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The American Behind India’s 9/11 – And How the US Botched Chances to Stop Him

Prologue: Justice Denied During a meeting overseas last summer, a senior U.S. official and Gen. Ashfaq Parvez Kayani, the chief of Pakistan’s armed forces, discussed a threat that has strained the troubled U.S.-Pakistani relationship since the 2008 Mumbai attacks: the Lashkar-i-Taiba militant group.

Prologue: Justice Denied

During a meeting overseas last summer, a senior U.S. official and Gen. Ashfaq Parvez Kayani, the chief of Pakistan’s armed forces, discussed a threat that has strained the troubled U.S.-Pakistani relationship since the 2008 Mumbai attacks: the Lashkar-i-Taiba militant group.

The senior U.S. official expressed concern that Zaki-ur-Rehman Lakhvi, a terrorist chief arrested for the brutal attacks in India, was still directing Lashkar operations while in custody, according to a U.S. government memo viewed by ProPublica. Gen. Kayani responded that Pakistan’s spy agency, the Inter-Services Intelligence Directorate (ISI), had told prison authorities to better control Lakhvi’s access to the outside world, the memo says. But Kayani rejected a U.S. request that authorities take away the cell phone Lakhvi was using in jail, according to the memo to Secretary of State Hillary Clinton and the National Security Council.

The meeting was emblematic of the lack of progress three years after Lashkar and the ISI allegedly teamed up to kill 166 people in Mumbai, the most sophisticated and spectacular terror strike since the September 11 attacks. The U.S. government filed unprecedented charges against an ISI officer in the deaths of six Americans. Yet, Pakistani authorities have not arrested him or other accused masterminds. The failure to crack down on the jailed Lakhvi, whose trial has stalled, raises fears of new attacks on India and the West, counterterror officials say.

“Lakhvi is still the military chief of Lashkar,” a U.S. counterterror official said in an interview. “He is in custody but has not been replaced. And he still has access and ability to be the military chief. Don’t assume a Western view of what custody is.”

In the United States, stubborn questions persist about the case’s star witness, David Coleman Headley, a confessed Lashkar operative and ISI spy. The Pakistani-American’s testimony at a trial in Chicago this year revealed the ISI’s role in the Mumbai attacks and a plot against Denmark. It was the strongest public evidence to date of ISI complicity in terrorism.

But the trial shed little light on Headley’s past as a U.S. Drug Enforcement Administration informant and the failure of U.S. agencies to pursue repeated warnings over seven years that could have stopped his lethal odyssey sooner — and perhaps prevented the Mumbai attack.

U.S. officials say Headley simply slipped through the cracks. If that is true, his story is a trail of bureaucratic dysfunction. But if his ties to the U.S. government were more extensive than disclosed — as widely believed in India — an operative may have gone rogue with tragic results. Both scenarios reveal the kind of breakdowns that the government has spent billions to correct since the Sept. 11 attacks.

The Obama administration has not discussed results of an internal review of the case conducted last year, or disclosed whether any officials have been held accountable.

During an interview in Delhi, former Indian Home Secretary G.K. Pillai asserted that U.S. authorities know more about Headley than they have publicly stated. Several senior Indian security officials said they believe that U.S. warnings provided to India before the Mumbai attacks came partly from knowledge of Headley’s activities. They believe he remained a U.S. operative.

“David Coleman Headley, in my opinion, was a double agent,” said Pillai, who served in the top security post until this past summer. “He was working for both the U.S. and for Lashkar and the ISI.”

The CIA, FBI and DEA deny such allegations.

An investigation by ProPublica and FRONTLINE during the past year did not find proof that Headley was working as a U.S. agent at the time of the attacks. But it did reveal new contradictions between the official version of events, Headley’s sworn testimony and detailed accounts of officials and others involved in the case. The reporting also turned up previously undisclosed opportunities for U.S. agencies to identify Headley as a terrorist threat, and new details about already-reported warnings.

U.S. and foreign officials say his role as an informant or ex-informant helped him elude detection as he was training in Pakistani terror camps and traveling back and forth to Mumbai to scout targets. And three counterterror sources say U.S. agencies learned enough about him to glean fragments of intelligence that contributed to the warnings to India about a developing plot against Mumbai.

In contrast, some U.S. officials say spotting a threat is harder than it seems. Glimmers of advance knowledge are part of the landscape of terrorism. In cases such as the Sept. 11 attacks and the 2004 Madrid train bombings, security forces had detected some of the suspects but not their plots.

“I just have to dispel some of these notions,” said Philip Mudd, a former top national security official at the FBI. “We look at a grain of sand and say … 'why couldn’t you put together the whole conspiracy when you saw that grain of sand?' Well, you got to reverse it. Every day coming into a threat brief, you’re not looking at a grain of sand and building a beach. You’re looking at a beach and trying to find a grain of sand.”

New information about the case comes partly from the DEA. After months of silence, DEA officials recently granted an interview with a ProPublica reporter and went over a timeline based on records about their former informant. The DEA officials said Headley’s relationship with the anti-drug agency was more limited than has been widely described.

The DEA officially deactivated Headley as a confidential source on March 27, 2002, according to a senior DEA official. That was weeks after he began training in Lashkar terror camps in Pakistan and six years before the Mumbai attacks. The senior official denied assertions that Headley had worked for the DEA in Pakistan while he trained with Lashkar in 2002 and beyond.

“The DEA did not send David Coleman Headley to Pakistan for the purpose of collecting post-9/11 information on terrorism or drugs,” the senior DEA official said.

The denial adds another version to a murky story. Officials at other U.S. agencies say Headley remained a DEA operative in some capacity until as late as 2005. Headley has testified that he did not stop working for the DEA until September 2002, when he had done two stints in the Lashkar camps.

Some U.S. officials and others involved say the government ended Headley’s probation for a drug conviction three years early in November 2001 to shift him from anti-drug work to gathering intelligence in Pakistan. They say the DEA discussed him with other agencies as a potential asset because of his links to Pakistan — including a supposed high-ranking relative in the ISI.

A senior European counterterror official who has investigated Headley in recent years thinks the American became an intelligence operative focused on terrorism.

“I don’t feel we got the whole story about Headley as an informant from the Americans,” the official said. “I think he was a drug informant and also some other kind of an informant.”

