Gov't spying bigger than you ever imagined

As soon as you set a passcode on your Apple iPhone, it sets off a feverish encryption process. If a hacker tries to get data off a memory chip, it just looks like a scrambled mess. But the same feature that is protecting your security is keeping the FBI locked out of any secrets held in a terrorist's iPhone after he killed 14 people in California last December.

A federal judge has ordered Apple to create the software to unlock the phone. Apple is fighting the order.

Sharyl Attkisson with Full Measure covered an extraordinary story that predates the Apple conundrum. In fact, it predates what most understand to be the beginning of widespread surveillance of U.S. citizens after 9/11.

In October of 1997, Joseph Nacchio was CEO of Qwest Communications, a major phone company in the western U.S., when one of his vice presidents told him he had an unexpected visitor.

"He came in and he said, 'Joe, we have a general downstairs who wants to meet you,'" related Nacchio. "I thought it was pretty surprising because, you know, generals don't just drop by. He was a three-star."

"Who was the general?" asked Attkisson.

"His name is classified, believe it or not," replied Nacchio. "Who it was, I'm still not allowed to disclose."

The general was from a U.S. intelligence agency interested in paying Qwest to use its cutting-edge global fiber-optics network for classified programs. But to learn more, Nacchio first needed a top-level security clearance.

"I had my clearance by January of 1998," recalls Nacchio. "We received that contract shortly thereafter, and that led to us working with multiple intelligence agencies."

Naccio's job as CEO of Qwest became steeped in a secretive world of classified meetings and clandestine government contracts. He's still barred from saying exactly what the projects involved.

As head of a telecom company, Nacchio was meeting with top spy agency people. "What I'm allowed to say is, I was working with four clandestine security agencies and senior government officials," he says.

Nacchio noted for several years, government requests to monitor and surveil Qwest customers came with proper legal authority – and brought Qwest lots of cash. Nacchio confirmed it was "easily" hundreds of millions of dollars.

Former Qwest Communications CEO Joseph Nacchio

The mutually beneficial relationship continued until Feb. 27, 2001, when Nacchio says he got an astonishing request at a meeting of the headquarters for the National Security Agency. Nacchio flew into Washington D.C. and was taken to a SCIF in Maryland – a SCIF (Sensitive Compartmented Information Facility) being a room designed to prevent eavesdropping. After briefing, a new request was made, a request Nacchio said sounded "very wrong" to him.

Nacchio recalls, "It was a request to do something that, under the law, I didn't believe the foreign intelligence agencies – particularly the NSA – had authority to do" unless they had a FISA [Foreign Intelligence Surveillance Act] warrant.

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A FISA warrant would come from the secretive Foreign Intelligence Surveillance Court, and would authorize the NSA to do something that was otherwise illegal: collect data in the U.S.

"I asked if they had a FISA warrant," relates Nacchio. "They said it wasn't required. I thought that was pretty strange."

Nacchio then asked if the White House – then under President Bush – had given executive authority for the project. "They said it wasn't required," said Nacchio, then clarified, "This was prior to 9/11. So I said we couldn't do it – and we wouldn't do it."

The 9/11 terrorist attacks are often cited as justification for the government's controversial programs to collect information on Americans without court warrants. But Nacchio said the NSA proposition to Qwest was nearly seven months before 9/11.

"After that meeting, there were repeated requests over the next several months," recalled Nacchio. "I continued to answer the requests by saying, 'Look, show me legal authority and we'll be happy to do it; but I can't do it without legal authority.' I could be sued civilly, but the government can't."

Thereafter, Nacchio found himself the odd man out. He specifically realized this on June 5, 2001 when he was told by Richard Clark, President Bush's chief counter-terrorism advisor, that a contract Nacchio thought was forthcoming was going somewhere else. This dealt a major financial blow to Qwest.

"We're talking hundreds of millions," clarified Nacchio.

Over the next several months, Qwest was bypassed by several contracts. Nacchio saw it as reprisal for his refusal to take part in what he viewed as an illegal program.

"It was in excess of $500 million that I was counting on that didn't come in, that year, in 2001 alone," he said. Nacchio left Qwest the following year without mending that fence.

Then three years later, in August of 2005, he got a call that the Justice Department was investigating him for insider trading of Qwest stock four years earlier.

Nacchio claims the government was targeting him in retaliation, something the government strongly denies. His defense hinged on telling the jury how his relationship with the spy agencies had gone sour.

But there was a catch: it was all classified. Nacchio lost his case.

"I'm barred under the law from bringing any of it up," said Nacchio. "I'm barred from the contracts, I'm barred from naming the agencies, I'm barred from naming who I was with. I was even barred with saying the meeting on February 27 had happened."

Some of it would later become public. About the time of Nacchio's indictment, the government's controversial programs were revealed for the first time.

The New York Times reported the NSA had been using phone companies to collect private information of U.S. citizens without court warrants.

Later, NSA contractor Edward Snowden blew the whistle in an explosive interview with the Guardian. "The NSA specifically targets the communications of everyone," said Snowden. "It ingests them by default."

He exposed the Obama administration's vast expansion of data collection. "I, sitting at my desk, certainly had the authority to wiretap anyone," said Snowden. "From you or your accountant, to a federal judge, to even the president if I had a personal email."

It was Snowden's example of a federal judge that hit home with Nacchio. By then, he was serving a four and a half year prison sentence. In a bizarre twist, the judge in Nacchio's case, Edward Nottingham, was soon embroiled in scandal. He was accused of soliciting prostitutes and allegedly asking one to lie to investigators. He resigned and apologized, but wasn't prosecuted.

After his dealings with the spy agencies, Nacchio wonders if they knew about Nottingham's private scandal and whether it was held over the judge's head as he ruled for the government against Nacchio.

"I think the intelligence agencies in that timeframe were wiretapping government officials, judges … they were just monitoring everything," stated Nacchio.

Government officials call Nacchio a convicted felon whose speculation can't be believed. Nottingham firmly denies anyone spoke to him about his personal scandals during Nacchio's trial. An appeals panel overturned Nacchio's conviction, saying Judge Nottingham erred in a key ruling; but the guilty verdict was upheld on appeal.

President Bush's NSA and CIA chief Michael Hayden, a Nacchio point of contact at the time, has championed controversial surveillance.

"Everything the agency has done has been lawful, it's been briefed to the appropriate members of Congress," stated Hayden. "The only purpose of the agency's activities is to preserve the security and the liberty of the American people. And I think we've done that."

President Obama also defends the government's mass data collection. "When it comes to telephone calls," said the president, "nobody is listening to your telephone calls. That's not what this program's about."

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This doesn't persuade Nacchio. "My advice to people is, put nothing on the Internet that you wouldn't take a billboard out on 42nd Street and Broadway and publicize. Your bank records, your health records, looking at porn sites, your illegal dating – it's all known."

Not just by the government, said Nacchio, but by their agents. "Let's look at who the agents are," he said. "The agents are the telephone companies, the agents are the banks, the agents are Apple, the agents are Google, the agents are Facebook … they're all involved."

When asked what advice he would give Apple, Nacchio said he would advise, "Keep this very quiet and cooperate, because you're going to lose this one in court. And what's going to happen to you when this is all over is for the next five years of your life, every federal agencies that's had some jurisdiction on you is going to be crawling all over Apple. That's what they do."

Nacchio's conviction was overturned on appeal in a decision that found Judge Nottingham made key errors; but the government got the conviction reinstated by a split judges panel. A hearing on the Apple case is scheduled for next month.