>> NARRATOR: Tonight on Frontline... >> Everybody's a suspect, and if you're good we won't bother you, and if you look a little strange then you might get on a watch list.

>> NARRATOR: A permanent war against a hidden enemy.

>> The president turned to me and said, "Never let this happen again."

>> NARRATOR: A new strategy of prevention.

>> You have to cast the net a bit more broadly.

>> NARRATOR And new perils to privacy.

>> It is inevitable that totally innocent Americans are going to be affected by these programs.

>> NARRATOR: Correspondent Hedrick Smith looks into the government's secret surveillance efforts here at home... >> We're talking about a wholesale diversion of communications to government control.

>> Oh, that's what they're doing.

This is a spy apparatus.

>> NARRATOR: ...and explores the new era of prevention: hunting them by watching us.

>> It seems to be like the beginning of "We're going to treat everyone like a bad guy."

>> And that applies to everything-- telephone records... >> Telephone records, financial records.

>> How much security do you want, and how many rights do you want to give up?

>> NARRATOR: Tonight on Frontline: "Spying on the Home Front."

>> SMITH: Las Vegas.

It was the week before New Year's 2004 when Stephen Sprouse and Kristin Douglas flew in from Kansas City to get married.

>> Stephen always wanted to get married in Vegas.

I mean, that was sort of a joke.

>> SMITH: Stephen and Kristin exchanged vows in front of friends, family... >> Ladies and Gentlemen, it is show time.

>> SMITH: ...and Elvis.

>> ♪ So love her tender... ♪ >> You come in and you're thinking, okay, I'm going to get married, and then, you know, Elvis comes down the aisle.

(laughter) Then you're kind of up there, and all of a sudden, you're thinking, wow, I'm really getting married.

Kristin, I give you this ring... And they're doing the vows, and you're like, oh, this is for real!

>> You may kiss your bride.

(applause) >> And then you're singing "Viva Las Vegas."

>> And then you're singing "Viva Las Vegas."

>> ♪ Viva Las Vegas ♪ ♪ Viva Las Vegas... ♪ >> SMITH: But in fact, things in Vegas weren't looking so good.

There was disturbing news.

>> Tom Ridge was on national TV, and, you know, he said, "Hey, there's three cities that, you know, we got to really pay attention to-- Washington, D.C., New York and Las Vegas."

And whoo, you know, when that happens, then the whole eyes of the world come on you.

>> U.S. Intelligence from overseas has prompted an elevated alert.

(phone rings) >> On Saturday, December 20, I was contacted by someone from our terrorism division at FBI headquarters.

The information that I received was that Al Qaeda could have an interest in Las Vegas possibly over the New Year's weekend.

>> SMITH: That's it?

>> That's it.

>> SMITH: No names?

No targets?

>> No targets identified, no threat articulated, no plot uncovered.

>> SMITH: New Year's Eve is a security nightmare for the cops, who see it as a tempting target for terrorists.

>> We have 300,000 to 400,000 people on the streets, on Las Vegas Boulevard, in front of all these beautiful hotels waiting for the clock to strike midnight and all the fireworks to go off.

And that was what the intelligence information indicated, that that was, you know, the type of area or venue that they were going to try to target.

>> Here was the real dilemma: do we cancel our New Year's Eve celebration in Las Vegas?

That was the question being placed on me.

>> When you are out there, that's when you kind of notice that you don't see any of the planes flying and you see helicopters off in the distance kind of circling around.

That's when it kind of seemed a little weird, seemed a little odd.

>> Yeah.

It was a little creepy.

>> Yeah.

>> SMITH: The clock was ticking, just 11 days 'til New Year's.

They needed to act fast.

>> We spoke almost an hourly basis at times with our own headquarters, with the Department of Justice, to try to determine if there were terrorist operatives in Las Vegas or preparing to come to Las Vegas.

>> Who's in Las Vegas, you know?

Can we find out who's in Las Vegas today, and who's going to be here over the New Year's Eve weekend?

Is there the potential that a Mohammed Atta is staying at the Economy Lodge again?

>> SMITH: The feds called in security chiefs of the major hotels and casinos and asked for help, but much different help from usual.

When Ellen Knowlton, the FBI agent in charge in Las Vegas at the time in December 2003, came to all the casinos and said, "We want all your records," how does that hit you?

>> To my knowledge, no one has ever made a request that is as broad as "we want all of your records," or no one had prior to that.

>> SMITH: The hotel records, the airline records, the rental car records, the gift shop records, the casino records.

When you're talking about all those records, you're talking about hundreds of thousands of people.

Particularly during this two-week period.

>> That's correct.

>> Hotel casino executives resisted, said they did not want to turn over the information.

There was, according to published reports, a lot of arm twisting, a lot of intimidation.

>> It was an extraordinary step.

It really was.

We were asking for records for the single purpose of making comparisons.

We were not asking for records that would become incorporated into the FBI files.

>> SMITH: But records for everybody who was here.

>> As many as we could obtain, yes.

