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SEPTEMBER 25, 2000 VOL. 156 NO. 12

The Long Way Home
In the rubble of the government's case against nuclear scientist Wen Ho Lee, no one looks good. Why did the prosecution turn into such a fiasco?
By MICHAEL DUFFY Washington

ALSO
Asian America: America is home, but Asian Americans sometimes feel treated as outlanders with unproven loyalties

It was hard to find anyone left standing—much less standing tall—after the government's strange case against nuclear scientist Wen Ho Lee came crashing to the ground last week. No one was bleeding so heavily as the FBI and its director, Louis Freeh, whose top agent recanted some of his testimony against the 60-year-old Los Alamos engineer. But there was rubble everywhere you looked. Energy Secretary Bill Richardson, whose department had ignored security lapses at Los Alamos for years, was walking around in a daze. Rescue workers were still searching for Attorney General Janet Reno and her deputy, Eric Holder, who were trying to explain why they had suddenly agreed to drop 58 of 59 charges against a man once accused of stealing the "crown jewels" of America's nuclear arsenal. When master survivalist Bill Clinton came out of hiding, it was to confide to reporters that he had "always had reservations" about some aspects of the case—words that recalled the way he ducked responsibility for the Waco fiasco in 1993.

  ALSO IN TIME
COVER: Enough Is Enough
After a deadly and mysterious bomb attack at Jakarta's stock exchange, citizens are desperate for President Wahid to take decisive action to restore stability
Sick Man of Asia: Just how ill is Suharto?
Interview: The Defense Minister sees conspiracies
Outside Help: Can the world do anything to bring peace?

SPECIAL SITE
TIME at the Olympics: Sydney 2000
TIMEasia, TIMEeurope, TIMEpacific and TIME.com bring you our take on the first Olympics of the new millennium

SUMMER OLYMPICS: Notebook
Highlights from the first few days

JAPAN: Fighting Back
Despite the appearance of dedicated service, the nation's consumers have long had a raw deal. But a series of product mishaps has prompted activists to challenge the giants
Viewpoint: The consumer movement is working

THE PHILIPPINES: Going In Hard
Fed up with delays and more kidnappings, Manila launches a military assault to free hostages held by Muslim rebels

PAKISTAN: You Can't Go Home Again
Politics blocks the return of Bengali refugees to Bangladesh

INNOVATORS: The Next Wave

Who's Cool In a Hot Medium

ESPIONAGE: Dumb and Dumber

The collapse of the government's case against nuclear scientist Wen Ho Lee has authorities looking foolish—and reckless
Asian America: The Lee case highlights discrimination

CINEMA: The First Empress

With a new movie starring Richard Gere, actress Joan Chen takes on a new role as a Hollywood director

TRAVEL WATCH:
Talk Can Be Cheap for Tech-Savvy Travelers

And though the neighbors in White Rock, N.M., just down the road from Los Alamos, put out flags last Wednesday and welcomed Lee home with a big backyard party on Barcelona Avenue, the man at the center of the wreckage still has a lot of explaining to do. Lee won back his freedom only after pleading guilty to a single felony count of mishandling national-defense information, which means he downloaded the equivalent of 400,000 pages of classified data about the U.S. nuclear-weapons program onto an unsecured computer system and then transferred them to high-volume cassettes. Lee had refused to spell out why he spent an estimated 40 hours over 70 days downloading all that data, what he did with much of it or why he tried repeatedly to enter a restricted area after losing his security clearance—once, around 3:30 a.m. on Christmas Eve. As part of his plea agreement, Lee promised to explain everything to investigators. He will never again be able to vote, however, or serve on a jury.

