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Fox News on Israeli espionage in America

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Dec 23, 2001, 1:00:02 PM12/23/01
Carl Cameron Investigates (Fox News)
Monday, December 17, 2001

This partial transcript was provided by the Federal Document Clearing
Visit to order the complete transcript.

Part 1 of 4,2933,40684,00.html

BRIT HUME, HOST: It has been more than 16 years since a civilian
working for
the Navy was charged with passing secrets to Israel. Jonathan Pollard
guilty to conspiracy to commit espionage and is serving a life sentence.
first, Israeli leaders claimed Pollard was part of a rogue operation,
but later
took responsibility for his work.

Now Fox News has learned some U.S. investigators believe that there are
Israelis again very much engaged in spying in and on the U.S., who may
known things they didn't tell us before Sept. 11. Fox News correspondent
Cameron has details in the first of a four-part series.

CARL CAMERON, FOX NEWS CORRESPONDENT: Since Sept. 11, more than 60
have been arrested or detained, either under the new patriot
anti-terrorism law,
or for immigration violations. A handful of active Israeli military were
those detained, according to investigators, who say some of the
detainees also
failed polygraph questions when asked about alleged surveillance
against and in the United States.

There is no indication that the Israelis were involved in the 9/11
attacks, but
investigators suspect that the Israelis may have gathered intelligence
about the
attacks in advance, and not shared it. A highly placed investigator said
are "tie-ins." But when asked for details, he flatly refused to describe
saying, "evidence linking these Israelis to 9/11 is classified. I cannot
you about evidence that has been gathered. It's classified information."

Fox News has learned that one group of Israelis, spotted in North
recently, is suspected of keeping an apartment in California to spy on a
of Arabs who the United States is also investigating for links to
Numerous classified documents obtained by Fox News indicate that even
prior to
Sept. 11, as many as 140 other Israelis had been detained or arrested in
secretive and sprawling investigation into suspected espionage by
Israelis in
the United States.

Investigators from numerous government agencies are part of a working
that's been compiling evidence since the mid '90s. These documents
hundreds of incidents in cities and towns across the country that
say, "may well be an organized intelligence gathering activity."

The first part of the investigation focuses on Israelis who say they
are art
students from the University of Jerusalem and Bazala Academy. They
made contact with U.S. government personnel, the report says, by saying
wanted to sell cheap art or handiwork.

Documents say they, "targeted and penetrated military bases." The DEA,
FBI and
dozens of government facilities, and even secret offices and unlisted
homes of law enforcement and intelligence personnel. The majority of
questioned, "stated they served in military intelligence, electronic
surveillance intercept and or explosive ordinance units."

Another part of the investigation has resulted in the detention and
arrests of
dozens of Israelis at American mall kiosks, where they've been selling
called Puzzle Car and Zoom Copter. Investigators suspect a front.

Shortly after The New York Times and Washington Post reported the
detentions last months, the carts began vanishing. Zoom Copter's Web
page says,
"We are aware of the situation caused by thousands of mall carts being
closed at
the last minute. This in no way reflects the quality of the toy or its
salability. The problem lies in the operators' business policies."

Why would Israelis spy in and on the U.S.? A general accounting office
investigation referred to Israel as country A and said, "According to a
intelligence agency, the government of country A conducts the most
espionage operations against the U.S. of any U.S. ally."

A defense intelligence report said Israel has a voracious appetite for
information and said, "the Israelis are motivated by strong survival
which dictate every possible facet of their political and economical
It aggressively collects military and industrial technology and the U.S.
is a
high priority target."

The document concludes: "Israel possesses the resources and technical
capability to achieve its collection objectives."

A spokesman for the Israeli embassy here in Washington issued a denial
that any suggestion that Israelis are spying in or on the U.S. is
"simply not
true." There are other things to consider. And in the days ahead, we'll
take a
look at the U.S. phone system and law enforcement's methods for
wiretaps. And an
investigation that both have been compromised by our friends overseas.

HUME: Carl, what about this question of advanced knowledge of what was
going to
happen on 9/11? How clear are investigators that some Israeli agents may
known something?

