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The Dismantling of a Russian Intelligence Operation

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  • Beowulf
    http://tinyurl.com/3xt89yq The Dismantling of a Suspected Russian Intelligence Operation July 1, 2010 | 0856 GMT
    Message 1 of 1 , Jul 1, 2010
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      The Dismantling of a Suspected Russian Intelligence Operation


      July 1, 2010 | 0856 GMT

      <http://www.stratfor.com?fn=7816576328>



      <http://www.stratfor.com?fn=7816576328> Criminal Intent and Militant
      Funding



      Recommended External Links

      * U.S.
      <http://web.stratfor.com/images/northamerica/062810complaint1.pdf?fn=4416631
      431> District Court Criminal Complaint, Part 1
      * U.S.
      <http://web.stratfor.com/images/northamerica/062810complaint2.pdf?fn=9816631
      428> District Court Criminal Complaint, Part 2

      STRATFOR is not responsible for the content of other Web sites.

      By Fred Burton and Ben West

      The U.S. Department of Justice announced June 28 that an FBI
      counterintelligence investigation had resulted in the arrest on June 27 of
      10
      <http://www.stratfor.com/analysis/20100628_us_announces_arrests_alleged_russ
      ian_spies?fn=6416631483> individuals suspected of acting as undeclared
      agents of a foreign country, in this case, Russia. Eight of the individuals
      were also accused of money laundering. On June 28, five of the defendants
      appeared before a federal magistrate in U.S. District Court in Manhattan
      while three others went before a federal magistrate in Alexandria, Va., and
      two more went before a U.S. magistrate in Boston. An 11th person named in
      the criminal complaint was arrested in Cyprus on June 29, posted bail and is
      currently at large.

      The number of arrested suspects in this case makes this counterintelligence
      investigation one
      <http://www.stratfor.com/analysis/20100628_russia_us_more_details_spy_ring_a
      ctivities?fn=9116631458> of the biggest in U.S. history. According to the
      criminal complaint, the FBI had been investigating some of these people for
      as long as 10 years, recording conversations in their homes, intercepting
      radio and electronic messages and conducting surveillance on them in and out
      of the United States. The case suggests that the classic
      <http://www.stratfor.com/russia_west_and_espionage_game?fn=5916631418>
      tactics of intelligence gathering and counterintelligence are still being
      used by Russia and the United States.


      Cast of Characters



      <http://web.stratfor.com/images/northamerica/art/Russia_US_Espionage_800.jpg
      ?fn=4416631475>




      <http://web.stratfor.com/images/northamerica/art/Russia_US_Espionage_800.jpg
      ?fn=4416631475> The Dismantling of a Suspected Russian Intelligence
      Operation


      <http://web.stratfor.com/images/northamerica/art/Russia_US_Espionage_800.jpg
      ?fn=4416631475> (click here to enlarge image)



      The following are the 11 individuals detained in the investigation, along
      with summaries of their alleged activities listed in the criminal complaint:

      Christopher Metsos

      * Claimed to originally be from Canada.
      * Acted as an intermediary between the Russian mission to the United
      Nations in New York and suspects Richard Murphy, Cynthia Murphy, Michael
      Zottoli and Patricia Mills.
      * Traveled to and from Canada.
      * Met with Richard Murphy at least four times between February 2001
      and April 2005 at a restaurant in New York.
      * Was first surveilled in 2001 in meetings with other suspects.
      * Left the United States on June 17 and was detained in Cyprus on June
      29, but appears to have skipped bail.

      Richard and Cynthia Murphy

      * Claimed to be married and to be U.S. citizens.
      * First surveilled by the FBI in 2001 during meetings with Mestos.
      * Also met with the third secretary in the Russian mission to the
      United Nations.
      * Communicated electronically with Moscow.
      * Richard Murphy's safe-deposit box was searched in 2006 and agents
      found a birth certificate claiming he was born in Philadelphia; city
      officials claim there is no such birth certificate on record.
      * Engaged in electronic communications with Moscow.
      * Traveled to Moscow via Italy in February 2010.

