The West Coast is seeing a "full-on epidemic of espionage" centered largely on Silicon Valley's technology industry, the report said.

A former U.S. intelligence official told online magazine Politico that local Russian and East European prostitutes may be getting money from Russia to target high-powered techies and VCs at the posh Rosewood hotel's lounge on Sand Hill Road in Menlo Park, a drinking establishment known for so-called "cougar nights" on Thursdays.

"Sex workers targeting executives at high-end bars and nightclubs such as the Rosewood Sand Hill … and other spots have been identified as potentially reporting back to Russian intel officers," the former official said, according to Politico.

The Rosewood, in a statement, disputed the report.

"Rosewood Sand Hill holds itself to the highest standards and does not tolerate illegal or immoral activity," the statement Friday said.

"The statements made in the Politico article regarding our hotel are unfounded and without validity. We will continue to maintain the highest levels of security as we always have to ensure the safety, privacy and integrity of our guests and local patrons."