Operation Ghost Stories

Inside the Russian Spy Case
FBI: Our case against the Russian Foreign Intelligence Service (SVR) operatives—dubbed Operation Ghost Stories—went on for more than a decade. Today we are releasing dozens of still images, surveillance video clips, and documents related to the investigation as part of a Freedom of Information Act request.

Although the SVR “illegals,” as they were called, never got their hands on any classified documents, their intent from the start was serious, well-funded by the SVR, and far-ranging.

“The Russian government spent significant funds and many years training and deploying these operatives,” said one of our counterintelligence agents who worked on the case. “No government does that without expecting a return on its investment.”

Our agents and analysts watched the deep-cover operatives as they established themselves in the U.S. (some by using stolen identities) and went about leading seemingly normal lives—getting married, buying homes, raising children, and assimilating into American society.

Using surveillance and sophisticated techniques, aided by support from intelligence analysts, investigators gathered information to understand the threat posed by the spies as well as their methods, or tradecraft.

The SVR was in it for the long haul. The illegals were content to wait decades to obtain their objective, which was to develop sources of information in U.S. policymaking circles. (See sidebar.)

Although they didn’t achieve that objective, the agent said, “without us there to stop them, given enough time they would have eventually become successful.”

After years of gathering intelligence and making sure we knew who all the players were, we arrested the illegals on June 27, 2010. Weeks later, they pled guilty in federal court to conspiring to serve as unlawful agents of the Russian Federation within the U.S.

“Operation Ghost Stories sends a message to foreign intelligence services that espionage threats to the U.S. will not be tolerated,” our agent said. “The FBI’s counterintelligence mission is to identify, disrupt, and defeat the activities of foreign espionage agents, and we take that job very seriously.”

The deep-cover Russian spies may not have achieved their objective, but they were not idle. They collected information and transmitted it back to Russia, and they were actively engaged in what is known in the spy business as “spotting and assessing.”

They identified colleagues, friends, and others who might be vulnerable targets, and it is possible they were seeking to co-opt people they encountered in the academic environment who might one day hold positions of power and influence.

Perhaps the most famous example of this tactic—the Cambridge Five—took place in Great Britain. Soviet intelligence “talent spotters” were able to recruit Cambridge University students in the 1930s—including future spy Kim Philby—who would later rise to power in the British government and become Soviet operatives during World War II and into the 1950s.

“We believe the SVR illegals may well have hoped to do the same thing here,” said a counterintelligence agent.

June 28, 2010

Eight individuals were arrested Sunday for allegedly carrying out long-term, “deep-cover” assignments in the United States on behalf of the Russian Federation, the Justice Department announced today. Two additional defendants were also arrested Sunday for allegedly participating in the same Russian intelligence program within the United States.

In total, 11 defendants, including the 10 arrested, are charged in two separate criminal complaints with conspiring to act as unlawful agents of the Russian Federation within the United States. Federal law prohibits individuals from acting as agents of foreign governments within the United States without prior notification to the U.S. Attorney General. Nine of the defendants are also charged with conspiracy to commit money laundering.

The defendants known as “Richard Murphy” and “Cynthia Murphy” were arrested yesterday by FBI agents at their residence in Montclair, N.J., and are expected to appear in federal court in Manhattan today. Vicky Pelaez and the defendant known as “Juan Lazaro” were arrested yesterday at their residence in Yonkers, N.Y., and are expected to appear in federal court in Manhattan today. Anna Chapman was arrested in Manhattan yesterday and is expected to appear in federal court in Manhattan today.

The defendants known as “Michael Zottoli” and “Patricia Mills” were arrested yesterday at their residence in Arlington, Va., and are appearing in federal court in Alexandria, Va., today. Defendant Mikhail Semenko was arrested yesterday at his residence in Arlington and is appearing in federal court in Alexandria today. In addition, the defendants known as “Donald Howard Heathfield” and “Tracey Lee Ann Foley” were arrested at their residence in Boston yesterday and are appearing in federal court in Boston today. The defendant known as “Christopher R. Metsos” remains at large.

The charges are filed in U.S. District Court for the Southern District of New York. The charge of conspiracy to act as an agent of a foreign government without notifying the U.S. Attorney General carries a maximum penalty of five years in prison. All the defendants are charged with this violation. The charge of conspiracy to commit money laundering carries a maximum penalty of 20 years in prison. All the defendants except Chapman and Semenko are charged with this violation.

This case is the result of a multi-year investigation conducted by the FBI; the U.S. Attorney’s Office for the Southern District of New York; and the Counterespionage Section and the Office of Intelligence within the Justice Department’s National Security Division.

The prosecution is being handled by Assistant U.S. Attorneys Michael Farbiarz, Glen Kopp and Jason Smith of the Terrorism and International Narcotics Unit of the U.S. Attorney’s Office for the Southern District of New York, and Trial Attorneys Kathleen Kedian and Richard Scott of the Counterespionage Section of the Justice Department’s National Security Division.

The charges and allegations contained in the criminal complaints are merely allegations, and the defendants are presumed innocent unless and until proven guilty.