      Donald Heathfield and Tracey Foley

      * Claimed to be married and to be natives of Canada who are
      naturalized U.S. citizens.
      * FBI searched a safe-deposit box listed under their names in January
      2001.
      * FBI discovered that Donald Heathfield's identity had been taken from
      a deceased child by the same name in Canada and found old photos of Foley
      taken with Soviet film.
      * Engaged in electronic communications with Moscow.
      * Tracey Foley traveled to Moscow via Paris in March 2010.

      Michael Zottoli and Patricia Mills

      * Claimed to be married and to be a U.S. citizen (Zottoli) and a
      Canadian citizen (Mills).
      * First surveilled in June 2004 during a meeting with Richard Murphy.
      * Engaged in electronic communications with Moscow.

      Juan Lazaro and Vicky Pelaez

      * Claimed to be married and to be a naturalized U.S. citizen born in
      Peru (Pelaez) and a Peruvian citizen born in Uruguay (Lazaro).
      * First surveilled at a meeting in a public park in an unidentified
      South American country in January 2000.
      * Evidence against Vicky Pelaez was the first gathered on the 11
      suspected operatives.
      * Lazaro appeared to communicate with a diplomat at the Russian
      Embassy in an unidentified South American country.
      * Engaged in electronic communications with Moscow.

      Anna Chapman

      * First surveillance mentioned was in Manhattan in January 2010.
      * Communicated with a declared diplomat in the Russian mission to the
      United Nations on Wednesdays.
      * Knowingly accepted a fraudulent passport from an undercover FBI
      agent whom she believed to be a Russian diplomatic officer June 26, but
      turned it in to the police the next day shortly before her arrest.

      Mikhail Semenko

      * First surveillance mentioned in the criminal complaint was in June
      2010 in Washington.
      * Revealed to an undercover officer that he had received training and
      instruction from "the center" (a common term for the Moscow headquarters of
      Russia's Foreign
      <http://www.stratfor.com/weekly/second_cold_war_and_corporate_security?fn=40
      16631496> Intelligence Service, or SVR).
      * Accepted a payment of $5,000 and followed orders given by an
      undercover FBI agent posing as a Russian diplomatic officer to deliver the
      money to a drop site in Washington.


      Their Mission


      According to the FBI, some of the alleged "undeclared agents" moved to the
      United States in the 1990s, while others (such as Anna Chapman) did not
      arrive until 2009. The FBI says nine of the suspects were provided with fake
      identities and even fake childhood photos and cover stories (part of what
      would be called a "legend") in order to establish themselves in the United
      State under "deep
      <http://www.stratfor.com/geopolitical_diary/20100630_spy_ring_and_russias_in
      telligence_apparatus?fn=6316631437> cover." Chapman and Semenko used their
      own Russian identities (Chapman is divorced and may have taken her surname
      from her former husband). The true nationalities of the other suspects are
      unknown, but several passages in the criminal complaint indicate that most
      of them were originally from Russia. The Russian SVR allegedly provided the
      suspects with bank accounts, homes, cars and regular payments in order to
      facilitate "long-term service" inside the United States, where, according to
      the criminal complaint, the individuals were supposed to "search [for] and
      develop ties in policymaking circles" in the United States.

      The FBI criminal complaint provides evidence that two of the deep-cover
      couples (Heathfield/Foley and Lazaro/Palaez) and the two short-term cover
      agents (Semenko and Chapman) were operating without knowledge of each other
      or in connection with the other two couples and Metsos, who did interact.
      This suggests that they would not have formed one network, as is being
      reported, but perhaps discrete networks. The criminal complaint provides
      evidence indicating that most of the operatives were being run out of the
      SVR residence at the U.N. mission.

      It is unclear exactly how successful the 11 accused individuals were in
      finding and developing those ties in policymaking circles. The criminal
      complaint accuses the individuals of sending everything from information on
      the gold market from a financier in New York (a contact that Moscow
      apparently found helpful, since it reportedly encouraged further contact
      with the source) to seeking out potential college graduates headed for jobs
      at the CIA. The criminal complaint outlines one recorded conversation in
      which Lazaro told Pelaez that his handlers were not pleased with his reports
      because he wasn't attributing them properly. Pelaez then advised Lazaro to
      "put down any politician" (to whom the information could be attributed) in
      order to appease the handlers, indicating that the alleged operatives did
      not always practice scrupulous tradecraft in their work. Improperly
      identifying sources in the field ultimately diminishes the value of the
      information, since it cannot be adequately assessed without knowing where it
      came from. If these kinds of shortcuts were normally taken by Pelaez, Lazaro
      and others, then it would reduce their value to the SVR and the harm that
      they may have done to the United States. The suspects were allegedly
      instructed by their handlers in the United States and Russia to not pursue
      high-level government jobs, since their legends were not strong enough to
      withstand a significant background investigation. But they allegedly were
      encouraged to make contact with high-level government officials, in order to
      have a finger on the pulse of policymaking in Washington.