CAMERON: It's very explosive information, obviously, and there's a
great deal
of evidence that they say they have collected -- none of it necessarily
conclusive. It's more when they put it all together. A bigger question,
say, is how could they not have known? Almost a direct quote.

HUME: Going into the fact that they were spying on some Arabs, right?

CAMERON: Correct.

HUME: All right, Carl, thanks very much.

Part 2 of 4,2933,40747,00.html

BRIT HUME, HOST: Last time we reported on the approximately 60 Israelis
who had
been detained in connection with the Sept. 11 terrorism investigation.
Cameron reported that U.S. investigators suspect that some of these
were spying on Arabs in this country, and may have turned up information
on the
planned terrorist attacks back in September that was not passed on.

Tonight, in the second of four reports on spying by Israelis in the
U.S., we
learn about an Israeli-based private communications company, for whom a
half-dozen of those 60 detained suspects worked. American investigators
information generated by this firm may have fallen into the wrong hands
and had
the effect of ... impeded the Sept. 11 terror inquiry. Here's Carl
second report.

learned that
some American terrorist investigators fear certain suspects in the Sept.
attacks may have managed to stay ahead of them, by knowing who and when
investigators are calling on the telephone. How?

By obtaining and analyzing data that's generated every time someone in
the U.S.
makes a call.

UNIDENTIFIED FEMALE: What city and state, please?

CAMERON: Here's how the system works. Most directory assistance calls,
virtually all call records and billing in the U.S. are done for the
companies by Amdocs Ltd., an Israeli-based private elecommunications

Amdocs has contracts with the 25 biggest phone companies in America,
and more
worldwide. The White House and other secure government phone lines are
protected, but it is virtually impossible to make a call on normal
without generating an Amdocs record of it.

In recent years, the FBI and other government agencies have
investigated Amdocs
more than once. The firm has repeatedly and adamantly denied any
breaches or wrongdoing. But sources tell Fox News that in 1999, the
secret national security agency, headquartered in northern Maryland,
what's called a Top Secret sensitive compartmentalized information
TS/SCI, warning that records of calls in the United States were getting
foreign hands -- in Israel, in particular.

Investigators don't believe calls are being listened to, but the data
about who
is calling whom and when is plenty valuable in itself. An internal
Amdocs memo
to senior company executives suggests just how Amdocs generated call
could be used. "Widespread data mining techniques and algorithms....
both the properties of the customer (e.g., credit rating) and properties
of the
specific 'behavior ...'" Specific behavior, such as who the customers

The Amdocs memo says the system should be used to prevent phone fraud.
U.S. counterintelligence analysts say it could also be used to spy
through the
phone system. Fox News has learned that the N.S.A has held numerous
conferences to warn the F.B.I. and C.I.A. how Amdocs records could be
used. At
one NSA briefing, a diagram by the Argon national lab was used to show
that if
the phone records are not secure, major security breaches are possible.

Another briefing document said, "It has become increasingly apparent
systems and networks are vulnerable. ... Such crimes always involve
persons, or persons who exceed their authorization...citing on

Those vulnerabilities are growing, because according to another
briefing, the
U.S. relies too much on foreign companies like Amdocs for high-tech
and software. "Many factors have led to increased dependence on code
overseas.... We buy rather than train or develop solutions."

U.S. intelligence does not believe the Israeli government is involved
in a
misuse of information, and Amdocs insists that its data is secure. What
government officials are worried about, however, is the possibility that
data could get into the wrong hands, particularly organized crime. And
would not be the first thing that such a thing has happened. Fox News
documents of a 1997 drug trafficking case in Los Angeles, in which
information, the type that Amdocs collects, was used to "completely
the communications of the FBI, the Secret Service, the DEO and the

We'll have that and a lot more in the days ahead -- Brit.

HUME: Carl, I want to take you back to your report last night on those
Israelis who were detained in the anti-terror investigation, and the
that some investigators have that they may have picked up information on
9/11 attacks ahead of time and not passed it on.

There was a report, you'll recall, that the Mossad, the Israeli
agency, did indeed send representatives to the U.S. to warn, just before
that a major terrorist attack was imminent. How does that leave room
for the
lack of a warning?

