$6 Billion of Iranian Money: Why Israeli Firm Black Cube Really Went After Obama's Team

When it was revealed earlier this year that the commercial spy firm was targeting members of the Obama administration, it was assumed it was working for the Trump team. But official company documents leaked to Haaretz reveal a far more lucrative target – the seizure of Iranian cash worldwide

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Former Obama aides Colin Kahl, Ben Rhodes and Caroline Tess - all targeted by Israeli spy firm Black Cube.
Former Obama aides Colin Kahl, Ben Rhodes and Caroline Tess - all targeted by Israeli spy firm Black Cube.Credit: Chip Somodevilla/Getty Images, Reuters

The name Caroline Tess doesn’t mean much to most Israelis or Americans. Born in 1979, after a career in government as aide to Senate Majority Leader Harry Reid, and assistant to U.S. ambassadors to the UN Susan Rice and Samantha Power, in 2014 she was appointed senior director for legislative affairs on the National Security Council, under President Barack Obama. In this position, Tess coordinated all the legislative perspectives relating to the Iran Nuclear Deal (JCPA) and its approval by the U.S. Senate and House.

Haaretz has uncovered that Tess was a target of the Israeli commercial intelligence firm Black Cube, during its private investigation into members of the Obama administration.

The Haaretz investigation relies on sources that work or worked in the intelligence company, and internal documents that reveal the broad, comprehensive operation Black Cube conducted against senior Obama administration officials, as well as its objective and its funder.

Last May, the Observer newspaper and New Yorker magazine published articles on the espionage operation against senior Obama administration officials. At their center were Deputy National Security Adviser for Strategic Communications Ben Rhodes and national security adviser to the vice president, Colin Kahl. Black Cube had contacted both under different covers, in order to discuss Iran. The operation failed and was exposed.

But another operation was supposed to ensnare Tess.

A Black Cube document on Caroline Tess, a former Obama aide.

The most difficult part of Black Cube’s work is to lure the target into meeting with them. Given the nature of the job, wealthy businesspeople, company directors and senior members of governments are highly suspicious of any potential meeting with a stranger.

Black Cube prepared a document regarding each of its targets. This mapped their occupational history, their residences, parents, siblings, spouses, children and hobbies, in order to identify points of interest through which they might open a conversation.

The research on Tess revealed that she had a pastime: scuba diving. A picture of her from a 2016 diving trip to Cuba was found on the Facebook page of a women’s diving club called Diving Divas. Another website displayed reviews she wrote of diving sites around the world. Black Cube reached the conclusion that the most effective way to get to Tess was through diving.

They built a website domain for an Argentine diving club called New Porto Ocean Club. The address they selected, 557 Bouchard, was that of an office building on the bay in Buenos Aires.

“Hello Ms. Tess,” the bogus Black Cube email began. “My name is Beatriz Ruiz and I am the president of the New Port Ocean Club, a non-profit diving club located in Buenos Aires, Argentina. I came across the 'Diving Divas Club' Facebook Page and got curious about the potential for cooperation.

“We are a non-profit and all our trips are sponsored and we'd love to possibly work with the club. I was hoping we could arrange to speak on the phone and you could give me some information, we'd also be happy to offer you a trip with us for the help in any case! Feel free to check out the website below.

“I look forward to hearing from you.”

Tess did not respond to the fake email.

A private Mossad

Black Cube has been the subject of much attention in recent years, since being founded in 2010 by Dr. Avi Yanus and Dan Zorella.

Last February, Black Cube moved into new offices – an entire floor of the luxurious Bank Discount Tower on Yehuda Halevy Street and Herzl Boulevard in Tel Aviv. Visitors to the office are confronted with a plain black entrance with no writing on it.

Former U.S. President Obama and Ben Rhodes, his deputy national security adviser, on board Air Force One, 2013.Credit: Pete Souza / The White House

Former employees report that the company operates like a secret spy organization. This is partially for actual needs, and partially to project a certain image. Office doors open only with fingerprint door locks. The office of general director Zorella features a collection of the most expensive bottles of whiskey and cognac in the world, for guests to drink. This isn’t by accident: The reception room of the Mossad espionage agency at Glilot, north Tel Aviv, greets visitors with a similar bar, featuring the best the world has to offer. Black Cube wants to give its clients the impression they are getting a private Mossad, for any purpose.

The structure of the company imitates that of Israel’s intelligence agencies: “There are different teams and each one is responsible for a different objective,” says one former employee. “As an analyst, you don’t know the portfolio itself. You receive SEI (Specialized Essential Information) [terminology imported directly from intelligence units], that just tells you what intelligence we need to obtain. What X will say about Y, for example. Afterward, you think, ‘If this information needs to be obtained, who will know it? What is his incentive to talk?’ But we as analysts don’t know who the client is.”

