(2 of 2)
The FBI is investigating what went wrong. Its rules require that two agents handle informants, in part to avoid inappropriate relationships. And the large payments to Leung would have required approval from supervisors. When FBI Director Robert Mueller learned details of the case, say bureau sources, he was furious. He removed the division director, named a special task force to investigate the case and moved the entire human-asset operation to the new office of intelligence.
The repercussions for agents Smith and Cleveland are deeply personal. Smith, 59, admitted to the affair after the FBI had recorded him having sex with Leung in an L.A. hotel. Smith, who through his attorneys denies any wrongdoing, was charged with gross negligence and released on bail. Cleveland, who was not charged (and declined to talk to TIME), left the bureau in 1993 and took a job at the Lawrence Livermore National Laboratory, a nuclear-weapons research facility. He resigned last week, and the lab is investigating whether any of its classified data were leaked. As for Leung, she remains in custody as a flight risk. Her American Dream is now a bleak nightmare. --Reported by Elaine Shannon/Washington and Sonja Steptoe/Los Angeles