NBC Universal Anchors and Correspondents
By Dennis Murphy Correspondent
NBC News
updated 7/12/2010 4:08:27 PM ET 2010-07-12T20:08:27

This report aired on Dateline Friday, July 10.  It will not be available online.

Part 1

They could have been your neighbors...

UNIDENTIFIED MAN: They seemed to be nice people.

...with houses, jobs, even families. But there was a secret in those suburbs.

PETER EARNEST: This network, we've never seen anything like this before.

Tonight, we take you inside a 21st century Russian spy ring, complete with encrypted codes, fake passports, buried cash, even a real life femme fatale.

ANNA CHAPMAN: My name is Anna Chapman.

ALAN FURST: The Mata Hari of the crew.

A secret agent for the digital age.

ANNA CHAPMAN: It was kind of very personal when I first had an idea to do this.

Superpower threat or international embarrassment?

PETER EARNEST: Putin may be tearing his hair out.

And she was the weak link.

ERIC O'NEILL: She made some serious mistakes.

One mistake was fatal, walking right into an FBI trap.

ERIC O'NEILL: She gets a cold call from an FBI asset.

This was a bit of an adrenaline rush for her.

The truth revealed. Just who were these spies among us?

JONATHAN DIENST: And he says my real name is...Vladimir Guryev.

The lightning quick deal, the swap in Vienna, the cold embrace of mother Russia. What's the summer thriller's next chapter?

ANNA CHAPMAN: It's something far more challenging.

The inside story of The Spies Next Door.

Part 2

ANN CURRY: Good evening and welcome to Dateline. I'm Ann Curry. It's a story with all the intrigue, lies and betrayal of a Cold War thriller, but this great power drama unfolded in just the last two weeks. 10 deep-cover agents for Russia swept up from leafy American suburbs and city streets were hustled back to Moscow just days ago in exchange for four men in prison for spying for the West. Dennis Murphy follows the trail of the spies among us.

Spies, married with children, some of them. Russians, most of them with counterfeit identities.

Unidentified Man #1: It's 20 years after the Cold War, but spying never ends.

Living in is the suburbs for years, sending their kids to school, all the while spying on behalf of Moscow Center back in mother Russia.

PETER EARNEST: Putin may be tearing his hair out for all I know...at this point, what's left of it.

2010 – the Cold War a moldering history lesson. What secrets could the Russians have been after that they couldn't find out more easily online? And what role did the come-hither-looking redhead play, Anna, quickly dubbed the Bond girl of the piece.

ALAN FURST: Ah, yes, the Mata Hari of the crew.

And a cover girl for the newspapers.

ANNA CHAPMAN: It's really making me hot, this one.

Unidentified Man #2: Oh, I'm so sorry.

And that's her, Anna, the young woman around town. But the government said Anna was a secret agent for the Russians. Anna Chapman and The Spies Next Door, threat to the United States or a welcome summer rerun
of a blast from the past? Maybe the continuing adventures of Boris and Natasha… A Maxwell Smart and Agent 99 return. What could the Russians have been thinking? In the 1950s, there was no doubt growing up in America who the enemy was: the Russians, those Soviets in Red Square with their boxy suits and steel teeth. They had the bomb. And the American couple, the Rosenbergs, were executed for passing on secrets that helped them build one. Writer Alan Furst, a Manhattan schoolboy then, remembers vividly thinking that the
Russians were coming.

ALAN FURST: I just grew up believing that Russia was a threat, that the Soviet Union was a threat.

It was a real threat when your teacher said, "Take cover!"

ALAN FURST: You know, it was done that suddenly.

You had to go scrambling under the desk. Senator Joe McCarthy meanwhile stirred the pot of the red scare. It was a tense but simpler world in some ways back then.

Unidentified Reporter: Already an iron curtain had dropped around Poland, Hungary, Yugoslavia.

There was the East and the West. And spies from both sides were dispatched to figure out what skullduggery the other side was up to – spies who were sometimes caught and tried. American Gary Powers shot down over the Soviet Union in his U-2. The West nabbed some of theirs and sometimes swaps, spy for spy, were arranged at a Berlin checkpoint, all part of an ongoing game of very serious cat and mouse that both sides understood.

PETER EARNEST: One of the things that agents are careful about is trying not to be caught with a lot of spy stuff.

At the International Spy Museum in Washington, D.C., Peter Earnest, a retired career CIA officer with clandestine experience, presides over displays of miniature cameras, phone bugs, and all the other tools of the espionage trade going back hundreds of years.

