U.S. consulate mistakenly sells secret files in Jerusalem

Hundreds of files–with social security numbers, bank account numbers and other sensitive U.S. government information–were found in a filing cabinet purchased from the U.S. consulate in Jerusalem through a local auction. "We couldn't believe what we found," said Paula, who purchased the cabinets and asked that her last name not be published. "We thought of calling the American consulate right away, and then we thought, you know they'll just hide it and say, 'Oh, we made a mistake.'" The consulate was unaware of the missing files until FOX News contacted U.S. officials. Initially they said that no filing cabinets were sold in the auction, but later they acknowledged the sale. The State Department has now launched an investigation. The files contained social security numbers of U.S. Marines and State Department employees stationed in Israel, and documentation of how U.S. government money is allocated to fund sensitive programs in the region. Among the papers was also a report labeled "secret" that documented an encounter a U.S. Marine had with an Israeli woman at a bar in Jerusalem. Robert Baer, a former CIA agent who spent years working in the Middle East, calls the incident a serious security failure. "It's a major breach because the government, at all cost, wants to keep these records out of foreign hands, whether Israeli or any other country," Baer says. "We spy on Israel; they spy on us. The Marines are vulnerable because they are young, and they are inevitably single. You're looking at what is called a honey trap. You run a girl into an employee. You actually get him to fall in love and then you get them to break the security clearance and go and steal documents or whatever." The head of security at the U.S. consulate approached Paula asking for the documents to be returned. When she refused to turn them in the consulate asked Israeli police to intervene. After she was threatened with criminal charges, she returned the files, but not before FOX News had a thorough look at them. The American consulate in Jerusalem routinely holds furniture auctions to dispose of unwanted items. The woman purchased the cabinets in December of 2005 but decided to come forward with the files after hearing about a Sept. 22, 2008 incident in which a Palestinian teenager crashed a BMW into a group of Israeli soldiers. Paula, whose son's unit was the one that was struck by the car, says she was angered when she heard that the car was purchased from an auction held by the consulate. U.S. officials insist the car was never linked to them. A FOX News investigation also found there was no connection. Paula, an Israeli who also holds U.S. citizenship, says she wanted to expose the incident because her loyalty is to the state of Israel.