April 2011, Pages 30-31

Special Report

AIPAC Triumphs Over Former Director's Defamation Lawsuit...or Does It?

By Grant F. Smith

On Feb. 22, 2011 District of Columbia Superior Court Judge Erik P. Christian dismissed a $20 million defamation lawsuit against the American Israel Public Affairs Committee (AIPAC). The civil suit, filed on March 3, 2009 by Steven J. Rosen, AIPAC's former long-time director of foreign policy issues, was a direct result of AIPAC's treatment of Rosen during a 2005-2009 criminal Espionage Act prosecution. Rosen's failed lawsuit opened the Israel lobby's practices to unprecedented public scrutiny.

Rosen and fellow employee Keith Weissman were still under criminal indictments in early 2009 when Rosen sued AIPAC. Pentagon official Lawrence Franklin, Rosen and Weissman's source, had pleaded guilty in 2005. During 2005-2009 pretrial maneuvers, it was never in question that Rosen and Weissman obtained classified national defense information from Franklin in order to press AIPAC's case for a U.S. attack on Iran. The pair funneled selections to Washington Post reporter Glenn Kessler as well as to Israeli Embassy officials. Rosen falsely claimed a major Iranian push—"total war" as he characterized it to Kessler in 2004—against petroleum infrastructure and U.S. troops in southern Iraq.

After they were wiretapped and caught passing classified information, AIPAC, Rosen and Weissman mounted a skilled defense—inside the courtroom and across the news media. Thanks to a series of favorable pre-trial rulings by presiding Judge T.S. Ellis of the Eastern District of Virginia and an extensive media campaign, they managed to turn public attention away from the violations listed in the indictment. A consortium of top establishment media companies intervened in court, portraying Rosen and Weissman as quasi members of the press "doing what reporters do every day." Ellis ruled in their favor in 2007, prohibiting closed court sessions designed to protect classified information. Government prosecutors were effectively "gray-mailed": If they wanted to present the stolen and circulated classified information as evidence, it would all have to be publicly revealed in open court.

In 2008 Judge Ellis allowed former government classification arbiter J. William Leonard—earlier barred for his role assisting the prosecution—to testify that while technically classified, the information purloined by the AIPAC operatives should not have been. In his most bizarre ruling of all, in February of 2009 Ellis ordered U.S. prosecutors to prove that Rosen and Weissman were in a "state of mind" in which they believed they were actually committing a crime. Under the close scrutiny of Obama political appointees, U.S. prosecutors dropped their case in May of 2009, citing Ellis' "unexpectedly higher evidentiary threshold." The FBI Washington Field Office was furious. Ellis went into semi-retirement—but the precedents set by his judicial rulings may have gutted the possibility of any successful future Espionage Act prosecutions.

Rosen's angry May 2009 civil suit applied a rack-and-pinion rib-spreader to AIPAC's chest of secrets. As a jilted high-level insider, Rosen guided civil court observers into AIPAC practices never uncovered by criminal prosecutors.

Rosen's core claim was that AIPAC repeatedly defamed him in the press by stating his behavior "did not comport with the standards that AIPAC expects of its employees." Initially, Rosen, AIPAC and Judge Christian all worked in tandem to ignore the elephant astride the courtroom: AIPAC's long history of collecting, circulating and leveraging U.S. government classified information in order to win benefits for Israel. In his 2009 filings (while still apparently hoping for a hefty out-of-court settlement), Rosen referred euphemistically to "inside" government information "not normally available to or needed by the wider public," while insisting that gathering such information was not really unlawful. This stance was to be only temporary, however. During a June 5, 2009 court appearance, Rosen's lawyer promised he would be seeking "serious discovery" against AIPAC.

Rosen's key court filings detail how AIPAC jettisoned its two employees in 2005 in order to avoid its own criminal indictment. After initially considering a joint legal defense agreement and media campaign to accuse the FBI of anti-Semitism, AIPAC suddenly got cold feet. U.S. prosecutors gave AIPAC's outside counsel a recorded audiovisual presentation of Rosen and Weissman circulating information they knew to be classified. AIPAC's legal counsel reported that prosecutor Patrick McNulty was on their side "fighting with the FBI to limit the investigation to Steve Rosen and Keith Weissman and to avoid expanding it." McNulty reportedly even advised AIPAC that "we could make real progress and get AIPAC out from under all of us." Under the Department of Justice "Thompson Memorandum" corporate prosecution guidelines in effect at the time, AIPAC could avoid criminal investigation and possible indictment by quickly cutting ties with its accused employees and publicly condemning them. AIPAC took the deal.

