Video: Anna Chapman meets with undercover FBI agent

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updated 10/31/2011 6:14:04 PM ET 2011-10-31T22:14:04

Unaware the FBI has her under surveillance, Russian spy Anna Chapman buys leggings and tries on hats at Macy's. A few months later, cameras watch her in a New York coffee shop where she meets with someone she thinks is her Russian handler. It's really an undercover FBI agent.

Tapes, documents and photos released Monday describe and sometimes show how Chapman, now a celebrity back in Russia, and other members of a ring of sleeper spies passed instructions, information and cash. The ring was shut down in June 2010 after a decade-long counterintelligence probe that led to the biggest spy swap since the Cold War.

The FBI released the material to The Associated Press in response to a Freedom of Information Act request. The investigation was code-named "Ghost Stories," the release of documents on Halloween a coincidence.

While the deep-cover agents didn't steal any secrets, an FBI counterintelligence official told the AP they were making progress.

They "were getting very close to penetrating U.S. policymaking circles" through a friend of a U.S. Cabinet official, said C. Frank Figliuzzi, FBI assistant director for counterintelligence.

He did not name names, but Russian spy Cynthia Murphy of Montclair, N.J., provided financial planning for venture capitalist Alan Patricof, a political fundraiser with close ties to Bill and Hillary Rodham Clinton.

The linchpin in cracking the case, apparently, was Col. Alexander Poteyev, a highly placed U.S. mole in Russian foreign intelligence, who betrayed the spy ring even as he ran it.

He abruptly fled Moscow just days before the FBI rolled up the operation. Poteyev's role emerged when a Russian military court convicted him in absentia for high treason and desertion.

The materials released Monday show Chapman and the other members of Moscow's 11-member ring of sleeper spies — deep-cover agents assigned to blend into American society — shopping in New York City, sightseeing, hanging around coffee shops or apparently just out for a stroll. While she shops at one department store, a Russian diplomat waits outside.

The FBI says seemingly mundane pursuits often served as cover for the exchange of encrypted messages or the transfer of cash, all with the long-range goal of penetrating the highest levels of U.S. policymaking.

What appears to be a family photo of one spy, Donald Heathfield of Cambridge, Mass., shows him graduating from Harvard's John F. Kennedy School of Government in 2000. The school revoked the degree a month after the FBI rolled up the spy ring.

Other spies are seen in video and photos meeting in Columbus Circle, on Brooklyn street corners and at a pay phone in Queens.

Image: Richard Murphy, Christopher Mestos
FBI via AP
This undated image released by the FBI on Monday shows Richard Murphy, right, and Christopher Metsos meeting in Queens, N.Y. Murphy was one of the ring of Russian sleeper spies shut down by federal counterintelligence agents in June of 2010.  According to the FBI, Mestos is the 11th suspected ring member; he vanished after a court in Cyprus freed him on bail.

Called "illegals" because they took civilian jobs instead of operating with diplomatic immunity inside Russian embassies and military missions, the spies settled into quiet lives in middle-class neighborhoods and set about trying to network their way into the worlds of finance, technology and government.

The operation's codename, Ghost Stories, stems from a number of the spies using a technique known among counter-intelligence investigators as "dead doubles" — taking the identities of people who have died. Tracey Lee Ann Foley, Michael Zottoli, Donald Heathfield and Patricia Mills all used the technique, Figliuzzi said.

The U.S. traded the 10 "Ghost Stories" spies arrested by federal agents for four Russians imprisoned for spying for the West at a remote corner of a Vienna airport on July 9 in a scene reminiscent of the carefully choreographed exchange of spies at Berlin's Glienicke Bridge during the Cold War.

While freed Soviet spies typically have kept a low profile after their return to Moscow, Chapman became a model, corporate spokeswoman and television personality. Heathfield, whose real name is Andrey Bezrukov, lists himself as an adviser to the president of a major Russian oil company on his LinkedIn account.

Russian President Dmitry Medvedev awarded the 10 freed spies Russia's highest honors at a Kremlin ceremony.