The transition from registered law enforcement source to secret counterterrorism operative would help explain the contradictory versions. But the duration and nature of intelligence work by Headley, if it was done, remain unknown.

Federal prosecutors and investigators declined to be interviewed on the record for this story. Pakistani officials, who also refused to be interviewed, have said they have cracked down on Lashkar and have denied that the ISI was involved in the Mumbai attacks.

Nonetheless, ProPublica and FRONTLINE talked to U.S. and foreign counterterror officials and other well-informed sources while reporting in the United States, India, Pakistan and Europe. A number of those officials and sources requested anonymity for their security or because they were not authorized to speak publicly about the sensitive case.

Headley was a wildly elusive figure who juggled allegiances with militant groups and security agencies, manipulating and betraying wives, friends and allies. He played a crucial role in an attack that had resounding international repercussions. And his unprecedented confessions opened a door into the secret world of terrorism and counterterrorism in South Asia — and closer to home.

Chapter 1: “The Prince”

David Coleman Headley is not his original name.

The 51-year-old was born Daood Gilani in Washington, D.C. His father, Syed Saleem Gilani, was a renowned Pakistani broadcaster. His mother, Serrill Headley, was a free spirit from a wealthy Philadelphia family. They moved to Pakistan when he was a baby, but the parents divorced and Serrill returned alone.

Headley grew up in an environment of Pakistani nationalism and Islamic conservatism. During a war with India in 1971, a stray bomb hit his elementary school in Karachi, killing two people. The incident stoked his hatred of India, according to his later accounts.

Headley attended the Hasan Abdal Cadet College, where he met his friend Tahawwur Rana. During testimony at Rana’s trial this year in Chicago, Headley said he was proud of studying at the elite military school, though he did not graduate. He described Rana as a “very good” student and himself as “very bad.”

Rana’s wife recalled an anecdote about Headley’s approach to morning prayers.

“Dave, he knocks on all the doors of students and he says, 'Get up, get up, it’s time for prayer,’ ” Samraz Rana said in an interview. “And then when everybody gets up, he went to his room and went to sleep, you know. So he was laughing, he was like that.”

Headley clashed with his Pakistani stepmother. At 17, he returned Philadelphia to live with his mother. She owned the Khyber Pass, a trendy club that featured tarot readings and jazz and folk music. Her son helped manage the bar. He was tall and smooth and had a striking characteristic: One eye was brown, the other blue.

Employees nicknamed him “The Prince.”

“I think he was in culture shock,” said Djuna Wojton, a friend of his mother. “He spoke like with almost a British accent. And he was very well-mannered and very proper and polite.”

Headley enrolled at Valley Forge Military Academy & College but did not last long there. He studied at a community college and slid into heroin addiction. His first encounter with the law happened during a visit to Pakistan when he was 24. He used his friend Rana, then a Pakistani army medical student, as an unwitting shield.

The two drove to the tribal areas, where Headley bought half a kilogram of heroin and smuggled it back to Lahore, according to the DEA and Headley’s testimony. He thought Rana’s military ID card would prevent a police search if they were stopped, according to his testimony.

Days later, police in Lahore arrested Headley for drug possession, according to his testimony and U.S. officials. He somehow beat the charges.

In 1988, police caught him at the Frankfurt, Germany, airport en route to Philadelphia with two kilos of heroin hidden in a suitcase. The DEA took over, and he made a deal on the spot. His partners in Philadelphia got eight and 10 years in prison. He got four years.

It would become a pattern, said former CIA officer Marc Sageman, a respected terrorism expert who was a consultant for Rana’s defense.

“He just turns around immediately and betrays everybody when it’s convenient for him,” said Sageman.

Struggling with addiction, Headley spent six months in prison for a probation violation in 1995. He moved to New York, where he bought and operated video stores. Despite his criminal record, he managed to avoid prosecution a year later when police on Long Island arrested him for allegedly assaulting and threatening the former boyfriend of his new Canadian girlfriend, according to Nassau County authorities.

Chapter 2: Informant and Militant

Headley overcame his addiction but not his taste for drug money.

In early 1997, the DEA arrested him in a sting at a Manhattan hotel. He signed up as a confidential DEA informant and was out on bail by August. In January 1998, the DEA sent Headley to Pakistan to dispel suspicions among traffickers about his absence. He used his wealthy father’s house in Lahore to meet with suppliers, and gathered useful intelligence during his first and only DEA-funded mission in Pakistan, the senior DEA official said.

“This was the only trip at the DEA’s behest,” the senior official said.

During his first 16 months as an informant, Headley infiltrated Pakistani heroin trafficking networks, generating five arrests and the seizure of 2½ kilos of heroin, the DEA says.

There were warning signs, however. He broke the rules by trying to set up dealers with jailhouse phone calls that were not monitored by agents, according to court records. He angled for leverage with his handlers, according to a close associate from that period.

“The DEA agents liked him,” the associate said. “He would brag about it. He was manipulating them. He said he had them in his pocket.”

One defendant was acquitted on grounds of entrapment, a rare finding in a drug case. Ikram Haq was a mentally impaired Pakistani immigrant. His lawyer, Sam Schmidt, convinced the jury that Headley conned his client into a heroin deal.

“My impression of him was a person who was in many ways a sociopath,” Schmidt said, “that he would be able to say anything that he thought would work to his benefit.”

Headley served another eight months in prison. He became a more devout Muslim behind bars, according to his associate. Soon after his release in 1999, probation officials permitted him to travel to Pakistan for a few weeks for an arranged marriage. His new wife remained in his family hometown of Lahore.

Headley returned to New York and resumed work for the DEA in early 2000. That April, he went undercover in an operation against Pakistani traffickers that resulted in the seizure of a kilo of heroin, according to the senior DEA official.

At the same time, Headley immersed himself in the ideology of Lashkar-i-Taiba. He took trips to Pakistan without permission of the U.S. authorities. And in the winter of 2000, he met Hafiz Saeed, the spiritual leader of Lashkar.

Saeed had built his group into a proxy army of the Pakistani security forces, which cultivated militant groups in the struggle against India. Lashkar was an ally of al Qaeda, but it was not illegal in Pakistan or the United States at the time.

