The suspect could have been in a position to influence Bush administration policy toward Iran and Iraq, the senior official said....
CBS News, which first reported the story, said the FBI had developed evidence against the suspect, including photographs and conversations recorded through wiretaps.
The network said the suspect has ties to two senior Pentagon officials: Deputy Defense Secretary Paul Wolfowitz and Undersecretary of Defense Douglas Feith.
Multiple sources have told CNN that the investigation is well along, and one government official described the evidence against the suspect as a "slam dunk case" and said "there has been no decision to prosecute the individual."
Update: As I suspected when I first read the above story last night, the matter has considerable depth and breadth which many would just as soon not know about, much less talk about. You probably already know Juan Cole and the extraordinarily helpful reporting and commentary about the Middle East which he posts daily in his weblog. You've probably heard him and seen him on the radio and TV. His take on the Pentagon spy reports today is fascinating and pretty scary.