On March 6, 1999, the New York Times ran an explosive page one story: “Breach at Los Alamos: A special Report: China Stole Nuclear Secrets for Bombs, U.S. Aides Say.”

The 4,000-word article, reported by Jeff Gerth and James Risen, detailed a shocking account of espionage at Los Alamos National Laboratory. Two days later, in a second story on Los Alamos, the Times named the FBI’s chief suspect, a 59-year-old scientist named Wen Ho Lee.

Lee, a native of Taiwan and a naturalized United States citizen, had worked for Los Alamos National Laboratory for nearly twenty years. He joined the lab in December 1978 as a nuclear scientist and within months was transferred to the top secret X Division. His job was to simulate nuclear explosions with the primary mission of improving the safety and reliability of America’s nuclear arsenal.

Long before the Times article appeared, Lee had been the focus of an FBI investigation. At issue was a 1992 nuclear test the Chinese had conducted. The test demonstrated an “advance in miniaturization of the country’s nuclear warheads.” American scientists were surprised at such progress by the Chinese. The only rational conclusion they and government officials could come to was that the Chinese did not arrive at this modernization without the help of U.S. secrets.

The FBI began looking for sources of a breach and in 1996 started tracking Lee’s movements at Los Alamos. Their decision was based upon a Department of Energy report that stated Lee was a logical suspect. The DOE stated Lee had opportunity, motive and legitimate access. Lee regularly traveled to Taiwan and China, always with energy department approval where he attended conferences, consulted, and visited for personal reasons.

During the first two years of the FBI’s investigation into Lee, the Bureau’s efforts were halfhearted, at best. But when Lee submitted an application to LANL to hire a research assistant in 1997, the FBI took note. The assistant Lee hoped to hire was Chinese-American, which raised suspicion at the FBI. The Bureau requested electronic surveillance of Lee, but the Department of Justice denied the request, citing no evidence that Lee was involved in espionage.

Another year went by and the investigation flagged. On the heels of a House committee’s hearings on Chinese nuclear capability, their efforts were amped up and when Lee returned from another trip to Taiwan, again approved by the Department of Energy. Lee was asked by the FBI to submit to a polygraph test. Lee agreed and passed the test.

At about this time, investigators learned that Lee had transferred an enormous number of classified files to an unclassified computer. Lee told the FBI that he had done so to backup his data. “Lee told a fellow scientist at Los Alamos that he needed to transfer the files from a classified computer to an unclassified computer because the classified computer did not have tape drives and he could not download files directly from them,” according to analytical firm Pherson Associates, which documented the case.

The majority of the data Lee transferred was categorized as PARD (Protect as Restricted Data) meaning it was neither classified nor unclassified; no determination had yet been made. Investigators did not believe Lee’s explanation, that he was trying to backup his data with the resources he had available to him, and treated the file transfer as a “smoking gun.” The New York Times, for its part, wasted no time in fingering Lee, as well.

Other news organizations were caught off guard by the Times revelation and struggled to catch up.

“When you're being hammered mercilessly by your main competition and you're new on the beat, that's tough,” said Vernon Loeb, who was a new Washington Post reporter at the time. “The Times is usually right, so we couldn't dismiss the story.”

But Loeb had difficulty finding sources to back up the claim that Lee was a spy. Other reporters were also having trouble confirming the Times’ story.

“It was shocking to see the descriptions of the alleged security breaches, the nature of the information that was supposedly compromised, and that they were fingering an active employee," Ian Hoffman told American Journalism Review. Hoffman was a 36 year old reporter for the Albuquerque Journal when the Times story broke. “In the history of Los Alamos, nobody working there was ever accused of spying—it was always revealed later—years or even decades later. The idea that there was a mole working inside the laboratory was electrifying news.”

Nonetheless Hoffman was ill at ease with the Times story. “I've got editors barking down my throat, saying, ‘Why don't you have this?’” he recalled. “It was frustrating to watch these stories roll out from Washington. The vast majority were totally unsourced, inside-the-Beltway stuff. How do you break that wall? My editors at the Albuquerque Journal almost never allow[ed] unsourced stories. They just [didn’t] want to go there.”

Later American Journalism Review would find that “thousands of articles” on Lee were published yet few supplied original reporting. “The overwhelming majority mostly recapitulated allegations first published by the New York Times, simplified highly technical material, repeated some errors and magnified others.”

Hoffman dug anyway. He had several contacts inside the lab that told him they were doubtful Lee had access to the kind of information the FBI accused him of passing along to the Chinese. It became clear to him this was Washington-driven coverage coming from anonymous sources inside the Beltway who weren’t familiar with the inner-workings of the laboratory and didn't understand nuclear weaponry science.

Nevertheless, Lee was fired two days after the New York Times “outed” him as a prime suspect and soon after was charged with 59 counts of mishandling nuclear secrets. Denied bail, Lee was kept in solitary confinement for nine months, sometimes shackled, and allowed only weekly visits with his family. But the government’s case was too weak and Lee ended up pleading guilty to a single charge of mishandling secret information. The presiding judge went so far as to apologize to Lee and rebuke government officials, saying they had “embarrassed our entire nation.”

Clinton White House Press Secretary Joe Lockhart called the reporting “near-hysterical” and The New York Times’ handling of the story even caught the eye of entertainers. “The New York Times' slogan [should be changed from] ‘All the news that's fit to print’ to ‘Stuff we heard from a guy who says his friend heard about it,” joked comedian David Letterman.

After Lee was freed, he filed a lawsuit against the United States, alleging Clinton Administration officials had leaked his name to the news media as the prime suspect in the Los Alamos breach investigation. Lee did not sue the press, but the court ordered five media outlets to provide Lee with the names of their government sources so his attorneys could pursue their case against the government.

In June 2006, Lee was awarded $1.6 million in a unique joint settlement arrangement. The United States government was ordered to pay Lee $895,000 and in return Lee would drop his lawsuit. Meanwhile, five journalism outlets—The New York Times, Washington Post, Los Angeles Times, Associated Press and ABC News each agreed to pay Lee $750,000 to avoid revealing their sources.

“Unfortunately, the journalists in this case . . . reluctantly concluded that the only way they could continue to protect the bond with their sources and sidestep increasing punishment, including possible jail time, was to contribute to the settlement with the government and Wen Ho Lee,” said Henry Hoberman, senior vice president of ABC. “It was not a decision that any of the journalists came to easily or happily.”

Lucy Daglish, executive director of the Reporters Committee for Freedom of the Press at the time, called the media’s settlement “exceptionally” unusual.

The New York Times never spoke publicly about its coverage of Lee, except to laud the skill of its reporters Gerth and Risen.

“They buried the concessions.... They never said they were wrong,” said Norman Miller, a former Los Angeles Times national editor who later taught journalism at the University of Southern California. “They never apologized to Lee, or indicated straight out that he hadn't committed espionage.”