FBI releases operation 'Ghost Stories' files on ring of Russian sleeper agents including never-before-seen video and photos of spy-turned lingerie model Anna Chapman

By Daily Mail Reporter
Updated: 17:32 EDT, 1 November 2011

Undercover video taken by FBI agents of former-Russian spy turned lingerie model Anna Chapman shows the sexy redhead's low-key life in New York before her bust, deportation, and stardom.

The FBI on Monday released surveillance tapes, photos and hundreds of pages of documents that shed new light on operation 'Ghost Stories,' the bureau's investigation of a ring of Russian sleeper agents that ended after more than a decade in the biggest spy swap since the Cold War.

Called illegals because they took civilian jobs instead of operating inside Russian embassies and military missions, the spies, including New York real estate agent Anna Chapman, mostly settled into quiet lives in middle-class neighborhoods.

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Average Joe: Chapman seen having coffee with an undercover agent before her arrest appears as a person of many in New York City

Glitzy makeover: The Anna Chapman that became a media darling, seen here after her bust, bears little resemblance to the redhead seen in the FBI files

Their long-range assignment from Moscow: burrow deep into U.S. society and cultivate contacts with academics, entrepreneurs and government policymakers on subjects from defense to finance.

The heavily-edited files provide a glimpse into the intensive surveillance the deep cover agents were under, in some cases for almost a decade, showing the middle-class spies with their children, shopping or in one case attending a graduation ceremony.

The code name Ghost Stories appears to refer to the ring's efforts to blend invisibly into the fabric of American society.

An FBI spokesman said the decision to release the material on Halloween was coincidental.

FBI videos of the Russian agents show Chapman, whose role in the spy saga turned her into an international celebrity, and the other illegals surreptitiously passing information and money as part of their operations, which included the use of spy tools as old as invisible ink and as modern as cryptographic software that hides messages in digital images posted on the internet.

The linchpin in the case was Col. Alexander Poteyev, a highly placed U.S. mole in Russian foreign intelligence, who betrayed the spy ring even as he ran it.

He abruptly fled Moscow just days before the FBI rolled up the deep cover operation on June 27, 2010.

Double-life: Richard Murphy (left) shown with Christopher Metsos (right) was a mostly stay-at-home dad to two pre-teen children with his wife who worked for an accounting firm that had close ties to Bill and Hillary Clinton

Poteyev's role in exposing the illegals program only emerged last June when a Russian military court convicted him in absentia for high treason and desertion.

The U.S. swapped the 10 deep cover agents for four Russians imprisoned for spying for the West at a remote corner of a Vienna airport on July 9, in a scene reminiscent of the carefully-choreographed exchange of spies at Berlin's Glienicke Bridge during the Cold War.

While freed Soviet spies typically kept a low profile after their return to Moscow, Chapman became a lingerie model, corporate spokeswoman and television personality.

Donald Heathfield, whose real name is Andrey Bezrukov, lists himself as an adviser to the president of a major Russian oil company on his LinkedIn account.

President Dmitry Medvedev awarded all 10 of the freed deep-cover operatives Russia's highest honors at a Kremlin ceremony.

The swap was Washington's idea, raised when U.S. law enforcement officials told President Barack Obama it was time to start planning the arrests.

Agents launched a series of raids across the northeast after a decade of intensive surveillance of the ring, which officials say never managed to steal any secrets.

Caught on camera: Tracey Lee Ann Foley, who worked as a real estate agent in Massachusetts, was recorded by FBI agents attending a Harvard graduation ceremony in 2000

The case was brought to a swift conclusion before it could complicate the president's campaign to 'reset' U.S. relations with Russia, strained by years of tensions over U.S. foreign policy and the 2008 Russian-Georgian war.

All 10 of the captured spies were charged with failing to register as foreign agents.

An 11th defendant, Christopher Metsos, who claimed to be a Canadian citizen and delivered money and equipment to the sleeper agents, vanished after a court in Cyprus freed him on bail.

Attorney General Eric Holder said the FBI decided to arrest the illegals because one of the spies was preparing to leave the U.S. and there was concern that 'we would not be able to get him back.'

Despite the ring's failure to gather any intelligence, Holder said they still posed a potential threat to the U.S.

Former Soviet intelligence officials now living in the West scratched their heads over the 'Ghost Stories' saga.

'In my view this whole operation was a waste of human resources, money and just put Russia in a ridiculous situation,' said Oleg Kalugin, a former KGB major general who spied against the U.S. during the Soviet era, in an interview earlier this year.

Signal marker: An empty upside-down bottle signals a 'dead drop' site of a package left by Christopher Metsos

He now lives near Washington.

Hidden: A package left by Christopher Metsos is unveiled at a drop site, wrapped in duck tape until it's retrieved

Alexander Vassiliev, a former KGB officer and journalist who has written extensively about Soviet spying in America, said the illegals were supposed to act as talent spotters and scouts, identifying Americans in positions of power who might be recruited to spill secrets for financial reasons or through blackmail.

