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FBI created job for suspected spy Jerry Lee to lure him to U.S.

The suspected betrayal of U.S. informants in China by a former CIA officer is "one of the biggest losses and intelligence failures in modern history," a former counterintelligence official told NBC News.

"There was a period of time when reporting to the U.S. intelligence community out of China dried up almost completely, and you don’t rebuild that base of information overnight," said Frank Figliuzzi, who was an FBI assistant director in 2011 and 2012.

That assessment comes a day after the Justice Department announced the arrest of former American spy Jerry Chun Shing Lee, 53, for illegal possession of classified information — including the real names of other CIA operatives.

Lee, a naturalized U.S. citizen who served in the Army and worked for the CIA for 13 years, is suspected of funneling information to China that caused the deaths or imprisonment of approximately 20 American agents, sources familiar with the case said.

Ex-CIA officer Jerry Chun Shing Lee suspected of spying for China 1:55

Court documents do not list an attorney for Lee. Relatives who live in California said his wife, who is in Hong Kong, and his daughter, who lives in Virginia, were trying to hire a lawyer. The family members declined further comment.

His most recent job was director of security for Christie's in Hong Kong. The auction house said he worked there for 20 months directing physical security for the auction house with no role in data security or IT. Christie's said it had suspended Lee "pending a criminal investigation" and declined additional comment.

Lee, who was stationed in Hong Kong for the CIA, left the agency in 2007, giving up his top secret security clearance. When U.S. authorities began to suspect he was a traitor, they came up with a plan to lure him to American soil — creating a job for him in the Washington, D.C., area, federal officials said.

He flew back with his family to the U.S. in August 2012, stopping in Honolulu, Hawaii, for a few days. In a scene out of a Hollywood film, surveillance teams secretly searched his hotel room and luggage, taking photographs of his possessions, according to an arrest warrant affidavit.

Image: The lobby of the CIA Headquarters Building in Langley, Virginia, on August 14, 2008.
Jerry Lee worked for the CIA for 13 years. Larry Downing / Reuters

When the Lee family arrived in Virginia, they checked into another hotel — and investigators repeated the covert exercise.

Among the items of interest: a 49-page datebook and a 21-page address book with a treasure trove of details that would have thrilled any Chinese spy hunter. There were names and numbers of covert CIA employees, addresses of CIA facilities and rendezvous notes, court documents say.

The information ranged from classified to top secret, "the disclosure of which could cause exceptionally grave damage to the National Security of the United States," the arrest warrant affidavit said. All of it should have been surrendered when he left the CIA, officials said.

While Lee was living and working in the U.S., FBI agents interviewed him five times, and he denied being a spy. Eventually, as the U.S. continued to investigate, Lee returned to Hong Kong.

On Monday, Lee flew to JFK Airport in New York on a Cathay Pacific flight and was arrested. A complaint filed in U.S. District Court in Virginia was unsealed on Tuesday.

Officials familiar with the case say it is unlikely that Lee will be charged with espionage, which can carry the death penalty. It may be that the government doesn't have the proof required for such a charge, or that it doesn't want to air secrets in an open courtroom.