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China’s Spying Poses Rising Threat To U.S. (#GotBitcoin?)

Officials say the country’s recruitment and cyber theft efforts are becoming more pervasive. China’s Spying Poses Rising Threat To U.S. (#GotBitcoin?)

Chinese spies are increasingly recruiting U.S. intelligence officers as part of a widening, sustained campaign to shake loose government secrets.

Senior U.S. law enforcement and intelligence officials have escalated their warnings characterizing Chinese espionage as the single most significant long-term strategic threat, encompassing both spycraft intended to steal government secrets and the sustained heist of intellectual property and research from the corporate and academic worlds.

A series of recent espionage cases, including that of a former Central Intelligence Agency case officer who was scheduled to go to trial next week, show the breadth of Chinese efforts to use U.S. intelligence personnel to gain access to nonpublic information from the government.

“No country poses a broader, more severe intelligence-collection threat than China,” Christopher Wray, director of the Federal Bureau of Investigation, said Friday at the Council on Foreign Relations in Washington. “They’re doing it through Chinese intelligence services, through state-owned enterprises, through ostensibly private companies, through graduate students and researchers, through a variety of actors all working on behalf of China.”

The former CIA case officer, Jerry Chun Shing Lee, faces charges of conspiring to provide classified information to China and mishandling classified information. Court records show that on the eve of the trial, he appeared poised to enter into a plea agreement. He had previously pleaded not guilty.

“China cases historically have involved economic espionage, and specifically targeting former intel officers seems like a new trend,” said Jeff Asher, a former CIA officer who is now a consultant. Mr. Asher said the trend might be linked to the 2015 theft of more than 20 million files from the U.S. Office of Personnel Management, which included background-check records for government employees. U.S. officials have linked that hack to China, which has denied it.

The Chinese embassy didn’t respond to a request for comment. Beijing has historically denied allegations of espionage against the U.S.

Mr. Lee was accused last year by federal prosecutors of communicating through secret email accounts with two people he knew to be officers of China’s state security ministry. Prosecutors said they sought sensitive information, including the locations of CIA officers, from him in 2010 and 2011. Mr. Lee allegedly created documents that responded to the officers’ questions. He also had made unexplained cash deposits to his Hong Kong bank account totaling hundreds of thousands of dollars, the May 2018 indictment said.

A judge abruptly canceled the trial last week and scheduled a “status hearing” for Wednesday. A spokesman for the U.S. Attorney’s office declined to comment. A lawyer for Mr. Lee, who had previously denied that his client provided information to China, also declined to comment.

Mr. Lee was born in Hong Kong and became a naturalized U.S. citizen, according to the indictment. Experts say Chinese intelligence has long targeted that kind of demographic profile.

But China now appears to be aiming to recruit people whom it previously might not have viewed as being susceptible to its overtures. It is deploying familiar strategies of dangling cash and gifts, establishing covert communication methods and tasking recruits with increasingly detailed requests for secrets.

Last week, for example, Candace Claiborne, a 63-year-old African-American former State Department employee, admitted in court that she accepted about $20,000 in cash, plane tickets and rent and living expenses for a relative from two Chinese men. One was a Ministry of State Security officer and that the other was an intermediary for Chinese intelligence, she acknowledged in her plea.

In one 2015 email with the subject line “Home repairs,” Ms. Claiborne, whose postings around the world as an office-management specialist had included Beijing and Shanghai, wrote to the intermediary and said: “Just wanted to know if you will be able to help me out.”

Assistant U.S. Attorney Thomas Gillice told a federal judge in Washington that Ms. Claiborne, a Mandarin speaker, had worked to hide her contacts with the two men, who pushed her to provide nonpublic information they couldn’t find on the internet. She gave them documents, including cables and white papers in connection with upcoming U.S.-China meetings, that she printed from internal State Department networks, Mr. Gillice said.

After Mr. Gillice’s remarks, Ms. Claiborne, wearing a dark purple head scarf, nodded and told the judge in a soft voice that the prosecutor’s comments were accurate. She faces up to five years in prison and will be taken into custody in June at the end of Ramadan, the monthlong Muslim fasting ritual, the judge said.

Another former U.S. intelligence officer, Kevin Mallory, is scheduled to be sentenced in mid-May. Mr. Mallory was convicted last year of selling to China secrets about U.S. assets in the country and other matters.

According to evidence introduced at his trial, the 61-year-old, a covert case officer for the CIA in the 1990s and a senior intelligence officer for the Defense Intelligence Agency in the early 2000s, provided or tried to provide multiple classified documents to Chinese handlers. Those documents included a PowerPoint presentation about a DIA proposal to use human assets in China in the form of a married couple described at trial as the “Johnsons,” and other details about the couple’s work with the DIA. He provided that information after learning that the “Johnsons” were traveling to China that summer, according to LinkedIn messages described by prosecutors.

Another former DIA officer, Ron Hansen, pleaded guilty in federal court in Utah last month and admitted to meeting with Chinese intelligence agents for four years and passing them information in exchange for $800,000.

Hanging over the case against Mr. Lee, the onetime CIA case officer, is the fact that starting around 2010, American assets in China were systematically killed in what U.S. officials described as a razing of the U.S. intelligence network there. The killings sparked a wide-ranging mole hunt. None of the recent cases have accused former U.S. employees of being responsible, but Mr. Lee was suspected by U.S. officials of helping China identify the assets. In court filings in advance of the expected trial, Mr. Lee’s lawyers said media reports about those alleged links—which weren’t described in the indictment itself—along with negative perceptions about China could hurt their ability to find an impartial jury.

