Spy Ring Arrest Highlights Jump in Russian Spying Under Putin

Arrest of deep cover SVR officer signals tougher U.S. stance toward Moscow

Vladimir Putin
Vladimir Putin / AP
January 28, 2015

The arrest of a Russian SVR intelligence officer and identification of two of his accomplices in New York this week highlights aggressive spying operations around the world under Russian leader Vladimir Putin.

Evgeny Buryakov, an SVR officer working undercover as an employee of a Russian bank, was arrested in the Bronx on Monday by FBI agents. Two other SVR officers, Igor Sporyshev and Victor Podobnyy, linked to the case were operating under diplomatic cover as Russian trade and United Nations officials, and thus were not arrested. They have fled the country.

The arrest of Buryakov, a Russian intelligence officer and not a recruited agent, is likely to trigger Russian retaliation, such as the arrest of a CIA officer in Russia who could possibly be exchanged for Buryakov.

In Moscow Tuesday, a Foreign Ministry spokesman denounced the arrest and demanded Buryakov’s release. "No evidence supporting the allegations has been presented," Alexander Lukashevich, the spokesman said in a video statement on the ministry's website.

The case has fueled speculation of a spy swap. The Obama administration could exchange Buryakov for former NSA contractor Edward Snowden, who is currently living in Moscow under the protection of the Russian government. Snowden was charged in May 2013 with unauthorized disclosure of national defense information and providing classified information to unauthorized persons.

While intelligence analysts say Russia is not likely to swap Snowden for Buryakov, the threat to do so could give the Russians leverage over the fugitive NSA contractor to disclose more of the NSA secrets he claims so far have not been provided to his hosts, only to journalists.

Russian intelligence-gathering operations in the United States by the SVR and the GRU military intelligence service are at high levels, according to intelligence officials. The number of SVR officers operating both officially from embassies and consulates and in non-officials status is currently at the same levels as during the days of the Soviet Union, current and former officials have said.

The New York arrests follow an increase in Russian intelligence operations around the world. They include:

  • In France, Russian intelligence has stepped up spy recruitment efforts against private sector companies, the national legislature and the president’s office. A GRU military intelligence colonel, identified in press reports as Illiouchine, recently was caught trying to recruit a "mole" that could spy inside the office of French President Francois Hollande. Some 40 SVR officers are operating in France, including "illegals" of the Directorate S non-official spy unit.
  • Germany’s elite GSG-9 counterterrorism unit uncovered two SVR illegals, Heidrun Anshlage and her husband Andreas, in an October 2011 raid on their house in Marburg, Germany. Heidrun was operating a short-wave radio, reportedly communicating with control officers in Moscow at the time of the raid.
  • Germany’s BND intelligence service has scaled back cooperation with the SVR as a result of the Ukraine crisis.
  • Russian FSB federal security agents, on Sept. 5, kidnapped an Estonian internal security officer, Eston Kohver, on the Estonian side of border with Russia and charged him with espionage.
  • The head of Britain’s MI5 domestic counterspy service has said SVR intelligence-gathering in Britain is similar to the activities of the Soviet-era KGB, with as many as 50 SVR officers operating in the country.
  • In 2006, a Russian SVR illegal operating in Canada under the name Paul William Hampel was deported after his arrest as a spy.

The success in uncovering some of the western operations of SVR and its companion services are said by U.S. intelligence sources to be the result of a major counterintelligence breakthrough in the early 2000s. The breakthrough is the result of either the defection of a key Russian intelligence official, or a success by the National Security Agency in penetrating Russian electronic communications.

In the Buryakov case, the FBI succeeded in planting listening devices and intercepting communications between the two SVR co-conspirators, Sporyshev and Podobnyy, according to a criminal complaint made public in the case.

The two SVR officers were overheard complaining about working under light spy cover as diplomats. In one intercepted conversation, Podobnyy said the illegals branch, or Directorate S, "is the only real intelligence" collector. He then noted that, as stated in commenting on the 2010 capture of the 10 Directorate S spies, "look, in the United States even the S couldn’t do anything."

The FBI complaint reveals that Buryakov was asked to help a Russian state-run news outlet, identified in press reports as the TASS news agency, as a Russian intelligence arm.

The FBI complaint also revealed attempts by the SVR ring to recruit a woman who was a financial consultant for a company, several women students attending a New York university and a U.S. businessman who traveled frequently to Russia.

