Top officials at the American Israel Public Affairs Committee (AIPAC) have appeared before a grand jury and two senior staffers have been placed on paid leave in the latest developments in the federal investigation of the pro-Israel lobby for allegedly passing classified information to Israel, according to multiple sources with direct knowledge of the case.
At the same time, the Pentagon staffer at the center of the allegations, accused of espionage by the FBI and then pressured into an alleged FBI "sting" against AIPAC, has been quietly rehired by the Pentagon, over the FBI's objections.
Sources close to the investigation, while confirming these details, say they do not foresee an imminent resolution before AIPAC's annual policy conference, which begins May 22. Rumors that something might happen sooner have been swirling around Washington in recent weeks.
The investigation came to light last August with an FBI raid of AIPAC's Washington headquarters. Files belonging to two senior staffers, policy director Steve Rosen and Iran specialist Keith Weissman, were confiscated.
News of the raid was leaked to CBS News as it was happening, igniting worldwide media coverage and speculation about a "nest of Pollardites," a reference to the American Jewish naval analyst who was convicted of spying for Israel in 1986.
Allegations soon surfaced that Rosen and Weissman had accepted classified information on Iran from Larry Franklin, an Iran analyst for the Pentagon, in 2003.
The FBI launched another raid on AIPAC headquarters in December 2004. It also issued grand jury subpoenas to four top staffers: Howard Kohr, the group's executive director; Richard Fishman, the managing director; Renee Rothstein, the communications director; and Raphael Danziger, the research director.
In late January or early February, sources say, several of the four testified before the grand jury. AIPAC would not comment on the proceedings of the grand jury, which was convened by U.S. Attorney Paul McNulty, the federal prosecutor in eastern Virginia.
Rosen and Weissman were placed on paid leave in January. At around the same time, Franklin returned to the Pentagon in a "nonsensitive position," sources said.
Franklin, who had been threatened with an espionage indictment by FBI assistant director David Szady's counterintelligence division, was pressured into acting as an FBI informant against AIPAC, according to multiple sources with direct knowledge of the FBI's tactics against Franklin. In an earlier case involving a CIA staff attorney, Szady had been publicly accused of targeting Jews with security investigations.
"I think that shows that Franklin was never any sort of espionage threat," a source close to Franklin said. Franklin has been described as overeager but intensely patriotic.
"Franklin was obviously more of a victim than a threat," said one source intimately familiar with the government's case against Franklin.
Szady told a contact that Franklin's rehiring by the Pentagon was not "our call," and was done over the FBI's strenuous objections. An FBI spokesman refused to comment on the rehiring.
Franklin has not been called to testify before the grand jury, nor have there been significant discussions or even contacts about a plea or a resolution, according to sources familiar with the Justice Department's case against Franklin.
"Nothing is happening, and Franklin is back at work," said a source familiar with the FBI's investigation.
Rumors have swirled that something was about to happen in the case before AIPAC's policy conference, but key sources familiar with the case say no resolution of the case "seems possible" by then, barring an unforeseen development.
Scheduled out-of-state travel for key people could make settlement negotiations difficult, sources say. Multiple sources associated with Franklin and the prosecution's cases confirm that genuine settlement discussions are not yet even underway.
AIPAC also was clamping down on any speculation about the latest developments.
Earlier statements from the organization, repeated as recently as December, asserted that "neither AIPAC nor any member of our staff has broken any law, nor has AIPAC or its employees ever received information they believed was secret or classified."
Under a new gag order by defense attorneys, AIPAC spokesmen have declined to repeat the original statement. The standard reply now is, "It is not appropriate for AIPAC to comment on any issue related to any ongoing investigation."
An AIPAC spokesman added that the statement should "not be construed as a no-comment."
The FBI and prosecutor McNulty refused comment.
Senior FBI officials, stung by criticism of Szady, are trying to understand exactly what conduct the agency is investigating. Two FBI agents recently talked to a senior Jewish communal leader, not to extract potential evidence but "simply to understand how AIPAC works," according to one participant.
The leader explained how the American Jewish community relates to its ancestral homeland. The conversation was characterized by the participant as "extremely congenial."
The investigation grew out of a sting last summer by Szady's counterintelligence division after Franklin, the Pentagon analyst, was observed at a Virginia restaurant in June 2003 sharing a classified Iran policy draft with an AIPAC staffer, according to multiple sources aware of the prosecution's case.
Such sharing of in-progress drafts with outside think-tanks and experts is common in Washington foreign policy-making circles. In this case, however, Szady's surveillance agents were watching, the sources say.
About a year later, the sources say, the counterintelligence division used the technical violation observed in the restaurant to pressure a frightened Franklin into becoming an undercover informant.
Sources confirm that while Franklin was without defense counsel, Szady's agents threatened him with a long prison term for espionage, which would have ruined his family financially. Franklin was placed on unpaid leave and forced to take odd jobs to support his five children and wheelchair-bound wife.
Under FBI pressure, Franklin agreed to feed AIPAC's Rosen and Weissman bogus information about plans to kidnap Israelis in Kurdistan, the sources say. AIPAC officials reportedly passed that information to the Israeli Embassy in an attempt to save lives, sources say.
Franklin also allegedly was directed to sting a group of other Washington figures associated with the controversial Iraqi politician Ahmed Chalabi, and with neoconservative circles. Those efforts apparently went nowhere.
On Aug. 27, 2004, FBI sources leaked details of the investigation to CBS News just as federal agents executed search warrants for hard drives and files at AIPAC headquarters. That night, CBS News led with an explosive story about an Israeli mole in the government, a story that since has been discredited.
Shortly after the FBI's alleged scheme to set up AIPAC became public last fall, Franklin secured prominent defense lawyer Plato Cacheris, who ended Franklin's cooperation with the government.
Rosen hired defense counsel Abbe Lowell, who represented former President Clinton during his impeachment proceedings.
It remains to be seen whether Rosen, Weissman and AIPAC will emerge from the investigation intact.
The entire Jewish community is watching closely.
As one Jewish leader who asked not to be identified said, "If AIPAC is targeted in this fashion, it is not good news for the rest of us. AIPAC would be only the beginning."
New York Times best-selling journalist Edwin Black, author of the award-winning "Banking on Baghdad," first revealed charges of anti-Semitism against FBI personnel and other details of the FBI's ongoing investigation of AIPAC.