Prosecutors say suspect in spy ring admitted working for Russian intelligence service

Prosecutors: Suspect in Russian spy ring confessed

NEW YORK — One of the suspects in an alleged spy ring has confessed to federal agents that he worked for Russia’s intelligence service, federal prosecutors said Thursday.

The revelation came on a day when lawyers for several defendants had been poised to argue in court that their clients, accused of going undercover in American cities and suburbs, were harmless and should be released on bail.

But federal prosecutors said incriminating statements by Juan Lazaro were among a series of events that underscore the need to keep the 10 suspects now in custody behind bars.

Investigators revealed that they had recently discovered $80,000 in new, hundred dollar bills in the safe-deposit box of two other suspects, who had been living in Montclair, N.J.

“There is little need here for speculation as to what will happen if the defendants are permitted to walk out of the court persuant to a release order,” Assistant U.S. Attorney Michael Farbiarz wrote to a judge in New York. “They will flee.”

And across the globe that’s exactly what happened with one suspect. Authorities scoured a Mediterranean island for an alleged co-conspirator who vanished after he was granted bail.

U.S. authorities said in a court filing that Lazaro made a lengthy statement after his June 27 arrest in which he discussed some details of the operation, which prosecutors said involved Russian moles on a long-term mission to inflitrate American society.

Among other things, prosecutors said, he admitted that “Juan Lazaro” was not his real name, that wasn’t born in Uruguay, as he had long claimed, that his home in Yonkers, N.Y., had been paid for by Russian intelligence, and that his wife, the Peruvian journalist Vicky Pelaez, 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.

Lazaro, Pelaez, and the two New Jersey suspects, Richard and Cynthia Murphy, were scheduled to appear before a U.S. magistrate Thursday on the issue of whether they should be released on bail pending trial.

Federal prosectors said they had searched a safe-deposit box belonging to the Murphys this week, and found eight unmarked envelopes each stuffed with $10,000.

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,” said his attorney, Peter Krupp.

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.

As they entered the court in handcuffs and leg shackles, the couple smiled at their sons, a teenager and a college student. The boys waved to their parents.

A magistrate judge in Alexandria, Va., postponed a hearing for three other people accused of being foreign agents, Michael Zottoli, Patricia Mills and Mikhail Semenko. It has been rescheduled for Friday.

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 ring.

Authorities also examined surveillance video from crossing points on the war-divided island, fearing the suspect might have slipped into the breakaway north, a diplomatic no-man’s-land that’s recognized only by Turkey and has no extradition treaties.

Not due in court Thursday was Anna Chapman, the alleged spy whose heavy presence on the Internet and New York party scene has made her a tabloid sensation. She was previously ordered held without bail.

Eight of the suspects are accused by prosecutors of being foreign-born, husband-and-wife teams who were supposed to be Americanizing themselves and gradually developing ties to policymaking circles in the U.S.

Most were living under assumed identities, according to the FBI. Their true names and citizenship remain unknown, but several are suspected of being Russians by birth.

Heathfield claimed to be a Canadian, but was using a birth certificate of a deceased Canadian boy, agents said in a court filing. His wife, Foley, purported to be from Canada, too, but investigators said they searched a family safe deposit box found photographs taken of her when she was in her 20s that had been developed by a Soviet film company.

Lazaro had said he was born in Uruguay and was a citizen of Peru; he was secretly recorded by the FBI talking about a childhood in Siberia, according to court documents.

Two, Chapman and Semenko, were Russians who didn’t attempt to hide their national origin, FBI agents said.

Britain’s Foreign Secretary William Hague said the U.K. was investigating whether Foley might have used a forged British passport. The British spy agency MI5 also is investigating the extent to which Foley and Chapman had links to London, and will likely seek to find out whether either attempted to recruit British officials as informants.

There is evidence that at least some of the alleged agents had success cultivating contacts.

Clare Lopez, senior fellow at the Center for Security Policy and a former operations officer for the CIA, said the alleged plotters might have someday been able to produce valuable information, if left in place long enough.

“Their value is not just in acquiring classified information,” she said. “There’s a lot that goes on that’s not simply stealing secrets and sending them back to Moscow.”

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.