After a three-year FBI investigation and months of highly charged political debate about China's alleged theft of nuclear secrets, the government's legal case against its prime suspect appears to be falling apart.
Federal officials conceded weeks ago that the espionage case against Wen Ho Lee, a Chinese American physicist at Los Alamos National Laboratory, was circumstantial and that they did not have enough evidence to charge him with spying.
The Justice Department, however, is still considering whether to charge Lee with a lesser felony, mishandling classified information. Now, even that case has been damaged, say some legal experts, by the public declarations of three participants in the probe who maintain that Lee was singled out for investigation because he is of Chinese descent.
Senior U.S. officials say they still believe there is substantial evidence that Wen Ho Lee and his wife, Sylvia, a former clerical employee at Los Alamos, had "inappropriate contacts" with Chinese scientists and may have divulged nuclear secrets. Larry Sanchez, a former CIA official now serving as the Department of Energy's intelligence chief, said this week that his review of classified evidence shows that "all roads pointed to Lee."
But a series of inquiries this year by Congress and the Clinton administration have revealed flaws in the reasoning that led Notra Trulock, an Energy Department intelligence official who resigned this week, and the FBI to ignore other potential suspects and focus on Lee:
The investigators early on decided that Los Alamos was almost surely the source of design secrets obtained by China about the W-88, America's most advanced nuclear warhead. But the information could have come from dozens of other federal facilities, and there is no hard evidence linking the security breach to Los Alamos.
Lee was placed on the initial list of suspects partly because he had been overheard in 1982 talking by telephone to an earlier espionage suspect. But Energy Department investigators who compiled the list failed to check, or did not have access to, FBI records showing that Lee was cleared in the earlier probe and had even served as an FBI informant.
Trulock and other department investigators thought Sylvia Lee had acted suspiciously by volunteering to serve as a hostess for numerous Chinese delegations visiting Los Alamos. What they did not realize was that she was working as an FBI informant at many of those affairs.
The investigators' suspicions also were raised by two trips that the Lees made to China's nuclear weapons design facility, followed by vacation travel in China. But they had traveled to China with government approval, and numerous other U.S. scientists privy to nuclear secrets visited the same facility.
Lee, a U.S. citizen born in Taiwan, worked at Los Alamos for 18 years and had a security clearance to work in the lab's top-secret X Division, which designs nuclear weapons.
He acknowledges that he transferred top-secret "legacy codes" -- huge computer files reflecting the knowledge gained from decades of U.S. nuclear tests -- from a secure computer system at Los Alamos to an unsecure desktop computer in his office. But he has said that the files were secured by multiple passwords and that many other Los Alamos employees made similar transfers of classified data. He denies passing secrets to China.
Energy Secretary Bill Richardson fired Lee in early March for violating security regulations. The firing came after FBI agents asked Lee in a polygraph examination whether he had ever given computer data or secrets pertaining to the W-88 to unauthorized persons, and Lee's answers indicated that he was being deceptive.
Lee later admitted failing to report a contact by a Chinese intelligence officer during one of his trips to Beijing, but he insisted that he had rebuffed the approach.
FBI agents went to the Justice Department's Office of Intelligence Policy and Review with that information in a final attempt to obtain authorization for a secret wiretap on Lee. But OIPR lawyers, after turning down earlier requests in 1997, still concluded that there was not probable cause to believe that Lee was a spy.
Indeed, an extensive report on the espionage case by the Senate Governmental Affairs Committee shows that the evidence against Lee was largely circumstantial.
From the beginning, the guiding force behind the probe was Trulock, who resigned Monday as the Energy Department's deputy director of intelligence. He said the last straw was a "whitewash" report by the department's inspector general that failed to hold senior Clinton administration officials accountable for security failures at Los Alamos. The report also did not back up his allegation that department officials tried to prevent him from testifying to Congress.
In 1996, Trulock drew up the first list of suspects and drafted an investigative road map for FBI investigators that clearly identified Lee and his wife as prime suspects, according to two officials who have reviewed the document.
Following Trulock's trail of evidence, FBI agents assembled a case that began with a 1982 telephone call Lee placed to a Chinese American physicist at Lawrence Livermore Laboratory who was suspected of passing classified information on the neutron bomb to China.
When initially questioned about the call, Lee gave deceptive answers on a polygraph exam. But he was cleared after a second polygraph and agreed to act as an FBI informant in an attempt to catch the suspect, who was ultimately dismissed from his job but was never prosecuted.
Another factor that attracted investigators' suspicions in 1996 was that Sylvia Lee often hosted visiting Chinese delegations to Los Alamos and had "extremely close contacts" with Chinese scientists. FBI agents noted that in 1987 she had written a note asking a colleague to provide three unclassified papers to Zheng Shaotang, the deputy director of China's nuclear weapons lab.
