Alleged Russian spy ring: Suspects led typical American lives

By Bob Drogin and Geraldine Baum, Los Angeles Times

April 25, 2013 5:39 PM PT

Reporting from Montclair, N.J. — Richard and Cynthia Murphy grew lettuce in a backyard garden, walked their daughters to the school bus each morning, and swapped Christmas cards with neighbors who had moved to Texas.

Their modest three-bedroom house sported maroon shutters and a wrap-around porch, and sat on a winding street in a well-heeled suburb across from Manhattan. They drove a green Honda Civic.

To all appearances, the Murphys were a typical, child-obsessed American family — not deep-cover Russian spies straight from a Cold War novel.

Their arrests, along with those of 9 other alleged Russian spies, has exposed a surprising side to modern espionage: The group led mundane lives far from the James Bond image. Instead of car chases and shootouts, they paid taxes, haggled over mortgages, and struggled to remember computer passwords.

As a result, the 11 — the biggest alleged spy ring ever broken by the FBI — blended into American society for more than a decade. They joined neighbors at block parties, school picnics and bus stops. Four of the couples were married, and at least three had young children.

One suspect wrote columns for a Spanish-language newspaper in New York. Another ran an international consulting and management firm in Boston, while his wife sold high-priced real estate near Harvard University. Yet another drove a shiny blue BMW to his investment banking job in Seattle; he regularly updated his status on LinkedIn, a social networking site.

If their cover jobs were ordinary, their secret lives had a humdrum side that sometimes seems more like Woody Allen than John LeCarre.

One suspect, Anna Chapman, bought a Verizon cellphone in Brooklyn, N.Y., with a patently false address: 99 Fake Street. She also posted sultry photos of herself on Facebook and videos on YouTube. Another, Juan Lazaro, used a payoff from Moscow to pay nearly $8,000 in overdue county and city taxes, according to court documents.

Donald Howard Heathfield and Tracey Lee Ann Foley, the alleged spies in Boston, filed regular expense reports to Moscow Center, headquarters for Russia’s foreign intelligence agency, called the SVR.

“Got from Ctr. 64500 dollars, income 13940, interest 76. Expenses: rent 8500, utilities 142, tel. 160, car lease 2180, insurance 432, gas 820, education 3600,” plus medical, lawyers’ fees, meals and gifts, mailboxes, computer supplies, and so on, they wrote in one, according to an FBI affidavit.

And the lettuce-growing Murphys of Montclair repeatedly argued with Moscow Center in encrypted computer messages last summer about who should legally own their $400,000 house — them or the SVR.

“From our perspective, purchase of the house was solely a natural progression of our prolonged stay here,” the Murphy’s explained, apparently after being reprimanded. “It was a convenient way to solve the housing issue, plus to ‘do as the Romans do’ in a society that values home ownership.”

Murphy later whined to another spy about their bosses back in Moscow: “They don’t understand what we go through over here.”

The group allegedly attended one of Moscow’s most elite spy schools before landing in America. Their mission was spelled out, somewhat awkwardly, in a 2009 message to the Murphy’s from Moscow Center.

“You were sent to USA for long-term service trip,” the message read, according to the FBI affidavit. “Your education, bank accounts, car, house etc. — all these serve one goal: fulfill your main mission, i.e, to search and develop ties in policymaking circles in US and send intels [intelligence reports] to C [Center].”

It’s unclear whether they were successful at that. But they did seem to succeed in adapting to life in America.

The Murphys appeared devoted their tow-headed, blue-eyed daughters, Katy, 11, and Elizabeth (called Lisa) 9.

Most mornings, according to neighbors, it was the mom, Cynthia, a blonde woman who favored long flowing skirts, who walked up Marquette Street to catch the commuter bus to Manhattan.

Or at least that’s where everyone assumed she went.

“I think she was in financial services but who knows now?” said Elizabeth Lapin, who lives on the same street.

Since the Murphy’s moved into the neighborhood a few years ago, Lapin and Cynthia had spoken at the annual block party in the fall, at the bus stop, on the sidewalk.

Many had assumed that Cynthia, because of her foreign accent and light hair, was Scandinavian. Lapin also said her neighbor smiled and waved whenever she passed. Once she saw her walking home with a bunch of daffodils and a French baguette.

“If you were to look at everybody on this street,” added Lapin, “she’d be the last person you’d suspect as a spy.”

Richard Murphy was the “stay at home dad,” said Denise Capone, 38, who lives across the street.

Murphy walked his daughters to the school bus in the morning and trailed after them in the late afternoon while they rode their bikes around the cul-de-sac at the end of their street.