      Tradecraft


      The criminal complaint alleges that the suspects used traditional tradecraft
      of the clandestine services to communicate with each other and send reports
      to their handlers. The suspects allegedly transmitted messages to Moscow
      containing their reports encrypted in "radiograms" (short-burst radio
      transmissions that appear as Morse code) or written in invisible ink, and
      met in third countries for payments and briefings. They are also said to
      have used "brush passes" (the quick and discreet exchange of materials
      between one person and another) and "flash meets" (seemingly innocuous,
      brief encounters) to transfer information, equipment and money. The criminal
      complaint also gives examples of operatives using coded phrases with each
      other and with their operators to confirm each other's identities.

      In addition to the traditional tradecraft described in the criminal
      complaint, there are also new operational twists. The suspects allegedly
      used e-mail to set up electronic dead drops to transmit encrypted
      intelligence reports to Moscow, and several operatives were said to have
      used steganography (embedding information in seemingly innocuous images) to
      encrypt messages. Chapman and Semenko allegedly employed private wireless
      networks hosted by a laptop programmed to communicate only with a specific
      laptop. The FBI claims to have identified networks (and may have intercepted
      the messages transmitted) that had been temporarily set up when a suspect
      was in proximity to a known Russian diplomat. These electronic meetings
      occurred frequently, according to the FBI, and allowed operatives and their
      operators to communicate covertly without actually being seen together.

      Operations are said to have been run largely out of Russia's U.N. mission in
      New York, meaning that when face-to-face meetings were required, declared
      diplomats from the U.N. mission could do the job. According to the criminal
      complaint, Russian diplomats handed off cash to Christopher Metsos on at
      least two occasions, and he allegedly distributed it to various other
      operatives (which provided the grounds for the charge of money laundering).
      The actual information gathered from the field appears to have gone directly
      to Russia, according to the complaint.

      It is important to note that the accused individuals were not charged with
      espionage; the charge of acting as an undeclared agent of a foreign state is
      less serious. The criminal complaint never alleges that any of the 11
      individuals received or transmitted classified information. This doesn't
      mean that the suspects weren't committing espionage. (Investigators will
      certainly learn more about their activities during interrogation and trial
      preparation.) According to the criminal complaint, their original guidance
      from Moscow was to establish deep cover. This means that they would have
      been tasked with positioning themselves over time in order gain access to
      valuable information (it is important to point out that "valuable" is not
      synonymous with "classified") through their established occupations or
      social lives. This allows agents to gain access to what they want without
      running unnecessary security risks.

      Any intelligence operation must balance operational security with the need
      to gather intelligence. Too much security and the operative is unable to do
      anything; but if intelligence gathering is too aggressive, the handlers risk
      losing an intelligence asset. If these people were operating in deep cover,
      the SVR probably invested quite a bit of time and money training and
      cultivating them, likely well before they arrived in the United States.
      According to information in the criminal complaint, the suspects were
      actively meeting with potential sources, sending reports back to Moscow and
      interacting with declared Russian diplomats in the United States, all the
      while running the risk of being caught. But they also took security
      measures, according to the complaint. There is no evidence that they
      attempted to reach out to people who would have fallen outside their natural
      professional and social circles, which could have raised suspicions. In many
      ways, these individuals appear to have acted more like recruiters, seeking
      out people with access to valuable information, rather than agents trying to
      gain access to that information themselves. However, all we know now is
      based on what was released in the criminal complaint. An investigation that
      lasted this long surely has an abundance of evidence (much of it likely
      classified) that wasn't included in the complaint.


