA and the FBI know that Lee cannot be responsible for the fiasco as he only had knowledge of some of the informants. Why then would they suggest to the US media that he betrayed all of them? And why are they silent on the fact that the UK foreign intelligence agency has also suffered a similar setback at about the same time?

Flashback — CIA Operation Merlin

In his book “State of War“, New York Times reporter James Risen revealed the bungles and miscalculations that led to a spectacular intelligence fiasco.

“She had probably done this a dozen times before. Modern digital technology had made clandestine communications with overseas agents seem routine. Back in the cold war, contacting a secret agent in Moscow or Beijing was a dangerous, labour-intensive process that could take days or even weeks.

But by 2004, it was possible to send high-speed, encrypted messages directly and instantaneously from CIA headquarters to agents in the field who were equipped with small, covert personal communications devices.

So the officer at CIA headquarters assigned to handle communications with the agency’s spies in Iran probably didn’t think twice when she began her latest download. With a few simple commands, she sent a secret data flow to one of the Iranian agents in the CIA’s spy network. Just as she had done so many times before.

But this time, the ease and speed of the technology betrayed her. The CIA officer had made a disastrous mistake. She had sent information to one Iranian agent that exposed an entire spy network; the data could be used to identify virtually every spy the CIA had inside Iran.

Mistake piled on mistake. As the CIA later learned, the Iranian who received the download was a double agent. The agent quickly turned the data over to Iranian security officials, and it enabled them to “roll up” the CIA’s network throughout Iran. CIA sources say that several of the Iranian agents were arrested and jailed, while the fates of some of the others is still unknown.

This espionage disaster, of course, was not reported. It left the CIA virtually blind in Iran, unable to provide any significant intelligence on one of the most critical issues facing the US – whether Tehran was about to go nuclear.”

Tang Chao — The Chinese Mole Hunter

Following the New York Times’ revelations about the loss of CIA sources who were arrested or executed by the Ministry of State Security (Guoanbu), Intelligence Online revealed the role of Tang Chao, special aide to the minister.

This highly secretive master spy has the job of coordinating the hunt for moles in the Guoanbu.

The Chinese authorities’ favourite weapon for “neutralizing” sources working for foreign intelligence services remains the corruption investigation. This was the case for former Guoanbu number two, Ma Jian, who was arrested last year.

Ma was head of the ministry’s Department 8, which was in charge of “offensive” counter-espionage – which is to say manage double agents.

But it would seem that it has not just been American intelligence networks which have been taken down in recent years.

According to our information, Britain, which has not had much of a presence in China since the hand-over of Hong Kong, has lost several informants and agents over the last three years.”

UPDATE (May 10 2018) — Former CIA Jerry Lee was charged with one count of conspiracy to gather or deliver national defence information to aid a foreign government and two counts of unlawfully retaining documents related to national defence, according to a statement from the department of justice. (May 8 2018)

According to prosecutors, two Chinese intelligence officers approached Mr. 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. (…)

Prosecutors said Mr. 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.” (NYT)

“When government officials violate their oath to defend our nation and protect its secrets, [we] will hold them accountable,” US assistant attorney for national security general John Demers said.

Court documents made public Wednesday (May 9 2018) said the Chinese spies told Lee they had prepared “a gift of $100,000 in exchange for his cooperation and that they would take care of him for life.”

“The new charges stop short of explicitly accusing Lee of giving classified information to the Chinese. Instead, they say he agreed to do so, received repeated requests from the Chinese, and made hundreds of thousands of dollars in cash deposits to his personal accounts, even though a business he was operating at the time was failing.” (NBC News)

The indictment does not address any effects of Mr Lee’s alleged espionage. The former CIA officer continues to maintain his innocence. If convicted, Lee could spend the rest of his life behind bars.

“I don’t think there’s any evidence that Mr. Lee was a spy for China, and we look forward to proving that at trial,” defense attorney Ed MacMahon said.

The US media have reported that the FBI believes that the material found in his Hawaii Hotel room in August 2012 (See Timeline below) was prepared at the request of his Chinese handlers.

According to a DOJ Press Release (dated Tuesday, May 8, 2018), Lee has admitted preparing a document containing secret information in response to taskings from Chinese Intelligence officers.

In August 2012, Lee and his family left Hong Kong to return to the United States to live in northern Virginia.  While traveling back to the United States, Lee and his family had hotel stays in Hawaii and Virginia.  During each of the hotel stays, FBI agents conducted court-authorized searches of Lee’s room and luggage, and found that Lee was in unauthorized possession of materials relating to the national defense.  Specifically, agents found two books containing handwritten notes that contained classified information, including but not limited to, true names and phone numbers of assets and covert CIA employees, operational notes from asset meetings, operational meeting locations and locations of covert facilities.  Agents also found a thumb drive on which was stored a document later determined to contain information classified at the Secret level.  During voluntary interviews with the FBI, Lee admitted preparing the document in response to taskings from the IO.

