State Department Counterintelligence: Leaks, Spies, and Lies

by Robert David Booth

  Keyser was advised of the importance of being absolutely honest and candid during the interview and was specifically told that it was a crime under Title 18, United States Code, specifically section 1001, to knowingly falsify or conceal material facts related to the background investigation. He was untruthful when he denied being involved in a reportable relationship during direct questioning. Moreover he had fibbed on his signed SF-86 about his relationship with a foreign national, his vulnerable personal behavior, and his foreign travel. After the meeting, the interviewer thanked Keyser for his time, closed his notebook, and returned to his office. When informed of the results of the interview, SA Warrener exclaimed “Strike three!”

  David H. Laufman, the assistant United States attorney (AUSA) and senior Department of Justice official assisting with the investigation, decided it was time to confront Keyser given his impending retirement. In late August 2004, he directed the FBI to interview Keyser under circumstances that would underscore the seriousness of the chat. Maybe they would get lucky and find evidence of a crime of espionage or, better yet, an admission of guilt.

  Running out of time, and with AUSA Laufman’s blessing, the FBI decided to intercept the next document Keyser passed to Cheng or General Huang regardless of circumstances. Once again, the team was able to determine that the trio had made reservations for the afternoon of September 4. The FBI and DS SAs spent all day on September 3 practicing for the intercept and possible arrest and search. SA Warrener had just returned from his temporary tour of duty in Baghdad and readily volunteered to be part of the team that would search Keyser’s residence. SA Cavalier was a member of the team that would detain and question the two NSB agents.

  On September 4, Keyser strolled into the Potowmack Landing restaurant in Alexandria, Virginia, and joined Cheng and General Huang for lunch. At the cozy and casual setting, the surveillance team noted that Keyser passed a legal-sized manila folder to Cheng, who put it away on her person. As on every other occasion, Cheng picked up the tab for the meal. She must have had deep pockets and an open expense account. After finishing dessert, the trio stood up, and the two NSB officers left the restaurant separately from Keyser. FBI special agents detained Cheng and General Huang as they walked to their car while a separate FBI team stopped and questioned Keyser.

  Both TECRO officials immediately told the FBI of their identity and did not attempt to conceal the fact that they were also NSB officers. Cheng quickly surrendered the manila folder, in which the FBI special agents found six pages of typewritten notes, one of which contained the caption “Talking Points.” As the agents thumbed through the pages, they did not find any security classifications or other government markings. The absence of such indicators was not a good sign.

  SA Cavalier quickly made copies of the six typewritten pages on a copy machine made available by the restaurant’s management. Diligent as ever, she then ran a blank sheet through “at least twenty-five times,” as she later told me, in order to remove the images from the photo machine’s memory.

  While the FBI was interviewing Cheng and Keyser, SA Cavalier returned to her office and logged onto her classified telegram program. Due to her position in CI, she had the ability to access almost all department cables processed and transmitted through the classified system. She ran search terms that matched up phrases, dates, and topics in the “Talking Points” document that Keyser had just passed to the two NSB agents. She quickly determined that several exact phrases and statements from the Keyser document matched wording from both confidential and secret/noforn department cables. The phrases were so exact that had Keyser been writing the “Talking Points” for a college research paper, he would have been expelled for plagiarism.

  SA Cavalier quickly notified her superiors and the FBI of her findings. Her discovery was essential for a federal judge to authorize a search of Keyser’s residence. A department analyst would later conclude that whole sentences and paragraphs contained on the pages created by Keyser were lifted from official US State Department documents classified at the confidential level.

  Back to the Potowmack restaurant. What to do with two TECRO officials and a senior department officer suspected of conspiracy to commit espionage? There was not any incriminating evidence such as spy paraphernalia on their persons. The FBI’s solution was simple. Separate General Huang from his protégé and question them individually. Divide and conquer and hope for the best outcome.