Given that many of Black Cube’s operations are undercover, analysts are tasked with the initial invention of the cover story. “For instance, buying a SIM card and foreign telephone account that fits the chosen cover story,” says the former employee, who spoke on condition of anonymity. “Whoever answers the call will be, in most cases, in an office in Israel. Acquiring a domain for all this requires a credit card that is not connected to the company, so that the transaction cannot be traced back to it. There is a logistics team whose job it is to take care of operation logistics.”

The ‘actives’

Agents are the tip of the company’s spear. In the “Weinstein affair,” an agent named Stella Penn, who lived in Jaffa, was exposed as targeting Americans. In the professional lingo, they are called “actives.” Their salaries are the highest – much more than the 45 to 65 shekels ($12 to $18) per hour that junior staff make, according to former employees. “I was surprised to see how some clients enjoy this, and not particularly because of the final results. I will tell you a secret: Many times, the final result isn’t so great,” says one former employee.

“Actives” were supposed to get Rhodes, Kahl and Tess to talk, after establishing initial contact, and to extract valuable information from them. After the operation became public last spring, fingers were pointed at the Trump administration and its allies. That was because the assumption was that Black Cube’s objective was to get information that would support the public campaign to cancel the Iranian nuclear deal.

But the documents Haaretz has obtained point to a different objective.

Chasing damages

On April 9, 1995, a suicide bomber from the Islamic Jihad group drove his booby-trapped vehicle into a bus packed with soldiers, near Kfar Darom in the Gaza Strip. Seven soldiers were killed, along with a 20-year-old U.S. citizen, Alisa Flatow, who was studying in Jerusalem. Her father, Stephen, an American attorney from West Orange, New Jersey, began a campaign against Iran. At the time of the attack, foreign countries had complete immunity from being sued in U.S. courts. In the wake of Flatow’s campaign, Congress passed a law in 1996 called the “Flatow Amendment,” which permitted lawsuits against countries financing terrorism.

Stephen Flatow, left, father of Alissa Flatow, at a memorial service in New York, for the latest victims of the Hamas terror bombings in Jerusalem and Tel Aviv, March 1996.Credit: Jon Levy/AFP

In 1998, a ruling was handed down: A federal district judge ordered the Iranian government to pay $247.5 million in damages to the Flatow family.

The ruling opened the door for a series of further lawsuits. On February 25, 1996, a suicide bomber from Hamas blew up a number 18 bus on Jaffa Road in Jerusalem. Among the 26 victims were two Americans, Matthew Eisenfeld and Sara Duker. Their families sued Iran and in 2000 were awarded $327 million. American families also sued over the Hezbollah attack on the Marine barracks in Beirut in 1983 and were awarded $1 billion. The sum total of these judgments is now in the tens of billions of dollars.

Iran, of course, does not recognize these rulings and does not pay the victims’ families. In a sense, then, these lawsuits are a modern treasure chest: A group of attorneys hold court bills worth billions, and whoever succeeds in finding Iranian assets can claim nice percentages on them.

Commercial intelligence firms like Black Cube specialize in locating assets around the world to help pay these legal judgments, and these kinds of challenges prove particularly alluring to them. Even small percentages of Iranian funds that are frozen in different parts of the world could yield potential profits of millions of dollars, for negligible cost.

Funding the operation

Pursuing asset forfeiture is actually an independent business initiative of Black Cube. No specific entity "ordered" this operation – but it had a funder.

His name is Nobu Su, a Taiwanese shipping tycoon who previously retained Black Cube in relation to his legal conflicts. Su, who is said to be friendly with the company’s managers, invested money from his own pocket – and his return is part of Black Cube’s percentage of the forfeiture.

Black Cube loves to market itself as the smartest and boldest commercial intelligence business of them all. While its competitors engage in classic asset location, Black Cube will go further and try to get senior government officials to reveal those assets or leads.

In the world of commercial intelligence, there is an unwritten law: “You don’t mess with the Americans.” As a result, many companies refuse to conduct this type of operation in the United States – and certainly not with former senior administration officials.

Black Cube broke this law. As far as it is concerned, as long as the attorneys allow it, it will take any job.

The background document for the project, which Haaretz possesses, establishes that the pursuit of Rhodes, Kahl and Tess was supposed to yield intelligence that would then enable a number of legal operations.

The first was the location of unknown Iranian assets, such as bank accounts in the Gulf states or the Far East. The second was assistance to Iran in hiding its assets in violation of U.S. or international law. If it turned out that a certain bank helped Iran hide assets, Black Cube believed it would be possible to sue it. The third was assistance to Iran in shifting money in violation of American or international laws.