Richard also tended the backyard vegetable garden and flower pots on the back deck. He wasn’t as friendly as his wife — though he sometimes shared a morning coffee with other stay-at-home parents.

“Whatever they were doing as spies, when you think about it, that was just their jobs,” said Denise’s husband, Steve, who works as a bartender near Lincoln Center in Manhattan.

“The guy stayed at home and sent e-mails and had secret meetings or whatever he did in his spy work. But then he was done he was like everybody else — he took care of the kids, he worked the yard, he carried bikes.

“The only difference is that his main office was in Moscow,” Steve said.

His daughter, Joelle, 12, looked at her father as if he was from another planet.

One Saturday, her friends, the Murphy girls, were merrily rolling down the street on their bikes; on Sunday their house swarmed with FBI agents, and on Monday, the media arrived in droves.

Little Lisa Murphy was in the house with female agents after her parents were taken away Sunday, almost two hours later Katy, in a bathing suit and carrying a swimming noodle, returned home from a pool party. A woman quickly drove both girls away in a mini-van with tinted windows.

Suddenly everything seemed suspicious in a place where nothing usually is.

The possibility that she was living in a hotbed of espionage was not nearly as disturbing to Amy Bandler, another neighbor, as what might happen to the Murphy girls.

Last week, Katy had received three awards at the Hillside Elementary School’s “moving up” ceremony. Next year, she would have been attending Glenfield Middle.

“I’m sick about the children,” Bandler said. “What becomes of the spies’ kids?”

Most of the 11 alleged spies, like the Murphys, seemed to pass their lives in mundane, suburban anonymity. But being low-key was apparently not a prerequisite of being a covert agent.

According to the FBI, defendant Vicky Pelaez worked as a both a print and television journalist for decades. She had risen to become a columnist for the prominent New York Spanish-language newspaper, El Diario/La Prensa.

In her column, she voiced strong criticism of U.S. foreign policy in Latin America in weekly pieces.

Gerson Borrero, a former editor in chief of El Diario, described Pelaez as soft-spoken but forceful in her opinions and stridently ideological. She stood out too, because she liked to wear traditional Peruvian garb to the office.

“She’s emotional and passionate about what she believes in, which makes her a great columnist,” Borrero said.

Still, in the crazy quilt of American punditry, her opinions seemed hardly shocking. Pelaez, in fact, had once been kidnapped while working as a television reporter in her native Peru by the communist guerrilla group, Tupac Amaru, and held for 17 hours. She and her cameraman were released after their station broadcast a videotaped message from the guerrillas protesting the alleged torture of members of the group captured by the government.

Pelaez was arrested with her 65-year-old husband, Juan Lazaro, a retired political science professor who has published articles about the role of women in Peruvian revolutionary groups.

The couple’s older son, Waldomar Mariscal, told El Diario that the charges were “ridiculous,” saying that his parents were so lacking in computer skills that they sometimes couldn’t remember how to access their e-mail accounts on Yahoo.

Many of the defendants, ironically, were perhaps most distinguished by their successful pursuit of the American Dream.

Defendants Michael Zottoli, 40, and Patricia Mills, who is about 31, both graduated from the Bothell campus of the University of Washington in 2006 with degrees in business administration.

Ufuk Ince, a former professor, recalled that the couple concentrated on finance, and that Zottoli excelled.

“Because he was in the top part of my class, I knew that he would have good opportunities in terms of corporate finance money management,” he recalled.

He called Zottoli personable and charming. “What I mean by that is he was not overbearing. Understated, smiling face, engaged, interested…. It was a pleasant thing to be around this person. There was a permanent smile on his face.”

John Evans, manager of the building where the couple last lived in Seattle, said Zottoli drove off each morning in a late model blue BMW to a job at an investment bank. He said Zottoli’s wife told him she planned to go back to school. They appeared devoted to a toddler named Kenny.

“Michael and Patricia were a very nice young couple,” Evans recalled. “They were so family oriented, you would never think they would be involved in something like, what are they saying, espionage?”

They paid their rent each month in advance with a cashier’s check, he said.

In hindsight, however, he now wonders about the couple and little things he noticed about them.

Evans said had initially assigned Zottoli a parking spot that seemed tight. Later, when another slot became available, he offered to let the couple switch because it would be easier to use.

“But they said, no, they had gotten used to this parking spot,” he said.

“Looking back, it was a perfect cover,” Evans said. “Their car was tucked in, and nobody would be able to tell whether they were home or not.”

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Times staff writers Kim Murphy in Seattle and Matea Gold in New York contributed to this report.