Mystery of the 'sleeper cell' that gave Russian espionage a bad name

Kim Sengupta delves beyond the lurid headlines to identify just how great a threat – or otherwise – the alleged agents posed

It was a high-octane tale of secrets and lies; of dangerous Russian agents who had infiltrated the heart of the America; of buried pots of money; of clandestine meetings in parks; there was even a flame-haired femme fatale. The geopolitical consequences, we were told, were incendiary – reminiscent of the dark days of the Cold War.

But despite the breathless accounts, the real story had more than an element of bathos. The prosecution have yet to produce any evidence of deep intelligence being passed by the "spy ring" to their Moscow handlers. In fact the Russian agents were not even successful enough to face espionage-related charges, being accused, instead, of failing to register with the US authorities as representatives of a foreign power and omitting to declare income for tax purposes.

"The government's case essentially suggests they successfully infiltrated neighbourhoods, cocktail parties and the Parents and Teachers Association," said Peter B Krupp, the lawyer for Donald Heathfield, after studying FBI affidavits. "It is all a bit confusing." Mr Heathfield, one of the defendants, was charged with his wife, Tracey Lee Foley.

Neighbours were certainly fooled by the agents' efforts to fit in. One told The New York Times: "But they couldn't have been spies! Look what she did with the hydrangeas." Another revealed: "They were just like anyone else around here. They had lots of pizzas and family-sized meals delivered."

According to US officials, the real purpose of the "sleeper cells" was to win the confidence of influential political circles, find out their thinking about Russia and get inside knowledge of Barack Obama's tactics in last year's Moscow summit.

Yet they were in no position to gain any of this information in the shopping malls where they spent much of their alleged spying money, or the parks where they met. This was clear from a dialogue taped by the FBI in which two of the agents, husband and wife Juan Lazaro and Vicky Pelaez, talked about about the lack of appreciation shown towards them by Moscow.

"They tell me that my information is of no value because I didn't provide any source. They say that without a source, without saying who tells you all of this, it's of no use to them." Ms Pelaez tried to soothe him, saying: "Just put down any politician from here."

Ms Pelaez could have gathered views about Russia from politicians through her job as a journalist. But she had chosen an unusual method of blending into mainstream US media: her column in a Spanish language newspaper, El Diario, was viewed as extremely left-wing, containing regular homages to Fidel Castro and castigating US policies.

Previous KGB operatives had used very different tactics to infiltrate the Western establishment. In his early days Kim Philby, who reached the highest ranks of MI6 while working for the Soviets, covered the Spanish Civil War for The Times. But he ensured he did so from Franco's side and, subsequently, on returning to London, built up links with right-wing circles. Having failed to gather "humint" – human intelligence – the Russian cell also seemed to have been rather backwards in the use of secret electronics, depending instead on off-the-shelf consumer electronics. They also used invisible ink and a manual encryption method known as "one-time pad" – both available in many "spyware" shops in New York and London.

The FBI were keen to stress that the spies were trying their utmost to carry out their work in secret. One example they gave was of Anna Chapman, the "Mata Hari" who, according to one American tabloid, had "Sexy Red Agent's Locks to Die For".

Ms Chapman would go to a coffee shop in Manhattan and set up her laptop. Then, using a standard Wi-Fi chip, she "probably" communicated with a minivan which would be seen with suspicious regularity in the neighbourhood. Another sign of her ingenuity was that she bought a "pre-paid" mobile telephone, which did not come with a contract and thus the shop did not check her ID before selling it.

Glenn Fleishman, who edits the "Wi-Fi News" blog in the US, maintained that the standard Wi-Fi link used by Ms Chapman was "pretty amateurish and laughingly easy to sniff out". He pointed out that other technology for short-wave transmission was commercially available; known as ultra-wideband radio, this would have been almost impossible for the FBI to pick up.

Robert Emerson, a British security consultant, said: "We are in a world of smoke and mirrors. The use of a 'prepaid' phone is being put forward as devilishly crafty. But the fact is that thousands of people use them every day and there are much more secure ways of communicating. Look, maybe this woman and her associates really were engaged in espionage. But they seemed to have been pretty crap at it." Ms Chapman's seeming lack of spying acumen is particularly surprising given that her father, Vasily Kushchenko, was supposed to have been a "high-ranking officer in the Russian security forces".

