A Department of Defense official with top-secret security clearance allegedly provided an official working for the Chinese government with classified department data and documents.

According to a Department of Justice announcement, officials have charged James Wilbur Fondren Jr., deputy director for the U.S. Pacific Command (PACOM) Washington Liaison Office, with espionage conspiracy for providing classified information to an agent of a foreign government. Fondren sold information to a Taiwanese-American man in the form of "opinion papers" that included classified DoD data via an at-home consulting business he ran on the side, according to the affidavit filed this week.

This classic case of espionage also highlights the dangers of the insider threat: Fondren had both a classified DoD computer as well as an unclassified one on his desk. "This case really highlights the question a lot of people are asking themselves these days: Where is the perimeter? Or maybe there is no perimeter?" says Phil Neray, vice president of security strategy for Guardium. "The traditional perimeter of firewalls doesn't exist [here] because the perimeter was this person. You might even say the data is the perimeter."

And Fondren was the equivalent of a privileged user with inside access to sensitive information. "As part of this job, he had access to these classified documents," Neray says. "It doesn't appear that there were any controls in place to look for suspicious usage of those documents."

Fondren, 62, allegedly funneled the data to Tai Shen Kuo, who was one of his consulting clients, between November 2004 to Feb. 11, 2008, according to the affidavit. Kuo purchased reports from Fondren for anywhere between $350 to $800, eight of which included classified information. Among the classified data Fondren supplied Kuo was information about a joint U.S.-China naval exercise, U.S.-China military meetings, and a DoD draft report on China.

What Fondren didn't know was that Kuo was turning around and selling the information to a Chinese government official. The official paid Kuo around $50,000 for certain documents he obtained from Fondren and other DoD officials. When Kuo was arrested on Feb. 11, 2008, he was staying at Fondren's house and had in his possession a DoD unclassified draft document called "The National Military Strategy of the United States of America 2008."

Fondren was placed on administrative leave in February 2008; he turned himself in to federal agents this week. He faces a maximum of five years in prison and a $250,000 fine.

Rick Howard, director of security intelligence for iDefense, says it's unclear from the report just how Fondren got the data out of the building, but it was likely simple. "If you're determined to get stuff out, it's not too hard to walk it out of the building. Thumb drives are pretty small these days," Howard says. Or it's possible he snuck out a hard copy, he says.

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