Federal authorities on Wednesday accused a Korean American businessman of working for North Korea in a quest to obtain "top secret" documents and recruit agents who would infiltrate the U.S. government.

One day after he was arrested without incident at his Santa Monica townhome, John Joungwoong Yai, 59, appeared in U.S. District Court in Los Angeles on charges that he knowingly served as a North Korea agent without notifying the U.S. government of his action.

Yai and his wife, Susan Youngja Yai, also were charged with two counts of lying to U.S. Customs officials by failing to declare $18,179 -- most in $100 bills -- that authorities allege a North Korean official paid to Yai during clandestine meetings in Prague and Vienna in April 2000.

For more than seven years, Yai has been under investigation by FBI counterintelligence officials, who received authorization from the nation's top secret Foreign Intelligence Surveillance Court in Washington to conduct covert searches, telephone taps and other forms of electronic surveillance.

Although Yai was not charged with espionage Wednesday, federal authorities said that was only because they had not uncovered evidence that he was ever successful in illegally securing classified documents for North Korea, one of a handful of nations listed by the U.S. State Department as having sponsored terrorism.

"The protection of this nation's security is the FBI's highest priority," said Assistant FBI Director Ronald L. Iden, who heads the agency's Los Angeles division. "The investigation that led to yesterday's arrest should send a clear message to any country that would attempt to compromise our nation's security that we will leave no stone unturned to defeat such efforts."

FBI sources said the government has not yet disclosed everything it has learned about Yai's activities.

"Not every shred of what we have on Mr. Yai is in this first affidavit," said one FBI agent, who spoke on the condition of anonymity. "So the government of North Korea needs to wonder what else the FBI knows."

At the North Korean Mission to the United Nations in New York, a woman who refused to identify herself said no one was available to talk to the news media Wednesday.

The bespectacled Yai, wearing a plaid jacket, sweatpants and sandals, made a brief appearance in federal court Wednesday afternoon. Yai's arraignment, and a hearing to determine whether he is eligible for bail, were put off until Friday at his request. Yai, who is seeking private counsel, will remain in federal custody until then on charges that could send him to prison for 20 years. His wife, an employee at Hanmi Bank in Koreatown, remains free and is expected to be arraigned in the near future.

At Wednesday's hearing, Yai wore a headset through which the judge's comments were translated from English to Korean.

Yai was expressionless through much of the short session, answering simply "yes" to a number of questions posed by the judge about whether he understood the proceedings and his rights under federal law. At one point, he politely corrected U.S. Magistrate Judge Victor B. Kenton's pronunciation of his name, which is pronounced "yay."

The FBI said its investigation is continuing and would not comment on whether additional arrests are expected. Nor was it clear why federal authorities decided to file charges against Yai now, after investigating him since 1995.

The court papers released Wednesday provided virtually no details about documents that Yai may have attempted to obtain or provided to the North Korean government. In fact, in one intercepted 1997 fax, Yai's alleged North Korean handlers encouraged him to provide information beyond that which is publicly available. "Do not send anything that has been revealed in the newspaper or radio," read a handwritten note found in a 1998 covert search of his office.

In the 80-page affidavit in support of the arrest warrant, FBI agent James G. Chang asserted that Yai's travels abroad, unexplained payments of cash, and coded means of communications led authorities to conclude Yai was working for the North Korean intelligence service.

"Yai was an agent of North Korea because he ... received and responded to tasking by North Korea, most evidently tasking to recruit another agent or subagent and ... was paid by North Korea for his services," wrote Chang, who is assigned to the National Security Division of the FBI office in Los Angeles.

In trips to China, North Korea and elsewhere, Chang alleged, Yai demonstrated his willingness to illegally obtain top secret information -- both directly and by recruiting someone to assist in the covert "conspiracy."

Probe Began in 1995

Beginning about December 1995, Chang wrote, the FBI put Yai under surveillance, and one year later received authorization through the Foreign Intelligence Surveillance Act to engage in secret searches, wiretaps and other high-tech electronic monitoring.