The former spy found that ferreting out secrets was both vital to the nation and a kick to the operatives who carried it out.

PETER EARNEST: Engaging in covert intelligence gathering, there is a thrill to that. It's part of that hidden agenda. It's having that very secret life that no one else knows about.

With the sudden demise of the Soviet Union and the collapse of the Eastern Bloc in the fall of 1989, the bad old days of the Cold War appeared to be just another chapter in history. The Soviets became the Russians. Moscow exploded with monied capitalists, filthy rich entrepreneurs intent on making up for lost time. The party was on, and it wasn't the Communist Party.

So, last month, when Russian President Dmitry Medvedev visited President Obama, it was all very low key. Nothing eyeball to eyeball about having a burger together in a crowded lunch spot… Weren't they like every other friendly nation? And then – whoops.

BRIAN WILLIAMS: The Justice Department said today 10 people have been arrested on charges of spying for Russia.

After almost a decade of surveillance, the FBI's counterintelligence agents had rolled up a spy ring of 10 individuals living in the United States, most of them Russian, all but three living under false names. An 11th person was being sought overseas.

PETER EARNEST: This network, we've never seen anything like this before in my memory.

A band of people said to be spies that looked just like us and blended in. In Yonkers, just outside of New York City, a columnist for the country's oldest Spanish language daily paper, Vicky Pelaez, and her political science professor husband, who was using the assumed name Juan Lazaro, were arrested.

UNIDENTIFIED MAN #3: To have Russian spies around the corner from you, like, you know, it's—you always see that in movies.

Across the river in suburban Montclair, New Jersey, Richard and Cynthia Murphy – false names – a couple with two girls, ages seven and 11, were picked up. He seemed to stay at home mostly while she worked as
a financial planner.

UNIDENTIFIED MAN #4: They seemed to be good parents and nice people.

Outside Boston, Donald Heathfield and Tracey Lee Ann Foley, phony names both, turned out not to be Canadians, as they’d told the neighbors. They have two sons, a 20-year-old in college and a 16-year-old.

UNIDENTIFIED WOMAN: And I literally just live right around the corner, so who knew?

Another pair of Russians using the fake names Michael Zottoli and Patricia Mills were arrested at their apartment house in Arlington, Virginia, outside the capital. They'd formerly lived in Seattle, and have two children. The older, a son, is three. Nearby lived Mikhail Semenko, a single guy around the D.C. suburbs, a travel agent fluent in four languages. And indicted as the paymaster for the ring was a Russian intelligence agent living outside the country and traveling under the assumed name of Christopher Metsos. 

And finally, there was the face who would become the star of the whole shebang, 28-year-old Russian-born Anna Chapman.

ANNA CHAPMAN: I will shop. I will have a business meeting at 2:00.

She worked in New York City as an online real estate agent, and her social networking sites were plastered with glamorous photos of herself.

Federal agents said the people arrested had been recruited by the intelligence agency that succeeded the old Soviet KGB. They were trained in spycraft, according to the charges against them, and sent to America to become long-term secret agents, living for all the world as the people next door, but with the real mission of developing contacts in the "policy-making circles of the US." Now, in spy jargon, agents like that are called illegals because, for the most part, they're not working under their real names and don't have the traditional spy game cover of a diplomatic posting.

ERIC O'NEILL: Illegals are the worst kind of spy. Hardest to spot, hardest to catch and the most insidious,  because you don't know what they're doing, you don't know where they're going.

Eric O'Neill was an undercover FBI operative for five years. He was key in bringing down the notorious FBI spy Robert Hanssen. An unanswered question is how the government got onto the spies here in the first
Place: O'Neill has three theories.

ERIC O'NEILL: The first, of course, is source information from overseas. The other way, it could be just good old-fashioned surveillance work. The third way, of course, is one of these illegals could have sold out, could have decided, “I like the life in America.”

Whether there is an illegal who sold out the others we don't know. But what's certain is that none of the Russians seemed aware that the FBI had been bugging their homes, reading their computers, and surveilling them with cameras and microphones for years and years.

PETER EARNEST: But you have had one of the world's top counterintelligence organizations, the FBI, cover these people like a blanket for the better part of the decade.

In the end, they were charged with something less than being spies. They were accused of violating federal law by acting as unregistered agents of a foreign government. There were also money laundering charges, but curiously no citations of secrets compromised and sent on to their handlers in Russia. So what were “The Spies Next Door” all about? It would make for a good summer movie.