>> SMITH: So you're talking hundreds of thousands of people.

>> It was very, very, very voluminous, yes.

>> As a citizen, I was very troubled by it.

As an executive with this company, I was very troubled by it.

You know, prior to this, we had dealt with the notion of here's a list of people whom we suspect are doing bad things or have the potential to do bad things.

To simply say, you know, "It's a matter of national security, "we need to know the name of every single person checking into your hotel at any given moment," that... that seems extremely unusual, and I think extremely troubling.

>> SMITH: Did you feel like you were doing something unprecedented?

>> In a way, yeah.

In a way, I did.

But we were doing so in order to safeguard this community.

If someone was not a terrorist or a terrorist associate, they were not of any interest to us whatsoever.

>> "Trust us, we're the government, "and if you are not up to no good, why should you care?"

That's not the way our system works.

We are a country that is founded on a set of principles relating to individual freedom, including our privacy, our right to be left alone by the government.

>> SMITH: 9/11 indelibly altered America in ways that are now being seriously questioned.

>> The deliberate and deadly attacks which were carried out yesterday against our country were more than acts of terror.

They were acts of war.

>> SMITH: A new paradigm of war spawned a new strategy: a proactive strategy of preemption.

>> When the President turned to me within hours, really, after 9/11, a day or so, and said-- in my direction anyhow-- "Never let this happen again," now, not letting something happen is different than proving something happened.

The old business of the Justice Department-- to be able to prosecute the criminal and declare victory-- is not good enough when you lose 3,000 people and the criminals purposefully extinguish themselves in the perpetration of the crime.

Prevention means disrupting a scenario before it actually all comes together.

>> SMITH: The new paradigm of prevention carried a new peril: innocent people will get caught in the dragnet.

>> When you talk about prevention, you're saying to people, "Well, you can't just focus on one person."

You have to cast the net a bit more broadly, and you have to... you have to start to work with situations where you're going to collect a lot of data and then try to connect the dots.

But that means you're going to collect a lot of data, and that means you're going to end up holding a lot of data about ordinary people who have nothing to do with your threat.

>> SMITH: That sounds pretty intrusive.

>> It is.

>> Tonight: Big Brother-- the uproar over a secret Presidential order giving the government unprecedented powers to spy on Americans.

>> ...over surveillance inside the U.S. without court orders.

>> SMITH: It was a bombshell.

The National Security Agency engaged in warrantless eavesdropping inside the United States.

The New York Times story broke on December 16, 2005, but spying on the homefront had begun in the shadow of 9/11, and there was more going on than the Times story revealed.

Congress erupted in protest.

>> Mr. President, it is time to have some checks and balances in this country.

We are a democracy.

>> It's inexcusable to have spying on people in the United States without court surveillance in violation of our law, beyond any question.

>> This was enormous news.

When the New York Times told us about the NSA wiretap program, for people like me, it was as though there was this alternate universe.

We had thought we had a legal system and we knew what the moves were, and it turns out that the NSA was doing something entirely outside of that.

>> SMITH: In the cold war, NSA's mission was to collect communications intelligence on enemies abroad.

Except in very rare cases, its cardinal rule was "hands off Americans at home."

>> NSA was looked at more as the nuclear weapon for eavesdropping-- much too powerful to use domestically.

It was never set up to use domestically.

>> It was almost something that was put into your bloodline from the very beginning.

In essence, you were taught that it was not part of the NSA mission, except under very exceptional and legally approved circumstances, to be involved with U.S. communications.

>> SMITH: But with one sweeping secret order, President Bush had changed all that.

>> As President and Commander-in-Chief, I have the constitutional responsibility and the constitutional authority to protect our country.

So, consistent with U.S. law and the Constitution, I authorized the interception of international communications of people with known links to Al Qaeda.

>> SMITH: The President minimized the risk to Americans.

His eavesdropping program, he said, was very narrowly targeted with one party outside the U.S. and known to be a member of or connected to Al Qaeda.

>> I just want to assure the American people that, one, I've got the authority to do this; two, it is a necessary part of my job to protect you; and three, we're guarding your civil liberties.

And we're guarding the civil liberties... >> SMITH: But once before, the NSA was accused of invading American civil liberties, during the scandals of the Watergate era in the 1970s.

>> The Select Committee made its first inquiries into this operation last May.

>> SMITH: The Church Committee, headed by Senator Frank Church of Idaho, exposed widespread abuses of power at the FBI and the CIA and revealed that the NSA had been spying on Americans for decades.

What was "Operation Shamrock"?

>> Operation Shamrock was a... a program of the National Security Agency to collect... to obtain access to telegrams that were leaving the United States for other countries, for foreign countries.

And the idea was that the NSA would look through these telegrams, look for telegrams of interest from a foreign intelligence standpoint.

>> SMITH: Are you saying all the telegrams going out of the U.S.?

How did they get access?

>> They asked.

(chuckles) I mean, that sounds very simplistic, but they approached the communications carriers, the telegraph companies concerned.

