BRIT HUME, HOST: Last time we reported on the approximately 60 Israelis who had been detained in connection
with the Sept. 11 terrorism investigation. Carl Cameron reported that U.S. investigators suspect that some of these
Israelis 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 fear
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 Cameron's second report.
CARL CAMERON, FOX NEWS CORRESPONDENT (voice-over): Fox News has learned that some American
terrorist investigators fear certain suspects in the Sept. 11 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, and virtually all call records and billing in
the U.S. are done for the phone companies by Amdocs Ltd., an Israeli-based private elecommunications company.
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 phones
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 security breaches or wrongdoing. But sources tell Fox News that in 1999, the
super secret national security agency, headquartered in northern Maryland, issued what's called a Top Secret sensitive
compartmentalized information report, TS/SCI, warning that records of calls in the United States were getting into
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
records could be used. "Widespread data mining techniques and algorithms.... combining 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. But 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
classified 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
Another briefing document said, "It has become increasingly apparent that systems and networks are vulnerable.Such
crimes always involve unauthorized persons, or persons who exceed their authorization...citing on exploitable
Those vulnerabilities are growing, because according to another briefing, the U.S. relies too much on foreign
companies like Amdocs for high-tech equipment and software. "Many factors have led to increased dependence on
code developed 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 U.S. government officials are worried about, however, is the possibility that Amdocs data
could get into the wrong hands, particularly organized crime. And that would not be the first thing that such a thing
has happened. Fox News has documents of a 1997 drug trafficking case in Los Angeles, in which telephone
information, the type that Amdocs collects, was used to "completely compromise the communications of the FBI, the
Secret Service, the DEO and the LAPD."
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 60 Israelis who were detained in the
anti-terror investigation, and the suspicion that some investigators have that they may have picked up information on
the 9/11 attacks ahead of time and not passed it on.
There was a report, you'll recall, that the Mossad, the Israeli intelligence agency, did indeed send representatives to
the U.S. to warn, just before 9/11, 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 right here on your show on the 14th. What
investigators are saying is that 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 sources and methods in the intelligence
community. The suspicion being, perhaps those sources and methods were taking place right here in the United
The question came up in select intelligence committee on Capitol Hill today. They intend to look into what we
reported last night, and specifically that 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.
BRIT HUME, HOST: Last time we reported on an Israeli-based company called Amdocs Ltd. that generates the
computerized records and billing data for nearly every phone call made in America. As Carl Cameron reported, U.S.
investigators digging into the 9/11 terrorist attacks fear that suspects may have been tipped 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 Comverse Infosys, a subsidiary
of an Israeli-run private telecommunications firm, with 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 transmit them to investigators.
The manufacturers have continuing access to the computers so they can service them and keep them free of glitches.
This process was authorized by the 1994 Communications Assistance for Law Enforcement Act, or CALEA. Senior
government 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 have undermined the whole wiretapping system.
Indeed, Fox News has learned that Attorney General John Ashcroft and FBI 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 effective 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, in effect, a back door through which wiretaps themselves can be intercepted by
Adding to the suspicions is the fact that in Israel, Comverse works closely 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 is considered career suicide.
And sources say that while various F.B.I. inquiries into Comverse have been 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
several government agencies expressed deep concerns that too many unauthorized non-law enforcement personnel
can access the wiretap system. And the FBI's own nondescript office in Chantilly, Virginia that actually oversees the
CALEA 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 buying intercept equipment. And for years, they've thrown much of the business to Comverse.
A handful of former U.S. law enforcement officials involved in awarding Comverse government contracts over the
years now work for the company.
Numerous sources say some of those individuals were asked to leave government 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 counter 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
changed 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 Israeli 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 possibility
HUME: All right, Carl. Thanks very much.
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 custody under the new anti-terrorism law.
Cameron also investigates the possibility that an Israeli firm generated billing data that could be used for intelligence
purpose, and describes concerns 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
CARL CAMERON, FOX NEWS CORRESPONDENT (voice-over): Los Angeles, 1997, a major local, state and
federal drug investigating sours. The suspects: Israeli organized crime with operations in New York, Miami, Las
Vegas, Canada, Israel and Egypt. The allegations: cocaine and ecstasy trafficking, and sophisticated 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 under surveillance. Some who did get caught admitted to having hundreds of
numbers 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 case. The organization discovered communications between organized crime
intelligence division detectives, the FBI and the Secret Service."
Shock spread from the DEA to the FBI in Washington, and then the CIA. An investigation of the problem, according
to law enforcement documents, concluded, "The organization has apparent extensive access to database systems to
identify pertinent personal and biographical information."
When investigators tried to find out where the information might have come from, they looked at Amdocs, a publicly
traded firm based in Israel. Amdocs generates billing data for virtually every call in America, and they do credit
checks. The company denies any leaks, but investigators still fear that the firm's data is getting into the wrong hands.
When investigators checked their own wiretapping system for leaks, they grew concerned about potential
vulnerabilities in the computers that intercept, record and store the wiretapped calls. A main contractor is Comverse
Infosys, which works closely with the Israeli government, and under a special grant program, is reimbursed for up to
50 percent of its research and development 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 potatoes.
ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: I would just refer you to the Department of Justice with
that. I'm not familiar with the report.
COLIN POWELL, SECRETARY OF STATE: I'm aware that some Israeli citizens have been detained. With respect
to why they're being detained and the other aspects 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 intelligence 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. Earlier 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 Powell. What are officials saying behind the
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 under 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 the
explosive nature and very political ramifications of the story itself – Tony.
SNOW: All right, Carl, thanks.