EUGENE KASEVIN, RUSSIAN BUSINESSMAN: She's a bright girl, very entrepreneurial.

Sex in the city? Anna storms Manhattan.

ROBERT BAUM: And, yes, she had a social life… I don't think she did anything different than any single 28-year-old woman would do in the city.

Or did she?

Part 3

Moscow by the end of the 1990s had survived the sometimes chaotic presidency of Boris Yeltsin, and a career old school KGB man, Vladimir Putin, had replaced him. And, according to complaints filed in US District
Court, it was sometime in the '90s that Russia's spy headquarters, Moscow Center, recruited and trained a group of men and women who agreed to live in deep cover in the United States and report back covertly on what they learned. They were known in the spy trade as illegals. Former CIA man Peter Earnest
can't recall a network of spies quite like this one, 10 secret agents linked in some way.

PETER EARNEST: It certainly looks like they dealt with one another or were aware of one another. That, to many people in intelligence, seems incredibly sloppy.

With forged passports and papers, provided with phony biographical back stories known as their legends, the rookie spies were assigned a partner, male, female, and instructed to make their way to America and blend in, get a house, get a car, have kids together, chat with the neighbors. A completely fake life, all of it willed and paid for by Moscow Center.

ANNA CHAPMAN: My name is Anna Chapman. You want me to spell it? C-h-a-p-m-a-n.

Anna Chapman was, according to the feds, one of the few using her true name. Her life story hadn't been manufactured.

EUGENE KASEVIN: She's a bright girl.

Eugene Kasevin, a wealthy Russian businessman, met Anna in London in 2007.

Mr. KASEVIN: She was very similar to many other girls from Russia or Ukraine… or Eastern Europe who were, and still are, doing their best to excel.

And Anna made new friends when she moved to New York City to set up her business, finding Russians places in Manhattan to live.

ANNA CHAPMAN: The name of my company is Property Finder.

Robert Baum would later briefly become Anna's defense lawyer.

ROBERT BAUM: She worked out of her home. She spent hours establishing her business. And yes, she had a social life. I don't think she did anything different than any single 28-year-old woman would do in the city.

ANNA CHAPMAN: Now I know a lot of people introduced me to someone else, and those introduced me to someone else, so now I know where to go if I have—if I have something to solve.

But the authorities believed Anna had a secret life. What she and the others didn't know was that the FBI was all over them, watching, bugging, tailing.

These illegals were different kinds of spies. They weren't expected to recruit another Alder James or Robert Hanssen who'd sell the Russian secrets for money. Their instructions were basically to get to know people who might be useful down the line, someone the illegals could identify for the real spy pros back in Moscow as a potential target for grooming. As it played out, though, it seemed that these suburban spies weren't much more than chit-chatterers.

ALAN FURST: There's a phrase for this kind of thing. It's called salon intelligence, which is very, very descriptive. It's just talk, gossip, that sort of thing.

Alan Furst, a one-time duck-and-cover schoolboy, went on to write 11 best-selling spy novels set in the Europe of the second World War. These real-life spies perplex him.

DENNIS MURPHY: What could the Russians have been thinking with this?

ALAN FURST: What they had in mind, I think, is this: This person gets a job at a major university, and they get to know someone in the political science department, and then that person turns out to be an adviser to one of the political candidates, and that political candidate gets into office. And this person now begins to know interesting things. I think that's the ideal. I don't think that happened.

DENNIS MURPHY: Infiltrate through the wine and cheese circuit and—


DENNIS MURPHY: —partners at dinners?

ALAN FURST: Yeah. How else could you do it?

And how difficult must infiltration have been when you're operating covertly out of a perfectly pleasant suburban house in Montclair, New Jersey, as the couple known as the Murphys were? They were raising two
daughters together and, reportedly, neither child knew that their parents were A: Russian, and B: spies. None of the neighbors suspected a thing.

JONATHAN DIENST: They never did anything out of the ordinary. I mean, there was nothing that was, like, suspicious or anything that was odd.

The federal complaint makes for fascinating detailed reading about the life of the Russians in America. How FBI bugs planted in the Yonkers home picked up the distinctive clicking of a coded signal, a radiogram being received likely from Moscow Center. The couple there was also heard talking about using invisible ink. In a Seattle apartment, agents saw an old-fashioned spy tool, a shortwave radio. And the Boston-area couple had more cutting edge gadgetry: Software capable of decoding otherwise unseen information embedded within images on publicly available Web sites.

