Defendant 'Lazaro' Allegedly Confesses in Spy Case

(July 1) -- A defendant known as "Juan Lazaro" has admitted that he worked for Russia's intelligence service and declared that his loyalty to "the Service" was greater even than his love for his son, federal prosecutors said today.

The alleged confession was detailed in a court document released as nine of the 10 alleged spies arrested last week were due to appear for bail hearings. Several of the hearings were postponed and just one of the suspects -- Lazaro's wife -- was granted bail.

Lazaro made a "lengthy post-arrest statement" on June 27 after waiving his Miranda rights, according to a bail letter provided by the U.S. Attorney's Office for the Southern District of New York.

Federal agents said the suspect told them he was not born in Uruguay, as had been claimed, and that "Juan Lazaro" is not his real name. He also said that his house in Yonkers, outside New York City, had been "paid for by the 'Service' and although he loved his son, he would not violate his loyalty to the 'Service' even for his son," according to the document.

Lazaro told agents his wife, co-defendant Vicky Pelaez, delivered letters to the "Service" on his behalf, according to the document. He refused to provide his real name to prosecutors. Lazaro is a former professor at Baruch College in New York. His wife was a journalist for a Spanish-language newspaper in New York.

Magistrate Judge Ronald Ellis said Pelaez could be freed on $250,000 bail, but she would be placed on house arrest. He denied bail for two other suspects, Richard and Cynthia Murphy of Montclair, N.J., and postponed the bail hearing for Lazaro.

Michael Zottoli, Patricia Mills and Mikhail Semenko were due in court in Alexandria, Va., but a magistrate judge rescheduled the hearing for Friday. The Boston hearing for Donald Heathfield and Tracey Foley of Cambridge, Mass., has been adjourned to July 16.

The 10th suspect arrested in the U.S., a 28-year-old Russian beauty who's been the focus of much media attention in the case, has been jailed without bail since a brief hearing Monday. At the hearing, federal prosecutor Michael Farbiarz pointed a finger at alleged spy Anna Chapman and called her a highly trained "Russian agent" and "practiced deceiver" who could try to flee the country if released even temporarily.

That's exactly what's believed to have occurred with an 11th suspect, said to be Chapman's handler, arrested Tuesday in Cyprus. The FBI alleges that Christopher Metsos, who claims to be a Canadian, funneled money between Moscow and the alleged spies.

Metsos was arrested on the Mediterranean island nation as he tried to board a flight for Budapest, Hungary. He was released Wednesday on about $33,000 bail, but now he's vanished after failing to show up for a required meeting with police.

Cypriot authorities said today they have "no indications yet" that he's left the island, and they are still looking for him there. Details were reported by several news agencies.

In a nine-page request, U.S. prosecutors asked the court not to release the accused spies, who they said are a clear flight risk.

"Within 24 hours of being bailed, Metsos simply disappeared," the request read. "There is little need for speculation as to what will happen if the defendants are permitted to walk out of the court. They will flee."

Chapman has been charged with conspiracy to act as an agent of a foreign government without notifying the U.S. attorney general, which carries a maximum penalty of five years in prison. Most of the other suspects in the group were also charged with conspiracy to commit money laundering, which carries up to an additional 20-year prison sentence, if convicted.

The Murphys, a couple in their mid-30s with two young children, had been living unsuspected in suburban New Jersey. Neighbors called them "suburbia personified" and said they'd attended Fourth of July barbecues on the Murphys' lawn.

The Murphys and the other suspects are believed to be originally from Russia, adopting fake names and identities as part of a long-term plot to penetrate U.S. policymaking circles and funnel secret intelligence to Moscow.