According to documents and depositions filed in the defamation suit, AIPAC continued paying Rosen and Weissman's criminal defense fees (almost $5 million) as wealthy AIPAC donors such as media mogul Haim Saban and SlimFast diet billionaire Daniel Abraham stepped in to provide nearly a million dollars in direct support to Rosen between 2005 and 2009. Rosen's civil suit deposition claimed AIPAC had put him into a legal "zone of danger" by abandoning their joint defense strategy, firing him and making derogatory statements to the press. Rosen also publicly decried the lack of a payoff for being AIPAC's fall-guy, revealing an e-mail to Washington Post reporter Jeff Stein promising that "when this is over" AIPAC would "do right by Steve."

In a massive 260-page filing submitted on Nov. 8, 2010, AIPAC maneuvered to have the Superior Court drop the civil suit by characterizing Rosen as a rogue operator and deviant. AIPAC's deposition revealed that, "on the morning of Aug. 27, 2004, two FBI agents came to plaintiff's [Rosen's] house, and after an 'intense exchange of words' issued a 'threat [to plaintiff] about getting a lawyer by 10:00 a.m.'" Rather than immediately meet with AIPAC's in-house legal counsel, Rosen instead quickly arranged a face-to-face with the second in command at the Israeli Embassy. Rosen warned Rafi Barak of an evolving "Jonathan Pollard" type crisis, allowing key embassy staff time to flee the United States. AIPAC's legal team also filed selective depositions showing Rosen had long used his work computer to download pornography and arrange sexual liaisons with married men.

After that AIPAC motion, Rosen finally dropped all pretenses, flatly promising Washington Post reporter Stein, "I will introduce documentary evidence that AIPAC approved of the receipt of classified information." Rosen then documented a two-decade span of intelligence collection to back up his claims. AIPAC obtained a "secret National Security Decision Directive #99 calling on the Armed Services and Secretary of Defense to explore the potential for stepped-up strategic cooperation." AIPAC gleaned classified annual reports of secret U.S. arms transfers. AIPAC skimmed classified law enforcement files about North African financial transfers to African-American political activists, which it then used to discredit Jesse Jackson's presidential campaign. AIPAC suctioned up classified U.S. intelligence about Khartoum. An AIPAC board member funneled classified raw U.S. signals intelligence into a lobbying effort, while another AIPAC employee solicited and received classified information about secret U.S. understandings with Saudi Arabia.

In his final desperate courtroom maneuvers, Rosen even filed several declassified FBI documents detailing a 1984-1987 investigation into a joint AIPAC/Israeli Embassy effort to obtain and leverage confidential U.S. business information in order to secure non-reciprocal trade preferences for Israel. (These documents were first obtained under the Freedom of Information Act in 2009 for the book Spy Trade: How Israel's Lobby Undermines America's Economy.)

In the end, Rosen never got a chance to prove that trafficking in classified information was a longstanding, accepted, even unavoidable practice at AIPAC, rather than conduct for which AIPAC could casually fire him to save its own skin. Rosen's case was short-circuited just as effectively as that of U.S. prosecutors pursuing him under a strong espionage case in 2009.

In deference to AIPAC, Judge Christian stuck to a disgruntled employee versus former employer framework, sternly opposing "inviting a jury to scrutinize and second-guess an employer's policies and business judgment." While dismissing the suit in his Feb. 22 order, the judge ruled that AIPAC's public statements about Rosen's comportment were "not provably false," conveniently extricating himself and the DC Superior Court from the overarching questions about AIPAC's classified information trafficking. AIPAC immediately put out statements that it was "pleased" with the dismissal of a lawsuit that "was frivolous and had no basis in fact."

But is AIPAC only deceiving itself? Many of the notoriously secretive organization's most closely guarded corporate documents and practices are now freely circulating in the public domain. These unprecedented disclosures are not going to waste.

Many pages of evidence and corporate documents released during Rosen v. AIPAC were included in a 1,389-page complaint filed by the nonprofit Institute for Research: Middle East Policy, Inc. with the Internal Revenue Service on Nov. 22, 2010 and a Feb. 23, 2011 complaint addendum. This unabridged official “IRS 13909” filing argues that trafficking in classified U.S. government information in service to a foreign government—among other documented illegal activities since 1951—proves that AIPAC is not a bona fidesocial welfare organization eligible for a tax exemption. (The summary can be downloaded at <http://www.IRmep.org/IRSAIPAC.pdf>.) The IRS filing calls for the retroactive revocation of AIPAC's tax exemption.

As a regulatory body chartered with continually monitoring AIPAC's actual (versus claimed) conduct for tax-exempt eligibility, the IRS must diligently respond to such complaints. Though AIPAC has once again prevailed in court, given the seriousness of the recent court disclosures it is much too early for Israel's Washington, DC lobby to claim victory.


Grant F. Smith is director of research at the Institute for Research: Middle East Policy (<www.IRmep.org>) and author of Spy Trade: How Israel's Lobby Undermines America's Economy(available from the AET Book Club).