Prosecutors: NY suspect spilled Russia spy details

[July 02, 2010]  NEW YORK (AP) -- Within hours of his capture, U.S. prosecutors say, Russian spy suspect Juan Lazaro admitted his name was an alias.

Caption: In this undated photo, Peruvian journalist Vicky Pelaez is seen on assignment in Lima, Peru.  Pelaez and her husband , Juan Lazaro, were among 10 suspects arrested in a sweep in the United States on June 27 as part of an alleged Russian spy ring and charged with conspiracy to act as agents of a foreign government without notifying the U.S. attorney general, which carries a maximum penalty of five years in prison upon conviction. (AP photo/Diario La Republica)

So who is he? Lazaro wasn't saying -- not "even for his son," court papers say.

Lazaro's admission -- and defiance -- was revealed Thursday by federal prosecutors arguing against bail for him, his wife and another couple with children. The U.S. government claims those defendants and seven others were part of a spy ring on assignment to infiltrate America's cities and suburbs for the Russian intelligence service.

Their cover was so deep, "there is no inkling at all that their children who they live with have any idea their parents are Russian agents," Assistant U.S. Attorney Michael Farbiarz told U.S. Magistrate Judge Ronald L. Ellis.

Farbiarz warned that a powerful and sophisticated network of U.S.-based Russian agents was eager to help defendants in the spy ring flee the country if they were released on bail.

"There are a lot of Russian government officials in the United States who are actively assisting this conspiracy," he said.

The judge ruled that two defendants, Cynthia and Richard Murphy, should remain in custody because there was no other way to guarantee they would not flee since it's unclear who they really are. But he set bail of $250,000 for Lazaro's wife, prominent Spanish-language journalist Vicky Pelaez, a U.S. citizen born in Peru, saying she did not appear to be trained as a spy. The judge required electronic monitoring and home detention and said she would not be freed before Tuesday, giving prosecutors time to appeal.

The judge ruled after Farbiarz said the evidence against the defendants continued to mount and the case was solid.

"Judge, this is a case where the evidence is extraordinarily strong," Farbiarz said. "Prosecutors don't get cases like this very often."

The decision to set bail for one defendant came as police on the island nation of Cyprus searched airports, ports and yacht marinas to find a man who had been going by the name Christopher Metsos, who disappeared after a judge there freed him on $32,500 bail. Metsos failed to show up Wednesday for a required meeting with police. He was charged by U.S. authorities with supplying funds to the other members of the spy ring.

In New York, prosecutors cited new evidence such as $80,000 in new $100 bills found in the safe-deposit box of the Murphys, who had been living in a Montclair, N.J., home paid for with money from the Russian intelligence service. Other evidence included the discovery of multiple cellular phones and currencies in a safe-deposit box and other "tools of the trade when they're in this business," Farbiarz said.

He said the spy ring consisted of people who for decades had worked to Americanize themselves while engaging in secret global travel with false passports, secret code words, fake names, invisible ink, encrypted radio transmissions and techniques so sophisticated that prosecutors chose not to describe them in court papers.

The prosecutors' claims were countered by lawyers for several defendants who said their clients were harmless and should be released on bail.

"It's all hyperbole, your honor," said attorney Donna Newman on behalf of Richard Murphy.

Lawyers for Lazaro asked to postpone his bail hearing just hours after prosecutors revealed in a letter to the judge that their client had made incriminating statements.

U.S. authorities said in their court filing that Lazaro made a lengthy statement after his Sunday arrest in which he discussed some details of the operation.

Among other things, prosecutors said, he admitted that Juan Lazaro wasn't his real name, that he wasn't born in Uruguay, as he had long claimed, that his home in Yonkers had been paid for by Russian intelligence and that his wife had passed letters to the "Service" on his behalf.

He also told investigators that even though he loved his son, "he would not violate his loyalty to the `Service' even for his son," three assistant U.S. attorneys wrote in a court memo. They added that Lazaro, who investigators claim spent at least part of his childhood in Siberia, also wouldn't reveal his true name.

Earlier in the day, the lawyer for another suspect, Donald Heathfield, told a judge the case against his client was "extremely thin."

"It essentially suggests that they successfully infiltrated neighborhoods, cocktail parties and the PTA," attorney Peter Krupp said.

A judge in a federal court in Boston gave Heathfield and his wife, Tracey Lee Ann Foley, of Cambridge, Mass., until July 16 to prepare for a bail hearing.

Not due in court Thursday was Anna Chapman, the spy suspect whose heavy presence on the Internet and New York party scene has made her a tabloid sensation. She was previously ordered held without bail. Her lawyer said the case against her is weak, and her mother said she's innocent.

But Chapman's former husband said her father was a high-ranking KGB officer and he wasn't shocked to learn about his ex-wife's secret life, a British newspaper reported Friday.

"Towards the end of our marriage she became very secretive, going for meetings on her own with 'Russian friends', and I guess it might have been because she was in contact with the Russian government," he was quoted as saying in London's Daily Telegraph in an article published Friday.

The couple were married in Russia in 2002, divorced in 2006.

A magistrate judge in Alexandria, Va., postponed a Thursday hearing for three other people accused of being foreign agents and rescheduled it for Friday.

[Associated Press; By TOM HAYS and LARRY NEUMEISTER]

Associated Press writers Denise Lavoie in Boston, Kathleen Miller in Alexandria, Va., Karen Matthews in New York and Menelaos Hadijcostis in Nicosia, Cyprus, contributed to this report.

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