CAMERON: I remember the report, Brit. We did it first internationally
here on your show on the 14th. What investigators are saying is that
warning from the Mossad was nonspecific and general, and they believe
that it
may have had something to do with the desire to protect what are called
and methods in the intelligence community. The suspicion being, perhaps
sources and methods were taking place right here in the United States.

The question came up in select intelligence committee on Capitol Hill
They intend to look into what we reported last night, and specifically
possibility -- Brit.

HUME: So in other words, the problem wasn't lack of a warning, the
problem was
lack of useful details?

CAMERON: Quantity of information.

HUME: All right, Carl, thank you very much.

Part 3 of 4,2933,40824,00.html

BRIT HUME, HOST: Last time we reported on an Israeli-based company
Amdocs Ltd. that generates the computerized records and billing data for
every phone call made in America. As Carl Cameron reported, U.S.
digging into the 9/11 terrorist attacks fear that suspects may have been
off to what they were doing by information leaking out of Amdocs.

In tonight's report, we learn that the concern about phone security
extends to
another company, founded in Israel, that provides the technology that
the U.S.
government uses for electronic eavesdropping. Here is Carl Cameron's

CARL CAMERON, FOX NEWS CORRESPONDENT (voice-over): The company is
Infosys, a subsidiary of an Israeli-run private telecommunications firm,
offices throughout the U.S. It provides wiretapping equipment for law
enforcement. Here's how wiretapping works in the U.S.

Every time you make a call, it passes through the nation's elaborate
network of
switchers and routers run by the phone companies. Custom computers and
software, made by companies like Comverse, are tied into that network to
intercept, record and store the wiretapped calls, and at the same time
them to investigators.

The manufacturers have continuing access to the computers so they can
them and keep them free of glitches. This process was authorized by the
Communications Assistance for Law Enforcement Act, or CALEA. Senior
officials have now told Fox News that while CALEA made wiretapping
easier, it
has led to a system that is seriously vulnerable to compromise, and may
undermined the whole wiretapping system.

Indeed, Fox News has learned that Attorney General John Ashcroft and
Director Robert Mueller were both warned Oct. 18 in a hand-delivered
letter from
15 local, state and federal law enforcement officials, who complained
that "law
enforcement's current electronic surveillance capabilities are less
today than they were at the time CALEA was enacted."

Congress insists the equipment it installs is secure. But the
complaint about
this system is that the wiretap computer programs made by Comverse have,
effect, a back door through which wiretaps themselves can be intercepted
unauthorized parties.

Adding to the suspicions is the fact that in Israel, Comverse works
with the Israeli government, and under special programs, gets reimbursed
for up
to 50 percent of its research and development costs by the Israeli
Ministry of
Industry and Trade. But investigators within the DEA, INS and FBI have
all told
Fox News that to pursue or even suggest Israeli spying through Comverse
considered career suicide.

And sources say that while various F.B.I. inquiries into Comverse have
conducted over the years, they've been halted before the actual
equipment has
ever been thoroughly tested for leaks. A 1999 F.C.C. document indicates
government agencies expressed deep concerns that too many unauthorized
enforcement personnel can access the wiretap system. And the FBI's own
nondescript office in Chantilly, Virginia that actually oversees the
wiretapping program, is among the most agitated about the threat.

But there is a bitter turf war internally at F.B.I. It is the FBI's
office in
Quantico, Virginia, that has jurisdiction over awarding contracts and
intercept equipment. And for years, they've thrown much of the business
Comverse. A handful of former U.S. law enforcement officials involved
awarding Comverse government contracts over the years now work for the

Numerous sources say some of those individuals were asked to leave
service under what knowledgeable sources call "troublesome
circumstances" that
remain under administrative review within the Justice Department.

And what troubles investigators most, particularly in New York, in the
terrorism investigation of the World Trade Center attack, is that on a
number of
cases, suspects that they had sought to wiretap and survey immediately
their telecommunications processes. They started acting much
differently as
soon as those supposedly secret wiretaps went into place -- Brit.

HUME: Carl, is there any reason to suspect in this instance that the
government is involved?