  One block from the restaurant, two FBI agents stopped Keyser, identified themselves, and asked if he would be willing to answer some questions. Keyser agreed, and all three returned to the Potowmack restaurant and quietly occupied an inside table. Declining the option to use the restroom or order food, Keyser requested a glass of water—the only sustenance he would have during the following four-hour “talk” with the FBI agents.

  He readily identified himself as the principal deputy assistant secretary of state for EAP and confirmed that his luncheon partners were TECRO officials. The FBI agents advised Keyser he was not under arrest and free to leave at any time. Initially Keyser was very talkative and told the agents he had just finished lunch with two “liaison officials.” He also admitted providing them with a manila envelope that had six documents inside. He commented that he had known General Huang since 2001 and had been introduced to Cheng by Gregg Mann at a private reception for Henry Tsai held at Mann’s home in 2002.

  Getting quickly to the point, the FBI agents asked Keyser if he was passing restricted, sensitive, or classified information to unauthorized persons. Keyser’s response was to raise his eyebrows. He remarked that he was authorized by his position to pass “classified but releasable” State Department information to his TECRO contacts. He said a principal deputy assistant secretary of state has the independent authority to release classified information to foreign officials. He added that he was also passing such information to TECRO ambassador David Lee.

  One quickly had to question how many TECRO officials were using Keyser as their favorite source. Or maybe Keyser was passing one set of “classified but releasable” information to the TECRO NSB agents and another set of “classified but releasable” data to a TECRO Ministry of Foreign Affairs official. Why the need for three different contacts? Only later during the interview would Keyser admit that Cheng and General Huang were NSB agents and not Ministry of Foreign Affairs officials. To justify his practice of passing classified information to TECRO officials, Keyser advised the FBI that National Security Council member David Wilkins was similarly providing TECRO senior official David Lee with “classified but releasable” data. With Keyser’s unexpected NSC revelation, it was clear that the government of Taiwan had excellent sources available to it in Washington.

  Shifting gears, the FBI agents asked Keyser if he provided the NSB agents with information that was classified government data. He replied he’d prepared “talking points” taken from open source information that included scholarly papers, newspapers, and Council on Foreign Affairs publications and had reduced the salient points on sheets of paper that he provided General Huang and Cheng. What Keyser was unable or unwilling to recall was whether his “oral talking points” may have included classified but not releasable information.

  In response to FBI questions, Keyser commented that he wasn’t required to report his contacts with legitimate diplomats and foreign intelligence officers to the Diplomatic Security Service or anyone else. The two agents had one last question before allowing him to go about his business. They asked if he thought “top secret” or classified documents would be found during the ongoing search of his home. This was Keyser’s first inkling that his talk with the FBI was part of a much larger investigation. He replied that he would be “astonished” at such a possibility. The last FBI question served to alert him that the ongoing conversation was not just a casual interview. At the very moment he was talking to the two FBI agents in Alexandria, FBI and DS agents were executing a search warrant at his home to determine if he had violated federal law by
unlawfully removing classified US secrets to his residence.

  The two agents thanked Keyser for his cooperation and left him sitting alone at the table. Unfortunately for him, the FBI interviews of his luncheon partners had not been completed. Actually they were just about to start, and they would be appetizing.

  Separated from General Huang and uncertain of her legal status or professional future, Cheng had been convinced by the FBI to return to TECRO and turn over the classified NSB telegrams she had transmitted to the NSB headquarters in which she summarized the conversational details of her luncheon engagements with Keyser over the past two years. An interesting diplomatic privilege was in play at this point. TECRO officials did not enjoy the same diplomatic immunities enjoyed by fully accredited diplomats to other diplomatic missions. They were protected from searches and arrests only while inside the TECRO building or in their cars. Cheng was being detained at this point and could have been arrested by the FBI. Maybe this was the motivation for her to cooperate? The TECRO cables would be critical in confirming the nature of her relationship with Keyser. David Laufman, the federal prosecutor in the case, would eventually reveal that Cheng “voluntarily retrieved” all the classified cables she transmitted to NSB headquarters along with Keyser’s e-mails. No NSA skullduggery here. . . . Cheng just gave the DOJ critical evidence in support of a prosecution. And what did the TECRO cables reveal?