>> SMITH: RCA, ITT... >> And Western Union.

>> SMITH: So in Operation Shamrock, what we saw was the NSA turning its foreign intelligence operations internally on American communications.

>> Oh, exactly.

Yeah.

Operation Shamrock was getting access to all the communications coming into, going out of and going through the United States.

>> There were very few rules back then, very few laws, regulations that dealt with what NSA or any intelligence agency could collect back then.

The capabilities were there, the restraints weren't there.

The temptation is to do it.

>> The committee believes that serious legal and constitutional questions are raised by this program, and for that... >> SMITH: The exercise of unchecked executive power rankled Congress.

>> The program certainly appears to violate section 605 of the Communications Act of 1934, as well as the Fourth Amendment to the Constitution.

>> SMITH: So Congress passed the FISA law, the Foreign Intelligence Surveillance Act, and set up a super secret court here on the sixth floor of the Justice Department to prevent abuses of civil liberties.

FISA said no intelligence wiretaps inside the U.S. without a warrant, and the FISA court was designated as the exclusive authority for getting warrants.

Why is the FISA court, the judge or the Congress, so important to this process?

>> Because the cop is a zealous person.

You want your cop, you want your intelligence agent to go full-bore, to be really devoted to what they're doing.

And then you want somebody to say, "Wait a second, "we don't want Dirty Harry, we have to have some ways to rein that in."

And so you want the energy of the executive and you want the checks and balances on that, so we get energy and we get rule of law.

And that was our American invention.

That's the whole checks and balances, Madison Federalist Papers.

It's those inventions that can get put at risk if it's just saying, "Commander in Chief, stop there, don't question it."

>> SMITH: Hence the furor when President Bush went around the FISA court.

>> And why did you skip the basic safeguard of asking courts for permission for these intercepts?

>> You're referring to the FISA court in your question.

Of course we use FISAs, but FISAs is for long-term monitoring.

What is needed in order to protect the American people is the ability to move quickly to detect.

>> The law said the exclusive authority for wiretaps were these other statutes, and the President looked at exclusive authority and said, "Except when I feel like it."

>> I swore to uphold the laws.

>> It was as though the lessons of Watergate had been forgotten.

It was as though the lessons of centralized executive power and the problems that come with that had been forgotten.

And now the President just said, "I think I can do it my way."

>> SMITH: So you're saying the President violated the law?

>> My view is that the President violated the law, yeah.

>> SMITH: What do you say to people who say the President violated the FISA law?

>> I think that there's a law greater than FISA, which is the Constitution.

And part of the Constitution is the President's commander-in-chief power.

Congress can't take away the President's powers in running war that are given to him by the Constitution.

There are some decisions the Constitution gives the President, and even if Congress passes a law, they can't seize that from him.

>> SMITH: But there was another reason the President went around FISA: the NSA needed to tap into communications more broadly than the President had indicated.

>> The difficulty in this war is that the enemy is not a nation, so what they do is they disguise themselves as civilians and they place their communications through normal civilian channels.

And so the hard thing for our side is to identify where, in that stream of civilian innocent communications, Al Qaeda members are disguising their messages to one another, trying to intercept those and find out what they mean.

>> SMITH: Fishing for possible targets among streams of civilian communications takes a lot of guessing.

>> If you're trying to prevent future terrorist attacks, trying to make guesses, trying to use probabilities, you may not have a lot of information that say "Yes, this person for sure is a member of Al Qaeda."

>> SMITH: But there's a legal problem: guessing is not allowed under FISA.

>> The second difficulty is that it doesn't allow you, for example, to tap streams of communication that might be coming, say, from Afghanistan to the United States, to try to search through those for terrorist communications even though you don't have a specific name of a terrorist leader.

>> SMITH: Could you do that kind of blanket eavesdropping, listening to those calls, under the Foreign Intelligence Surveillance Act?

>> No.

I think that's... this is a good example of where existing laws were not up to the job.

>> SMITH: In the intelligence game, blanket eavesdropping is called a driftnet, an electronic driftnet.

But former NSA director General Michael Hayden said no, that's not what was going on in the President's eavesdropping program.

>> This isn't a driftnet out there where we're soaking up everyone's communications.

We're going after very specific communications that... >> SMITH: Now you have General Hayden, the former head of the NSA, and the Attorney General saying, "This is not a driftnet.

We're not doing data mining in this program."

>> What they've said repeatedly is that "We're not doing the driftnet in this program."

But it might be program number two or program number three.

>> SMITH: This program being what?

The President's program?

>> Because they were talking about the President's program.

And then the other things we're worried about tend to be happening in these other programs they haven't admitted to.

>> Is there anything to stop you from wiretapping without a warrant somebody inside the United States that you suspect of having Al Qaeda connections?

>> Clearly, Senator, that is not what's going on here, first of all.

The President has authorized a much more narrow program.

>> SMITH: So you're suggesting their denials are a word game, not a true denial.

>> Yep.

>> SMITH: Have you looked at it closely?

>> I looked at the Attorney General's testimony very carefully, and every time he gave the big denials, they were attached to the words "this program."

>> Al Qaeda-to-Al Qaeda within the country, you're saying we do not get involved in those calls.

>> Not under the program in which I am testifying, that's right.

>> It seems to me, you're saying Al Qaeda-to-Al Qaeda within the country is beyond the bounds?

>> Sir, it is beyond the bound of the program which I'm testifying about today.

>> Has the President ever invoked this authority with respect to any activity other than NSA surveillance?

>> Again, Senator, I am not sure how to answer that question.

The President has exercised his authority to authorize this very targeted surveillance of international communications of the enemy, so...

I'm sorry, your question is?

>> Has the President ever invoked this authority with respect to any activity other than the program we are discussing, the NSA surveillance program?

>> Senator, I am not comfortable going down the road of saying yes or no as to what the President has or has not authorized.

>> He's a former judge.

He's a smart lawyer.

The Attorney General was speaking very carefully.

But I think there could be lots of room after you read his testimony for other programs to be doing really unprecedented things.

>> SMITH: What other things might the NSA be doing?

To answer that, you have to understand what the NSA actually does and how it works.

>> The average person doesn't have a concept of the massive capability that is available to the National Security Agency.

Forget about the idea of the guy with the earphones on listening to something.

That's not what happens.

You know, the calls are being sucked up by the millions, and not just the calls; you're engaged in this data mining.

>> It's essentially looking for certain kinds of... of signals in a... in an almost Herculean task of much, much larger communications environment to find the things that actually have intelligence value.

>> SMITH: Data mining, sifting through oceans of phone calls and internet traffic.

That's a far cry from what President Bush described: targeted intercepts of point-to- point Al Qaeda communications.

>> Another feature of data mining is that you don't have any individualized suspicion going in.

They don't say, "Hey, we're looking for something that Hedrick Smith is doing."

They are just collecting the data, and then the analysis of the data gives rise to suspicion of individuals based on these connections.

>> SMITH: The inside story of what the NSA has actually been up to was discovered here in San Francisco by Mark Klein, a longtime internet technician for AT&T.

>> In 2002, I was sitting at my work station one day, and some e-mail came in saying that somebody from the National Security Agency, NSA, was going to come visit for some business.

This NSA representative showed up at the door.

I happened to be the one who opened the door, I let him in.

>> He was doing a background check for a security clearance for one of our field engineers.

He was going to be working at the Folsom Street office, and they were building a secure facility there.

>> And I heard from our manager, Don, that he's working on some new room that's being built.

So people start speculating, "Well, what's this new room being built?"

>> SMITH: Mark Klein got suspicious when the workmen constructing the room treated it as hush-hush.

So how do you know that it wasn't just some kind of new-fangled AT&T thing that was going beyond what had already been established for security purposes elsewhere?

>> They wouldn't need the NSA for that purpose.

The odd thing about the whole room, of course, was that only this one guy who had clearance from the NSA could get in there, so that changed the whole context of what this is about.

>> SMITH: Klein's job was to maintain AT&T's internet service for several million customers-- domestic and international traffic all mixed together.

>> We're talking about billions and billions of bits of data going across every second, right?

>> SMITH: A co-worker showed Klein how their internet room was directly connected to the secret NSA room through a special device called a splitter.

>> So what they do with the splitter is they intercept that data stream and make copies of all the data, and those copies go down on the cable to the secret room.

>> What this thing was is a very full-scale device to take all communication, voice and data, and send it both wherever it was supposed to go but also shunt it off to a little listening room.

>> SMITH: So what exactly was going on in that listening room?

Klein found clues at work one day.

>> I came across these three documents, and I brought them back to my desk.

And when I started looking at it, I looked at it more.

And finally, I... it dawned on me sort of all at once, and I almost fell out of my chair.

>> SMITH: Klein eventually found detailed designs for the secret room.

One of the first to see his documents was internet expert Brian Reid.

>> Lord, they had a lot of hardware, and they could with the... with the computers that they had there, they could do anything they wanted with that data.

There was serious compute power available to process that wiretap data.

>> But then, there was one thing that was odd because I didn't recognize it.

It was not part of normal day-to-day telecommunications equipment that I was familiar with, and that was a NARUS-- N-A-R-U-S-- NARUS STA 6400.

>> The NARUS STA 6400.

It made me sit up and take notice and realize that this was not an amateur game.

And so, when you see it, a NARUS box and all that storage space and all that compute power, you can't help but think, "Wow, this is some heavy- duty processing power here "to really analyze the data that this siphoned off.

What is going on?"

>> The term "narus" is Latin for "to know."

The way our software works is it monitors all of the traffic on the internet-- all of the ones and zeros that make up all of the data that, you know, that you and I generate when we're looking at web pages or when corporations are sending e-mails back and forth.

All of that information, we just sort of peer into the pipes, if you will, and look at the ones and zeros as they go by.

>> SMITH: Peering into the pipes?

What does that mean?

>> It's sort of analogous to a letter inside of an envelope.

So you've got different layers in these things we call packets, and, you know, the first layer that you get to peer back is the information about where the packet's coming from and where it's going to, the addresses that identify, you know, who's communicating with who.

And then, once you delve into deeper parts of the packets, that's when you get into what's called the payload, and that includes the actual information that you're trying to send in the packet.

>> SMITH: The contents.

>> The content of the packet.

That's correct.

>> SMITH: So your customers would be communications providers like AT&T or the Bell System.

Do you also sell to government agencies like the National Security Agency or the FBI?

>> I can't comment on any... on any particular agencies that we may or may not have sold to because they haven't given us permission to... to announce their... their names.

>> SMITH: Why would AT&T put a NARUS STA system in a room in its San Francisco office to which the NSA has access?

>> That's not a question that I...

I... so... as far as I know, no one's ever proved anything.

I don't know...

I don't know the answer to that question.

I have no idea if that's ever been done or not.

>> SMITH: You've seen the splitter, you've now got the documents, you've seen the NARUS.

What is it you think is going on here?

>> When I saw all that, it all clicked together to me.

"Oh, that's what they're doing.

This is a spy apparatus."

>> SMITH: Klein decided to blow the whistle.

He went to see the Electronic Frontier Foundation.

Cindy Cohn is their senior attorney.

>> Mark Klein brought us some very good specific information about a specific facility in San Francisco that confirmed a lot of things that we thought were going on.

We found a few other experts who know about the telecommunications companies and the issues that Mr. Klein was talking about, and we ran what Mr. Klein had given us past them, and we said, "Does this fly?

Does this hold water to you?"

And we were told, "Yes, it does."

>> SMITH: Scott Marcus, a former Federal Communications Commission expert, estimated that they set up eavesdropping rooms at "15 to 20 sites" across the U.S., intercepting about "10% of all purely domestic" internet traffic.

And that's just at AT&T.

>> We're not talking about just targeted person-to-person communications being handed over to the government.

We're talking about something much bigger.

We're talking about a wholesale diversion of communications to government control.

>> SMITH: In early 2006, the Electronic Frontier Foundation filed suit against AT&T, asking the court to stop AT&T from handing over customer communications to the government.

>> Our case alleges that AT&T is wholesalely providing the communication records and ongoing live information to the government.

That's a violation of law.

>> SMITH: In court, AT&T urged dismissal of the case, citing state secrecy.

Both AT&T and NSA refused to talk to Frontline about the case.

You're aware that there's a case out here in San Francisco where people are saying that AT&T violated the law by giving the National Security Agency access to all its phone and internet traffic.

As a lawyer, is it your opinion that that actually would violate the law?

>> No, I don't think so if it was part of the President's commander-in-chief power to gather information on the signals intelligence of the enemy.

>> SMITH: Can the government pull out the communications it wants, or does it have to have access to the entire flow?

>> I think the government needs to have at least access to the flow.

Even if it was going to enforce a warrant, it has to have access to the flow.

>> SMITH: Under pressure from lawsuits like the AT&T case and from Congress, President Bush made a dramatic reversal last January.

He put the one NSA eavesdropping program that he has acknowledged under the FISA court, but he still claims he has the power to go outside FISA any time he wants.

And the government isn't saying whether the eavesdropping at AT&T in San Francisco is covered by FISA.

As far as we know, the NARUS box that Mark Klein told us about is still peering into the internet traffic.

They say what happens in Vegas stays in Vegas, but the marketing pitch, like the city itself, is a paradox.

While legions of fun-seekers flock to Vegas every day to get lost in the crowd... the reality is that privacy has become an illusion.

I see this sign on your cab getting in: "Video and audio recording going on."

>> Well, what we have here is, first, the minute the doors are opened, digital still pictures are taken, okay, which are saved.

Then, the video and audio is running at the same time.

And in the event that there is a problem, then the video camera will now download the 20 seconds previous to the event and what's going on during the event.

>> SMITH: So this is quite a place, Las Vegas.

I mean, there's obviously in the airport lots of video, and obviously at the hotels and casinos they're loaded with cameras, and now taxis.

So we're on film from practically the moment we arrive.

>> Correct.

>> People that come to Vegas, the only time they are not on video is when they're in their room or they're in a public restroom.

They don't have them in those.

But the hallways, the elevators, the gaming area, we've taken that to a level that has, I think, surpassed any place in the... in the United States.

>> SMITH: Las Vegas as surveillance city struck me as an apt metaphor for life in the digital age.

Businesses gather information on us routinely.

Every day we leave digital trails that reveal where we go, what we do, who we are.

After 9/11, government agencies moved aggressively to tap into all that information compiled in commercial databanks.

That's what the FBI was doing when it asked for records on 250,000 tourists in Las Vegas.

So you are looking at airlines, car rental agencies, hotels, casinos, timeshare apartments, storage places, the works.

>> As much as we could get in a... the few days that we had to... to work with, yeah.

>> SMITH: Were legal papers produced of some kind?

>> There were official requests for the information.

It was not off the record or in any way inappropriate.

>> SMITH: What you wanted was an assurance that this was a legal request backed by the power of law, not just a voluntary compliance.

>> Absolutely, absolutely.

>> SMITH: And why?

>> The concept that someone would want all records with no names identified over a period of... of time-- in this case, it was give or take a couple of weeks-- is, in our industry, an extraordinary request.

>> The Patriot Act includes provisions that permitted the government and the FBI to do exactly what it did with very little or no judicial oversight whatsoever.

It gave the FBI broad, sweeping power and authority to engage in precisely this kind of massive fishing expedition.

>> SMITH: What the Patriot Act had done was vastly expand the reach of national security letters, which are FBI administrative subpoenas not approved by any court.

>> One big change that most people haven't quite seen is that before the Patriot Act, you could get a national security letter, one of these special "without a judge, get the phone records" letters, but it would be about one person, just about me.

But now, the language was changed so the government can get the entire database, and that's just a little change in the language.

"NSLs, national security letters, get X," but X went from the suspect to being the entire database.

>> SMITH: And that applies to everything-- telephone records, financial records.

>> Telephone records, financial records, your credit histories.

That applies... and it applies to these other kind of orders for any kind of record in the American economy.

>> SMITH: Did you use national security letters?

>> I'm not going to be in a position to tell you what the legal avenues we used were.

I...

I can't go there.

>> SMITH: Do you know whether or not you got a subpoena, a warrant from a court, or do you know whether or not you got a national security letter from the FBI?

>> Here... here's the fun of the Patriot Act.

If we were to have received a national security letter, it would be against the law for me to tell you that we did.

>> SMITH: And had you received a subpoena signed off on by a judge, you would be able to?

>> As a rule, usually, we would... we would acknowledge that we received something.

>> SMITH: And we're left in blanket silence, which... blanket silence in the sense that there are quite a few people who say "We can't say."

Logical deduction, they must have received the national security letters direct from the government.

>> It would seem to be a logical deduction.

>> SMITH: But the big question remains: what did they do with all that information?

>> It was burned on to CDs here in Las Vegas, and then those CDs were transported to Washington, D.C., for comparison against the various terrorist watch lists.

>> SMITH: Back in Washington, the FBI did a batch match, matching the list of 250,000 Vegas visitors against watch lists of tens of thousands of terrorist suspects, and they got a few hits.

Now, when you said there were a few hits, what does that mean?

That there were... >> There might be a similar name.

>> SMITH: On the hotel list and on the watch list?

>> And on one of the watch lists, yes.

>> SMITH: But how could the FBI decipher those hits?

Were those really terrorists or mistaken identities?

And what if the bad guys had disguised their names to get lost in the crowd?

How could the FBI ferret them out?

Ironically, the answer was right here in Las Vegas.

For years, the casinos had been using special computer software to ferret out the hidden links between criminals and prospective employees.

>> At one point, this young computer wizard named Jeff Jonas approached us and had this idea to use a computer program to compare lots of data.

Things like addresses, phone numbers, birth dates, Social Security numbers, where... where things were inverted to make it look different.

>> SMITH: Is the idea behind the Jonas software-- he calls it NORA, N-O-R-A-- to unmask sort of obscured relationships?

>> No, that's exactly the idea.

I mean, the idea was to... was to determine whether or not someone who was applying as a dealer was in fact associated with or connected with someone who was a known thief.

So the idea was to protect the company's assets before a crime took place.

>> SMITH: Our sources said the FBI used Jonas's software to analyze the data collected in Las Vegas.

But would that invade the privacy of ordinary Americans?

I'm just wondering in that 2003 episode, was Jeff Jonas a help?

Were you guys able to use him?

>> I believe he was.

>> SMITH: The reason I asked is we were actually told that it was used, that... that he had... >> You got a source here that says it was used.

You know, I'm not going to disagree with you or argue with you.

Did I use it?

I'm...

I'm not saying.

Did my department?

We may have.

Like I said, there's a lot of... there is a lot of privacy concerns and there's a lot of issues and there's a lot in the weeds when it comes to private information and how it's used.

And I'm...

I'm simply not in a position today-- and maybe never will be-- to talk about how we use software to match up tourist information with potential terrorism suspects.

>> We house 2,400 terabytes of online systems storage, enough capacity to contain the entire contents of the U.S. Library of Congress 48 times.

>> SMITH: This is a marketing video for ACXIOM.

Since the 1990s, companies like ACXIOM, Lexis-Nexis and Choice Point have marketed their ability to collect vast amounts of data about all of us, from home mortgages to spending habits, and to create virtual digital dossiers.

Watergate-era reforms restricted government use of these private information empires.

But after 9/11, the Bush administration lifted the restraints and pushed agencies aggressively to use private databases.

This internal FBI document, for example, spread the word: "Use Choice Point to your heart's content."

>> When it comes to the Privacy Act, the law didn't change, but there's a change in computers that changed everything.

It used to be the fear was the government would have the government database in some big room, an IBM Brainiac computer.

And the Privacy Act says, "We're going to protect against problems there."

Today, what... >> SMITH: You can't have a big database... >> Yeah, you can't have the big Brainiac with the one database on all Americans run by the government.

But here's the trick.

What you can do if you're the FBI is you can ping the private sector database.

"Hey, Lexis-Nexis..." >> SMITH: You can access it?

>> You can access it.

"Hey, give me some information on this person or on that person."

And as long as you just access it one at a time, which is the way it works anyways, Privacy Act doesn't apply because it's not a government database.

It's the private sector database.

The law doesn't apply to the private sector database.

>> SMITH: Why should Americans worry about the government having the same kind of information that private companies have, companies like Choice Point?

>> Well, the... the easy answer is that Choice Point can't come and arrest you.

They can't come search your house.

They can't use that information to... to sort of put into motion the machinery of the justice system.

Once it's in the hands of the government, it has those consequences, and that's why the government is looking for the information.

>> If an American company would have access to this data for purposes of conducting business, I guess I would argue why wouldn't you want an agency like the FBI in charge of national security to help you protect American lives?

And again, it's done, to my knowledge, in accordance with strict guidelines and controls.

It's not willy-nilly.

There's a structure to the process.

>> SMITH: Well, not exactly.

FBI director Robert Mueller was called on the carpet by Congress this spring for myriad abuses by the FBI in using national security letters to secretly collect private records of American citizens.

The FBI had issued 150,000 national security letter requests over the past three years, and the Justice Department's inspector general determined that thousands were improperly issued.

>> I'm deeply disturbed by the Justice Department inspector general's report finding widespread, illegal and improper use of national security letters to obtain Americans' phone and financial records.

>> SMITH: Mueller acknowledged the problem and the dangers.

>> We will correct the deficiencies in our use of national security letters and utilize each of the critical tools Congress has provided us, consistent with the privacy protections and civil liberties that we are sworn to uphold.

>> SMITH: But the FBI is hardly alone in mining the mountains of commercial data now available.

The Government Accounting Office found 199 data mining projects in more than 50 government agencies.

The granddaddy of them all originated inside an elite Defense Department research agency known as DARPA.

>> The key to fighting terrorism is information.

We must be able to detect, classify, identify and track potential foreign terrorists in a world of noise.

>> SMITH: This is a DARPA video for TIA, or Total Information Awareness.

The concept was to use predictive data mining to detect suspicious patterns of terrorist operations.

>> ...information and human identification at a distance will improve the ability to identify foreign terrorists from a distance.

>> SMITH: TIA's controversial logo was an all-seeing eye.

>> If one could imagine that, you know, we have an eye in the sky and we could truly get all the transactions, all the things that that group did to conduct that plot, okay, to conduct that attack, our thesis is that that set of transactions across space, time and by some number of people will be a unique signature.

>> SMITH: TIA's mission, which required access to enormous volumes of personal data, triggered controversy in Congress.

>> The Total Information Awareness program is over the line, is invading the civil liberties of law-abiding Americans on U.S. soil.

Total Information Awareness... >> SMITH: In 2003, Congress cut off funding for TIA, or so it seemed.

Is it true that in that black budget, some of the TIA programs were moved over to the National Security Agency?

>> All I can...

I can't.

It's classified.

I mean, all I can say is that there were elements of our agenda at DARPA that the Congress recognized as being valuable to the point where they said, "Let's not kill them, "let's get them out of DARPA and transition them to another agency within the intelligence community."

And... and I was the guy that did that.

>> SMITH: Is it inevitable that we're moving towards a world in which this kind of mass data mining and analysis is... is just going to happen?

>> I mean, I think it is happening.

There's been an explosion of information technology and access to data.

I mean, this is what the internet and all this IT revolution has done.

You know, the world is getting digitized.

It's ubiquitous, information technology.

Access to data is far more easy, and a lot of people see tremendous advantage in being able to tap into that.

>> SMITH: So we should be having an open discussion about this and then maybe talking about what privacy safeguards are needed in a new world.

>> Bless you.

Absolutely, absolutely.

>> SMITH: What do we need to do?

Are we just going to have to live with this?

Is this going to happen inevitably and we just have to live with it?

>> I think that we do need to say, "Look, "data mining or fusion of information "or connecting the dots, or whatever you want to call it, "is clearly going to be a huge feature of our "law enforcement national security apparatus.

Let's start crafting a set of rules for it."

>> I always said, when I was in my position running counterterrorism operations for the FBI, how much security do you want and how many rights do you want to give up?

I can give you more security, but I got to take away some rights.

And so there's a balance.

Personally, I want to live in a country where you have a commonsense, fair balance because I'm worried about people that are untrained, unsupervised, doing things with good intentions, but, at the end of the day, harm our liberties.

(fireworks exploding) >> SMITH: Back in December 2003, Sheriff Bill Young ultimately decided to carry on with Las Vegas's New Year's celebrations.

So your conclusion was, a day or two or three before New Year's Eve, that the threat wasn't that hard.

>> Well, it... it... it wasn't specific enough to me as to time, method or place for me to make the call to say, "Let's cancel this New Year's Eve celebration."

>> SMITH: It was too vague.

>> Too vague.

>> SMITH: Long after the celebrations were over, Stephen Sprouse and Kristin Douglas received the disquieting news that they had been swept up in that FBI data dragnet.

When you found out afterwards that all the hotel records were collected, what went through your head when you heard that?

>> They have no reason to be looking at me.

I don't think that I've done anything to raise any suspicion.

So, I mean, just being in Las Vegas on New Year's shouldn't be enough for them to say, "Well, you know, she might be a terrorist."

>> I just tell people that we... we made every effort to safeguard the privacy of... of everyone whose records were accessed.

There was no breach, the information was closely safeguarded.

>> SMITH: The FBI says it held all the data from Vegas for more than two years, but has now destroyed it all.

>> I work with data.

I mean, you know if it's on the computer, it's not really ever gone.

It's on a tape, it's on a back-up, it's on a drive somewhere.

>> SMITH: A more fundamental concern confronts us all.

The Fourth Amendment protects us against unreasonable search and seizure without probable cause, so does the strategy of prevention collide with the Constitution?

When the government is doing this kind of data mining, has it moved from individualized suspicion, getting an individual warrant, to generalized suspicion to check everybody to find out who are the bad guys?

>> Yeah.

Check everybody.

Everybody's a suspect.

Everybody's phone records, everybody's e-mail is subject to government scrutiny, and if you're good we won't bother you, and if you look a little strange then you might get on a watch list.

>> SMITH: Isn't that a huge change in Anglo-Saxon law?

I mean, Anglo-Saxon law is based on "get a warrant."

The Fourth Amendment is based on individual suspicion.

>> General warrants was part of the reason for the American Revolution.

It was that the king's agent could go in and search a house everywhere, search a whole neighborhood with one warrant.

And the Boston people said, "We don't like that.

We'll have a tea party.

We'll fight you."

We said no.

>> Look, there's no doubt that there are important Fourth Amendment issues here.

One is, is this a reasonable search and seizure?

You can still have warrantless searches, but they have to be reasonable.

And then the second question is, does the... that restriction apply to wartime operations?

We don't require a warrant, we don't require reasonable searches and seizures when the Army, the military's out on the battlefield attacking, killing members of the enemy.

>> SMITH: But that's usually abroad, and it doesn't involve the American homeland and American citizens.

>> But this gets to my point, is do you want to make it more difficult for our government to try to stop terrorist attacks?

The closer that members of Al Qaeda get to the United States, the closer they get to striking our cities as they did on 9/11.

You want to make it more legally difficult for the government to stop that?

I...

I don't think so.

>> In our tradition of law, there is this idea that there is private space around the individual.

You know, the individual's home, their papers, as it says in the Constitution.

That there is this... there is a sphere around you that the government can't come into without meeting this level of suspicion.

And what I see in all of these developments is the sphere is getting smaller and smaller.

You know, we're allowing access to much more information so that maybe the government can't come into that sphere, but they can go all the way around it.

They can get the contours, the outlines of your daily life through a lot of this information that isn't protected as well.

And I think that's what's eroding.

>> So many people in America think this does not affect them.

They've been convinced that these programs are only targeted at suspected terrorists.

"I'm not engaged in any terrorist activities, "therefore this does not concern me.

"There's no... no way in which I'm going to be caught up in this activity."

>> SMITH: And you think that's wrong.

>> And I think that's wrong.

I think that, as I said, I think our technology is not perfect, our programs are not perfect, and it is inevitable that totally innocent Americans are going to be affected by these programs.

>> It seems to be like the beginning of we're going to treat everyone like a bad guy to begin with, knowing that most of them are not bad guys.

But we're going to start with the assumption that everybody's a bad guy, and then if we just collect the right stuff and connect the dots, we'll find the real bad guys.

>> SMITH: Did you find any terrorists?

>> No.

No, we didn't.

>> SMITH: So when you got to the bottom of it, you found nothing.

>> Which was on about the 29th of December.

We had gone through everything and we had... had no... no identifiable, no known terrorists or terrorist associates.

>> SMITH: Later, we learned that, in fact, the original intelligence warning about Las Vegas was mistaken.

In decoding a suspected Al Qaeda message, someone got it wrong.

>> Next time on Frontline... >> He's been so vehemently anti-gay... >> A conservative mayor... >> ...and now we find him in Gay.com.

>> ...an aggressive newspaper... >> What if he's using the internet to have sex with underage boys?

>> ...and a story that took apart a man's life.

>> The worst thing you can say about somebody is that they're a sexual predator.

How do you refute that?

>> Frontline examines the conflict between the public interest and a hidden life.

Next time on Frontline.

>> To order Frontline's "Spying on the Homefront" on DVD, call PBS Home Video at 1-800-PLAY-PBS.