Dangerous Liaisons

She was just what the spooks were looking for. Nada Nadim Prouty was athletically fit and aggressive, shrewd and tough-minded. She spoke fluent Arabic—an all-too-rare skill in the American intelligence community—and she had a CPA's license, the better to follow the money. Prouty, born and raised in Lebanon, knew the Middle East. First hired by the FBI in 1999, she was sent to Baghdad in 2003 to help interrogate captured insurgents. She did so well that, a few months later, the CIA stole her away and made her an undercover case officer.

But Prouty got her post fraudulently. She illegally obtained her U.S. citizenship, a fact the intelligence agencies somehow missed when they hired her. Far more worrisome, she was caught tapping into the FBI's criminal investigative files dealing with Hizbullah, the terrorist organization allied with Iran. Last week, when Prouty pleaded guilty to defrauding the United States in a federal courtroom in Detroit, intel experts began speculating about nightmare scenarios. Richard Clarke, the former White House counterterrorism chief in the Clinton administration (who also served under President Bush), asked if the FBI and CIA had been penetrated by a "Hizbullah mole."

Prouty was not, however, charged with espionage. High-ranking intel sources, who declined to be identified discussing the sensitive matter, tell NEWSWEEK there is no evidence—at least so far—that Prouty was spying for terrorists. (Her lawyer had no comment.) Though she had a top-level clearance and access to sensitive information, she was a fairly low-level operative (a "GS-12," in government-speak) and was not in a position to run any operations herself. She has told investigators she just wanted to see what information the FBI had on her sister and brother-in-law, a well-known Detroit restaurateur who was the focus of an FBI probe into Hizbullah fund-raising. Her motives may turn out to have been relatively innocent, but her somewhat dodgy past makes investigators want to learn more.

According to court documents, Prouty came to America from Lebanon in 1989 and overstayed her student visa. To get her green card, she arranged a sham marriage and got a job as a hostess at La Shish, a popular chain of shish kebab restaurants in Detroit. Her sister was the business manager; her brother-in-law, Talil Khailil Chahine, was the chain's owner. The Detroit shish kebab man later became a target of FBI investigators when he was suspected of skimming millions of dollars from his restaurants and funneling the money to a Hizbullah-linked charity in Lebanon. In 2002, Chahine flew to Lebanon to a fund-raiser and sat beside Muhammad Hussein Fadlallah, once the spiritual leader of Hizbullah, who was officially designated a terrorist by the United States in the wake of the 1983 Marine-barracks bombing in Beirut. Both men were keynote speakers at the event and were seen conferring privately. When FBI agents raided Chahine's home, they found a picture of Chahine and his wife, Elfat Al Aouar—Prouty's sister—posing at a military outpost (the site of a Hizbullah battle against the Israelis) under the yellow and green Hizbullah emblem. Al Aouar was indicted with her husband last year on tax charges and has pleaded guilty. Chahine is a fugitive, presumably in the Middle East. (Chahine's lawyer has denied Chahine had any involvement in terrorism.)

As part of her plea agreement, Prouty will have to answer questions about her sister and brother-in-law while wired to a lie detector. She will no doubt be thoroughly interrogated. The FBI and CIA are sensitive about the risk of being penetrated by moles. After the cold war, it was revealed that a pair of top spooks—the FBI's Robert Hanssen and the CIA's Aldrich Ames—had been feeding secrets to the Soviets for years. Applicants are now subjected to lengthy background checks, including a polygraph test. A former intel official, who asked for anonymity when talking about the investigation, said he heard in 2005 that Prouty had shown some sign of deception on the lie detector, but her career did not suffer. The official noted that about a quarter of CIA case officers (particularly those with families abroad) have trouble passing the polygraph test, and most of the issues are harmlessly resolved. When Prouty was polygraphed, the CIA badly needed Arabic speakers to meet the intelligence demands of the Iraq War. Indeed, she had recently been taking language training in Farsi—spoken by Iranians.

Counterintelligence—finding moles—always places conflicting demands on spy services. If spooks become too suspicious about double agents, they have a hard time recruiting spies or trusting each other. Ironically, notes a senior law-enforcement official who didn't want to be identified talking about intel matters, the bureau in recent years has been criticized for keeping its standards too high, thereby preventing it from meeting its recruitment goals for foreign-speaking agents. "When you see a case like this," the official says, "you start to think we've been setting the bar too low."