  For example, on September 23, 2003, Cheng transmitted a cable to NSB headquarters detailing Keyser’s written analysis of Chinese foreign minister Li Zhaoxing’s speech in Washington and private conversation with Secretary of State Colin Powell. A few weeks later, Cheng sent a secret cable to NSB headquarters describing Keyser’s analysis of Taiwanese president Chen’s controversial visit to New York that had Beijing fuming with anger. Cheng ended her cable by stating, “Mr. Keyser’s talk is very sensitive. It involves his e-mail communications with others. In order to keep this mutually beneficial and trusted relationship, please conceal the intelligence source of this report if this report is cited.”

  And again in a secret cable to NSB headquarters on November 25, 2003, Cheng concluded her report by saying, “The sources . . . of Keyser’s information is/are unclear. Please do not use this intelligence to avoid exposing of intelligence sources.” Regardless of future claims by Keyser, the NSB unhesitatingly desired to keep his identity secret—the hallmark of a clandestine relationship.

  While Keyser was being interviewed inside the Potowmack restaurant, an FBI/DS team drove up to the Keyser residence at 9500 Quail Pointe Lane in the suburb of McLean, Virginia. Located on one-third acre, this five-bedroom, $750,000 home was similar to its neighbors on this quiet cul-de-sac. Quiet, that is, until now. Opening the door, the third Mrs. Keyser, Margaret, was handed a copy of a search warrant.

  The agents subsequently discovered more than 3,600 classified documents, including more than twenty-five “top secret” papers, neatly catalogued and arranged throughout the house. Documents were found in closets, the basement, and the couple’s den. So many classified papers and computer files were discovered that a call went out for more FBI and DS agents to assist with the search. One DS agent showed up wearing blue jeans and a sweatshirt; an FBI agent arrived in a black evening dress and pearls. They all spent hours scouring the house. Of particular interest to the team were a Sony VAIO laptop computer and unlabeled computer disks.

  During the search, SA Warrener noticed a magnet affixed to the kitchen refrigerator with the following message: “Beware of Female Spies. Women are being employed by the enemy to secure information from Navy men on the theory that they are less liable to be suspected than male spies. Beware of inquisitive women as well as prying men.”

  SA Warrener took a photograph of the magnet and added it to his DS/CI Keyser file, titled “Dogpatch.” And then SA Warrener was confronted by unpleasant fallout from the search. He and his FBI colleague had to search the bedroom belonging to Keyser’s young teenage daughter.

  “Do you have to go through her room and her stuff?” Margaret asked.

  After glancing over to his FBI counterpart, Kevin said, “Yes, we do.”

  “Can I be inside while you do your job?” she pleaded.

  The immediate answer was “No.” As a father, SA Warrener was conflicted about what he had to do. When they finished their search of the young teenager’s room, the SAs removed a laptop and advised Margaret that they would have to seize the computer. The young teenager protested and said that her schoolwork was on the laptop and she needed it for her projects. She was a student at the Thomas Jefferson High School for Science and Technology, a magnet school operated in Fairfax County for academically gifted students. The SAs had no option, and the laptop was seized.

  Subsequent examinations by forensic specialists revealed that the disks for Keyser’s computer contained thousands of pages of classified information. None were found on the young teenager’s laptop.

  Midway through the search, following his four-hour chit-chat with FBI agents, Keyser arrived home. SA Kevin Warrener and I later had a conversation about what happened after Keyser entered the house.

  “Robert,” Kevin told me, “he looked absolutely miserable.”

  “What happened when he arrived?”

  “He came in the front door and did not call out to his wife or children. He just walked over to the living room couch and sat down.”

  “Did he say anything to the special agents walking around the house?”

  “No, he just sat there on the couch with his head in his hands.”