But the real damage from the Lee case isn't the leaks from porous national labs or the mystery of secrets that got away. Instead, the case makes it harder to believe that in America at least, the government will always ensure that the punishment fits the crime. After last week, it's almost reasonable to ask whether federal agents cut corners on all their cases or just the ones involving Chinese Americans and national security. "Most federal cases are well founded and ethically prosecuted," says John Barrett, a former U.S. prosecutor who teaches law at St. John's University in New York City. "But Wen Ho Lee now stands in the place of every defendant who claims to be wrongly charged or wrongly overcharged. That's a good climate for a defense attorney and an unfortunate one for the country."

The Wen Ho Lee saga began in 1995, when a walk-in source gave the CIA a document from the People's Republic of China that claimed Chinese weapons designers had obtained specific and highly classified details of an American nuclear warhead known as the W-88. Not everyone in the intelligence community was convinced the document was genuine. The DOE and the FBI, which handles spy catching, quickly learned that several agencies and some defense contractors had information about the W-88, and concluded that the leak had probably occurred at the weapons lab at Los Alamos, where most of the data were cached. DOE officials compiled a list of about 12 people who had both access to the material and contact with Chinese officials and scientists. On the list was Wen Ho Lee.

Nailing spies is hard. To stand a chance of putting them behind bars, you almost have to catch them in the act of forking over secrets. But in the Los Alamos case, the damage was already done, and so agents had to find a way to "walk the cat back," as they like to say, and prove the crime in retrospect. That makes spy catching even harder, but the FBI didn't do itself any favors. Bureau sources concede that when the probe was opened in May 1996, it was left to second-string agents. "It was dumb and dumber," says a bureau veteran. "They put the wrong people to investigate it, and they didn't give it sufficient oversight from headquarters."

Perhaps that's why Reno cast a skeptical eye on the case against Lee. Reno's seven years at Justice—she's the longest-serving Attorney General ever—have made her the loneliest woman in Washington. The White House long ago concluded that she is aloof and politically tone-deaf, but those qualities helped her stand out in an Administration that often lacked ethical bearings. Aides admit she has a social worker's soft side that often gets the better of her, as it did in her handling of the Elian Gonzalez case. And congressional Republicans regard her by-the-book reading of laws as a knee-jerk reluctance to prosecute—especially when questions are raised about her bosses.

And so, true to form, in July 1997, Reno's staff turned down the FBI's request for permission to search Lee's computer because the agents lacked the "probable cause" evidence required by law. The agency appealed to Reno, who refused to budge. Her decision was correct, but FBI grumbling about it made its way, as many FBI complaints do, to Capitol Hill. There, congressional Republicans who were already angry at Reno for dragging her feet on another probe involving China—the 1997 investigation into the highly creative Clinton-Gore fund-raising practices during the 1996 campaign—began to keep a watch on the Los Alamos case.

While the pot boiled in Washington, the FBI's probe in New Mexico was going nowhere in 1998. At one point, the bureau allowed the DOE to have Lee polygraphed by a private security firm, which concluded that Lee was telling the truth. When DOE and FBI agents looking at the same results disagreed, alarmed DOE officials assigned Lee to another, unclassified job. The feds still lacked any evidence that Lee had spied or even stolen anything, and so they kept their sleuths on the case.

Then, on March 6, 1999, the New York Times disclosed the FBI probe without mentioning Lee's name. The next day, FBI agents rushed to his home to "sweat him" before he clammed up completely. A confused Lee owned up to nothing, and on March 8 Richardson fired him for unrelated security violations turned up during the W-88 investigation. His name was leaked to the press, and he became known as a "suspected Chinese spy." He still had not been charged.

FBI agents searched Lee's office and discovered three computer tapes—vcr-size cassettes in metal jackets—containing downloaded weapons codes. Computer-forensics experts concluded that Lee had used his classified computer in the X Division, where nuclear warheads are designed and assessed, to download voluminous mathematical descriptions of the characteristics and performance of various thermonuclear warheads to an unsecure portion of the computer-storage system. Prosecutors say he stored the data in a subdirectory protected only by a password that consisted of his initials. Then, the evidence showed, he went to another division at Los Alamos and borrowed a colleague's computer that came with a device for making backup tapes. On that machine, the government charged, Lee downloaded the data from the subdirectory onto 10 tapes. Only the three have been found.