Saeed made a statement that was Headley’s epiphany: “One second spent in jihad is superior to 100 years of worship and prayer.”

In New York, Headley recruited for Lashkar, prayed intensely and studied Arabic, according to his associate and other sources. Headley talked about getting ready for jihad overseas. He prepared to sell his stores, underwent laser eye surgery and took horseback riding lessons, which he said would be useful for mountain training camps.

“He was living on the Upper West Side,” the associate said, “sleeping on the floor, eating rice and beans, acting really weird. He started collecting money for Lashkar, saying how great it was.”

Headley later testified that he told his DEA handler about his views about the disputed territory of Kashmir, Lashkar’s main battleground. But the senior DEA official insisted that agents did not know about his travel to Pakistan or notice his radicalization.

On Sept. 6, 2001, Headley signed up to work another year as a DEA informant, according to the senior DEA official.

Chapter 3: Mission in Pakistan?

On Sept. 12, Headley’s DEA handler called him.

Agents were canvassing sources for information on the al Qaeda attacks of the day before. Headley angrily said he was an American and would have told the agent if he knew anything, according to the senior DEA official.

Headley began collecting counterterror intelligence, according to his testimony and the senior DEA official. He worked sources in Pakistan by phone, getting numbers for drug traffickers and Islamic extremists, according to his testimony and U.S. officials. He visited a mosque in Queens at the direction of the DEA, according to his testimony and officials.

But there was a dark side. A former girlfriend of Headley’s told a bartender named Terry O’Donnell that he wanted to go to Pakistan to fight alongside Islamic militants, according to law enforcement officials. She said he had praised the Sept. 11 attacks, recalled O’Donnell, now a New York firefighter.

“And then she went on and said he was happy to see it happen,” O’Donnell said in interview. “And he got off on watching the news over and over again.”

O’Donnell contacted an FBI-led task force that was investigating 9/11 — and an avalanche of tips. Residents of the traumatized city were reporting everything from people who spoke Arabic to neighbors who put out the garbage at odd hours. Investigators interviewed Headley’s mother and the girlfriend, who described his ideological support for militants in Kashmir, according to officials.

It would be the only warning about Headley that resulted in an interrogation. On Oct. 4, two Defense Department agents working for the task force questioned him in front of his DEA handlers at the drug agency’s office, according to the senior DEA official.

Headley denied the accusations and cited his counterterror work, according to U.S. officials. He told the agents he had a distant Pakistani relative who was an Army general and the deputy director of the ISI, that nation’s powerful intelligence service, according to U.S. and Indian officials.

Today, U.S. intelligence believes the relative may have been Gen. Faiz Gilani, the ISI’s deputy director at the time, according to a U.S. counterterror official. The suspected family connection has not been confirmed, the counterterror official said. But it was a portentous detail.

The investigators cleared Headley. Although their informant had been interviewed by the FBI task force, the DEA handlers did not write a report, the senior DEA official said. In addition, he said the DEA has no record that agents looked into Headley’s claim about the ISI relative to determine whether it had intelligence value or, conversely, might show he was a liar.

Six weeks later, another unusual thing happened. A federal judge ended Headley’s probation three years early so he could travel to Pakistan. A transcript and accounts of participants show the hearing was rushed. Headley’s lawyer told the judge he had “just been handed all sorts of material.” A supervisory probation officer, Luis Caso, apologized because he had not had time to dress appropriately for court.

“Having a probation terminated early is rarely done. It's usually reserved for someone who’s very ill,” Caso said in an interview. “It was a last-minute thing.”

The government was in a hurry, said Caso, who is now retired.

“From what I remember, it's basically he was a very good cooperator at that time, working with the DEA, and he was going to do more of the same but overseas in Pakistan,” he said. “It was shortly after 9/11 occurred, and at that time, all the federal law enforcement agencies were doing their very best to investigate the terrorist activity, and whoever they had under their control for information purposes they had utilized to the maximum.”

Headley’s lawyer has a similar recollection. Howard Leader said prosecutors called him a few days earlier to tell him the hearing would take place.

“The fact that this was coming from the government, that was, frankly, highly unusual,” Leader said. “It's the only occasion I can recall it ever happening.”

Leader said he believed the DEA had made the request and that Headley would continue working for the agency in Pakistan.

“My recollection is, basically, it's a twofold mission,” Leader said. “There would be drug-related work specifically. But also, in light of the then-very-recent events on September the 11th, I think that he was going to go back to Pakistan with a view towards meeting with or gathering whatever information he could that might be useful to the U.S. government regarding certain extremist elements there.”

An excited Headley told friends and family that he was leaving on a mission. He explained that “the FBI and DEA had joined forces” and he would work for them in Pakistan, according to his close associate.

The DEA gives a far different account. The senior DEA official said Headley told his handlers he wanted to return to Pakistan for family reasons. The senior official said the DEA agreed to support ending his probation because of his past cooperation. The DEA provided a letter to the judge describing his work on drugs and counterterrorism, according to U.S. officials and others familiar with the case.

The DEA then deactivated him as a law enforcement informant, a process that became official on March 27 of the next year, according to the senior DEA official. Headley was paid a total of $3,925 while an informant, the senior official said. DEA agents did not work with him again after the hearing, the senior official said.

The transcript of the Nov. 16, 2001, hearing does not resolve the disputed versions. The prosecutor apparently did not know about Headley’s extremism, unauthorized travel or the task force interview weeks before; he called him an “outstanding supervisee” with “no problems.” The judge said probation was being ended “for the purposes of him returning” to Pakistan, and mentioned Headley’s “continuing cooperation.”

In the frenzied aftermath of Sept. 11, U.S. intelligence agencies were scrambling to recruit spies. With his language skills, Pakistani connections and undercover talents, Headley had potential. A U.S. law enforcement official familiar with the case said he doubts the government ended the probation early just to reward Headley, and even let him leave the country, because he suddenly decided to stop being an informant.

“It’s preposterous,” the official said. “It defies any sort of logic at all. U.S. attorneys are not in the business of granting presents for people. In the post-9/11 environment, there was a big push for intelligence assets.”

