Indicted Officials Consider Suing Pro-Israel Lobby

Ori Nir - The Forward (NY) - December 23, 2005

WASHINGTON — Two former employees of the nation's main pro-Israel lobby, who are facing trial for allegedly receiving classified information and relaying it to foreign diplomats and the press, are considering lawsuits against the lobbying powerhouse.

Steve Rosen, former director of foreign policy at the American Israel Public Affairs Committee, and Keith Weissman, Aipac's former Iran analyst, are considering suing Aipac over its stopping payments of legal fees to their attorneys, sources close to the two said. They are also considering a defamation suit against Aipac, if they are exonerated, for accusing them of unbecoming conduct.

Indications that Rosen and Weissman were preparing to sue Aipac have caused the collapse of negotiations between their attorneys and Aipac's attorneys over the lobby's coverage of the two men's legal fees, sources close to both sides said.

To the dismay of many Aipac members and supporters, relations between Aipac's leadership and its two former employees have deteriorated sharply in recent months, to the point of bitter exchanges of accusations and threats of legal action.

The hostility between the two dismissed officials and Aipac's leadership is expected to peak at the two men's trial, scheduled to start in late April 2006. Defense attorneys will try to establish that the men were following the organization's routine practice and that Aipac's top officials were fully aware of their actions. "The evidence in this case will show that Dr. Rosen and Mr. Weissman always acted in Aipac's interests, never were on their own and acted with the knowledge and approval of their superiors," Rosen's lawyer, Abbe Lowell, told the Forward.

Aipac's top officials, by contrast, are attempting vigorously to distance the agency from its ex-employees, maintaining that the reason Rosen and Weissman were fired in March was "conduct that was not part of their job, and beneath the standards required of Aipac employees," said Patrick Dorton, a spokesman for Aipac.

The quarrel over paying Rosen's and Weissman's legal fees is the latest manifestation of this escalating adversarial relationship, although it is not clear whether bad blood was the reason Aipac first halted the lawyers' fees last spring.

What is clear is that the two sides' conflicting arguments regarding the lobby's routine working norms are likely to collide in court. Defense attorneys are expected to argue that receiving information from administration officials was something the two were paid and encouraged to do, and something Aipac routinely does — as do many other lobbying groups in Washington. Aipac is expected to try to portray the actions of the two as contradictory to Aipac's norms and conduct.

"It is very possible" that attorneys for Rosen and Weissman will call senior Aipac officials to testify in court, sources familiar with the case told the Forward. Such testimony would undoubtedly be embarrassing to Aipac, according to several sources familiar with the case.

"There is a clear collision course here," said a former Aipac official who maintains close contacts with the organization. "Aipac understands that by firing Steve and Keith it cannot avoid being dragged into this scandal." The former staffer said that Aipac officials are grinding their teeth at the thought that "they are paying the fees of lawyers who will trash them in court." A spokesman for Aipac declined to comment on the mood within the organization.

Since Rosen and Weissman were fired, their lawyers have been exploring defense strategies, many of which could be damaging to Aipac. Attorneys for the two are exploring Aipac's legal responsibility for informing employees what the law says regarding the handling of sensitive information. Rosen and Weissman maintain that they had no idea that receiving information from administration officials could be illegal, said sources close to the defense. The two argue that the organization should have alerted them that such a possibility exists, the sources said.

Lawyers for Rosen and Weissman, seeking to establish that they were not involved in a rogue operation, also intend to discuss Aipac's employee procedures for reporting to superiors. These will be pivotal themes in defense arguments, sources close to the case said, both because they are key to demonstrating that the two acted in good faith, unaware of any legal wrongdoing, and because the defense has limited access to key witnesses and evidence.

The defense's intention to bring Aipac into the courtroom — both physically and figuratively — is causing concern and resentment within the organization, sources close to Aipac said. Rosen and Weissman, said one former Aipac employee with connections to the organization's current leadership, are perceived as acting "like Samson, trying to bring the house down on everybody." Rosen and Weissman, on the other hand, in conversations with confidants in recent months, have been fiercely critical of Aipac's leadership for withdrawing moral support for the two, for accusing them of wrongdoing and for suspending payment of lawyers' fees.

Last week, the Jewish Telegraphic Agency reported that Aipac had stopped payments to Rosen's and Weissman's lawyers since the spring. The report, confirmed by sources close to both sides, said that Lowell, Rosen's attorney, had incurred some $993,000 in fees in the first year of representing Rosen, through August 2005. He has written off $300,000 and was still owed $476,000 by Aipac, which means that Aipac had paid him only $217,000. Aipac's bylaws obligate the organization to cover legal fees in such situations, except in cases of "gross negligence, bad faith, fraud, willful misconduct or willful breach of such person's duties and responsibilities in any material respect."

