What happened to Capitol Hill ‘conspirators’ in the FBI’s 2010 Russian spy case

The story is something out of a Cold War thriller, with a Capitol Hill twist. Buried cash, “deep cover” spying, “brush passes” at train stations to exchange bags of money, all ending with a U.S.-Russia spy swap on a Vienna airport runway.

Russian intelligence called it the “Illegals program” — an ambitious multiyear spy operation carried out by at least 11 deep cover Russian agents in the U.S. that all came crashing down five years ago this summer. Two of those spies, a married couple with children, lived in Seattle as early as 2004 and left in 2009.

They lived on Capitol Hill.

Known in the U.S. as Michael Zottoli and Patricia Mills, the couple lived relatively quiet lives. He purported to be from Yonkers, New York while she claimed to be Canadian. Their spycraft never drew any suspicion from neighbors or their landlord at 424 Belmont Ave E.

In 2010, after the couple had moved to Virginia, they were arrested as part of a major FBI surveillance investigation into the Russian spy ring. It wasn’t until then that the true identities of Mikhail Kutsik and Natalia Pereverzeva were revealed. FBI agents called them the “Seattle conspirators.”

“They don’t get what we go through over here.”

The purpose of their operation, according to FBI reports included in court documents, was to become sufficiently “American-ized” in order to recruit others and gather information about the U.S. for Russia. A message from a Russian official intercepted by the FBI outlined the mission they chose to accept:

You were sent to USA for long-term service trip. Your education, your bank accounts, car, house, etc – all these serve one goal: fulfill your main mission, ie to search and develop ties in policymaking circles in US and send intels (intelligence reports) to C (Center, a nickname for the Russian Foreign Intelligence Service).

What type of intelligence they were after, or if they ever got it, remains unclear. None of the Illegals were charged with obtaining classified materials.

Kutsik first moved to the U.S. in 2001; Pereverzeva came two years later. Complaint documents filed in federal court don’t state why the couple decided to come to Capitol Hill or Seattle. After years of extensive phone and email monitoring, surveillance, and apartment searches, FBI reports don’t reveal much about the couple’s activities on Capitol Hill, either.

In one apparently secret search of the conspirator’s Seattle apartment in 2006, FBI agents found shortwave radio equipment and spiral notebooks filled with seemingly random numbers. Agents concluded they were codes to decipher radiograms. Kutsik worked at a small Bellevue telecom company where coworkers told the Seattle Times he constantly took personal calls and railed against President George W. Bush.

Most of the FBI reports of the Seattle couple involved following them on trips to the East Coast.

In 2004, FBI agents in New York City witnessed a Russian diplomat “surreptitiously” hand an orange bag of money to another accused spy. The spy divided up the money and buried some of it in a bottle in upstate New York. Two years later, Kutsik and Pereverzeva dug up the bottle and took the cash back to Seattle.

In another trip to New York, Kutsik arranged to meet with a fellow spy to accept more money. The spy was told by Russian intelligence officials that he would meet Kutsik on a train station platform and have the following exchange:

“Excuse me, did we meet in Bangkok in April last year?’
Reply: “I don’t know about April, but I was in Thailand in May of that year.”

Documents also detail some amusing “Spies Like Us” moments. In one 2004 trip to New York City, FBI agents spent hours surveilling Kutsik and Pereverzeva as they sat on park benches in Central Park waiting to meet a man who went by Richard Murphy, another Russian spy. They eventually left as Murphy had apparently mixed-up the meeting location.

“We might have, ah, have a different place in mind. I was there at three,” Murphy said in an FBI recorded call to Kutisk. “I was there at three o’clock, too,” Kutsik replied.

When the men did meet two days later, Murphy handed Kutsik a gift bag from a museum.

In 2009, the the couple again traveled to New York City to meet with Murphy after they were having trouble using their laptop to connect with their Russian handlers. This time, Kutsik and Murphy met in a Brooklyn coffee shop. They discussed his computer problems and commiserated about spy life. “They don’t get what we go through over here,” Murphy is reported to have said.

Later that year, the Seattle couple moved to Arlington, VA. In 2010 they were arrested in a coordinated raid that included arrests of eight other suspected Russian spies. The uncovering of the spy operation made international headlines, fueled by the spy games detailed in the FBI reports (and the “sexy” spy who became a minor celebrity and alleged Edward Snowden seducer). CHS wrote about the Capitol Hill connection at the time.

Kutsik and Pereverzeva were charged with acting as unauthorized agents of a foreign government and money laundering. In a plea deal, the couple forfeited their all of their U.S. assets and avoided a maximum five-year prison sentence.

The spy theatrics weren’t over for the Capitol Hill conspirators. U.S. and Russian officials struck a deal: The U.S. would hand over the 10 Russians in exchange for four Westerners being detained in Russia. The spy swap went down on a sweltering airport tarmac in Vienna, Austria. Reporters even managed to capture the exchange.

Five months after the bust, a Russian newspaper reported that it was a high ranking Russian intelligence officer that tipped off the Americans to the spy ring. An unnamed Kremlin official told a reporter for the Moscow-based Kommersant that a “Mercader” had been sent after the defector, who had apparently fled to the U.S. just before the arrests. It was a reference to Soviet agent Ramon Mercader who assassinated Leon Trotsky with an ice axe in 1940 at the behest of Joseph Stalin.

Back in Russia, the agents were welcomed with open arms by Russian officials. They sang songs with Prime Minister Vladimir Putin, a former KGB colonel, who said at the time, “I’m sure they will work in worthy places and they will have bright and interesting lives.” Indeed, in 2012 Kutsik was reported to have become a top executive with Gazprom — the largest natural gas company in the world and majority owned by the Russian government.

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