At the time of the operation, many months before Black Cube was exposed, Zorella bragged to cronies about the Iranian forfeiture – because he would soon be in possession of major and dramatic information.

Black Cube's headquarters in central Tel Aviv.Credit: Meged Gozani

If it were possible to prove that the Obama administration officials acted illegally – an allegation that has never been proven – in a case like this, you could sue the banks or the U.S. government in order to get Iranian money. Banks and governments are classic targets of lawsuits because they have deep and bottomless pockets. The Black Cube background document includes mention of “gathering intelligence leveraging the banks to disclose information on Iranian assets.”

The Omani bank affair

The primary focus of the investigation was the “Omani bank affair.” Iran had an account with Bank Muscat in Oman, where it banked payments for oil it sold. By 2015, the sum at the bank had reached $5.7 billion, but in Omani rials. The Iranians sought to convert the money into euros – but because Omani currency is linked to the dollar, no bank would agree to convert such a large sum. For this, an American bank would need to agree to convert the money from rials to U.S. dollars, and thence to euros. However, despite the nuclear agreement, Iran has yet to gain access to the banking network in the United States and therefore needed the help of the Obama administration.

The affair ultimately reached Congress, which opened an official investigation whose findings were published last June. According to the probe, senior Obama administration officials worked with the U.S. Treasury Department’s Office of Foreign Assets Control – which is responsible for enforcing sanctions – to allow it to permit the currency exchange, in spite of sworn statements that Iran would not receive access to the banking network. In the end, Wells Fargo Bank and J.P. Morgan refused to participate in the exchange due to concerns about legal liability.

Black Cube also conducted its own investigation into the affair with that huge sum in Oman proving impossible to ignore. The intel firm earmarked a series of senior officials at the two bank as potential targets, and their names are recorded in the Black Cube document, as well as the managers at the Omani bank.

Profiles were prepared of some of these bankers for the agent approaching them to use, including occupational history, addresses, phone numbers, email accounts, etc. At least two profiles were prepared for bankers whose jobs related to sanctions enforcement. Ultimately, this also failed to produce anything.

A suspicious message

Former U.S. Deputy Assistant Defense Secretary for the Middle East Colin Kahl on Capitol Hill in 2012.Credit: Chip Somodevilla / Getty Images

After the Weinstein affair was made public last November, it soon became clear to Kahl that a Black Cube operative had also approached his wife, Rebecca Kahl, under a false identity – using the cover of a representative of a fund involved in education who sought to donate money to their daughter’s school. The fund cited was Reuben Capital Partners, the same name as the one used when a Black Cube agent approached actor Rose McGowan during the Weinstein operation. Rebecca Kahl referred the operative to school staff, as she had insisted on speaking only with her, and then stopped answering the operative’s emails completely.

But the approach to Rebecca Kahl only took place after Black Cube had first approached Kahl himself. In order to reach him, they used an agent impersonating an emissary, who sent the following email:

“Greetings Professor Kahl

“Following the presidential election in France, and in anticipation of the upcoming parliamentary elections, The Neri Foundation is looking to organize a conference in conjunction with the IFRI and IRIS research institutes here in Paris.

“The goal of the conference is that we have experts in the fields of international relations and national security participate, along with former government national security officials, in order to contribute their experience and perspectives on the problems facing Europe in general, and France in particular.

“In our research your name featured prominently as an experienced academic as well as a government figure. I'm arriving in Washington D.C., in the second half of June, to meet with a number of others who have confirmed their participation in the conference I have attempted to reach you through email as well as leaving voicemail with the hopes of being able to meet you while I'm in town.

“With the assumption that you are interested, I was hoping that you might be able to tell me when you can set some time aside for us to meet while I am in D.C. so I can explain to you in more detail what we are looking to put together.

“It goes without saying that, on top of a speakers fee, the foundation is willing to cover all expenses associated with your participation in the event. While the date for the conference has yet to be finalized, we expect to hold it towards the end of the summer.

“I look forward to hearing from you.

“Sincerely, Emile Neri”

Kahl was suspicious. He responded via email: "I will be traveling with family from mid-June to mid-August, so I won't be in DC to meet.

“Can you give me a better sense for the conference agenda, whether there are other sponsors, and who else has been invited?" The two arranged to talk by phone, but that never happened. Neri's website soon went offline.

Black Cube said in response to this article: “Black Cube policy is never to discuss its clients with any third party, and never to confirm or deny any speculation about its work. Black Cube only works to gather evidence in the biggest litigations in the world and not in other cases.

“It should be stressed that Black Cube always acts in accordance with the law, in any country it's working in, and in accordance to the legal counsel by the leading law firms in the world.”

Nobu Su did not respond to an inquiry from Haaretz.

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