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Feds: Russian spy confessed

Photo by Constance Flavell Pratt

Photo by Constance Flavell Pratt

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

The revelation came on a day when several defendants in the case were making court appearances, and prosecutors announced that they had discovered $10,000 in new, hundred dollar bills in the safe-deposit box of two other suspects.

Meanwhile, authorities scoured a Mediterranean island for an alleged co-conspirator who disappeared after he was granted bail.

Authorities said in a court filing that Juan Lazaro made a lengthy statement after his June 27 arrest in which he discussed some details of the operation, which prosecutors said involved Russian moles living under assumed identities in American suburbs.

Among other things, he admitted that ''Juan Lazaro'' was not his real 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 that 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 that Lazaro also wouldn't reveal his true name.

Prosecutors submitted the information to underscore evidence that they said was so strong that U.S. Magistrate Judge Ronald L. Ellis should deny bail for Lazaro, Pelaez, and two suspects who had been living in New Jersey, Richard and Cynthia Murphy.

Federal prosectors also revealed that they had searched a safe-deposit box belonging to the Murphys this week, and found eight unmarked envelopes stuffed with ''apparently new $100 bills.''

The lawyer for another suspect told a judge Thursday that his client was innocent.

Donald Heathfield and his wife, Tracey Lee Ann Foley, of Cambridge, Mass., appeared in federal court in Boston on Thursday for a bail hearing. A judge granted a delay until July 16 to give their new lawyers time to prepare.

Heathfield's lawyer, Peter Krupp, said afterward the evidence revealed so far against his client is ''extremely thin.''

''It essentially suggests that they successfully infiltrated neighborhoods, cocktail parties and the PTA,'' he said. ''My client looks forward to facing the charges.''

As they entered the court in handcuffs and leg shackles, the couple smiled at their sons, a teenager and a college student. The boys waved to their parents.

A magistrate judge in Alexandria, Va., postponed a hearing for three other people accused of being foreign agents, Michael Zottoli, Patricia Mills and Mikhail Semenko. It has been rescheduled for Friday.

Hearings also were set for additional defendants in New York, including Lazaro, Pelaez and Richard and Cynthia Murphy.