ERIC O'NEILL: Anyone who had the key to decrypt those pictures could do it. But one, you'd have to know that picture was actually spy tradecraft, and two, you'd have to have the key to decrypt it even if you knew that. And don'tblab to your wife about exactly about what you're doing because you never know who's listening.

And on and on the complaint reads, ticking off the circle's amateurish missteps. Most of the details are about Richard Murphy of New Jersey in particular: He was the whiner of the group. And the story hinted at in the complaint is that the life of these spies was nothing like you'd see in a James Bond movie. No Aston Martins for this crowd. Coming up, the intrigue thickens. Bags of cash, buried bills and an encrypted scolding from Moscow.

PETER EARNEST: We paid for your education...we got you the house. Now don't forget your mission.

Part 4

When you're a suburban spy next door and Russia is the home office, a glamorous lifestyle is not part of the deal…if you read between the lines on the federal complaint. Take the man calling himself Richard Murphy from New Jersey, the Rodney Dangerfield of the spy ring: In videotaped surveillance going back eight years, federal agents followed him to a restaurant in Queens, New York, where he met Metsos, the Russian paymaster, the 11th person in the indictment. After listening to Murphy's bellyaching about being underpaid and underappreciated, Metsos handed him a black bag that the feds say had $40,000 in it. Two years later, FBI agents videotaped Metsos again, this time getting a bag of money from a person later identified by feds as a Russian official from its United Nations mission.

Now, some of the stuff in the investigation you just can't make up. Later that same day, the paymaster drove to upstate New York and buried some of the money in a hole in the ground. The feds tracked it all by GPS. And their cameras were rolling a full two years later when the illegal couple from Seattle turned up and dug the buried money up. Now, what was Moscow getting for all these bags of cash? Apparently, not much.

The Boston couple, for instance, allegedly cozied up to a maybe sympathetic student, code name "Farmer," and an unnamed scientist working at a government weapons research facility. Neither contact apparently went anywhere. The husband in Yonkers, meanwhile, was overheard complaining to his wife about Moscow handlers regarding his output as junk. They wanted him to source his information and he couldn't.

PETER EARNEST: And so the other one said, “Well, just put down the name of a politician, any one of them.”

In other words, just make something up. Moscow Center was improbably asking Cynthia Murphy in New Jersey questions they could have answered for themselves by reading the op-ed page of The New York Times. Before an Obama trip to Russia in 2009, they pressed their Montclair, New Jersey, operative for a brief on the US position with respect to a new strategic arms limitation treaty, Afghanistan and Iran's nuclear program. As we said, subscribe to a newspaper. 

In 2005, the FBI had gotten a court order and found on a table in an apartment where the couple used to live a double secret password, one that would unlock over 100 encrypted files between the Murphys and Moscow Center. To read the federal charges is to understand that whatever this decade-long secret mission was all about, it was not a great moment in spy history. Instead of relaying useful information to their bosses, the Murphys are encrypting complaints about their desire to be home owners, only to be reprimanded by Moscow, as a former CIA agent reads between the lines.

PETER EARNEST: “We paid for your education, we gave you this training, you know, got you the house and so forth, now don't forget your mission, to get in and mingle among the so-called policy makers.” So, to me, that acts as sort of a “Let's get on with the work here.”

Writer Alan Furst can imagine the scheme coming together in the topsy-turvy days of the mid '90s when the old KGB was out and something new was expected to take its place.

ALAN FURST: And what I thought to myself is, this may be some new guy in the office. He's got a new office, but it's the office that spies on America. So he sits there for a few months and finally the phone rings and somebody says, “Well, are you going to do anything?” …And he says “I'm going to have long-range, deep-cover illegals, a bunch of them,” which, to be quite honest with you, means that he doesn't have to show success for an astonishing number of years.

DENNIS MURPHY: So your theory in this could be that this is a bureaucracy looking for fodder.

ALAN FURST: Of course.

DENNIS MURPHY: Paper to pass along to the next guy up the line.

ALAN FURST: Of course.

DENNIS MURPHY: “Here's what my guy in Montclair, New Jersey, is telling me.”

ALAN FURST: Right. Right. But we're sending him and then we don't expect to hear from him anything productive for several years. In other words, this is spying just to make the wheels go around and to make sure that office 141-A remains in existence. We're all in office 141-A, you know, I mean, we have to do something, we have to show that we're working and we have to produce something.