  As the federal agents were literally tearing up his house, he sat alone and spoke to no one. His family was elsewhere in the house. I asked Kevin if any neighbors came over.

  “As far as I can remember, the only people loitering outside were agents and technicians.”

  “So it was all peaceful while the search went on?”

  “Sure was,” Kevin said, “but I am not so sure how peaceful it was inside the house when we left.”

  After several hours, the agents concluded their search and prepared an inventory of the seized items, including classified materials and the laptop computer. As the government van drove off, Keyser was seen closing the front door. Presumably he went to explain to his family what had just happened.

  While Keyser’s home was being “tossed”—as they say—SA Cavalier was authorized to drive immediately to Annapolis and interview Keyser’s boss, Assistant Secretary of State James Kelly, to inform him of Keyser’s activities, including the unauthorized trip to Taiwan. Kelly was attending a reunion with his fellow graduates from the US Naval Academy (BS 1959) and was clearly having a lovely time with his wife and friends when SA Cavalier and a fellow DS special agent pulled up outside the reception. Approaching Kelly, they identified themselves and asked if they could have a quiet moment in an empty room.

  Scotch in one hand, cigar in the other, a puzzled Kelly followed the two SAs to a secluded anteroom. Kelly was clearly upset at being interrupted, and when they explained why they were there, he had even more reason to be upset. He had been left out of the loop regarding possible espionage activities of his right-hand man.

  There was nothing that the FBI or DS could have done to avoid this omission; Kelly was too close to Keyser, and the decision was made by senior department and FBI officials not to inform him of the investigation prior to Keyser’s initial interview by the FBI. SA Cavalier had a copy of the “Talking Points” paper which she wanted Kelly to review and comment on their sensitivity and level of classification. Perhaps Kelly should have been told about the FBI’s and DS’s interest in Keyser after the reunion was over, or had the news broken to him in pieces, waiting to have him review the document until after he had calmed down a little.

  Kelly’s interpretation of the information passed by Keyser to the NSB agents was very different from that of DS and the FBI. Upon reviewing the “Talking Points” document and seeing that some of the phrases and statements matched those found in classified de
partment cables, Kelly stated that was not why he had classified the department cables.

  As classifying authority, he had just kicked off a chain of events that could allow Keyser to avoid being prosecuted for passing classified information to a foreign clandestine intelligence officer.

  Chapter Eight

  The classifying authority in the State Department has the independent, autonomous right to state whether or not something that he, she, or they classified is still classified or was misclassified in the first place. When SA Cavalier asked Assistant Secretary Kelly to explain why he had classified those department cables, he reminded her that he signed off on hundreds of classified documents a month and could not give her an immediate answer.

  Just as quickly, Kelly offered justification for Keyser’s meetings with Cheng and General Huang despite the fact that Keyser had been doing so behind his back. When told about the unauthorized trip that Keyser took to Taiwan, Kelly appeared a bit more upset, but he refused to say anything suggesting that Keyser had acted badly. He expressed his disapproval only of not being informed of the DOJ inquiry. The interview was a disaster for the investigation.

  Once back in the office, SA Cavalier called SA Warrener, still at Keyser’s residence with the search team, to advise him of the results of the interview. SA Warrener told her about the thousands of classified documents found in Keyser’s basement. SA Cavalier badly wanted to travel and join the search team, but her branch chief ordered her home to sleep.

  Justice Department officials reviewed all the materials removed from Keyser’s home and concluded there was irrefutable evidence of a crime. But was it espionage or something else? On September 15, 2004, Magistrate Barry R. Poertz issued an arrest warrant, number 1:04M803, authorizing the FBI to arrest Keyser—not for espionage, but for lying, or more technically, “in a matter within the jurisdiction of the executive branch of the government of the United States, [Keyser did] knowingly and willfully falsify, conceal and cover-up by trick, scheme and device a material fact, and make a materially false, fictitious and fraudulent statement and representation.”