State Department Counterintelligence: Leaks, Spies, and Lies

by Robert David Booth

  The day after his luncheon with the two TECRO NSB agents, Keyser sent an e-mail to Cheng in which he stated, “I’m glad if the background helped. By now you know that, as we say, your wish is my command. All you need to do is ask, and I will do my best to reply quickly, fully and helpfully. No matter the subject, whether official or personal or anything.” As the FBI and DS investigators read the May 23 e-mails, there was little doubt in their minds that Keyser was treading in very dangerous waters.

  Chapter Seven

  On May 29, 2004, FBI agents observed Keyser and Cheng boarding an Amtrak train at Union Station in Washington, DC. They were destined for New York City, where they spent the day sightseeing, including a cozy hour of drinks together at a New York hotel before returning home.

  Keyser sent Cheng an e-mail on his State Department computer the next day in which he said, “Having my arm around your shoulder, your head resting against my shoulder, and then on my chest, your hand in mine for a couple of hours while you were in ‘Dreamland’ was more than ample compensation. . . . Now I’m going to have to think a [sic] particularly cunning plan to induce you to come to Honolulu in the middle of June.” Not surprisingly, never once did the investigators see such romantic messages being forwarded on his department computer to his wife, Margaret.

  When the FBI watched Keyser and Cheng walking together in the cavernous White Flint Mall located a few miles outside Washington on June 30, 2004, the agents were alerted to the “mall stroll” from a previous e-mail sent by Keyser to Cheng in which he remarked, “Careful about telling me where you’ll be on Saturday afternoon. . . . It’s been a while since I practiced my ‘accidental encounter’ methodology at White Flint.”

  The investigators were amused by Keyser’s attempts to impress Cheng with his basic CIA training and pleased to note how he characterized the meeting. Despite future denials, Keyser had defined the clandestine nature of their relationship in writing that day. Then, unexpectedly, Keyser managed to upend the entire direction of the investigation.

  Toward the middle of July, he gave the department an official notification of his intention to retire at the end of September 2004. Apparently the department had informed Keyser that he was its top candidate for senior officer at the AIT, the US government’s equivalent to TECRO. The only formal requirement for any appointment to the AIT was that the individual cannot be an active department or US government employee. The stipulation was about diplomatic sensibilities and smoke and mirrors and little else. As Keyser had already passed the minimum age for retirement, was a specialist on cross-strait issues, spoke fluent Mandarin, and had spent more than two years in Taiwan previously, there couldn’t have been a better candidate. Shortly after considering his options, Keyser announced his retirement in order to prepare for his potential future assignment to Taipei.

  The foreign affairs regulations require all department employees to notify the Retirement Office of their pending departure so that the proper paperwork can be completed to ensure a smooth transition to private life. As part of the retirement process, employees are enrolled in a two-month Retirement Planning Seminar offered at the Career Transition Center at the Foreign Service Institute. The conundrum Keyser’s impending retirement presented to the investigators was this: while the investigation had confirmed that the department’s EAP PDAS was involved in a clandestine relationship with a foreign intelligence officer residing in the United States under diplomatic cover, the special agents had never observed or recorded Keyser physically providing the NSB agent with a genuine classified government document. And now, with his impending departure from the State Department and his access to official secrets coming to an end, the chance of catching him in such an overt act of espionage was vanishing. This was the same investigative conundrum that unexpectedly developed in the Kendall Myers case.

  It was time for the Justice Department to decide how the penultimate act of this drama cum comedy would play out. However, until a decision could be made, Keyser and Cheng would continue to meet. Surveillance could be so boring at times for those who watched and waited.

  On July 23, 2004, around 8:10 p.m., Keyser once again picked up Cheng at TECRO in his personal vehicle and drove to the Washington Gas utility lot in Rockville, Maryland. During the next twenty minutes, FBI agents observed Keyser in the reclined driver’s seat with his head leaning back against the headrest. The agents also observed Cheng in the front passenger seat leaning across the defendant with her back facing upward and head below the line of observation. I wonder if Keyser ever considered for a moment that his evening with Cheng would be described in a Department of Justice court filing.