And then there was Anna of the red hair, who quickly took center stage of this increasingly freaky and sometimes hilarious summer reality show, “The Spies Next Door.” If the spy world was humdrum in New Jersey, Anna over in Manhattan, was having an exhilarating time of it. After a summer of bad news – the BP spill, endless recession – what a welcome diversion it was to have a hottie alleged spy to talk about. Coming up...

ANNA CHAPMAN: It was kind of very personal when I first had an idea to do this.

...ambitious Anna, the siren at the center. Was the newest spy also the weakest link?

ERIC O'NEILL: At the end of the day she made some serious mistakes.

Part 5

From Mata Hari, the femme fatale spy of World War I, to the fictional babes that romped through Bond movies, the female spy has long been engraved in our fantasies of what the secret world is all about and,
what's more, a factor in real operations.

PETER EARNEST: Women were very, very good at that from as far back as we know… I think women are particularly astute at assessment, at reading another's person personality, character, however you want to describe it. I think in many cases, they're superior to men.

“The Spies Next Door” gave us Anna Chapman, 28 years old, Russian and born to a maybe KGB father, according to her ex-husband, an Englishman. Like any true child of the digital generation, she plastered her
life on her social networking page: Anna on a boat. Anna in a bar. Anna in Times Square. Tabloid editors around the world should have sent flowers to Moscow Center in gratitude when they came up with a photo of topless Anna in bed. Spy novelist Alan Furst always features a woman in the dangerous mix of things.

ALAN FURST: It adds the Hollywood ingredient. It adds the James Bond ingredient. You know, the James Bond women were attractive. And the fact of the matter is, if you wanted to hire a spy tomorrow, you could do worse than finding a very sexy, attractive young women. Those individuals are very well treated, by and large. Everybody's happy to see them, OK? So it's not so dumb to have at least one of them in your array.

ANNA CHAPMAN: So I launched this business purely because I wanted to help someone.

This is Anna Chapman in February, being interviewed following a conference for entrepreneurs in New York. She's telling budding capitalists how she got her start.

ANNA CHAPMAN: I studied a lot to be an investment banker and to really understand something in finance. It was very competitive all the time, even though I did have a lot of success in doing so. But I think the most challenging part of my life really started when I quit all my jobs, really cut all my salaries, and really did something I wanted to do. And even though my company was much smaller than any investment banker can imagine, it was far more challenging.

MAN #2: And exciting.

ANNA CHAPMAN: And exciting.

Anna was a single woman in New York, working doggedly to get her Internet-based Russian real estate company off the ground.

ANNA CHAPMAN: It was kind of very personal when I first had an idea to do this. I was trying to buy an apartment for myself when I was living in London.

When Anna posted a job listing on Craigslist for a real estate marketing hire, New Yorker Scott Beauchamp answered the ad.

SCOTT BEAUCHAMP: She was just sort of a 20-something who was—seemed like she was trying to start a business. She seemed—I don't want to use the word normal—but she did. She seemed normal.

DENNIS MURPHY: Professional, on point?


DENNIS MURPHY: Asking you what you were about and you're asking her, “What's the job?”

SCOTT BEAUCHAMP: As a normal interview, just like any other interview I've ever had. And, I mean, never mentioned anything that would have led me to believe that, you know, she was a spy.

DENNIS MURPHY: No secret decoder ring was going off or—

SCOTT BEAUCHAMP: No, no. No secret...

DENNIS MURPHY: —drawing up a deal for you in invisible ink?

SCOTT BEAUCHAMP: Exactly. None of that. No invisible ink.

ANNA CHAPMAN: Well, in a couple of months we will be launching nycrentals.com, so...

SCOTT BEAUCHAMP: And she seemed a little nervous, maybe.

DENNIS MURPHY: So not smooth. She didn't have a polished line of...

SCOTT BEAUCHAMP: No, not smooth at all. She didn't seem like she was trying to extract information from me, you know, in any sort of way.

SCOTT BEAUCHAMP: She didn't seem to me like how papers are making her out to be now.

DENNIS MURPHY: It doesn't sound like you thought you met a Bond girl?

SCOTT BEAUCHAMP: No, it didn't feel like I met a Bond girl, unfortunately.