Alex Chapman, a 30-year-old trainee psychologist, married Anna Kushchenko in Moscow in 2002, five months after they met at an underground rave party in London's Docklands when she was working for the small business banking division of Barclays.

The marriage did not last, but Mr Chapman decided to sell his story to the newspapers after his wife appeared in the news. He said: "Anna told me her father had been high up in the ranks of the KGB. She said he had been an agent in 'old Russia'. Her father controlled everything in her life and I felt she would have done anything for her dad."

Mr Chapman, showing impressive counter-intelligence nous, said he was "not surprised" to discover that Anna had been arrested for spying: "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."

After leaving Barclays Ms Chapman worked for a hedge fund – the only evidence so far that she intended to cause any damage to the UK while resident here – before moving to the US. Her ex-husband thought this, too, was suspicious because she had always complained about American accents. However, he added: "She had met a rich American man who had taken her to the States and when she came back she said she loved it."

According to reports in the US media Ms Chapman became "romantically involved" in New York with Michael Bilton, a New Jersey millionaire aged 60 who "loves surrounding himself with beautiful women, mostly Russian". Whether Mr Kushchenko was a bad father in failing to tutor his daughter properly on the family's spying heritage cannot be ascertained because there is no verification that he had, in fact, been an agent in "old Russia". But old Russian intelligence hands are embarrassed by the ineptitude of the secret American cell.

Juan Lazaro made a lengthy statement soon after his arrest admitting that that was not his real name, that he was not born in Uruguay and that his home in Yonkers was paid for by the Russians. He declared, with a flourish, that his loyalty to his service was greater than his love for his son. The service, however, was still waiting for a decent report out of him.

Mikhail Lyubimov, who had worked as a KGB operative in Western Europe in the Seventies and Eighties, said: "We don't seem to have the human resources to continue this competition with dignity." Gennady Gudkov, deputy chairman of the State Duma's security committee, added: "In the best times of Soviet history, the organisers and controllers of such a sloppy operation would have ended in prison. And at the worst times, they would have been shot."

Vladimir Putin significantly increased funding for the SVR, the successor to his former employers, the KGB, and other Russian security services, when he came to power. But accounting appears to have become a major preoccupation. A message intercepted by the American authorities to the spy cell showed the director of SVR poring over the cost of the house used by his agents: "We are under the impression that C views our ownership of the house as a deviation from the original purpose of our mission here. We'd like to assure you that we do remember what it is," it read.

Robert Emerson, the security consultant, said: "What on earth is going on here? We have the director of their intelligence agency worrying about who owns a piece of real estate. Hasn't he got other things to worry about? At this rate the West does not seem to have much to worry about."

But it was not that long ago that British agents were caught in Moscow using a fake "rock" to pass intelligence. The idea apparently came from watching a David Attenborough wildlife programme in which a tiny camera was hidden inside artificial elephant dung. The secret mission was filmed and shown on Russian TV, leaving red faces in London. Vladimir Putin's first reaction at the time was that the MI6 agents should not be expelled. "If these spies are sent out, others will be sent in. Maybe they will send some clever ones next time who will be far harder for us to find. Maybe we don't want that to happen."

The suspects

Christopher Metsos

The alleged moneyman, Metsos was picked up in Cyprus but jumped bail and is still at large.

Juan Lazaro

The political science professor is said to have confessed to spying. His bail hearing has been postponed.

Vicky Pelaez

Married to Lazaro, she is a newspaper columnist who has criticised US policy. Granted bail in New York.

Patricia Mills

Claimed to be Canadian, but friends doubted her accent. Accused of receiving coded radio messages.

Michael Zottoli

Married to Mills, the pair were photographed digging up cash buried in a field by Metsos.

Tracey Lee Ann Foley

Partner in tech firm with husband Donald Heathfield; prosecutors say she used a fake British passport.

Donald Heathfield

A graduate of Harvard, where he was a classmate of the Mexican President, Felipe Calderon.

Mikhail Semenko

A travel agent fluent in four languages, he drove a Mercedes. Arrested in Washington suburbs.

Cynthia Murphy

Developed contacts with an ally of Hillary Clinton, Alan Patricof. Married to Richard Murphy.

Richard Murphy

Apparently used a false birth certificate. Criticised by his wife for failing to make contacts.

Anna Chapman

The daughter of a Russian diplomat was caught taking a passport from an FBI agent.