As early as November 1996, FBI physical and electronic surveillance revealed that Yai was sharing a Los Angeles office with a then-31-year-old woman identified in Chang's affidavit only as "Person L," who would later become another alleged agent for North Korea. Over time, according to the affidavit, the court-ordered surveillance enabled FBI agents to secretly enter Yai's former home in Granada Hills as well as his office, where one of the items they found was a five-page chart in Korean that included code words for, among other things, "the White House," "the Pentagon," "human target" and "nuclear facility." For example, the words "Peter" and "Kang" were code words for North Korean intelligence headquarters, the FBI says.

During secret searches of Yai's office, Chang wrote, FBI agents twice found thousands of dollars in $100 bills as well as faxes and other correspondence, including a November 1997 letter in code. The letter, Chang said, referenced an assignment for Yai to find a recruit "inside the church" -- code for Washington, D.C.

Then in April 2000, Chang wrote, Yai and his wife traveled to Prague and Vienna, ostensibly to celebrate their 25th wedding anniversary.

Before leaving Los Angeles, according to the affidavit, Yai received a fax telling him to contact a "Mr. Kim" when he arrived in Prague. The phone numbers on the fax, the affidavit said, were traced to North Korea's embassy.

When they returned from that trip, Yai and his wife were detained by U.S. Customs agents for failing to report that they were carrying more than $10,000. The couple, according to the affidavit, said they misunderstood the question and insisted they had brought the money with them from the U.S. to purchase jewelry and watches in Europe.

But the affidavit says wiretaps at the Yai home showed the couple concocted the story as cover. The money -- more than $17,000 in cash found by U.S. customs agents in Yai's shirt pocket and his wife's sunglasses holder -- came from North Korea, authorities contend.

Yai's alleged efforts to recruit someone as an agent for North Korea focused largely on Person C, an unidentified male who Yai allegedly considered planting as a reporter in Washington, the affidavit suggests.

Yai frequently talked with Person L, the woman who worked with him in his mid-Wilshire office, about obtaining various types of government jobs that could be helpful to their cause, according to the affidavit.

For example, Chang wrote, the woman sought a job with the child custody unit of the Los Angeles County district attorney's office and, during one taped conversation with Yai, discussed the possibility of later being hired by the FBI.

After concluding that the background checks at the FBI and INS would make it "very difficult" to be hired, the woman discussed with Yai the possibility of finding other government employment. An FBI source said she did eventually work for the district attorney's office but no longer works there.

To some recent acquaintances, an air of mystery seemed to follow Yai, who has had five Los Angeles County addresses since 1994.

"He would never tell me what he did before," said John Noe, who recently bought a Santa Monica sandwich shop from Yai. "I think he was hiding something."

Neighbor Shari Hammerman said she barely saw the couple, who since last June had lived just steps away in a five-unit condominium complex. "I saw him smoking once in a while ... he didn't say much," said the 33-year-old television editor. "I got the impression that he was just quiet or didn't speak much English."

A Different Picture

But some longtime acquaintances painted a different picture of Yai, who arrived in the U.S. from Seoul, became a naturalized citizen in 1981 and raised two children who have since graduated from a top California university. "It seems like a trumped-up charge because of the increasing tensions between the United States and North Korea," said Kil Nam Roh, editor of Minjok Tongshin, an Internet news agency and a friend of Yai for more than 20 years.

Roh, whose news agency has a reputation among many in Koreatown of being sympathetic to North Korea, described Yai as a "a gentle person" with a "peace-loving philosophy." Like him, Roh said, Yai wants to see the divided Koreas united. Until several years ago, Yai was active in Koreatown activities calling for the unification of North and South Korea, according to people who have known him for a long time.

Jin Hwan Choi, a Koreatown dentist who participated with Yai in numerous protests in Los Angeles against the authoritarian rule in South Korea in the last two decades, said Yai had a tendency to "praise North Korea in an impulsive way." He said he has not seen Yai in about three years.

Choi, chairman of the Korean Resource Center, said Korean immigrants in Los Angeles are "so conservative that if you mention the word 'unification,' you're branded a Communist or North Korea sympathizer."

South Korean Consul Yong Kim attended Wednesday's court session. "We came to see if there is anything we can to do help," said Kim. "But it appears that this is not the kind of situation in which we can be of help."

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Times staff writers Zeke Minaya and Steve Chawkins and research librarian John Tyrrell contributed to this report.