The picture that comes together of Anna, born Anna Kuschenko, is of a bright, multilingual material girl, getting to know the better sorts of people. First in London, where she was a pretty face on the private club scene. She worked briefly for Barclays Bank and NetJets.

EUGENE KASEVIN: She's one of those girls that came to London and she was trying to do her best. When I looked at her and I thought, well, she's an initiative, bright girl who is very entrepreneurial. She's very communicative. She's smart… And in London, that would have worked for her.

She met and married a Brit named Alex Chapman. They were together for four years. He has, since the spy ring story broke, told the newspaper of his suspicions that Anna came from a KGB family. He also dished about their hot sex life together. Following her divorce, Anna ended up in New York City and continued her strategy of networking in monied circles.

ALAN FURST: You know, she's not unique in America. There's a lot of Russian or Romanian…or Bulgarian or Eastern European women who have come to America, who have married. In this case, she found a Brit to marry. But they get married and they work in real estate and they try to make their way. It's the American dream.

But federal authorities say that Anna Chapman was not simply another laptop-toting, Facebook-working yuppie hustler on the make. Her laptop, the feds say, was a critical tool in her true job, not selling real estate but making contacts on behalf of Moscow Center. According to the federal indictment, counterintelligence agents were on to her in January of this year. They followed her to a coffee shop on New York's Eighth Avenue, just west of the theater district. They saw her pull her laptop out of a tote bag. Ten minutes later, the agents  observed a minivan they'd tailed before, a Russian government official inside. Former FBI operative Eric O'Neill
explains what Anna Chapman did next.

ERIC O'NEILL: Chapman had a laptop that was specially configured to connect to one other laptop... Instead of a router, instead of the Internet, it connects directly to radio in a separate laptop that's held by the intelligence officer who's servicing her. She's the asset and he or she is trying to get the information.

DENNIS MURPHY: So she, in the coffee shop, hits send, and what happens?

ERIC O'NEILL: She hits send, it’s what's called a burst communication. The communication goes directly to the opposite laptop in an encrypted format that doesn't allow someone else to intercept.

DENNIS MURPHY: And the beauty of that, it leaves no legible fingerprints on the Internet.

ERIC O'NEILL: Exactly. It's machine-to-machine with no way to penetrate that communication. What our surveillance people can do, and what they did, was monitor that the communication was active.

DENNIS MURPHY: The FBI surveillance team didn't know what information Anna was zapping to the Russian waiting in the van, but they stayed on her and they got a major break, one that led to the demise of the ring. Every Wednesday like clockwork they tailed Anna around Manhattan and watched her fire her laptop up. And every time they observed that same Russian official lingering nearby. Now, the FBI software was telling them that Anna's computer was talking to another one. Digital Anna had been ensnared by her laptop.

By now it was late June 2010. The investigation was almost a decade old. FBI agents had been following Anna Chapman for six months and were prepared now to close in on her. She had become the weak link.

ERIC O'NEILL: Obviously she's the most attractive so she's gotten the most press. She probably has the best bet for a movie deal if she wants to pursue it. But, at the end of the day, she made some serious mistakes as a

But it seemed that Anna had smelled a rat. Would the alleged spy ring scatter before the FBI could close the noose? Coming up...

ERIC O'NEILL: She was clearly into spying.

This was a bit of an adrenaline rush for her.

A phony passport, a fake rendezvous. The plan to trap and trick Anna Chapman when Dateline continues.

Part 6

By Saturday, June 26th, “The Spies Next Door” were just a day away from having their covers blown. And it was the move the FBI was about to make on Anna that precipitated it. According to the court papers, Anna had been in Connecticut that day when her cell phone rang. Answering it was a grave mistake.

ERIC O'NEILL: She gets a cold call from an FBI agent pretending to be her Russian handler.

And she makes the mistake of taking the call.

Anna didn't do what spies are trained to in a murky situation, which is to contact spy central immediately for guidance. The undercover FBI agent gets Anna to agree to met him later in the day at a coffee shop in downtown Manhattan.

ERIC O'NEILL: Anna is very excited to do so and is happy to trade information with what turns out to be the FBI.

And this person has another mission for her: “I have a phony passport here, and it's very important that you, Anna Chapman, deliver it to this person I'm going to show you a photo of here tomorrow at 11:00.”

ERIC O'NEILL: Exactly. And, you know, the interesting thing is she pauses before moving forward with that. But for whatever reason didn't follow her gut feeling. And often when you're in this business, your gut feeling can keep you alive, keep you safe.