Concerns about Chinese espionage surfaced again in recent weeks after a Chinese woman was arrested and charged with unlawfully entering President Trump’s Mar-a-Lago resort and lying to federal agents about her plans, though her motives remain unclear. She has pleaded not guilty and faces trial next month.

American officials have spoken in dire terms about China’s cyber theft of national-security secrets, including a persistent effort to breach the Navy and its contractors, which threatened the U.S.’s standing as the world’s top military power, according to a recent internal review. Senior Justice Department officials have said more than 90 percent of economic-espionage prosecutions over the past decade—many of them cyber-enabled—have involved China.

U.S. officials consider China more of an espionage threat than other foreign adversaries, like Russia, in part because Beijing has exponentially more human and economic resources to dedicate to its operations.

Multiple senior U.S. officials from the FBI, National Security Agency and Department of Homeland Security have in recent months more publicly discussed concerns about the extent of the Chinese espionage threat. At a recent security conference in San Francisco, many characterized Beijing’s mix of traditional spycraft, involving the use of insiders like Messrs. Lee, Mallory and Hansen, and cyber theft as a strategic foreign threat without parallel.

“Russia is the hurricane: It comes in fast and hard,” Rob Joyce, senior cybersecurity adviser at the NSA, told reporters. “China is climate change: long, slow, pervasive.”

Updated: 5-2-2019

Ex-CIA Officer Pleads Guilty To Efforts To Supply China With Classified Information

Case highlights Justice Department focus on fighting Chinese espionage

A former CIA officer pleaded guilty to conspiring to provide classified information to China, as the Justice Department sharpens its efforts to combat what officials describe as a widening campaign by China to shake loose government secrets.

Jerry Chun Shing Lee, who worked as a case officer at the Central Intelligence Agency for more than a decade, admitted in court Wednesday that between 2010 and 2018 he had communicated with agents from China’s spy service and had prepared documents in response to requests from them.

The materials included information about locations to which the CIA would assign officers and a sketch of an out-of-use agency facility. Mr. Lee said he tore up the sketch and thought about giving the other document to the Chinese intelligence officers but never provided them with either, according to a statement of facts filed in connection with his plea. He also admitted he later misled U.S. investigators about those contacts.

Mr. Lee had been scheduled for trial on the charges this week but reached an agreement under which prosecutors dismissed two additional counts of mishandling classified information.

He Faces The Possibility Of Around Two Decades In Prison

Mr. Lee told U.S. District Judge T.S. Ellis he would plead guilty to the charge. “I conspired to send secret-level information to the government of the PRC,” he said, referring to the People’s Republic of China.

Mr. Lee’s plea comes amid similar cases of U.S. government employees allegedly providing agents from China’s Ministry of State Security with confidential documents in exchange for cash and other gifts. A former State Department employee pleaded guilty last week to accepting $20,000 in cash, plane tickets, and rent and living expenses for a relative in exchange for providing internal State Department cables about coming U.S.-China meetings.

“Every one of these cases is a tragic betrayal of country and colleagues,” said John Demers, the head of the Justice Department’s national security division.

Senior U.S. law enforcement and intelligence officials have escalated their warnings about Chinese espionage, characterizing it as the most significant long-term strategic threat to the U.S. They say it encompasses spycraft intended to steal government secrets along with the heist of intellectual property and research from the corporate and academic worlds.

While the Trump administration has sought to emphasize the damage from Beijing’s economic espionage—an area of focus in bilateral trade talks—current and former U.S. officials say China has grown bolder and more successful in traditional spy games, including targeting less conventional recruits.

The 54-year-old Mr. Lee was born in Hong Kong, grew up in Hawaii and became a U.S. citizen in 1985. He joined the CIA in 1994 and left in 2007.

According to the statement of facts, Mr. Lee went to a private dinner in Shenzhen in 2010 with officers from China’s state-security ministry, at which they offered to take care of him “for life,” said they had prepared a gift of $100,000 in cash and asked if he would disclose information from his time at the CIA.

Mr. Lee admitted to receiving hundreds of thousands of dollars in unexplained cash deposits at his personal bank account in Hong Kong, though the document doesn’t allege that the money specifically came from the Chinese government.

When FBI agents searched his hotel room in Hawaii in 2012, they found a 2002 day planner and address book in his luggage that included the true names of U.S. assets and information about covert facilities. The discovery fueled suspicions among some U.S. investigators that Mr. Lee played a role in the systematic killing, beginning in 2010, of a network of informants working with U.S. intelligence in China. The plea doesn’t include any such allegations.

“There is nothing in the statement that indicates that he gave any information to the Chinese,” an attorney for Mr. Lee, Edward MacMahon, told reporters after the plea hearing.

But the document indicates the Chinese officers aggressively pursued him, creating email accounts for them to communicate.

In a 2013 message on one of the accounts, the Chinese apparently used an innocuous-sounding reference to a grade book to allude to something else: “Long time no see, How’s christina’s grade book? We have not seen her recent grade book for a few months, maybe [sic] little girl always like changing her mind.”

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