Feds: Spy suspect confesses he works for Russians

One of the suspects in an alleged spy ring has confessed to federal agents he worked for Russia's intelligence service, federal prosecutors said Thursday.

The revelation came on a day when lawyers for several defendants had been poised to argue in court that their clients, accused of going undercover in American cities and suburbs, were harmless and should be released on bail.

But federal prosecutors in New York said incriminating statements by Juan Lazaro were among events that underscore the need to keep the 10 suspects now in custody behind bars.

"If these defendants walk out of the courtroom, they are going to run," Assistant U.S. Attorney Michael Farbiarz told magistrate judge Ronald Ellis in federal court in Manhattan. The defendants had, he said, "a powerful network they can call on here in the United States."

U.S. authorities said in a court filing Lazaro had made a lengthy statement after his June 27 arrest in which he discussed some details of the operation, which prosecutors said involved Russian moles on a long-term mission to infiltrate American society.

Among other things, prosecutors said, he admitted that "Juan Lazaro" was not his name, that he wasn't born in Uruguay, as he had long claimed, that his home in Yonkers had been paid for by Russian intelligence, and that his wife, the Peruvian journalist Vicky Pelaez, had passed letters to the "Service" on his behalf.

He also told investigators even though he loved his son, "he would not violate his loyalty to the 'Service' even for his son," three assistant U.S. attorneys wrote in a court memo. They added Lazaro, who investigators claim spent at least part of his childhood in Siberia, also wouldn't reveal his true name.

Lazaro, Pelaez, and the two New Jersey suspects, Richard and Cynthia Murphy, were scheduled to appear before a U.S. magistrate on the issue of whether they should be released on bail pending trial.

Federal prosecutors said they had searched a safe-deposit box belonging to the Murphys this week and found eight unmarked envelopes, each stuffed with $10,000.

Ellis denied bail to the Murphys but allowed Vicky Pelaez to post $250,00 bail provided she be confined to her Yonkers home and wear an electronic monitoring bracelet. Unless the U.S. attorney's office successfully appeals, she may be released as soon as Tuesday.

Earlier in the day, a lawyer for another suspect, Donald Heathfield, told a judge the case against his client was "extremely thin."

"It essentially suggests that they successfully infiltrated neighborhoods, cocktail parties and the PTA," said his attorney, Peter Krupp. A judge in a federal court in Boston gave Heathfield and his wife, Tracey Lee Ann Foley, of Cambridge, Mass., until July 16 to prepare for a bail hearing.

A magistrate judge in Alexandria, Va., postponed until today a hearing for three other people accused of being foreign agents.

On Cyprus, meanwhile, police searched airports, ports and yacht marinas for a man who had been going by the name Christopher Metsos, who disappeared after a judge there freed him on $32,500 bail. Metsos was charged by U.S. authorities with supplying funds to the other members of the ring.

With Pervaiz Shallwani