The FBI agent is tempting Anna to break the law by handing over a passport she's been told is counterfeit. Anna gets instructions on how to approach the woman in the photo the following day when she's to deliver the bogus passport. The contact, who will be another undercover FBI agent, will say, "Excuse me, but haven't we met in California last summer?" Anna is to reply, "No, I think it was the Hamptons." Anna is told that if she pulls off the passport exchange successfully it will do her career wonders back at spy central in Moscow. The undercover agent challenges her.

DENNIS MURPHY: “Are you up for the game, Anna Chapman?”

ERIC O'NEILL: And, of course, she – in no uncertain terms, if you read the indictment – was certainly up for it… She was clearly into spying, and it seems to me this was a bit of an adrenaline rush for her.

Anna then left the coffee shop and other agents tailed her across the bridge to Brooklyn. There she wandered through a few stores, pharmacies, a cell phone shop. At Verizon she finally emerged with a shopping bag in hand, a bag she tossed into a garbage bin. Agents were watching.

ERIC O'NEILL: And there's her next mistake...discarding information in a trash can.

Agents retrieve the bag and find a receipt made out to an invented name with a fake address and a charger for a brand-new Motorola phone.

ERIC O'NEILL: She's buying a cell phone...to do something that--clearly clandestine. You don't throw away the charger for that.

DENNIS MURPHY: Use it once, throw it away, kind of?

ERIC O'NEILL: Exactly. A one-time phone.

Anna told her court-appointed attorney that she called her father in Russia to ask him what to do and that her father advised her to go to a police station the next day and turn the counterfeit passport over. Meanwhile, still Saturday, the scene changes to Arlington, Virginia, where another undercover FBI agent is running more or less the same kind of sting on Semenko, the young travel agent. He's instructed to deliver an envelope with $5,000 in it the following day, to leave it in a hidey-hole spies call a dead drop under a Virginia foot bridge. Like Anna, he's been told this is a step up the ranks for him.

DENNIS MURPHY: And he took the bait?


DENNIS MURPHY: And went to the foot bridge, delivered the parcel of money.

ERIC O'NEILL: Made the drop.

But back in New York on Sunday morning, Anna was a no show at the rendezvous to deliver the bogus passport. She'd taken her father's advice and turned it in at her local police station. This was an unexpected development for the FBI. Was Anna getting suspicious? Had she perhaps send out an alarm to the other nine illegals that the wheels may be coming off their operation? Two hours later, federal authorities arrested Anna at the police station.

ERIC O'NEILL: They've investigated enough to know that the network…knows each other. So one person goes out, they can tell the rest and warn them off.

DENNIS MURPHY: Speculation, is that why the FBI seemed to round this thing up, roll it up more quickly than maybe they'd intended?

ERIC O'NEILL: Certainly it's quite part of it. I also read that it's possible that Murphy...one of the Murphys, was talking about fleeing. And at that moment, once you hear that communication, you really have to wrap it up and you can't just take down one...because as I said, they knew each other and worked with each other.

And take them down they did. The spies next door were cuffed, led away from their barbecue grills and issued prison jumpsuits. Various child protective services took custody of the smaller children in the ring. Now, what was the United States going to do with its catch? It was such a humiliation for the Russians. Coming up, Anna behind bars.

ROBERT BAUM: She was kept in solitary confinement.

And it was very harsh.

ROBERT BAUM: The only contact she had was with me.

And the drama's final act, inside the courtroom, when “The Spies Next Door” continues.

NATALIE MORALES: Ten people are in custody this morning, accused of spying for Russia.

The spies next door were finished. FBI agents swooped down on homes and apartments in Cambridge, in Montclair, in Arlington. All 10 were rounded up and arraigned in federal court and charged with conspiracy to act as unregistered agents of a foreign government. But where was the charge that would have branded them spies?

ERIC O'NEILL: It doesn't appear from reading the indictment that any of these illegals had information that was a slam dunk for espionage, classified information transmitted to a intelligence officer for Russia.

Anna Chapman was placed in a federal cell in Brooklyn, New York, and allowed to speak with only her court-appointed lawyer, Robert Baum.

ROBERT BAUM: She was kept in solitary confinement during the...course of her imprisonment following her arrest, and it was very harsh. She was allowed out of her cell for only one hour per day. She had no visitors, she had no access to television, she wasn't allowed to read the newspapers. The only contact she had was with me.