A number of DEA informants moved to counterterror work during that period. Some were passed to the FBI or CIA, and a few were run jointly by the DEA with other agencies, according to former U.S. law enforcement and intelligence officials.

In fact, a counterterror source said the DEA had discussions with the FBI and other agencies in late 2001 about which agency could best use Headley. The discussions cited his allusion to a relative in the ISI as a potential benefit, the counterterror source said.

During his testimony this year, Headley said nothing about deciding to end his service as an informant before going to Pakistan. Asked when he stopped working for the DEA, he testified: “The following year, in September. … It was the time that I had signed up for.”

The world of informants is hazy, according to law enforcement veterans. Agents at the DEA, FBI and other agencies sometimes use unofficial “hip-pocket” sources, the veteran officials said. Ex-informants sometimes surface and provide intelligence. Or they try to use past relationships with the government to justify their behavior when they get in trouble.

Officials at other agencies say Headley remained a DEA operative in some capacity as late as 2005. The senior DEA official denied that, citing the agency’s detailed records on informants. He said he had no information on whether Headley shifted to intelligence work for another agency but would not rule out that possibility.

The CIA and FBI deny that Headley worked for them. Today, nobody wants any part of him.

Chapter 4: The Path to Holy War

By February 2002, Headley was training in Lashkar’s mountain camps. He did a three-week introductory course on ideology and jihad.

The U.S. and Pakistan had outlawed Lashkar. But the ISI continued to fund, train and direct the group, which refrained from attacking Pakistan. The group’s global networks and storefront offices in Pakistan made it easier to join than al Qaeda. Lashkar camps churned out thousands of militants, some of whom went on to lead al Qaeda plots in the West.

That summer, Headley returned to New York and proposed to his Canadian-born girlfriend with a diamond ring in Central Park. Photos show he had bulked up and grown a long beard. His sharp profile and receding, slicked-back hair gave him a hawk-like look.

In June, Headley visited his mother in Oxford, Pa., a small town about 50 miles from Philadelphia where she then ran a day-care center. She had become stout, favored colorful dresses and wore her hair short and dyed blonde. She was a regular customer at the Morning Glories café and spent many afternoons talking to co-owner Phyllis Keith.

One day, Headley's mother said she was concerned because he was training in militant camps in Pakistan. She told Keith he was increasingly fanatical and had described meeting teen-age trainees who had later died, according to U.S. officials.

“It was kind of like mother to mother: 'I’m really worried about my son,'” Keith recalled.

Keith had seen Headley once at the café. On a catering visit to his mother’s home, she noticed his car parked behind the house as if he were hiding it. Keith called the FBI in Philadelphia and told them about the mother’s account of Headley’s involvement with militants in Pakistan. The conversation lasted about five minutes, she said.

Headley later told an associate that an FBI agent had gone to his mother’s house and asked about him. But the FBI says there was no such visit. An agent in Philadelphia did basic record checks and closed the case, a law enforcement official said. The official did not know whether the agent was aware of the interview of Headley in New York the year before. Headley’s links to the DEA probably caused the FBI to see him as less of a threat, officials say.

Headley did his second Lashkar training stint in August. When he was not at the camps, he lived with his Pakistani wife in Lahore. By then, two of their four children had been born.

On Dec. 11, 2002, Headley returned to New York to marry his fiancée there. At the airport, border inspectors sent him to the secondary inspection area for questioning. It was not the first time. After his heroin smuggling arrest in 1988, border agencies placed him on a “drug lookout” list and stopped him at airports in 1993, 1996 and 2001 for questioning and luggage searches, according to U.S. officials.

This time, however, inspectors were on alert for potentially suspicious travel patterns to Pakistan and other hubs of terrorism. They found nothing amiss. Headley was not on a watch list, and the inspectors did not know about the allegations by O’Donnell and Keith, according to U.S. officials.

Days later, Headley married the Canadian woman at a resort in Jamaica. He did advanced Lashkar training in Pakistan in April, August and December. He wanted to fight in Kashmir, but the bosses had other ideas.

Headley was cultivated by Sajid Mir, a chief in charge of foreign recruits. Mir was about 30, a rising star. He was waging global jihad at a time when many Western authorities mistakenly saw Lashkar as a threat limited to India.

“My impression was that he was an authority and a power in his own right,” said Charles Wardle, a former Lashkar operative from New Zealand. “He could pretty much do whatever he wanted.”

Wardle, now 28, is one of Mir’s few known recruits who is not dead or in prison. He was an angry drifter who arrived at Lashkar headquarters in the heady days of the fall of 2001. He hung out with American, French and British trainees whom Mir later deployed to procure equipment and scout targets in the United States and to carry out a bomb plot in Australia that was foiled in 2003.

The recruits included a Korean-American and a French-Caribbean convert: Mir was looking for operatives with unlikely profiles suited to espionage-style work.

Mir didn’t let Wardle take paramilitary training because he had just converted to Islam. But Mir gave him travel cash and kept in touch as Wardle traveled to Saudi Arabia, where Lashkar militants helped him make his way to Iraq in time for the outbreak of the war.

Wardle narrowly survived combat alongside militants in the north.

In the summer of 2003, Mir sent Wardle from Pakistan to Dubai, a hub of Lashkar activity, for training in the use of explosives and espionage techniques. Mir visited him in Dubai.

Mir gave “the impression … that I would be returning to my country,” Wardle said. “I can only guess, but explosives training, I guess he would have had a target in mind.”

Before training could begin, however, Dubai police arrested and deported Wardle in a round-up of Islamic extremists. Mir was also detained in Dubai at some point but used Lashkar connections to get out of it, according to investigative documents.

Mir did not seem fazed by the incident or, in 2007, by his conviction in absentia in France on terror charges. Pakistan did nothing in response to the verdict or an Interpol warrant from Judge Jean-Louis Bruguière, who led the French investigation. Bruguière is convinced that Mir was in the military or ISI.

“When you send an Interpol warrant and a country ignores it, it tends to confirm my theory that he was extremely powerful, that he was protected at high levels,” Bruguière said in an interview. “And the fact that no one has done anything about him, even today, confirms it once again.”

Other investigators believe Mir was close to the security forces but not an officer.