But when investigators first sought permission for a wiretap, they failed to tell Justice Department lawyers that Sylvia Lee had volunteered her services to the FBI as an "informational asset" and had for years passed along intelligence to the bureau about Los Alamos's Chinese visitors.
Beyond these events, FBI agents reported what they considered to be a string of suspicious events. The Lees took vacation time and traveled in China after Wen Ho Lee delivered official Los Alamos papers there in 1986 and 1988. And in 1992 the Lees made a mysterious purchase from a travel agent during a trip to Hong Kong. The agents speculated that they might have bought tickets for an unreported trip to the mainland. The nature of the purchase is still unclear.
The agents also noted that Lee had requested permission to hire a Chinese postdoctoral fellow working at Los Alamos to assist him on an unclassified project involving the kind of computer programs used to simulate nuclear detonations. They told the Justice Department that Los Alamos officials had informed them that all such programs are classified. But Lee and the Chinese graduate student, who now works at Pennsylvania State University, ultimately co-wrote an unclassified scholarly paper describing their research.
In addition to this evidence, which is described in detail in the Senate committee's report, some pieces of information that helped make Wen Ho Lee the government's prime suspect are still classified, one FBI official said this week.
Once agents winnowed down an initial list of 12 suspects developed by Trulock, the FBI official said, "the Lees were far and away the leading candidates."
But when presented with both the classified and the unclassified evidence, OIPR lawyers still found it unconvincing. They viewed the case "as being flawed from the outset, and the central reason for that . . . had to do with the fact that the Department of Energy and [the FBI] had multiple suspects, and only two were investigated," the Senate report said.
"There being no evidence directly linking the Lees to the compromise of the W-88 warhead, the FBI's case for probable cause rested upon the Lees standing out amongst other potential suspects," the report continued. But "the failure of DOE and FBI investigators . . . to assess whether these others were not for some reason equally suspicious meant that it was impossible to be sure that the Lees really did stand out as prime suspects."
That key argument was reinforced over the past two weeks by former Los Alamos counterintelligence chief Robert J. Vrooman, former Energy Department acting counterintelligence chief Charles E. Washington, and Los Alamos physicist Michael S. Soukup, a specialist on Chinese nuclear weapons who assisted in the espionage investigation. All three have said in interviews that they believe Trulock lacked any hard evidence against Lee and singled him out as a suspect because of his ethnicity. Numerous other scientists, they said, had access to the same secrets and participated in similar trips to China or meetings with Chinese delegations.
The possible prosecution of Lee for mishandling the "legacy codes" developed this year as the espionage case withered. FBI agents discovered the highly sensitive files on his desktop computer in April, after he had already been fired and consented to a search.
If the case goes forward, Lee will be the first person ever prosecuted in the United States for transferring classified information to an unclassified computer. The relevant statute, which does not refer specifically to computers, makes removal of classified information from its "proper place of custody" through "gross negligence" a felony punishable by up to 10 years in prison.
In a case with important legal similarities, former CIA director John Deutch lost his security clearance this month for keeping secret documents on an unsecure computer at his home. But the government has decided not to prosecute Deutch.
If the Justice Department brings charges against Lee, his defense attorney, Mark Holscher, almost certainly will cite the Deutch case and the public allegations of ethnic bias as evidence that Lee is a victim of selective prosecution, according to veteran litigators.
In the pretrial discovery process, Lee's attorney could request government records on all similar cases. If a judge granted that request, the government could face the dilemma of either revealing highly sensitive information or abandoning the prosecution, the legal experts said.
Justice Department lawyers have already begun a careful review of what sensitive information might have to be revealed in a trial, but both sides have declined to comment on their legal strategies or deliberations.
Samuel Dash, a professor of law at Georgetown University and former chief counsel of the Senate Watergate Committee, said yesterday that the government could probably justify investigating Lee on the basis of ethnicity in a probe of suspected Chinese espionage, because China's intelligence service is known to target Chinese Americans.
But prosecuting Lee merely for mishandling classified information would leave government prosecutors vulnerable to a defense motion that Lee was being selectively prosecuted, Dash said.
Samuel J. Buffone, a white-collar criminal defense attorney at Ropes & Gray in Washington, added that he had never heard of another instance in which investigative authorities acknowledged that a criminal suspect had been singled out on the basis of ethnicity. "That would be a powerful argument," he said, "that there has been prohibited selectivity based on race or ethnicity."
But Joseph E. diGenova, former U.S. attorney in the District, disagreed. He said identifying Lee as a suspect based on ethnicity in a probe of Chinese espionage is appropriate and would have no bearing on any lesser charges the government might bring, no matter what public criticism has been voiced by investigative officials.
"The Justice Department will move carefully, but none of its options have been precluded by anything that has happened up to now," diGenova said. "Convincing a jury and getting a guilty verdict -- that's another question. But the government can proceed against him on any crime. No judge is going to dismiss this case."