Counterterrorism Fight Blurs Lines Between Government, Private Sectors

By Richard Leiby
Washington Post Staff Writer
Saturday, December 27, 2008

After a federal jury in New York swiftly convicted a major Afghan heroin trafficker and Taliban supporter named Haji Bashir Noorzai, the government promptly issued the usual celebratory news release thanking the men and women of the DEA and FBI for their "countless sacrifices" in making the case.

Left out was any credit to the party most responsible for the government's victory: an unusual three-man private intelligence firm called Rosetta Research and Consulting.

At the instigation of the Drug Enforcement Administration, Rosetta agents lured Noorzai to America and delivered him right into the feds' hands. He spent 11 days in an Embassy Suites Hotel in Manhattan in 2005, enjoying room service and considering himself a guest of the U.S. government -- until he was arrested. He was imprisoned for three years awaiting his trial, which concluded in September. He faces up to life in prison when he is sentenced in January.

Noorzai's capture should have been Rosetta's finest hour. Instead, it led to the company's downfall. A close examination of the case reveals how a spy firm trafficking in sensitive intelligence for profit got sandwiched between conflicting government goals: Noorzai, one of the company's best sources, was considered an asset by the intelligence side of the government, even as the law enforcement side considered him a criminal.

The tale reveals some of the rivalries, ugly choices and ironies that permeate this shadowy world. The company that thought it might get a $2 million reward was dragged into an internal Justice Department investigation. The FBI employees who helped the firm ended up in trouble with their own agency.

Rosetta, which spent lavishly in its pursuit of Noorzai, got nothing for arranging his capture and ended up going broke. Investors thought their money was going toward building an anti-terrorism database, not to helping the government snare a drug kingpin.

"I certainly -- my partner and I -- had no idea," said Paul Hanly, a New York lawyer who joined with four others to invest $1 million in Rosetta Research.

The role of Rosetta and its agents was not aired during Noorzai's trial; the topic was ruled off-limits by the judge. Most people connected to the company won't talk publicly about it. Spokesmen for the DEA and Justice Department declined to comment on Rosetta.

Whatever else it was, the sting operation was a unique blending of public and private sector efforts that appears to have taken the outsourcing of federal law enforcement to new levels, according to interviews and internal Rosetta documents reviewed by The Washington Post.

"It's bizarre. I've never heard of anything like that," said Thomas V. Cash of the risk consulting firm Kroll Inc., who during his 25-year career as a top-ranking DEA official presided over the apprehension and conviction of deposed Panamanian dictator Manuel Antonio Noriega. "This case, and how it was totally handled in a new manner, certainly seems to have ignored all I know about international drug investigations."

In the summer of 2003, two businessmen -- Mike A., a former Army captain, and Patrick J., a former Treasury Department financial-crimes analyst -- founded Rosetta. Its mission was to assist in a mammoth legal case filed on behalf of victims of the Sept. 11, 2001, attacks by tracking the flow of terrorist-connected money. The Post is not using the men's full names because of the sensitive nature of their undercover work.

The documents show that another aim of Rosetta's principals was to turn a profit by developing a database of terrorist financial information that could be sold to banks, securities firms and the government.

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