In addition to the bylaws, a letter representing an agreement between Aipac's and Rosen's lawyers states that Aipac has agreed to pay for the legal representation in this case.

Nowhere does it explicitly say, however, that Aipac must advance the payments on a month-by-month basis. This week, attorneys for the two former employees received a letter from Aipac's attorney, making clear that the lobbying group does not intend to pay the fees before the trial is over. The letter says that Aipac "never committed to advance the costs" of Rosen's and Weissman's defense on a regular basis, "and certainly not irrespective of develops in the investigation and now prosecution." The letter also points out that because the organization's bylaws stipulate that indemnification of legal fees "depends in part on the nature of an employee's conduct," the question of whether Aipac would be required to indemnify the two "cannot be addressed or resolved until current proceedings against them have been concluded." The letter was signed by Jamie Gorelick, a prominent Washington lawyer, who was deputy attorney general in the Clinton administration and apparently was recently hired by Aipac to handle the dispute over the legal fees.

Rosen and Weissman, who also recently hired a labor-law specialist to consider whether to sue Aipac over the halting of legal fees, believe they have a solid case, sources close to the two said. They are relying particularly on the fact that Aipac did make monthly payments between August 2004 and March 2005. That monthly pattern, they argue, establishes a course of conduct known in contractual law as "detrimental reliance," meaning that their attorneys have been relying on monthly payments, and that cutting off payments would be to the defendants' detriment, according to sources close to the two.

Sources close to Rosen and Weissman said that barring upfront payments to their lawyers, the defense might not be able to afford expert witnesses and advisors, such as experts on classified documentation or on jury selection.

Aipac obviously has an interest in the full exoneration of the two, sources close to the lobbying group confirmed. Aipac also seems to have enough money to fund the best defense possible. According to Aipac's official filings, it raised more than $59 million in 2004 in combined taxed and tax-exempt contributions, far more than any previous year. The totals for the past four years is as follows: 2003 — $43 million; 2002 — $37 million; 2001 — $25 million; 2000 — $22 million. Numbers for 2005 are not yet available but the total is expected to surpass last year's, Aipac officials confirmed.

Asked why they have stopped paying legal fees, Aipac officials did not answer directly. Dorton, the spokesman, told the Forward that Aipac "made a very generous offer" to cover the men's past and future defense costs. Rosen and Weissman rejected the offer because they wanted to preserve their right to sue Aipac in the future, Dorton alleged, calling Rosen's and Weissman's decision "misfortunate." Sources close to Aipac said the offer was for a total of $1.625 million, to be split equally between the two law firms. Sources close to Rosen and Weissman confirmed the sum and the fact that the two rejected the offer. They argued, however, that the proposed sum was less than the accumulated arrears, leaving nothing for the critical period of the trial. Moreover, they said that the upfront payment offer was conditioned on their making no future claims, including coverage of fees of appeals procedures, if needed. The sources charged that Aipac seems more concerned about the money, despite its flourishing fund raising, than with the requirements of a robust defense.

Conversations with sources close to Aipac suggest that the organization is trying to protect itself not only against financial damages but also against damage to its reputation, while fending off ongoing pressure from the government. Aipac's decision, sources said, was motivated by several factors: mushrooming legal fees; critics' suggestions that by paying the legal fees Aipac has not fully dissociated itself from the scandal, and pressure from the government to manifest its rejection of Rosen and Weissman. Aipac, therefore, seems to have made the following calculation, say sources close to the organization: By deferring the payments until the trial is over, Aipac could both protect its image and reduce its financial risks. If the two are found not guilty, covering their legal fees after the fact would not be an embarrassment and would be a worthwhile price to pay for the scandal to evaporate. If the two are convicted, however, Aipac could argue that it is exempt from covering the fees under the exception in its bylaws, saving itself the financial risk of not being able to recoup the money from Rosen and Weissman and avoiding the embarrassment of having paid the legal expenses of convicted former employees.

Many members of Aipac's staff and board of directors are reportedly uneasy with the notion that Aipac is not giving full backing to the two. Despite arguments by the lobby's top leadership that the organization's reputation is more important than its loyalty to two former staffers, some say that the organization's moral obligation to Rosen and Weissman supersedes its financial and image concerns. A former Aipac staffer who is still close to the lobbying group said: "I hear many people saying that they think the indictment is wrong, that Keith and Steve deserve Aipac's backing, that there is no way they could have been freelancing out on their own. But most people trust that Aipac's leaders are doing what's best for Aipac."

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