Steven J. Rosen’s $20 million defamation lawsuit against his former employer, the American Israel Public Affairs Committee, has now taken a predictable turn. AIPAC fired Rosen and fellow analyst Keith Weissman over their indictments under the Espionage Act in 2005. The criminal prosecution was ultimately quashed by the Obama administration to the chagrin of prosecutors in early 2009. A November 8, 2010 AIPAC defense filing in Superior Court asked Judge Erik Christian to dismiss the civil suit, alleging that Rosen’s use of company computers to surf pornographic websites and selections from damning depositions proved AIPAC’s statements that he did not comport to company standards were not slander. As predicted, Rosen has now gone for AIPAC’s jugular by deposing Executive Director Howard Kohr (PDF) and legislative deputy director Esther Kurz about their roles in an earlier espionage caper against US industries and workers involving AIPAC’s use of classified information.

In a 44 page response (PDF), Rosen refutes AIPAC’s assertions that classified information gathering was prohibited at AIPAC. On page 12, Rosen refers ominously to a "Confidential Portion" of a sealed deposition of Esther Kurz. While the Kurz confidential deposition responding to questions guided by Rosen is sealed by the court, Rosen has also submitted a recently declassified 1986 FBI interview form of Kurz (PDF) inquiring into how she obtained a classified 300 page USTR document full of trade secrets provided by US industries and worker groups. Rosen has also submitted other declassified documents of the FBI espionage and theft of government property investigation of AIPAC which took place between 1984 and 1987. Rosen ruefully states "Obviously, AIPAC had survived — indeed, flourished — and without loss of staff when it earlier stood by its employees in the face of true public revelations of their having received and disseminated a classified document."

AIPAC’s failure to stand by Rosen and Weissman in the face of the espionage indictments is a lingering sore point. Rosen’s filing has numerous attachments of internal AIPAC damage control documents. As Espionage Act indictments approached, AIPAC held a crash series of meetings with lawyers and wordsmiths to formulate a "Narrative" to reverse the media stories about an Israeli "spy ring". An internal draft AIPAC speech (PDF) to key donors is replete with dramatic pauses and delivery cues and was readied for deployment by October 18, 2004.

"What you are about to hear may shock you. It may make you angry. You will have the urge to interrupt and ask me how what I am telling you could happen in America, to our community. You will want to turn to your neighbor to share your outrage. (Lower inflection, more serious) …I am asking that you do neither…."

AIPAC’s dramatic plan was to stage a counter-offensive with the help of a recognized legal expert (that it was unable to find on short notice).

"So these are the facts. We would now like to tum this over to TBD [to be determined] to discuss the law as it applies to this situation. (What is the law?) INSERT TBD LAWYER…"

AIPAC’s core strategy was to allege institutionalized FBI anti-Semitism personified by David Szady.

"Finally, the fact that press reports have indicated that David Szady, a senior FBI counterintelligence official who some Jewish organizations believe has targeted Jews for investigation, is involved in the investigation, has only heightened our concerns. According to these reports, Szady has targeted Jews and blocked or slowed their clearances. He was directly involved in a high profile case involving a Jewish former CIA staff attorney who sued the FBI, CIA and its top officials for religious discrimination."

But AIPAC got cold feet and noted DO NOT USE UNTIL WE HAVE VERIFIED on the speech draft. The paragraph was later crossed out, neutering the fulcrum of the entire speech.

Internal AIPAC documents submitted by Rosen also reveal hurried inquiries to determine whether US government prosecutors would bring up (PDF) the dreaded Jonathan Pollard espionage case in their public court filings. Rosen also filed internal AIPAC emails (PDF) about how to curry favor with government prosecutors and his own last minute plea (PDF) to AIPAC not to throw him under the bus in March of 2005. Lastly, Rosen files his golden ticket, an email promise (PDF) that AIPAC would "do right" by him after the espionage prosecution had blown over.

How will this be resolved? Where can Rosen cash his ticket?

AIPAC simply cannot allow Ester Kurz’s compelled testimony about the subversion of the US-Israel Free Trade Agreement or other documents held by Rosen to enter the public domain. It is the worst performing bilateral deal in history, having locked US exports out of Israel via floating tariffs while accelerating Israel’s access to the US, and is characterized as a "subsidy" by bona fide trade experts. Nor can AIPAC openly pay off Rosen since that would be an admission that it is indeed a hotbed of espionage related activity. A higher authority is clearly needed. But who, and where?

In the past, when AIPAC and its leaders were in trouble, they turned to the Jewish Agency, a quasi-governmental entity headquartered in Jerusalem, for financial and leadership support. By taking the settlement process offshore and straight to their foreign principals, AIPAC and Rosen could avoid alienating American donors and the glare of US publicity. It could be win-win. A negotiated settlement could stipulate that funds enter a newly chartered Rosen-controlled nonprofit, perhaps a new "Institute for Lobbying Solidarity" to educate other potentially disgruntled employees about the dangers of lawsuits or public disputes. Since the Jewish Agency sometimes takes in US tax dollars allocated by Congress as well as donations from US federations, the payment of damages to Rosen could secretly be arranged to be drawn entirely from unwitting US taxpayers.

This final clause — though shocking to the uninitiated — might be key to sealing the deal. Israel’s lobby has long thrived on secrecy as well as heaping insult on injury when it comes to US taxpayers, the law enforcement community and disenfranchised policy stakeholders.

Or, with some real due process and public concern, it could go the other way.

The Interagency Security Classification Appeals Panel could declassify the trade document purloined by AIPAC in 1984. This would allow private US corporations and organizations to sue AIPAC for damages incurred when their trade secrets (entrusted to the US government) were used against them. At present, there is no longer any legitimate national security or commercial benefit to be obtained for keeping the document out of public hands. Armed with detailed information about how Israel and its US lobby turned closely held industry trade secrets against their owners, the American private sector could provide the relief that stymied Espionage Act prosecutions and weird defamation suits over illegal activity cannot.