  Neither the FBI nor DS agents were happy when, eight days later, Keyser exited his car with three manila envelopes under his arm and headed in the direction of the Potowmack Landing Restaurant in Alexandria, Virginia, which sits overlooking the Potomac River. Luckily for the investigators, once again, Keyser had clumsily attempted to masquerade the nature of his luncheon and the participants’ identities on his department electronic calendar. Once inside, Keyser headed to a table where Cheng and General Huang were seated. Briefly rising out of their seats, they shook hands and got down to work.

  The FBI observed Keyser providing one large document to each of the two NSB officers. Cheng put her envelope in her handbag, and General Huang took one document out to scrutinize before putting the paper back inside the envelope. According to the statement of one FBI agent, the envelopes contained documents that appeared to have blue State Department markings on them.

  The three talked a great deal over lunch. When Keyser left the restaurant by himself, the FBI agents noted that he was carrying only one manila envelope that was folded up. Whatever was inside those envelopes was now in the hands of the NSB. The FBI would get a better understanding of their contents when they gained possession of the official NSB cables sent to Taiwan by the very participants in those luncheons.

  In early August, Keyser forwarded a paper to Cheng via e-mail entitled “PRC weapons.” At this point in Taiwan–PRC relations, the Beijing government was again saber rattling, probably for home consumption, that the time was now right for the reunification of China by force.

  Regardless of the seriousness of the PRC’s intent, the NSB needed to provide its government with quality analysis of the potential Chinese military threat. Given Keyser’s experience, his analysis was invaluable to them.

  As the Department of Justice attempted to determine exactly what violations of law could hold up in a federal courtroom, Keyser sent an e-mail to Cheng on August 1, 2004, the first day he started his retirement seminar at the Foreign Service Institute. In the e-mail, he further defined their relationship: “After two years of sharing thoughts—and increasingly intimate thoughts—I can no longer imagine how it could be otherwise. . . . I mentioned long ago that you are incredibly easy for me to talk to. . . . And so I continue to say silent prayer (though I am not religious) and make silent wishes that somehow that will be able to endure.”

  Just a few days after starting his retirement course, Keyser left FSI’s Arlington campus and ventured over to Fin, a seafood restaurant located on Nineteenth Street in Washington, DC, with an outdoor café. The FBI agents noted that when Keyser entered the establishment, he held a piece of paper in his hand. Cheng had arrived about fifteen minutes earlier, and he walked directly to her table and placed the document on her menu.

  He sat down, and she quietly read the paper before handing it back to him. They enjoyed a casual and decidedly crustaceous lunch, punctuated by animated conversation, before parting some two hours later.

  Completely infatuated with Cheng for the past year, Keyser arranged for a meeting with her on August 11, 2004, where the two enjoyed a long luncheon accompanied by fine libations. Afterward FBI agents observed Keyser and Cheng drive off in his car and park on a quiet side street in Washington. The agents observed movement in the car similar to the “rocking motion” noted in their July 23 encounter. For approximately twent
y minutes, Cheng’s head disappeared from view.

  After the parking session was over, Keyser drove Cheng back to her apartment. In a cellular phone call to Cheng only minutes after she returned home, Keyser told her: “The food was good, the wine was good, the champagne was good, and you were good.” All told, things must have been good between them. Despite future denials, Keyser’s intimate relationship with Cheng had been captured and recorded for posterity.

  Six days later, the two-year-old investigation almost collapsed. Once again, Keyser arranged to pick up Cheng from TECRO. Leaving the Taiwan compound in his private vehicle, they eventually parked in a secluded PEPCO power station lot in suburban Maryland. About thirty seconds later, an undercover FBI car glided into position some thirty yards away to record their activities. Unfortunately one energetic FBI agent leaned a little too far outside the car’s window with a video camera in hand.