CAMERON: No, there's not. But there are growing instincts in an awful
lot of
law enforcement officials in a variety of agencies who suspect that it
had begun
compiling evidence, and a highly classified investigation into that
-- Brit.

HUME: All right, Carl. Thanks very much.

Part 4 of 4,2933,40981,00.html

TONY SNOW, HOST: This week, senior correspondent Carl Cameron has
reported on
a longstanding government espionage investigation. Federal officials
this year
have arrested or detained nearly 200 Israeli citizens suspected of
belonging to
an "organized intelligence-gathering operation." The Bush
administration has
deported most of those arrested after Sept. 11, although some are in
under the new anti-terrorism law.

Cameron also investigates the possibility that an Israeli firm
billing data that could be used for intelligence purpose, and describes
that the federal government's own wiretapping system may be vulnerable.
Tonight, in part four of the series, we'll learn about the probable
roots of the
probe: a drug case that went bad four years ago in L.A.

CARL CAMERON, FOX NEWS CORRESPONDENT (voice-over): Los Angeles, 1997,
a major
local, state and federal drug investigating sours. The suspects:
organized crime with operations in New York, Miami, Las Vegas, Canada,
and Egypt. The allegations: cocaine and ecstasy trafficking, and
white-collar credit card and computer fraud.

The problem: according to classified law enforcement documents obtained
by Fox
News, the bad guys had the cops' beepers, cell phones, even home phones
surveillance. Some who did get caught admitted to having hundreds of
and using them to avoid arrest.

"This compromised law enforcement communications between LAPD
detectives and
other assigned law enforcement officers working various aspects of the
The organization discovered communications between organized crime
division detectives, the FBI and the Secret Service."

Shock spread from the DEA to the FBI in Washington, and then the CIA.
investigation of the problem, according to law enforcement documents,
"The organization has apparent extensive access to database systems to
pertinent personal and biographical information."

When investigators tried to find out where the information might have
from, they looked at Amdocs, a publicly traded firm based in Israel.
generates billing data for virtually every call in America, and they do
checks. The company denies any leaks, but investigators still fear that
firm's data is getting into the wrong hands.

When investigators checked their own wiretapping system for leaks, they
concerned about potential vulnerabilities in the computers that
record and store the wiretapped calls. A main contractor is Comverse
which works closely with the Israeli government, and under a special
program, is reimbursed for up to 50 percent of its research and
costs by Israel's Ministry of Industry and Trade.

Asked this week about another sprawling investigation and the detention
of 60
Israeli since Sept. 11, the Bush administration treated the questions
like hot

Department of Justice with that. I'm not familiar with the report.

COLIN POWELL, SECRETARY OF STATE: I'm aware that some Israeli citizens
been detained. With respect to why they're being detained and the other
of your question -- whether it's because they're in intelligence
services, or
what they were doing -- I will defer to the Department of Justice and
the FBI to
answer that.

CAMERON: Beyond the 60 apprehended or detained, and many deported
since Sept.
11, another group of 140 Israeli individuals have been arrested and
detained in
this year in what government documents describe as "an organized
gathering operation," designed to "penetrate government facilities."
Most of
those individuals said they had served in the Israeli military, which is
compulsory there.

But they also had, most of them, intelligence expertise, and either
worked for
Amdocs or other companies in Israel that specialize in wiretapping.
this week, the Israeli embassy in Washington denied any spying against
or in the
United States -- Tony.

SNOW: Carl, we've heard the comments from Ari Fleischer and Colin
What are officials saying behind the scenes?

CAMERON: Well, there's real pandemonium described at the FBI, the DEA
and the
INS. A lot of these problems have been well known to some
investigators, many
of who have contributed to the reporting on this story. And what they
say is
happening is supervisors and management are now going back and
collecting much
of the information, because there's tremendous pressure from the top
levels of
all of those agencies to find out exactly what's going on.

At the DEA and the FBI already a variety of administration reviews are
way, in addition to the investigation of the phenomenon. They want to
find out
how it is all this has come out, as well as be very careful because of
explosive nature and very political ramifications of the story itself --

SNOW: All right, Carl, thanks.

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