“There are a lot of questions about Sajid Mir,” Sageman said. “Is he really an ISI person who is within Lashkar-i-Taiba? Or is he a Lashkar-i-Taiba person who was trained by the military in the background? It doesn’t matter because, in a sense, Lashkar-i-Taiba was a proxy of the Inter-Services Intelligence Directorate.”

Chapter 5: Narrow Escapes

Mir told Headley he wanted to use him for missions in India.

The American suggested he could perfect his cover by changing his name to hide his Pakistani ancestry and using a Chicago immigration consulting firm owned by Rana, his boyhood friend. Mir loved both ideas.

In the summer of 2005, Headley saw his Canadian wife in New York. He had applied for a green card for her, even though his marriage to his Pakistani wife was known to U.S. immigration, officials say.

The Canadian was furious. He had gone for months without communicating with her from Pakistan. She had called Headley’s father in Lahore, and he told her about the Pakistani wife and children, according to Headley’s associate and U.S. officials. The father said Headley claimed to be working for the U.S. government but was spending time in the Lashkar camps, the associate said.

On Aug. 25, Headley and his wife argued at his video store, and he allegedly hit her. Police arrested him on charges of assault. The wife also called a terror tip line. Headley had told her a lot over the years, even calling and emailing from the training camps. She knew more about Lashkar, a relatively obscure group, than most Westerners, officials say.

Agents from the FBI-led Joint Terrorism Task Force interviewed her three times. She told them about his extremist activities, overseas training and acquisition of equipment for the terror group. She said he had told her periodically that he was working as a U.S. informant in Pakistan, according to officials and the close associate.

An FBI agent called Headley’s former DEA handler, according to the senior DEA official. The FBI agent said the wife had claimed, curiously enough, that the drug agent had obtained night-vision goggles for Headley, according to the senior DEA official.

The DEA agent denied that assertion, the senior official said. The drug agent said Headley was no longer his informant and that the agent had not known Headley to threaten the United States, according to the senior official. The FBI agent said he felt the wife “had an ax to grind” because of the other wife in Pakistan, the senior DEA official said.

The FBI knew about the previous allegations in New York and Philadelphia, according to U.S. law enforcement officials. Yet, the agents did not question Headley as a suspect or even as a potential source of intelligence, officials say.

“Why close a case when you have a guy going to Pakistan to train?” said a U.S. law enforcement official who believes Headley was still an informant. “He could have been training with al Qaeda, too. We keep cases open for years on people.”

A senior law enforcement official said Headley’s past with the drug agency influenced the FBI’s decision that he was not a threat. The report went into the FBI’s Guardian Lead system, which was created to improve the tracking of leads in the wake of the Sept. 11 attacks.

Headley soon found out about his wife’s tip, but it didn’t affect his activities, officials say. He went to Philadelphia and initiated the legal name change from Daood Gilani to David Coleman Headley, adopting his mother’s family name. Pennsylvania officials did a required check for a criminal record but apparently did not find his two federal drug convictions, according to state documents and officials.

As for his wife’s assault charges, there were several hearings before the prosecution was dropped, officials say.

In January 2006, Headley took another big step: He was recruited by an ISI officer named Major Iqbal. U.S. counterterror officials believe Iqbal was in Directorate S, the wing of the spy agency that works with militant groups.

Headley and Iqbal met at a safe house with a colonel who was Iqbal’s commanding officer. It has not been revealed whether Headley mentioned his relative in the ISI.

“I told him that I was being sent to India and that I had applied for a name change and would be getting that in the near future,” Headley testified. “I was planning to leave for the United States at that time. So he told me to leave and call him after I returned.”

On Feb. 7, Headley had a familiar experience at JFK International. Border inspectors sent him to the secondary inspection area for questioning because his travel had caught their attention. He told them he had been visiting family and described himself as an owner of a video store, officials say.

The ex-convict had a lot to hide: The three FBI inquiries. His upcoming mission. His recruitment by the ISI. The pending name change.

But the inspectors, once again, didn’t have access to databases where leads were stored, officials say. Nor was his name on a watch list. Headley eluded detection again.

At about this time, Headley called his former DEA handler for a brief social conversation, according to the senior DEA official. The official said this was the DEA’s only documented contact with Headley between November 2001 and his arrest in 2009.

Armed with his new name, Headley became a Pakistani spy.
Noncommissioned officers trained him in espionage techniques during dozens of sessions at a safe house and on the streets of Lahore. Now he had two handlers: Mir and Major Iqbal. They ran him in tandem but always met with him separately to maintain deniability.

U.S. investigators have corroborated Headley’s contacts with Mir, Major Iqbal and other ISI officers through emails, phone intercepts, witness accounts and other evidence.

“I’m trying to think of another case where we saw somebody who was an international jihadist direct against foreign targets that would involve the killing of Americans and who was also so deeply involved … with [a] foreign security service,” said Mudd, the former FBI official. “I can’t remember another case like that.”

In June 2006, another warning made its way into the government. Headley’s estranged Canadian wife filed a petition for permanent residency with U.S. Citizenship and Immigration Services under a law for abused spouses, according to U.S. officials.

In addition to accusing him of abuse, the petition recounted Headley’s radicalization, travel and militant training, his hatred for Jews and Hindus and his praise for suicide bombers. It mentioned his claims of working for the U.S. government and the 2005 FBI inquiry, according to officials and the close associate.

The green card was granted. The petition “raised concerns” at the immigration service, a U.S. official said. But privacy laws governing immigration issues are even stricter for cases of abused spouses, the official said. As a result, the immigration service did not advise law enforcement about the disturbing portrait of a potential terrorist, the U.S. official said.

Chapter 6: Target Mumbai

Headley spent most of the next two years in Mumbai developing a blueprint for terror.

Funded by $25,000 from Major Iqbal, he opened an office of Rana’s firm as a front. Like many Pakistanis, Headley had a conflicted relationship with India, according to an Indian counterterror official familiar with his questioning by Indian investigators in Chicago last year.

“He told us: ‘I like everything about India,’” the official said. “'I like the food, the people. But I don’t like India.'”

