, NEW YORK, Jul 2 – A suspect in the Russia spy saga cracked after his arrest, confessing that he was a Russian agent and saying he had greater loyalty to the Kremlin than to his own son, US prosecutors said here.
The suspect, who operated under the false identity of Juan Lazaro, also revealed that his Peruvian born journalist wife, Vicky Pelaez, made several trips to South America to give intelligence to their Russian spymasters.
The couple are among 11 "deep-cover" suspects charged with trying to infiltrate US policymaking circles in a Cold War-style spy case that has threatened to upset efforts to "reset" ties between Washington and Moscow.
Nine of the 11 suspects faced bail hearings on Thursday in three separate courts, though the five awaiting their fate in Boston and Virginia will have to return as proceedings were adjourned to consider further evidence.
US Attorney for the Southern District of New York Preet Bharara outlined Lazaro\’s remarkable confession in a letter to Judge Ronald Ellis, imploring him not to make the same mistake as a local court in Cyprus, which freed a key conspirator on bail who later fled.
In what was described as a "lengthy post-arrest statement" after waiving his Miranda rights, Lazaro confessed that he was not Uruguayan and that "Juan Lazaro" was not his real name, though he never revealed his true identity.
He also told investigators that "although he loved his son, he would not violate his loyalty to the \’Service\’ even for his son," according to the letter. The "Service" is short for Russia\’s foreign intelligence service SVR, the successor to the Soviet-era KGB.
Judge Ellis said he would decide on Lazaro at a later date, but said that Pelaez, his wife, could be released under house arrest on a 250,000-dollar bond.
"Vicky\’s case is more complicated. She does not appear to be a trained agent. She has a real identity and she is a US citizen, and she has an incentive to stay in the country," the judge said.
Ellis denied bail to another couple, Richard and Cynthia Murphy, accused of secretly garnering high-level contacts since the mid-1990s while posing as a suburban New Jersey couple.
Bharara\’s letter also revealed that the FBI has decrypted some 90 messages they have not made public, and that a raid on a safe-deposit box yielded "eight unmarked envelopes – each of which contained 10,000 dollars, in apparently 100 dollar bills."
Ellis turned down a bail request from a 10th suspect arrested in Sunday\’s swoop, flame-haired Russian bombshell Anna Chapman, on Monday.
The suspect\’s British ex-husband, Alex Chapman, told Britain\’s Daily Telegraph on Friday that he met his wife-to-be, then called Anna Kushchenko, at a London party in 2001.
Just 21 and 19 at the time, the pair fell in love and married five months later in Moscow.
Alex Chapman said he was not surprised to learn about the spying allegations.
"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\’," he told the Telegraph.
"Her father controlled everything in her life, and I felt she would have done anything for her dad."
Alex Chapman said when their marriage broke down in 2005 he feared she was being "conditioned" to become a spy.
Britain\’s Foreign Office has said it was looking into Anna Chapman\’s links to Britain.
The 11th suspect is Christopher Metsos, the alleged Kremlin money-man. Metsos was arrested in Cyprus but vanished after he posted a 26,500 euro (32,330 dollar) bond and surrendered his passport.
Authorities feared Metsos might cross into the breakaway northern part of the Mediterranean island, which has no international extradition treaties and is a well-known haven for fugitives.
Nine suspects face up to 25 years prison for money laundering as well as another five years for conspiring to work for a foreign government. Chapman and one other face lesser conspiracy charges.
None of the 11, however, were charged with the more serious offense of espionage.
The White House has said President Barack Obama knew the FBI was closing in on the suspects when he hosted Russian President Dmitry Medvedev at a summit three days before the arrests.
Medvedev has yet to comment on the scandal although strongman Prime Minister Vladimir Putin, himself a former KGB officer, has criticized US law enforcement authorities, while saying he hoped the row would not harm ties.