Spies with the protection of diplomatic credentials would handle the more delicate task of recruiting and handling the agents.

Moscow's ultimate aim, Vassiliev said, was probably to cultivate a source who could provide day-by-day intelligence on what the president's inner circle was thinking and planning in response to the latest international crisis.

But he said there was no evidence the Kremlin made any progress toward that goal.

'How are you going to recruit someone like that, on what basis? That's quite a successful person.

Why should he spy for the Russians? I can't see any reason.'

He said Russia's intelligence services seem unable to shake their Soviet-era habits.

'The current practice of the Russian espionage agency is based on the practices which existed before 1945,' said Vassiliev, who now lives in London. 'It's so outdated.'

The 10 Russian illegals included:

— Chapman, the daughter of a Russian diplomat, who worked as a real estate agent in New York City. After she was caught, photos of the redhead's social life and travels were splashed all over the tabloids. Following her return to Russia, Chapman worked as a model, became the celebrity face of a Moscow bank and joined the leadership of the youth wing of the main pro-Kremlin party.

— Vicky Pelaez and Juan Lazaro, of Yonkers, New York. He briefly taught a class on Latin American and Caribbean politics at Baruch College. She wrote pieces highly critical of U.S. policy in Latin America as a columnist for one of the United States' best-known Spanish-language newspapers, El Diario La Prensa.

— Michael Zottoli and Patricia Mills of Arlington, Virginia. He had worked at a telecommunications firm. The couple raised a young son and toddler in their high-rise apartment.

— Richard and Cynthia Murphy of Montclair, New Jersey. He mostly stayed home with their two pre-teen children while she worked for a lower Manhattan-based accounting firm that offered tax advice. As part of her job, she provided financial planning for a venture capitalist with close ties to Bill and Hillary Clinton.

— Donald Howard Heathfield and Tracey Lee Ann Foley of Cambridge, Massachusetts. He worked in sales for an international management consulting firm and peddled strategic planning software to U.S. corporations. She was a real estate agent.

—Mikhail Semenko of Arlington, Virginia, who spoke Russian, English, Spanish, Chinese and Portuguese.

He worked at the Travel All Russia travel agency, where co-workers described him as 'clumsy' and 'quirky.'

Street talk: Agents captured sill images of a meeting between Michael Zottoli of Arlington, Virginia, with Richard Murphy in Brooklyn, New York.

In return for the return of the illegals, Moscow freed four Russians after they signed statements admitting to spying for the U.S. or Britain.

The U.S. spies included Alexander Zaporozhsky, a former colonel and deputy chief of Russian foreign intelligence's American section, who had retired in 1997 and moved to suburban Baltimore in 2001.

He was arrested after he returned to Moscow for what he thought was a reunion with KGB colleagues and was sentenced in 2003 to 18 years in prison for espionage.

Zaporozhsky may have provided information leading to the capture of Robert Hanssen and Aldrich Ames, two of the most damaging spies ever caught in the U.S.

Gennady Vasilenko, a former KGB officer who worked in Washington and Latin America, was accused by Hansen of spying for the U.S.

He was arrested in Havana in 1988, but released from Moscow's notorious Lefortovo prison after six months for lack of evidence.

Eye on the prize: FBI agents left no stone unturned following and capturing Richard Murphy during some possible 'sight seeing'? at Columbus Circle in Manhattan

Meeting place: Michael Zottoli (back) and Richard Murphy (front, with backpack), were watched by FBI agents while visiting Columbus Circle in Manhattan

But suspicions lingered, and Vasilenko was arrested again in 2006 in Moscow and sentenced to three years in prison for illegal weapons possession and resistance to authorities.

Vasilenko now has a home in Leesburg, Virginia. He declined the Associated Press' request for an interview.

Arms control researcher Igor Sutyagin worked for what may have been a British-based CIA front, and he denies being a spy, saying he didn't pass along any information that wasn't available through open sources.

He told reporters he signed a confession out of concern he would otherwise ruin the swap for the others — and for fear of abuse and misery in the three years remaining in his prison term.

The fourth was Sergei Skripal, a former colonel for Russian military intelligence, the GRU.

He was sentenced in 2006 to 13 years in prison for passing the names of other Russian agents to British intelligence. Skripal, now about 60, is said to be suffering from diabetes. Both Skripal and Sutyagin went to Britain following their release.

U.S. officials have not commented on the Poteyev case.

Watch the videos here:

Anna Chapman is seen having coffee with an undercover agent for the US on June 26th of 2010:

Christopher Metsos is caught making a quick handover in paper bags to an official with the Russian Mission on May 16th of 2004:

An undercover agent captures a meeting between Michael Zottoli and Richard Murphy on March 7th of 2010:

Stacked videos capture Anna Chapman in a department store while a Russian government official stands outside near the store on January 20th of 2010:

Video shows Michael Zottoli recovering a package left by Christopher Metsos in a dead drop on June 8th of 2006: