By Jeff Stein, CQ National Security Editor

Like Hansel and Gretel hoping to follow their bread crumbs out of the forest, the FBI sifted through customer data collected by San Francisco-area grocery stores in 2005 and 2006, hoping that sales records of Middle Eastern food would lead to Iranian terrorists.

The idea was that a spike in, say, falafel sales, combined with other data, would lead to Iranian secret agents in the south San Francisco-San Jose area.

The brainchild of top FBI counterterrorism officials Phil Mudd and Willie T. Hulon, according to well-informed sources, the project didn’t last long. It was torpedoed by the head of the FBI’s criminal investigations division, Michael A. Mason, who argued that putting somebody on a terrorist list for what they ate was ridiculous — and possibly illegal.

A check of federal court records in California did not reveal any prosecutions developed from falafel trails.

FBI spokesman Paul Bresson would neither confirm nor deny that the bureau ran such data mining, or forward-leaning “domain management,” experiments, but said he would continue to investigate. “It sounds pretty sensational to me,” he said, upon his initial review of the allegation. The techniques were briefly mentioned last year in a PBS Frontline special, “The Enemy Within”.

Mason, who is leaving the FBI to become security chief for Verizon, could not be reached for comment.

The FBI denies that sifting through consumer spending habits amounted to the kind of data mining that caused an uproar when the Pentagon was exposed doing it in 2002.

“Domain management has been portrayed by the bureau as a broad analytic approach, not specific data mining activities,” says Amy Zegart, author of the much-praised recent book, “Spying Blind: The CIA, the FBI and the Origins of 9/11.” “It is a methodology to determine what is known about a problem, develop indices to measure it, and take steps to close knowledge gaps.”

Zegart said her recent interviews with FBI officials “suggest that domain management has been implemented in a spotty fashion; L.A. and New York appear to be ahead of the curve, but some other field offices are not using it and at least one had never heard of it.”

As ridiculous as it sounds, the groceries counting scheme is a measure of how desperate the FBI is to disrupt domestic terrorism plots.

The possibility of Iranian-sponsored terrorism in the United States has drawn major attention from the FBI because of rising tensions between Washington and Tehran over Iran’s nuclear program.

“Because of the heightened difficulties surrounding U.S.-Iranian relations, the FBI has increased its focus on Hezbollah,” Bresson said 16 months ago. “Those investigations relate particularly to the potential presence of Hezbollah members on U.S. soil.”

Just this week, analyst Matthew Levitt wrote that “according to FBI officials here, some 50-100 Hamas and Hezbollah members with military training are present in the United States.” An FBI spokesman would not confirm that figure.

But others are far more circumspect, including U.S. intelligence.

Last July’s National Intelligence Estimate (NIE) on terrorism trends addressed the potential for Iranian subversion here in such cautionary terms that it was rendered useless.

“We assess [Iran-backed] Lebanese Hezbollah, which has conducted anti-U.S. attacks outside the United States in the past, may be more likely to consider attacking the Homeland over the next three years if it perceives the United States as posing a direct threat to the group or Iran,” the [NIE] said. (Italics added.)

In other words, who knows?

Nobody.

Calling Cassandra

A veteran CIA operative with vast Middle East experience chuckled about the wobbly NIE over a sandwich a few weeks ago.

Nobody knows what Iranian capabilities are outside of its base in Lebanon, he said, crumpling a thick white napkin.

On the other hand, he said, “There are a million Iranians living in California, and not all of them are royalists.”

Thousands of Iranians fled to the United States when the U.S.-backed shah of Iran was overthrown in the radical Islamic revolution in 1979. In the immediate years after, the regime’s agents followed, assassinating a handful of former officials in exile.

Today it seems logical that in the flood of Iranian refugees here, there would be at least a few, and perhaps many more, terrorists or spies.

But less than a handful have been arrested over the past 25 years.

Hezbollah and Hamas (also backed by Syria) have kept mostly to their own backyards, with the notable exception of a 1994 bombing of a Buenos Aires synagogue, which was traced to Tehran. While fiery calls for launching attacks inside the United States remains a guaranteed applause line in Iran’s mosques, so far cooler heads have prevailed.

In the face of that reality, however, one camp of terrorism analysts has been predicting attacks here for years, even decades, with nothing to show for it.

As far back as June 1985, the late terrorism analyst Robert Kupperman was quoted by Time as saying, “If we hit Iran, there is certain to be terrorism in the U.S.”

