From D.E.A. Deployed Mumbai Plotter Despite Warning, by Ginger Thompson, Eric Schmitt and Souad Mekhennet of The New York Times (dated 7 November 2010):

American authorities sent David C. Headley, a small-time drug dealer and sometime informant, to work for them in Pakistan months after the Sept. 11, 2001, attacks, despite a warning that he sympathized with radical Islamic groups, according to court records and interviews. Not long after Mr. Headley arrived there, he began training with terrorists, eventually playing a key role in the 2008 attacks that left 164 people dead in Mumbai.

The October 2001 warning was dismissed, the authorities said, as the ire of a jilted girlfriend and for lack of proof. Less than a month later, those concerns did not come up when a federal court in New York granted Mr. Headley an early release from probation so that he could be sent to work for the United States Drug Enforcement Administration in Pakistan. It is unclear what Mr. Headley was supposed to do in Pakistan for the Americans.

“All I knew was the D.E.A. wanted him in Pakistan as fast as possible because they said they were close to making some big cases,” said Luis Caso, Mr. Headley’s former probation officer.

On Sunday, while President Obama was visiting India, he briefed Prime Minister Manmohan Singh on the status of his administration’s investigation of Mr. Headley, including the failure to act on repeated warnings that he might be a terrorist. A senior United States official said the inquiry has concluded that while the government received warnings, it did not have strong enough evidence at the time to act on them. “Had the United States government sufficiently established he was engaged in plotting a terrorist attack in India, the information would have most assuredly been transferred promptly to the Indian government,” the official said in a statement to The New York Times. The statement did not make clear whether any American agencies would be held accountable.

[pullquote] One Warning May Have Been Withheld from Court during Sentencing [/pullquote]

In recent weeks, United States government officials have begun to acknowledge that Mr. Headley’s path from American informant to transnational terrorist illustrates the breakdowns and miscommunications that have bedeviled them since the Sept. 11 attacks. Warnings about his radicalism were apparently not shared with the drug agency that made use of his ties in Pakistan.

The director of national intelligence, James R. Clapper Jr., began an investigation into Mr. Headley’s government connections after reports last month that two of the former drug dealer’s ex-wives had gone to American authorities between 2005 and 2008, before the Mumbai attacks, to say they feared he was plotting with terrorists. Combined with the earlier warning from the former girlfriend, three of the women in Mr. Headley’s life reported his ties to terrorists, only to have those warnings dismissed.

An examination of Mr. Headley’s story shows that his government ties ran far deeper and longer than previously known. One senior American official knowledgeable about the case said he believed that Mr. Headley was a D.E.A. informant until at least 2003, meaning that he was talking to American agencies even as he was learning to deal with explosives and small arms in terrorist training camps.

D.E.A. Deployed Mumbai Plotter Despite Warning via NYTimes.com

For background,  see the BBC’s excellent (and award-winning)  Special Report on the 2008 Mumbai Attacks.