      Counterintelligence


      According to authorities, the suspected operatives were under heavy
      surveillance by U.S. counterintelligence agents for 10 years. Working out of
      Boston, New York and Washington, the FBI employed its Special Surveillance
      Group to track suspects in person; place video and audio recorders in their
      homes and at meeting places to record communications; search their homes and
      safe-deposit boxes; intercept e-mail and electronic communications; and
      deploy undercover agents to entrap the suspects.

      Counterintelligence operations don't just materialize out of thin air. There
      has to be a tip or a clue that puts investigators on the trail of a
      suspected undeclared foreign agent. As suggested by interviews with the
      suspects' neighbors, none of them displayed unusual behavior that would have
      tipped the neighbors off. All apparently had deep (but not airtight) legends
      going back decades that allayed suspicion. The criminal complaint did not
      suggest how the U.S. government came to suspect these people of reporting
      back to the SVR in Russia, although we did notice that the beginning of the
      investigation coincides with the time that a high-level SVR agent stationed
      at Russia's U.N. mission in New York began passing information to the FBI.
      Sergei Tretyakov (who told his story in the book by Pete Earley called
      "Comrade J," an abbreviation of his SVR codename, "Comrade Jean"), passed
      information to the FBI from the U.N. mission from 1997 to 2000, just before
      he defected to the United States in October 2000. According to the criminal
      complaint, seven of the 11 suspects were connected to Russia's U.N. mission,
      though evidence of those links did not begin to emerge until 2004 (and some
      as late as 2010). The timing of Tretyakov's cooperation with the U.S.
      government and the timing of the beginning of this investigation resulting
      in the arrest of the 11 suspects this week suggests that Tretyakov may have
      been the original source who tipped off the U.S. government. So far, the
      evidence is circumstantial - the timing and the location match up - but
      Tretyakov, as the SVR operative at Russia's U.N. mission, certainly would
      have been in a position to know about operations involving most of the
      people arrested June 27.


      Why Now?


      Nothing in the complaint indicates why, after more than 10 years of
      investigation, the FBI decided to arrest the 11 suspects June 27. It is not
      unusual for investigations to be drawn out for years, since much information
      on tradecraft and intent can be obtained by watching foreign intelligence
      agencies operate without knowing they are being watched. Extended
      surveillance can also reveal additional contacts and build a stronger case.
      As long as the suspects aren't posing an immediate risk to national security
      (and judging by the criminal complaint, these 11 suspects were not), there
      is little reason for the authorities to show their hand and conclude a
      fruitful counterintelligence operation.

      It has been suggested that some of the suspects were a flight risk, so
      agents arrested all of them in order to prevent them from escaping the
      United States. Metsos left the United States on June 17 and was arrested in
      Cyprus on June 29, however, his whereabouts are currently unknown, as he has
      not reported back to Cypriot authorities after posting bail. A number of the
      suspects left and came back to the United States numerous times, and
      investigators appear not to have been concerned about these past comings and
      goings. It isn't clear why they would have been concerned about someone
      leaving at this point.

      The timing of the arrests so soon after U.S. President Barack Obama's June
      25 meeting with Russian President Dmitri Medvedev also raises questions
      about political motivations. Medvedev was in Washington to talk with Obama
      in an attempt to improve relations between the two countries on the day the
      FBI officially filed the criminal complaint. The revelation of a network of
      undeclared foreign agents operating in the United States would ordinarily
      have a negative effect on relations between the United States and the
      foreign country in question. In this case, though, officials from both
      countries made public statements saying they hoped the arrests would not
      damage ties, and neither side appears to be trying to leverage the incident.
      Indeed, if there were political motivations behind the timing of the
      arrests, they remain a mystery.

      Whatever the motivations, now that the FBI has these suspects in custody it
      will be able to interrogate them and probably gather even more information
      on the operation. The charges for now don't include espionage, but the FBI
      could very well be withholding this charge in order to provide an incentive
      for the suspects to plea bargain. We expect considerably more information on
      this unprecedented case to come out in the following weeks and months,
      revealing much about Russian clandestine operations and their targets in the
      United States.



      Reprinting or republication of this report on websites is authorized by
      prominently displaying the following sentence at the beginning or end of the
      report, including the hyperlink to STRATFOR:

      "This report is republished with permission of STRATFOR
      <http://www.stratfor.com/> "





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