Headley had fun in the city he was planning to devastate. He joined an upscale gym, befriending a Bollywood actor who introduced him to the elite party scene. He hung out in the Colaba area of south Mumbai, where he tried to romance a 25-year-old who owned a café, according to Indian investigators. He stayed at the Taj Mahal Palace Hotel, the prime target designated by his handlers. It was a landmark on the waterfront by the Gateway to India monument. He charmed employees, praising the opulent architecture, going on in-house tours and shooting hours of video.

In 2007, things got more complicated on the domestic front. Headley met a young Moroccan in Lahore and soon married her. Faiza Outalha was a medical student and Western in outlook, but Headley had her dress in traditional Muslim style. This created a problem when she insisted on accompanying him to Mumbai, because he was posing as a non-Muslim American. A stay at the Taj ended in a tearful spat, and he sent her back to Lahore.

Mir and Major Iqbal later scolded Headley about endangering his cover, according to investigators. Headley soon broke up with Outalha. In December 2007, she got into an altercation outside Headley’s house with his servant. She filed assault charges against Headley, who spent eight days in jail in Lahore. Major Iqbal intervened to free him, according to an Indian investigative report.

Outalha did something more drastic. She reported him to the U.S. embassy in Islamabad. During interviews in December, January and April, she met with agents of the State Department’s security bureau and U.S. Immigration and Customs Enforcement. Outalha described his involvement with Lashkar and visits to India, saying he was on a secret mission. She told them she had stayed at the Taj hotel with him. She called him a drug dealer, terrorist and spy, according to officials.

In a later account to an investigator, Outalha admitted that she had mixed the truth with false and emotional accusations. But she said the agents had an inch-thick file about Headley on the table when she talked to them. When she mentioned his training at Lashkar camps, the Americans told her they already knew about that, according to her account.

As with past tips, U.S. officials say her warnings were not specific enough and that angry spouses often make bogus allegations. But officials have not clarified a key point: whether the embassy officials learned about the previous FBI inquiries, which would have reinforced her credibility. The prior cases, combined with her allegations, could have led investigators directly to Headley’s reconnaissance work.

The State Department security agent communicated the wife’s warning in an information package to the CIA, FBI and DEA, according to U.S. officials. It’s not clear whether anyone did anything further. The DEA senior official says he has not seen any record that his agency was informed.

Headley learned about Outalha’s tip to the embassy, but it did not have much of an impact on him, according to testimony and U.S. officials.

In the 10 months before the attacks in November 2008, the FBI and CIA issued half a dozen increasingly urgent and specific warnings to Indian counterparts, according to Indian and U.S. officials. The U.S. agencies warned that Lashkar was plotting to attack Mumbai, that Westerners and foreigners would be targeted and that the Taj hotel was a target. As a result, the Taj beefed up its security defenses in September.

U.S. officials have not disclosed the sources of the warnings. Indian security chiefs are convinced the information came partly from Headley. They think he was still a U.S. informant.

“You would call him a double agent,” said former Home Secretary Pillai. “If they went deep into the records, I think they would find there was enough evidence to show that he was involved in some planning or an attack in India. And I think at some level in the United States, some agencies decided that can be kept under wraps because he’s doing something for [them].”

A senior Indian counterterror official admitted that Indian agencies must share the blame because they failed to respond effectively to the U.S. warnings. He and other Indian security officials praised U.S. cooperation on aspects of the case. But he said he is suspicious.

“I think he was a U.S. agent,” the official said. “Maybe this information came from him. Maybe he was telling them part of what he knew but not all of it. … It’s good to develop informants like that and infiltrate organizations. That is what intelligence agencies are supposed to do. But they could have taken us into confidence and told us about him.”

In response, U.S. counterterror officials insist that Headley was not a double agent and that they did not have prior knowledge of his involvement in the plot.

“I know where those warnings came from,” a U.S. official said, “and they didn’t come from Headley.”

On the other hand, three counterterror sources described a different scenario to ProPublica. The sources said they do not think Headley was a double agent at the time of the attacks. But they said U.S. officials learned enough about his activities to become concerned, monitor him intermittently and pick up fragments of intelligence that contributed to the warnings to India. Investigators did not realize he was a central figure in the plot until later, the sources said.

If that scenario is true, it remains a tightly guarded secret.

Headley, meanwhile, wrapped up his mission. The targets were chosen by Major Iqbal, an officer in a military that has received billions of dollars from the United States. Iqbal wanted to ensure that Americans and Jews would die.

Responding to dissent in Lashkar and defections to al Qaeda and other groups, the ISI and Lashkar designed the attack to fortify the group’s global image, according to Headley and other sources. There are also suspicions that hard-line ISI officers and militants wanted to torpedo attempts at rapprochement between India and Pakistan.

The dimensions and duration of the plot, which could have caused a war, make it hard to believe high-ranking ISI officials were not aware of it, U.S. counterterror experts say.

“The way the ISI is structured and the way things function in that part of the world, this is not a couple of guys,” said Charles Faddis, a former CIA counterterror chief who worked in South Asia. “This is not a couple of junior or mid-level individuals who have the capacity to put together this level of an operation and escape detection. That’s just not credible. So whether that translates to a decision by ISI formally as an institution from the top down or not, I can’t say. … But it’s going to have to be sanctioned at a pretty senior level.”

The final targets were the Taj hotel, the Leopold Café, the Chabad House Jewish community center, the CST train station and the Oberoi-Trident Hotel. The Oberoi had not been on Headley’s reconnaissance list, but he scouted it anyway.

“I was in the area, and I was going to watch a movie in a nearby theater, and I had about an hour left,” he testified. “So I went there, and I just made the video.”

Thirty-three people died at the Oberoi because of his whim. They included Naomi Scherr, a 13-year-old from Virginia who was shot in the head as she ate dinner with her father, who also died.

Chapter 7: “Congrats On Your Graduation”

On the night of Nov. 26, 2008, Headley was at home in Lahore when Mir sent him a text message. It said: “Turn on your television.”

The siege of Mumbai lasted three excruciating days. The 10-man attack team arrived by sea, landing at a fishermen’s slum chosen by Headley for its strategic location. The young gunmen had never been to India. They were guided by Headley’s videos and written reports, his provision of GPS coordinates and his work with a Pakistani Navy frogman on the maritime approach.

Mir and other Lashkar bosses directed the slaughter by phone from a command post in Karachi. Their calls were intercepted by Indian intelligence and have been subsequently broadcast in international television reports.