The case was brought to a swift conclusion before it could complicate U.S. President Obama's campaign to "reset" American relations with the Kremlin, strained by years of tensions over U.S. foreign policy and the 2008 Russian-Georgian war. All 10 of the captured spies were charged with failing to register as foreign agents.

An 11th suspect, Christopher Metsos, who claimed to be a Canadian citizen and was accused of delivering money and equipment to the sleeper agents, vanished after a court in Cyprus freed him on bail. The FBI released surveillance photos of Metsos on Monday.

Figliuzzi said Metsos traveled into the U.S. solely for the purpose of providing the other illegals with money. Security measures after the Sept. 11 terrorist attacks meant he could no longer risk carrying large amounts of cash, prompting the Russians to send officials already in the U.S. to meet with the illegals and pay them.

That could have made them more vulnerable to discovery.

Image: Anna Chapman
Ivan Burnyashev  /  AP
In this Sunday, Oct. 30, photo, Anna Chapman  walks after participating in the Volvo Fashion Week Moscow.

He said Chapman and another illegal, Mikhail Semenko, who worked in a D.C.-area travel agency, represented a "new breed" of illegals operating in the U.S. under their own names.

Chapman and Semenko "were very tech savvy, very intellectual and bright," he said, adding that Semenko is fluent in five languages including Chinese.

Both of the new-breed operatives used state-of-the-art wireless computer communications, but the others fell back on techniques that have been used for centuries. With the two different approaches, "the Russians were experimenting," said Figliuzzi.

The FBI official said that Chapman's ring was the largest network of illegals ever seen in the U.S. By working on the case for so long, he said, the FBI penetrated the ring's communications network to the point where FBI officials were playing the part of Russian handlers. "So in a sense we began to own their communications and we became the Russians," Figliuzzi said.

But former Soviet intelligence officials now living in the West scratched their heads over what Russia hoped to gain from its ring.

"In my view this whole operation was a waste of human resources, money and just put Russia in a ridiculous situation," said Oleg Kalugin, a former KGB major general who spied against the U.S. during the Soviet era, in an interview earlier this year. He now lives near Washington.

Alexander Vassiliev, a former KGB officer and journalist who has written extensively about Soviet spying in America, said the illegals were supposed to act as talent spotters and scouts, identifying Americans in positions of power who might be recruited to spill secrets for financial reasons or through blackmail.

Spies with the protection of diplomatic credentials would handle the more delicate task of recruiting and handling the agents.

Moscow's ultimate aim, Vassiliev said, was probably to cultivate a source who could provide day-by-day intelligence on what the president's inner circle was thinking and planning in response to the latest international crisis. But he said there was no evidence the Kremlin made any progress toward that goal.

"How are you going to recruit someone like that, on what basis? That's quite a successful person. Why should he spy for the Russians? I can't see any reason, said Vassiliev, who now lives in London.

The 10 Russian illegals included:

— Chapman, the daughter of a Russian diplomat, who worked as a real estate agent in New York City. After she was caught, photos of the redhead's social life and travels were splashed all over the tabloids.

— Vicky Pelaez and Juan Lazaro, of Yonkers, N.Y. Lazaro briefly taught a class on Latin American and Caribbean politics at Baruch College. She wrote pieces highly critical of U.S. policy in Latin America as a columnist for one of the United States' best-known Spanish-language newspapers, El Diario La Prensa.

— Michael Zottoli and Patricia Mills of Arlington, Va. He had worked at a telecommunications firm. The couple raised a young son and toddler in their high-rise apartment.

— Richard and Cynthia Murphy of Montclair, N.J. He mostly stayed home with their two pre-teen children while she worked for a lower Manhattan-based accounting firm that offered tax advice.

— Heathfield and Tracey Lee Ann Foley of Cambridge, Mass. He worked in sales for an international management consulting firm and peddled strategic planning software to U.S. corporations. She was a real estate agent.

— Semenko of Arlington, Va., who spoke Russian, English, Spanish, Chinese and Portuguese. He worked at the Travel All Russia agency, where co-workers described him as "clumsy" and "quirky."

The videos and documents can be found here: http://vault.fbi.gov/ghost-stories-russian-foreign-intelligence-service-illegals

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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