  As bad luck would have it, a passerby discovered the Keystone Cops at work. After about a minute, the individual walked over to Keyser’s car, knocked on the window, and advised the pair that a white male in a car with DC license plates appeared to be photographing them. Keyser thanked the helpful Samaritan and immediately drove off to Cheng’s apartment.

  The following day, the FBI tried to prevent an investigative meltdown. In a telephone call recorded that morning, the agents listened as Keyser coached Cheng on how they should react if questioned regarding the PEPCO incident. They discussed a variety of possible explanations and scenarios. Why did innocent people need to coordinate answers when the simple truth should suffice? Keyser was recorded saying: “[W]e just have to think a little bit about . . . explanations and then work out from here. . . . It’s obviously . . . not a particularly delightful development. . . . There are probably as many as five different explanations. I don’t especially like any of them, but . . . we just need to think through what each one might mean and then . . . figure out . . . how to address it.”

  Was Keyser’s primary fear that his current wife had become suspicious about his newfound habit of late evenings and hired a private detective to document his infidelity as his first wife had done? Or was Keyser’s first concern that he was about to become the victim of a criminal or foreign intelligence blackmail attempt? Maybe he thought that he was wrongfully being watched by federal investigators, for later on in the recorded conversation he told Cheng, “you know and I know that nothing bad has occurred in terms of anything that . . . is contrary to anybody’s law or regulations. . . .” Or maybe Keyser made that statement suspecting that the phone call was being intercepted.

  The creativity of the FBI knew few bounds. On August 27, 2004, a Fairfax County detective, with permission from his supervisors, knocked on the door of Keyser’s residence and stated that he was investigating potential terrorism activity. The detective explained that his police counterparts in Maryland had filmed a vehicle with Virginia license plates registered to Keyser parked near a public utility, which seemed suspicious.

  Keyser identified himself as a senior department official, confirming that he was the owner of the car in question and that he was the driver of the car on the night in question. After a few more questions and answers, the Virginia detective said good-bye and left. The calculated gambit paid off handsomely. The specter of terrorism can sometimes be a good thing for those who protect and serve their nation—and their own devious ends.

  A few minutes later, Keyser called Cheng and left the following voice mail on her private phone: “I just had an interesting experience . . . but I don’t want to share it over the phone. Suffice it to say that the . . . mystery . . . that we experienced a while back has now been resolved. And, actually the outcome is probably the best possible one that we might’ve imagined. . . . But I’ll talk about it later.”

  Time was running out for the investigative team as Keyser approached his retirement date and no incriminating physical evidence was in hand to go forward with an espionage prosecution by DOJ. In order to determine if Keyser was actually passing classified documents to Cheng, the FBI decided to try to film an entire lunch the next time Keyser met with his NSB colleagues. The investigators had determined that Cheng and Keyser had made reservations for three (General Huang was coming this time) at the Aquarelle restaurant located inside the Watergate hotel.

  SA Giovanna Cavalier and her FBI counterpart entered the restaurant twenty minutes before Cheng and Keyser and, with the help of the restaurant staff, were seated at a window with a beautiful view of the Potomac River. Better than the view was the fact that there were no tables or chairs between them and the Keyser party. The surveillance team had a hidden camera that was aimed directly at the Keyser table.

  Soon after, the FBI–DS surveillance team watched as Huang, Cheng, and Keyser chatted about their luncheon selections. The investigators couldn’t help but marvel at how innocent Keyser’s lunches with the NSB agents appeared to the untrained eye. Foreign intelligence services have always taken advantage of the average US citizen’s absolute disbelief and disinterest in espionage matters.