According to Israeli-born Youssef Bodansky, director of the conservative-backed Congressional Task Force on Terrorism and Unconventional Warfare, Iran already had a terrorist network in place here in the early 1980s.

It “included safe houses in major cities, weapons, ammunition, money, systems to provide medical and legal aid, false identity papers, and intelligence for the operatives,” Bodansky said in a widely circulated 1993 Associated Press report. It was “large and spanned the United States.”

The FBI was unable to find any of it.

Two years later, in February 1995, Bodansky’s Task Force was back with another warning widely circulated by the news media.

“Iranian sources confirmed Tehran’s desire and determination to strike inside the U.S. against objects symbolizing the American government in the near future,” it said,

But again there were no FBI round-ups.

Only about a dozen Iranians in the United States have been arrested over the years, mostly in connection with small-time fund raising scams on behalf of Hamas, which included drug peddling, scalping cheap North Carolina cigarettes in New York and counterfeiting Viagra.

But that doesn’t mean serious subversives aren’t here, says Walid Phares, director of the Future Terrorism Project at the Foundation for the Defense of Democracies in Washington.

“The threat coming from the Iranian regime is not only through its agents inserted in the Iranian exiled community, but also from infiltration of other communities, such as the Syrian and Lebanese as well,” he said.

“The penetration of the Iranian community by . . . Iranian agencies targets the older Iranian-American groups,” he added, “that is, immigrants, as well as those who consider themselves political exiles.”

Traditionally, he continued, all totalitarian states make sure to penetrate exile communities, including “let alone the Iranian one.”

Perhaps the most influential Cassandra on Iran’s alleged subversion here is Steven Emerson, the Washington-based author of several terrorism-related books, the founder of the Investigative Project on Terrorism and MSNBC’s security analyst.

“As far as the existing Hezbollah threat,” Emerson told me by e-mail last week, “it is being taken very seriously by the FBI. I agree that there is a major threat here, if a green light is given [in Tehran]. Hezbollah and their supporters have been collecting intel on possible targets for years here.”

One of Hezbollah’s major supporters, Emerson said, is the Muslim Student Association-Persian Speaking Group, centered at Florida Atlantic University in Boca Raton. In 1999 then-FBI Director Louis Freeh said it was “comprised almost exclusively of fanatical, anti-American, Iranian Shi’ite Muslims.”

An e-mailed request for comment from the MSA-PSG went unanswered.

Pitching to Iranians

“L.A. Is a Den of Iranian Intrigue and Ambition,” a Los Angeles Times headline trumpeted in 2005. “U.S. agents tap an incongruous mix of exiles for intelligence on Tehran.”

Federal and California law enforcement officials haven’t been able to find the right mix of pitches to the state’s large number of Iranians, estimated at somewhere between 159,016 (the latest U.S. Census) and more than 500,000 (the unofficial Iranian diplomatic mission in Washington).

Community leaders have frequently complained that, since 9/11, any Muslim is considered a terrorist suspect. Some Iranians have complained of heavy-handed efforts by the FBI to turn them into informants. They say they constantly have to “prove” their loyalty to their adopted country to authorities and their neighbors.

Michael P. Downing, commander of the Counter-Terrorism/Criminal Intelligence Bureau of the Los Angeles Police Department, reflected law enforcement’s dilemma in testimony before the Senate Homeland Security and Government Affairs Committee last week.

“In contrast to much of Europe, which has suffered from [homegrown terrorism], the problem we face in the U.S is mainly political,” Downing said in his Oct. 30 statement.

“There are those among us, I call them political jihadists, who are attempting to create division, alienation, and a sense of persecution in Muslim communities in order to create a cause,” he said. “They are the nemesis of community engagement. Their purpose is to create the conditions that facilitate the radicalization process for international political causes.

“Law enforcement`s ultimate goal,” Downing continued, “is to engender the continued loyalty and good citizenship of American-Muslims — not merely disrupt terrorist activities.

“Let me be clear. I am not saying that law enforcement should relax its effort to hunt down and neutralize small numbers of ‘clusters’ on the criminal side of the radicalization trajectory. That task remains, and must be done with precision and must also be carried out in the context of what is ultimately valuable,” Downing said.

And then he posited the question that domestic counterterrorism agencies have yet to answer.

”What good is it to disrupt a group planning a mall bombing,” Downing said, “if the enforcement method is so unreasonable that it is widely criticized and encourages many more to enter the radicalization process?”

The falafel flap was just such a ploy.

Jeff Stein can be reached at jstein@cq.com.