In one conversation about the recruitments, Sporyshev told his colleague: "But there was a problem with [Female-2]…. I have lots of ideas about such girls, but these ideas are not actionable because they don't allow [you] to get close enough. And in order to be close you either need to f*** them or use other levers to influence them to execute my requests. So when you tell me about [recruiting] girls, in my experience, it's very rare that something workable will come of it."

The spies also were interested in gaining inside information on plans for U.S. economic sanctions imposed after the Russian military annexation of Crimea.

Buryakov, in response to the SVR tasking, conducted an Internet search using the terms "sanctions Russia consequences."

In late 2013, the spies sought information on the pending multibillion dollar deal for commercial aircraft between Canada's Bombardier Aircraft and Russia's state-owned defense technology conglomerate, Rostec.

The complaint did not identify the companies but news reports revealed the company names.

The complaint indicated that Buryakov, from his position as a Russian banker, "was gathering intelligence for SVR during confidential meetings with representatives of" Bombardier and others.

The arrest is the first major Russian espionage case since the 2010 arrest of the 10 deep-cover Russian "illegals" who were later exchanged for four imprisoned CIA recruited agents.

The case represents a hardening of the Obama administration’s policy toward Russia that in the past was characterized by conciliatory policies dubbed "the reset" that failed to improve bilateral ties.

Since last year, however, U.S.-Russian relations declined sharply after Russian President Vladimir Putin, a former officer of the KGB, predecessor to the SVR, ordered the military annexation of Ukraine’s Crimea. Russia also is carrying out covert military operations in support of pro-Moscow rebels in eastern Ukraine.

The United States has imposed economic sanctions on Moscow as a result of the Ukraine intervention and is considering additional sanctions, including tightening Moscow’s access to financial markets.

According to the FBI, the Buryakov spy ring was part of the SVR’s Line ER unit that is directed at gathering economic secrets. The three men were charged with espionage conspiracy and failure to register as foreign agents, as the operations involved attempts to recruit at least three Americans involved in the U.S. finance sector.

Marion "Spike" Bowman, a former a former FBI counsel and former deputy national counterintelligence executive, said the latest Russian spy case reflects a hardening of the U.S. government position toward Russia.

"In light of the rather chilly relations between United States and the Russians, I think what’s happening here is the administration is saying, ‘Look we understand what’s happening and we don’t like it, and unless you shape up, we’re going to continue to keep doing this [arresting spies],’" Bowman said.

Kenneth deGraffenreid, another former deputy national counterintelligence executive, said the arrest this week should be a wake up call for the administration that Russia likely is engaged in more damaging spy operations against the U.S. government.

"The biggest signal this case should be sending to the political leadership of the Obama administration is that there are dangerous intelligence activities going on," deGraffenreid said.

"If the Russians can afford to run operations seeking future penetrations of the financial systems, think what they are doing to our military and intelligence organizations," he said.

Under the Obama administration, no foreign spies have been uncovered inside key national security agencies such as the CIA, Pentagon and State Department, despite high levels of spying activity, deGraffenreid said.

Past major spy penetrations that caused extensive national security damager have included CIA turncoat Aldrich Ames, convicted in 1994 of giving up CIA agents to Russia; FBI Agent Robert Hanssen, who spied for Moscow for 22 years until his arrest in 2001; and Ana Montes, a senior Defense Intelligence Agency analyst and spy for Cuba until her arrest in 2001.

Bowman said the Buryakov case appears linked to the 2010 case of Russian illegals in New York who were under surveillance for years in an effort to spy on their activities.

"They didn’t really do much of anything except one woman who was friends with a fundraiser for Hillary Clinton," Bowman said. "That was all we saw."

One of the Russian spies, Cynthia Murphy, was later identified as SVR officer Lydia Guryev. Court papers in that case revealed that she met several times with Alan Patricof, a prominent New York-based financier active in political fundraising, director of the venture capital firm Greycroft LLC who was a donor to Democratic candidates, including Clinton when she was a U.S. senator from New York.

Both Bowman and deGraffenreid said it is unlikely the Russians would agree to give up Snowden for Buryakov.

A future spy swap for Buryakov, however, is said to be a possibility, as the U.S. government does not have a strong record of following through with prosecutions of foreign intelligence officers caught spying in the United States.

Justice Department spokesman Marc Raimondi declined to comment on a possible spy swap.

The Buryakov case involved all the FBI’s surveillance tools, including covert microphones and video cameras, telephone intercepts, and use of a confidential informant, the complaint said.