By then, Republicans on Capitol Hill were up to speed on the Lee case. They had heard from Energy officials who suspected Lee, as well as some who believed he was innocent. But the House Republicans were in no mood to show any quarter to Reno or other officials on the case. Early in the year, several Senators tagged Reno in public for denying the FBI its warrant to inspect Lee's computer in 1997. By late in the year, Reno and the rest of the Administration were under intense pressure—and not just from Republicans—to move against Lee. Energy Secretary Richardson was pushing for the prosecution of Lee—on any ground that could be found. The government might not be able to prove Lee was a spy, but he was certainly sloppy with secrets. "There was a tremendous amount of pressure on the Executive Branch to do something and to deal with what appeared to be very substantial security breaches," says Michael Bromwich, who was the Justice Department's inspector general at the time.

Still, the decision to prosecute went all the way to the White House Situation Room—except it was never really discussed once it got there. According to two participants in the two-hour Dec. 4 session, chaired by National Security Adviser Sandy Berger and attended by more than a dozen officials, the conversation was not so much about whether to go forward as about just how damaging it would be to discuss the loss of the crown jewels in court. "We didn't know any other way [to find out what happened to the tapes]," says a participant. "The whole goal was to try and figure out what happened to them." As to whether Lee might be the next Julius Rosenberg, another participant says, "None of us were able to make an independent judgment on that." On Dec. 10 last year, Lee was arrested and charged with 59 counts of mishandling national-security information—everything, it seemed, except espionage.

That would turn out to be thehigh-water mark of the government's three-year pursuit of Wen Ho Lee. Before Christmas, prosecutors asked Federal Judge James Parker to deny Lee bail and hold him in solitary confinement before trial, lest he somehow communicate to allies or foreign governments how to find the missing tapes or destroy evidence. The government based its plea on testimony from the FBI's chief investigator in the case, Robert Messemer, who said Lee had engaged in a pattern of deceit, misled the government about his contacts with Chinese officials and written letters seeking employment overseas, perhaps using the tapes to better his chances.

And so Lee spent the next five months virtually alone, reading Russian novels, writing a math textbook and leaving his cell for only one hour a day. His arms and legs in chains, he was allowed to kick a soccer ball around a small exercise area. The restrictions were eased in June, as both sides prepared for trial. "This has been such a strange, surreal experience," Chung Lee, the scientist's only son, told Time.

In July, Judge Parker dealt the prosecution two blows. He ruled that the defense could use highly sensitive material in court, forcing the government to accept a compromise of secret information. And he allowed Lee's lawyers to subpoena internal government documents that might shed light on whether racial profiling had been used to target Lee in the first place. Both rulings threatened to make a trial unpleasant for the government. Lee's lawyers planned to portray him as an unlikely spook, more bumbling and naive than clever and secretive, who had asked for a colleague's help in moving the files—curious tradecraft for a spy.

Then, in August, the government's case collapsed. FBI agent Messemer recanted statements he had made at the December bail hearing about Lee's alleged lies, letters and contacts with Chinese officials—claims that had helped send Lee into solitary confinement. That reversal angered Judge Parker, who already had doubts about whether the sensitive material Lee downloaded was truly vital to national security.

Two weeks ago, prosecutors began to try to cut a deal and eventually dismissed all but one of the 59 counts. Before releasing Lee on Wednesday, Judge Parker scolded the government for its handling of the case, apologized to Lee and told him he had served enough time already—278 days in prison. Afterward, Richardson argued improbably that the government had triumphed. "The issue here," he says, "is are we getting the tapes back, and do we find out what happened to those tapes. The plea bargain enables us to get that information." Maybe so, but there had to have been an easier way.

Reported by Nancy Harbert and David S. Jackson/Albuquerque and Massimo Calabresi, Viveca Novak and Elaine Shannon/Washington

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