Headley watched the coverage with his Moroccan wife; they had reconciled weeks earlier. He got a celebratory email from his Pakistani wife, whom he had moved with their children to Chicago in September. The wife knew about his reconnaissance and praised him in an email using coded language, according to court testimony.

“Congrats on your graduation,” the wife wrote on Nov. 28, according to court documents. “Graduation ceremony is really great. Watched the movie the whole day.”

Headley was already thinking about his next mission.

In October, Major Iqbal and Mir had visited him at home, the first time he had seen his ISI and Lashkar handlers together, according to Headley’s testimony. They wanted to take their holy war to Europe. They assigned him to scout the Jyllands-Posten newspaper of Denmark, a terrorist target because it had published cartoons of the Prophet Muhammad.

Headley visited his family in Chicago over the Christmas holiday. He learned that yet another tipster had gone to the FBI, according to his testimony. It was a female friend of his mother, who had died earlier in the year. Apparently motivated by news of the Mumbai attacks, the woman contacted the Wilmington, Del., FBI office, which passed the lead to the Philadelphia field office.

Interviewed on Dec. 1, the tipster said Headley’s mother had told her years earlier that her son was fighting alongside militants in Pakistan. The tipster said she believed he was still involved in militant activity. FBI agents reviewed records and found “most or all” of the warnings dating back to 2001, according to a senior U.S. law enforcement official.

On Dec. 21, agents interviewed Farid Gilani, Headley’s cousin in Philadelphia. He deceived them by saying Headley was in Pakistan, according to testimony. The cousin called Headley in Chicago to alert him, according to testimony. In an email to a militant in Pakistan, Headley speculated that the FBI’s interest was related to the allegations months earlier at the U.S. embassy by his Moroccan wife, whom he called “M2.”

“So I think that it is OK, just routine, because of what M2 said before,” Headley wrote on Dec. 24.

Lashkar had just pulled off a terror spectacular, killing six Americans. Headley was an American. Half a dozen leads over seven years painted a picture connecting him to Lashkar and the Taj hotel.

Yet, the FBI did not go find him in Chicago. Agents put the inquiry on hold because they thought he was out of the country, officials say.

“It is surprising that after Mumbai the FBI didn’t pick up on him,” a senior U.S. counterterror official said. “You would have thought they would have scrubbed records for anyone in the U.S. with Lashkar connections and tried to work him as a source or investigative lead.”

Headley went to Copenhagen, Denmark, in mid-January of 2009. There was no high life this time. He stayed at the Hotel Nebo, a discreet establishment behind the central train station on a strip frequented by prostitutes and drug addicts.

But his approach was the same. He did video surveillance, assessed target areas and took notes. He looked into renting an apartment as a safe house for an attack team. Using Rana’s firm as a cover again, he talked to a young Danish woman about a possible job as a secretary, according to European counter-terror officials and interviews in Denmark.

On Jan. 20, he went to the newspaper offices in historic King’s Square.

“I looked up, and a gentleman, a businessman, walked through the door,” recalled Gitte Johansen, who was the receptionist in the street-level lobby. “He looked as if he was, you know, he had a certain goal … as if he had a meeting, for instance. So I let him through the second door. … He was tall, light-tanned, business suit and tie, very friendly and very serious but in a friendly way, explaining to me that he was in Denmark because of his business. He had moved from U.S. to Denmark, and he wanted to buy space in our newspaper for advertisement.”

Headley met with an advertising representative in the lobby for about 15 minutes. He drove to the city of Aarhus, cased the newspaper building there and met with another advertising representative, according to investigators and newspaper employees.

Headley returned to Pakistan and met with his handlers. In March, they decided to put the plot on hold. Responding to foreign pressure, Pakistani authorities had arrested Zaki-ur-Rehman Lakhvi — Lashkar’s military leader — and a few other suspects.

Headley had grown disenchanted with Lashkar. He shifted to al Qaeda with the help of a friend named Abderrehman Syed, a former Army major who had left Lashkar.

“He said they were conducting the ISI’s jihad and we should conduct God’s jihad,” Headley testified.

Despite his declarations, Syed retained contact with an ISI colonel who had been his handler, according to investigative documents. Syed, in turn, became Headley’s latest handler. He introduced him to Ilyas Kashmiri, a notorious Pakistani terror chief, who took over sponsorship of the Denmark plot, according to Headley’s testimony and other evidence.

Kashmiri was enthusiastic. He gave Headley the names of militants in Britain and Sweden who could help with funds and weapons and possibly take part in an attack. Kashmiri said the gunmen should storm the newspaper, Mumbai-style, then put on a media spectacle.

He wanted them to behead hostages and throw the heads out of windows into King’s Square.

Chapter 8: The Downfall

Back in Chicago that summer, Headley prepared for his second reconnaissance trip to Denmark.

He communicated with two al Qaeda operatives in Britain referred to him by Kashmiri. Once again, Headley strayed into a law enforcement net. This time, though, he didn’t slip out.

In July, British intelligence learned about his impending visit and notified the FBI. On July 23, the FBI passed a lead to U.S. Customs and Border Protection for assistance: A man named David, possibly an American, a suspected associate of Lashkar and al Qaeda, would soon fly to Manchester via Chicago and Frankfurt, according to U.S. officials.

Border agency analysts began sifting through hundreds of possible candidates on passenger lists. The next day, another detail surfaced: The suspect would fly Lufthansa. An analyst quickly zeroed in and identified Headley because of his past travel and stops at secondary inspection. The FBI’s Chicago field office took charge of the investigation and coordinated with European counterparts.

Headley’s meeting in the English town of Derby on July 26 did not go well. The militants, known as Simon and Bash, didn’t want to participate in the attack and couldn’t supply weapons. They gave him about $15,000 to finance the plot, according to his testimony and other evidence.

Headley continued to Stockholm to see a veteran militant named Farid. The reception was worse. An agitated Farid told Headley to leave him alone because Swedish police had him under tight surveillance, according to European counterterror officials. The officials say Farid declared: “Sorry, brother, I can’t help you.”

