A Tale of Wireless Transmissions, Invisible Ink

NEW YORK — They sometimes worked in pairs and pretended to be married so they could blend in as the couple next door while working as spies in a throwback to the Cold War, complete with fake identities, invisible ink, coded radio transmissions and encrypted data to avoid detection, authorities say.

Assistant U.S. Attorney Michael Farbiarz, speaking Monday in federal court in Manhattan, called the allegations against 10 people living in the northeastern United States "the tip of the iceberg" of a conspiracy of Russia's Foreign Intelligence Service, the SVR, to collect inside U.S. information, the biggest such bust in recent years.

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 upon conviction. 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 upon conviction.

The FBI said it intercepted a message from SVR's headquarters, Moscow Center, to two of the 10 defendants describing their main mission as "to search and develop ties in policymaking circles in U.S." Intercepted messages showed that they were asked to learn about a wide range of topics, including nuclear weapons, U.S. arms control positions, Iran, White House rumors, CIA leadership turnover, the last presidential election, Congress and the political parties, prosecutors said.

"The FBI did an extraordinary job in this investigation," U.S. Attorney Preet Bharara said in a statement.

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 the hollowed-out nickels used by captured Soviet Colonel Rudolf Abel in the 1950s to conceal and deliver microfilm.

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, prosecutors said. The FBI undercover agents gave each an espionage-related delivery to make. Court papers indicated that Semenko made the delivery as instructed but apparently Chapman didn't.

Another defendant was a reporter and editor for a prominent Spanish-language newspaper videotaped by the FBI contacting a Russian official in 2000 in Latin America, prosecutors said.

Foreign Policy Intelligence

Intelligence on Obama's foreign policy, particularly toward Russia, appears to have been a top priority for the Russian agents, prosecutors said.

In spring 2009, court documents say, conspirators Richard and Cynthia Murphy, who lived in New Jersey, were asked for information about Obama's impending trip to Russia that summer, the U.S. negotiating position on the START arms reduction treaty, Afghanistan and the approach Washington would take in dealing with Iran's suspect nuclear program. They also were asked to send background on U.S. officials traveling with Obama or involved in foreign policy, the documents say.

"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 wanted reports that "should reflect approaches and ideas of" four sub-Cabinet U.S. foreign policy officials, they say.

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 active in politics.

In response, Moscow Center 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.

The Murphys lived as husband and wife in suburban New Jersey, first Hoboken, then Montclair, with Richard Murphy carrying a fake birth certificate saying he was born in Philadelphia, authorities said.

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

One defendant 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 defendant's intelligence report said.

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, prosecutors said. 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 Russian agents using mobile wireless transmissions between laptop computers, which has not previously been described in espionage cases brought in the United States: 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 Defendants

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

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.

Aside from the Murphys, three other defendants also appeared in federal court in Manhattan — Vicky Pelaez and Juan Lazaro, who were arrested at their Yonkers, New York, residence, and Chapman, arrested in Manhattan on Sunday.

A federal magistrate ordered the Murphys, Lazaro, Pelaez and 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 and worked for several years for El Diario/La Prensa, one of the country's best-known Spanish-language newspapers. She is best known for her opinion columns, which often criticize the U.S. government.

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 complaint.

Pelaez was born in Cusco, southeast of Lima, and worked as a journalist for the defunct daily La Prensa de Lima and later for a television station, where she gained notoriety among local journalists. On Dec. 8, 1984, Pelaez, who worked for Frecuencia Latina, was kidnapped for a day and interviewed a leader of the Tupac Amaru Revolutionary Movement. The interview wasn't broadcast on television, but the following year it appeared in Marka, a newspaper with leftist leanings.

Lazaro and Pelaez discussed plans to pass covert messages with invisible ink to Russian officials during another trip Pelaez took to South America, a complaint said.

The complaint alleges that authorities overheard an unguarded Lazaro once saying in his home, "We moved to Siberia … as soon as the war started."

Waldo Mariscal, Pelaez's son, said his mother was innocent.

"This is a farce. We don't know the other people," he said, referring to the others who have been accused.

Robert Krakow, an attorney for Lazaro, said after the court hearing that his client was innocent and that the information in the complaint "had no value."

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

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

Prosecutors countered that Chapman was a flight risk, calling her a highly trained "Russian agent" who is "a practiced deceiver."

Two other defendants, Michael Zottoli and Patricia Mills, were arrested at their Arlington, Virginia, residence. Also arrested at an Arlington residence was Semenko.

Zottoli, Mills and Semenko appeared before U.S. Magistrate Theresa Buchanan on Monday afternoon in Alexandria, Virginia, the U.S. attorney's office said. The hearing was closed because the case had not yet been unsealed in New York. The three did not have attorneys at the hearing, U.S. attorney spokesman Peter Carr said.

In Arlington, where Zottoli and Mills lived in an apartment, 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 Cambridge, Massachusetts, residence on Sunday. They appeared briefly in Boston federal court Monday. A detention hearing was set for Thursday.

A message left after business hours with Heathfield's public defender, Catherine Byrne, was not immediately returned. A telephone number for Foley's attorney could not be found.

An 11th defendant, Robert Christopher Metsos, who was accused of delivering money to the agents, was detained Tuesday in Cyprus.

Cypriot police spokesman Michalis Katsounotos said Metsos, 54, was arrested early Tuesday at Larnaca airport trying to fly to Budapest, Hungary.

Katsounotos said Metsos' arrest was based on an Interpol arrest warrant.

The suspect appeared in a Larnaca court, which ordered Metsos released on 20,000 euros ($24,700) bail after surrendering his travel documents. The court also ordered Metsos to report to a Larnaca police station once a day.

Katsounotos says Metsos will remain on the island for one month until extradition proceedings begin.