America... Spying on Americans II

URL: http://www.rockymountainnews.com/drmn/tech/article/0,2777,DRMN_23910_5719566,00.html
Documents: Qwest was targeted

'Classified info' was not allowed at ex-CEO's trial

By Sara Burnett And Jeff Smith, Rocky Mountain News
October 11, 2007

The National Security Agency and other government agencies retaliated against Qwest because the Denver telco refused to go along with a phone spying program, documents released Wednesday suggest.

The documents indicate that likely would have been at the heart of former CEO Joe Nacchio's so-called "classified information" defense at his insider trading trial, had he been allowed to present it.

The secret contracts - worth hundreds of millions of dollars - made Nacchio optimistic about Qwest's future, even as his staff was warning him the company might not make its numbers, Nacchio's defense attorneys have maintained. But Nacchio didn't present that argument at trial.

The documents suggest U.S. District Judge Edward Nottingham refused to allow Nacchio to present the argument about retaliation. Nottingham also said Nacchio would have to take the stand to raise the classified defense.

Prosecutors have said they were prepared to poke holes in Nacchio's classified defense.

Nacchio was convicted last spring on 19 counts of insider trading for $52 million of stock sales in April and May 2001, and sentenced to six years in prison. He's free pending appeal.

The partially redacted documents were filed under seal before, during and after Nacchio's trial. They were released Wednesday.

Nacchio planned to demonstrate at trial that he had a meeting on Feb. 27, 2001, at NSA headquarters at Fort Meade, Md., to discuss a $100 million project. According to the documents, another topic also was discussed at that meeting, one with which Nacchio refused to comply.

The topic itself is redacted each time it appears in the hundreds of pages of documents, but there is mention of Nacchio believing the request was both inappropriate and illegal, and repeatedly refusing to go along with it.

The NSA contract was awarded in July 2001 to companies other than Qwest.

USA Today reported in May 2006 that Qwest, unlike AT&T and Verizon, balked at helping the NSA track phone calling patterns that may have indicated terrorist organizational activities. Nacchio's attorney, Herbert Stern, confirmed that Nacchio refused to turn over customer telephone records because he didn't think the NSA program had legal standing.

In the documents, Nacchio also asserts Qwest was in line to build a $2 billion private government network called GovNet and do other government business, including a network between the U.S. and South America.

The documents maintain that Nacchio met with top government officials, including President Bush, Vice President Dick Cheney and then-National Security Adviser Condoleeza Rice in 2000 and early 2001 to discuss how to protect the government's communications network.

They portray U.S. government officials, even before the Sept. 11 terrorist attacks, worried about a "Pearl Harbor" type of attack on the Internet. As early as 1997, a three-star general talked to Nacchio about using Qwest's new fiber-optic network for government purposes, according to the defense.

One key meeting with a government official was held at Qwest founder Phil Anschutz's ranch near Greeley, with former Chief Financial Officer Robin Szeliga prevented from attending presumably because she lacked security clearance.

Nacchio was on a Bush-appointed national security telecommunications advisory panel. In March 2001, then-counter-terrorism adviser Richard Clarke asked the panel if it would be possible to build a private network for the government to protect it from cyberwarfare.

Nacchio piped up: "I already built this network twice" for other government agencies. The defense asserts Nacchio believed Qwest would be asked to build the network and that it could do so in six months.

But the contract didn't materialize.

The accusations rely in large part on the assertions of a former engineer on the project. The engineer, who spoke on the condition of anonymity, said in an interview that he participated in numerous discussions with N.S.A. officials about the proposal. The officials, he said, discussed ways to duplicate the Bedminster system in Maryland so the agency "could listen in" with unfettered access to communications that it believed had intelligence value and store them for later review. There was no discussion of limiting the monitoring to international communications, he said.

"At some point," he said, "I started feeling something isn't right."

Two other AT&T employees who worked on the proposal discounted his claims, saying in interviews that the project had simply sought to improve the N.S.A.'s internal communications systems and was never designed to allow the agency access to outside communications. Michael Coe, a company spokesman, said: "AT&T is fully committed to protecting our customers' privacy. We do not comment on matters of national security."

But lawyers for the plaintiffs say that if the suit were allowed to proceed, internal AT&T documents would verify the engineer's account.

"What he saw," said Bruce Afran, a New Jersey lawyer representing the plaintiffs along with Carl Mayer, "was decisive evidence that within two weeks of taking office, the Bush administration was planning a comprehensive effort of spying on Americans' phone usage."

The same lawsuit accuses Verizon of setting up a dedicated fiber optic line from New Jersey to Quantico, Va., home to a large military base, allowing government officials to gain access to all communications flowing through the carrier's operations center. In an interview, a former consultant who worked on internal security said he had tried numerous times to install safeguards on the line to prevent hacking on the system, as he was doing for other lines at the operations center, but his ideas were rejected by a senior security official.

Asked what he would tell Americans worried that the practice violates their privacy rights, Bush said, "If somebody from al Qaeda is calling you, we'd like to know why.

"In the meantime, this program is conscious of people's civil liberties, as am I. This is a limited program designed to prevent attacks on the United States of America -- and I repeat: limited."

Bush said the calls monitored are limited to those between known al Qaeda members or their affiliates outside the United States and people inside the United States.

Exclusive: Inside Account of U.S. Eavesdropping on Americans

US Soldier's 'Phone Sex' Intercepted, Shared

Faulk says he and others in his section of the NSA facility at Fort Gordon routinely shared salacious or tantalizing phone calls that had been intercepted, alerting office mates to certain time codes of "cuts" that were available on each operator's computer.


"Hey, check this out," Faulk says he would be told, "there's good phone sex or there's some pillow talk, pull up this call, it's really funny, go check it out. It would be some colonel making pillow talk and we would say, 'Wow, this was crazy'," Faulk told ABC News.


Faulk said he joined in to listen, and talk about it during breaks in Back Hall's "smoke pit," but ended up feeling badly about his actions.


"I feel that it was something that the people should not have done. Including me," he said.