The situation is rather confusing. If true, why is Mr Lee’s attorney saying that there is no evidence that his client was a spy for China? Perhaps, even more troubling, why did the FBI/DOJ waited so long before acting if they had such incriminating evidence all along?

And why was he not charged with the main crime immediately when he was arrested? Finally, if Lee was tasked to deliver information to China and was actually paid by Chinese Intelligence officers, why is he charged with “conspiracy to deliver” secret information and not for the actual crime of delivering this information?

This case was investigated by the FBI’s Washington Field Office.  The case is being prosecuted by Trial Attorneys Adam L. Small and Patrick T. Murphy of National Security Division’s Counterintelligence and Export Control Section, and Assistant U.S. Attorney Neil Hammerstrom of the Eastern District of Virginia.

END of UPDATE

Jerry Chun Shing Lee — Short Bio & TIMELINE

Jerry Chun Shing Lee (about 53-year-old) — also known as Zhen Cheng Li — is a US citizen (Naturalization)

Born 1964

 1982-86 –Lee serves in the US Army

1992 —  Graduation (International business management) at Hawaii Pacific University

1993 — Lee receives a master’s degree in human resource management

1994 to 2007 — Officer in the CIA. His job “was helping to recruit foreign spies to spill secrets to the United States.” Lee is trained in covert communications, surveillance detection, recruitment, and the handling and payment of assets (agents or informants). Lee is said to have left the CIA discontented after his career plateaued. At the time of his resignation, Lee was the second secretary at the US Embassy in Beijing, China.

2007 — Lee starts working on the brand integrity team at Japan Tobacco International in Hong Kong, responsible for investigating smuggling and counterfeiting of tobacco. In 2009, the company terminated his contract.

June 2010 — Lee decides to set up his own company to do investigations. That company, FTM International, was created in June 2010 and dissolved in September 2014.

2010: Information gathered by the US from sources deep inside the Chinese government bureaucracy start to dry up. CIA informants in China begin to disappear. In all, 18-20 in total are killed or imprisoned between 2010 and 2012

2011: It is not clear whether the CIA has been hacked or whether a mole has helped the Chinese to identify agents

2012: CIA and FBI begins the investigation. “How did the names of so many C.I.A. sources, among the agency’s most dearly held secrets, end up in Chinese hands?”

August 2012: Lee and his family travel from Hong Kong to Virginia and Hawaii. FBI agents search his hotel rooms and find “two small books containing handwritten notes that contained classified information, including but not limited to, true names and phone numbers of assets and covert CIA employees, operational notes from asset meetings, operational meeting locations and locations of covert facilities.”  [ US DOJ release]

2013: The FBI questions Lee five times but does not arrest him. The FBI, meanwhile, continues the investigation.

Summer 2013 — Lee returns to Hong Kong with his family

June 2013 — Lee joined the cosmetics company Estée Lauder in Hong Kong, working there until September 2015.

May 2014: Five Chinese army officers are charged with stealing trade secrets and internal documents from US companies. Later that same month, China says it has been a main target for US spies

2015: CIA withdraws staff from the US embassy in Beijing, fearing data stolen from government computers could expose its agents

May 2016 — Lee is working for Christie’s auction house in Hong Kong in a security capacity

April 2017: Beijing offers hefty cash rewards for information on foreign spies

May 2017: Four former CIA officials tell the New York Times that up to 20 CIA informants were killed or imprisoned by the Chinese between 2010 and 2012

June 2017: Former US diplomatic officer Kevin Mallory is arrested and charged with giving top-secret documents to a Chinese agent

January 15 2018: Former CIA officer Jerry Chun Shing Lee is arrested

January 16 2018– Lee appears in court in New York, charged with unlawful retention of national defense information. The New York Times reports that he is the suspected mole.

Fox News senior judicial analyst Judge Andrew Napolitano

 

How a crippling intelligence loss led the CIA on a mole hunt 

Jerry Chun Shing Lee, a former CIA officer, was arrested this week on charges of mishandling classified information.

A massive mole hunt inside the agency has been on for years for the person who may have helped the Chinese government roll up a significant piece of the U.S. spying network in that country.

John Yang learns more from Adam Goldman of The New York Times.

REFERENCES

Ex-CIA officer arrested for retaining classified information — Reuters

Arrested ex-CIA agent was fired from tobacco firm after suspicions he was spying for China — SCMP

How the CIA’s spy network in China collapsed — AXIOS

Chine/Etats-Unis : jeux d’espions — TTU

Ex-C.I.A. Officer Indicted in Dismantling of U.S. Informant Network in China — NYT (May 8 2018)

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The Bizarre Story of ex-CIA Jerry Chun Shing Lee

The Bizarre Story of ex-CIA Jerry Chun Shing Lee [UPDATE]

One Year Ago — The Bizarre Story of ex-CIA Jerry Chun Shing Lee

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