PBS FRONTLINE: FROM CHINA WITH LOVE 2 OF 3

PBS FRONTLINE: FROM CHINA WITH LOVE PART 2 OF 3

The cases against Leung and Smith were shocking to longtime FBI observers. Essentially, Agent Smith and his prized asset Leung admitted they would meet at her upscale home in a Los Angeles suburb. After they made love, J.J. would leave the bedroom and Katrina, unbeknownst to J.J. would copy secret or classified documents from his briefcase. Leung's possession of secret documents and Smith's alleged complicity called into question virtually every piece of counterintelligence information on China gathered by the United States over two decades.

"Very grave damage could have been done," says Ed Appel, the former head of FBI Counterintelligence in San Francisco. "And it certainly could result in a compromise of U.S. government interests and intelligence interests with regard to China." Neither Leung nor Smith were charged with espionage. Instead, the government said Leung had copied classified documents and that Smith provided access to those documents through gross negligence. Both pled not guilty. The government alleged that Leung regularly traveled to China where she often met with high-ranking officials, and that she was a Chinese agent with the code name "Luo."

"Katrina Leung is a loyal American citizen," her attorneys said in a statement issued to the press. "For over 20 years she has worked at the direction and behest of the Federal Bureau of Investigation." J.J. Smith's attorney, Brian Sun, questioned the motives of the government in charging his client. "We think the bureau is ... reacting and perhaps overreacting to external political pressures, to public relations nightmares, and [Smith and Leung] are being unduly and harshly sanctioned and punished for conduct which arguably could have been dealt with administratively or some other means short of criminal prosecution."