One of the indicted, the 11th man, the Russian paymaster known as Christopher Metsos, had slipped in and out of the net, detained in Cyprus, bonded out, and not heard from since.

DENNIS MURPHY: Is his career over?

ERIC O'NEILL: His career is certainly over. He is not going to be able to spy.

The arrests of the spies was a coup for the FBI, but a fresh diplomatic headache for the United States and Russia, two nations in relationship counseling for decades. President Obama has not only shared hamburgers with the Russian president, but also signed a strategic arms reduction treaty with Russia that's still being debated in the Senate. Wheels began to turn behind closed doors and on secure government lines to get Anna and the spies next door out of the headlines. The swap, spies for spies, began to take shape. Anna, meanwhile, jailed, had no idea that her pictures were being gawked at around the world.

DENNIS MURPHY: Did you tell her she was being played as the Bond girl?

ROBERT BAUM: I did tell her about some of the...some of the names she was called, the femme fatale, for
example, and she smiled and was just surprised at all this attention.

DENNISMURPHY: Did she know the others, the nine living in the states?

ROBERT BAUM: She never—she didn't know any of them. She never met them. She never met anybody. There is no allegation she ever had a face-to-face meeting with anyone.

Anna's court-appointed lawyer says he talked to her family in Russia and asked directly if the father had been in the KBG in the old days as some rumors had it. The family denied it.

DENNIS MURPHY: Was Anna Chapman spying on behalf of the Russians?

ROBERT BAUM: Well, if you consider spying turning over secrets, the answer is no. The only thing that Anna Chapman could give to Russian officials was information on how to find a cheap two-bedroom apartment in Manhattan.

On the other hand, we're looking into the spy world and we may never know what information, what names, Anna and the others might have passed on to their Russian handlers. The former FBI operative, now a partner in the investigative firm The Georgetown Group, understands why, in the big picture, the Russians took the risk they did in planting people here.

ERIC O'NEILL: You do need spies like this...if you're going to work intelligence effectively. You can't just rely on communications, reading media, cyber hacking and that sort of thing. You've got to have people on the ground who can talk to people. Human intelligence is always the key to spying.

DENNIS MURPHY: So how did they do, the group of 10 in America? Because the book on them seems to be these people were inept. They didn't come up with anything.

ERIC O'NEILL: The difficult answer to that question is “What did they do?” You can't read the indictment and think you know the whole story. Most of what they did is going to be held back.

DENNIS MURPHY: Would you be surprised if they got through to a few Americans who were recruited?

Mr. O'NEILL: I would not be—I would not be surprised.

In the end, the spy story was wrapped up quickly. The 10 were brought to a federal courtroom in New York and entered guilty pleas to the charge of conspiring to act as unregistered agents of a foreign government. A weightier charge of money laundering, which eight of them faced, was dropped. The judge asked each to say out loud their true names. WNBC-TV reporter Jonathan Dienst watched on a courthouse monitor.

JONATHAN DIENST: Judge Wood turns to them and says, "I want to know your real name." And Richard Murphy is the first...and he says, “My real name is Vladimir Guryev.”

JONATHAN DIENST: And the courtroom sort of gasps and people sort of looked forward, and then his wife stands up and gives her real name and it goes on the list, one by one by one, seven out of the
10 acknowledging that they were using fake names.

The children of the spies have either already left with their parents or are said to be joining them soon.

ERIC O'NEILL: I think that we need to learn a lesson from this... that spying hasn't ended.

And just like that it was over. And back to the mid 1980s...a little Cold War “lite.” The 10 convicted agents were bused to La Guardia Airport and a waiting charter plane. They were flown to Vienna where another jet from Moscow was bringing in four men who'd been accused of spying on Russia for the US and Britain. The two planes parked side by side on a distant tarmac as the spies were swapped in the shadows, fitting for the conclusion of a summer spy yarn. "The Tonight Show with Jay Leno" said its goodbye to one of the spies.

JAY LENO: This Russian woman here, let me ask you something – and you would know this, Mr. Vice President – do we have any spies that hot?

VICE PRESIDENT JOE BIDEN: Let me make it clear: It wasn't my idea to send her back.

But is she really gone? Will there be a sequel? Will Anna be heard from again with a book or a movie deal? A major Hollywood player is said to have made contact with her family, though any profits from her story will be confiscated by the US government. That wouldn't prevent her from becoming a Russian celebrity headliner on, say, "Dancing with the Czar."

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