  At one point during the lunch, the FBI special agent got up to head to the restroom, and just then Keyser pulled out what appeared to be several pages stapled together. As Keyser handed the document to Cheng and General Huang, several diners made their way out of the restaurant, blocking the camera’s view. However, SA Cavalier was able to see red underlined writing on the top of the document, which she recognized as being similar to the red “secret/noforn” (no foreign dissemination) label that the department puts on the header of classified documents. She could not, though, discern the exact wording on the document in question.

  The next day, the FBI was eager to know about the document and came to DS/CI to discuss exactly what SA Cavalier had seen. While the hidden camera had caught the passing of the document, it was impossible to make out the words. Much to the FBI’s dismay, DS/CI could not confirm the marking “secret/noforn,” only that the document passed had a heading highlighted in red, like department classification markings. Later Cheng would provide the document to the FBI, and it would show that the words “Talking Points” with a date that had been typed in red and underlined at the top center of the document.

  Keyser was within two months of retiring, and the case was not as strong as either the federal investigators or the Justice Department would have liked. The physical evidence to support a conviction of espionage was weak. It was mostly circumstantial fluff and not much more.

  Fortunately DS decided with the FBI earlier in the investigation to bolster our prosecution chances by catching Keyser in violation of another federal law. Any federal law would do; we were not particularly picky at this point. Therefore, it wasn’t by chance that in early 2004, DS informed him that he needed to submit a security questionnaire, Standard Form (SF) 86, to initiate a routine update investigation to maintain his “top secret” security clearance. According to Executive Order 12986, all individuals with such a clearance were subject to periodic reinvestigations at any time but no later than five years from the date of the previous completed investigation. Keyser was approximately one year shy of the five-year limit, but DS/CI decided to accelerate his reinvestigation.

  The SF-86 contains a block in which the employee is instructed: “List any foreign countries you have visited, except on travel under official government orders, working back seven years.” Keyser, while indicating that he had taken personal travel to France in April 2000 and Ireland in May 2003, omitted his September 2003 trip to Taiwan. It was not an official trip since he had asked Assistant Secretary Kelly for annual leave for those days. Keyser had simply gone through the ritualistic motions at the time, knowing there would be no problem as long as he did not tell his boss he planned to go to Taipei.

  Prior to submitting his completed SF-86 electronically, he printed a page entitled “Certification That My Answers Are True” and signed the block underneath that states, “My statements on this form, and my attachments to it, are true, complete, and corre
ct to the best of my knowledge and belief and are made in good faith. I understand that a knowing and false statement on this form can be punished by fine or imprisonment (18 USC 1001).” On May 3, 2004, Keyser signed the certificate and faxed it along with the required questionnaire to the DS Personnel Security Division in Arlington, Virginia.

  When shown the signed certification a few days later, SA Warrener exclaimed even more exuberantly than he did at Dulles International Airport some nine months earlier: “Got him a second time!” Keyser had falsified a federal document in addition to his false sworn statement on his customs form when returning from his trip to Taiwan in 2003. His deceptions were beginning to add up to something meaningful.

  The investigators wanted to take advantage of the required clearance update process to see if Keyser would lie a third time to disguise the nature of his relationship with Cheng. Not satisfied with just two counts of 18 USC 1001, we wanted more charges if we could find them. All department update investigations for access to “top secret” material include a personal interview conducted between the employee and a security investigator. If done properly, the interviews can elicit information that otherwise wouldn’t be disclosed during an investigation. It could be a great investigative tool in the right hands.

  On August 9, 2004, a DS special agent met with Keyser at FSI to conduct the required update interview. Every special agent of the Diplomatic Security Service was responsible at one time or another in his or her career for conducting update investigations both in the US and abroad. I cannot remember how many hundreds of update inquiries I had managed over my twenty-eight years, but I never forgot the critical step of reminding the interviewee of the necessity to be candid and truthful. To emphasize that point, employees were reminded that any falsification of fact could result in a loss of security clearance and possible criminal sanctions. The agent interviewing Keyser had been briefed beforehand regarding our interests.