A discouraged Headley took a train to Copenhagen on July 31. Danish intelligence was waiting for him. Danish agents shadowed his every step. They monitored his calls and his visits to seedy neighborhoods to talk to drug dealers about acquiring guns. When he rented a bicycle, they followed on bikes, according to a senior European counterterror official.

“He rode up and down the street past an army barracks, filming with a video camera,” the European official said. “That raised eyebrows.”

Headley returned via Atlanta on Aug. 5. He was on a watch list now. Airport inspectors questioned him, then let him go so the FBI could continue surveillance. Investigators soon came to suspect he had been involved in the Mumbai attacks. They dug into his past, debriefing his former DEA handler and reviewing records of prior inquiries, officials say.

The two-month surveillance operation drew high-level interest, according to Mudd, the former top FBI national security official.

“I remember hearing about the case and it immediately boiling up to the top of our morning threat briefings,” Mudd said. “We sat down every morning with the director of the FBI and with the attorney general to talk about what’s happening in the United States. … And all of a sudden you have … an [al Qaeda-] affiliated organization, Laskhar-i-Taiba, that had a presence in the heartland of the United States and not only a presence but a man who’d been involved in a murder of 160-something people.”

On Oct. 9, the FBI arrested Headley at Chicago’s O’Hare Airport. He was bound for Pakistan with his Denmark videos in his luggage. He had planned to meet with his terror bosses and return to Denmark. He had been talking about an attack he could do himself, perhaps assassinating an editor, according to officials and testimony.

Headley’s former DEA handler came to Chicago for the arrest. The drug agent’s presence sent an unspoken message: time to cooperate. FBI agents read Headley his rights, and he started talking. He kept talking for 15 days.

His interrogation and later trial testimony provided unprecedented evidence on Lashkar, the ISI, al Qaeda, plots, targets, leaders, methods. Supervised by agents, he communicated with people overseas in attempts to lure Mir out of Pakistan and set a trap for a militant in Germany, according to testimony.

None of it worked. So Headley turned on Rana, his old friend. He revealed that Rana had helped him use his immigration firm as cover during the Mumbai and Denmark plots. He testified against Rana at the Chicago trial, which ended with a conviction on two of three counts of material support of terrorism.

Headley agreed to a plea bargain that spared him from the death penalty and extradition to India, Denmark or Pakistan. He now faces a maximum sentence of life in prison. According to investigators, he has steadfastly protected one person: his Pakistani wife, Shazia.

“His condition when he spoke to us was that he accepted no questions about Shazia,” said the Indian counterterror official familiar with the Indian interrogation of Headley. “He said: ‘She is the only one who has given me four children. Despite my philandering, she has been faithful. She has been loyal to me. She is a devoted Muslim. I admire her.’”

Epilogue: Questions And Contradictions

The epilogue has been like the prologue: a trail of impunity and mystery.

In addition to Major Iqbal, Mir and two other accused Lashkar masterminds were indicted this year by U.S. federal prosecutors. Despite abundant evidence, Pakistan has not arrested or charged them — or half a dozen other top suspects, officials say.

The targeting of the West in Mumbai and Denmark has raised fears that Lashkar could become a more formidable threat than a diminished al Qaeda.

“Now we wonder if they think about the political ramifications of an attack on the U.S. or the West,” a U.S. counterterror official said. “The presumption has been that they did, or that ISI did and controlled their targeting with this mindset. Is it really a constraint now? Do they really worry about a crackdown if they do another attack on the West? What would be going too far for them?”

Pakistan’s Federal Investigative Agency, the equivalent of the FBI, is in charge of the investigation. But in reality, no one in Pakistan is trying to arrest Major Iqbal, Sajid Mir or the others, U.S. and Indian officials say.

Pakistani officials deny that Major Iqbal was an ISI officer. That only makes it harder to understand why he has not been arrested. It raises questions about the potential knowledge and involvement of ISI chiefs.

The director of the ISI during the period in which the Mumbai plot developed, Gen. Nadeem Taj, stepped down two months before the 2008 attacks as the result of pressure from foreign governments concerned that he was soft on militants, according to Western officials. Taj previously was the top military officer in the garrison city of Abbottabad during the period that Osama bin Laden established himself in hiding there, officials say.

“We, as a government, want to say that the Pakistanis are in our corner,” said Faddis, the former CIA counterterror chief. “Obviously, it’s way more complicated than that. And there are a whole bunch of folks in Pakistan and in the ISI who are not at all on the same sheet of music with us here. So even when they have cooperated with us over the years, it is often basically because they’ve been forced to. …Then we have a number of individuals within ISI who are very sympathetic to the folks that we are targeting.”

The official U.S. version of the case presents contradictions as well.

In response to ProPublica stories last year detailing the 2005 tip about Headley, the Office of the Director of National Intelligence led a multiagency review of Headley’s contacts with the U.S. government. But the DNI has declined to discuss the findings or any consequences. During the review process, agencies pointed fingers at each other, according to knowledgeable officials.

Although the litany of warnings about Headley paints a grim picture, officials at the FBI and other agencies assert that the allegations lacked specificity. They say Lashkar was not seen as a major threat before Mumbai. They cite the sheer volume of terror-related leads, especially after the Sept. 11 attacks. And they say some problems in tracking threats revealed by the case have been corrected as systems have improved.

But the questions linger. And the man at the center of the labyrinth is fittingly contradictory and enigmatic.

Headley slid among personas and cultures with ease, not completely at home in any of them. He spouted hateful anti-Semitic and anti-Indian rhetoric but loved the films of the Coen brothers and Bollywood. He veered from caring and generous to cold and treacherous. He washed out of military schools and clashed with authority figures, yet saw himself as a warrior and hoped his son would become a special forces commando.

Investigators and experts suggest a variety of motivations driving him: ideology, money, women, glory and, above all, an appetite for adrenalin.

“The pattern is risk-taking,” said Sageman. “He wants to live for the moment. He is not above taking crazy risks. … He just likes the adventure. He loves the game.”

Contributing: Sabrina Shankman and David Montero for PBS FRONTLINE.

Related Features:

Interactive timeline: Headley's Lethal Odyssey
More Coverage: Pakistan’s Terror Connections
PBS FRONTLINE series page
FRONTLINE: Could This Man’s Warnings Have Prevented the Mumbai Attacks?

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