WASHINGTON — A federal domestic security effort to help state and local law enforcement catch terrorists by setting up more than 70 information-sharing centers around the country has threatened civil liberties while doing little to combat terrorism, a two-year examination by a Senate subcommittee found.

The so-called fusion centers were created in 2003 after the Sept. 11 commission concluded that federal, state and local law enforcement agencies needed to collaborate more in counter-terrorism efforts.

Funded by federal grants, the fusion centers were intended to share national intelligence with state and local law enforcement and to analyze potential terrorist activity detected by police. Homeland Security Department officials have credited the centers for helping uncover terrorist plans, including a 2009 plot to bomb the New York subway.

DOCUMENT: U.S. Senate report on Fusion Centers

But the Senate Permanent Subcommittee on Investigations, in a 146-page report released Tuesday that reviewed intelligence reports from fusion centers between April 1, 2009, and April 30, 2010, "could identify nothing that uncovered a terrorist threat, nor could it identify a contribution any fusion center made to disrupt an active terrorist plot."

Senate investigators concluded that Homeland Security liaisons to the centers "forwarded 'intelligence' of uneven quality — oftentimes shoddy, rarely timely, sometimes endangering citizens' civil liberties and Privacy Act protections, occasionally taken from already-published public sources, and more often than not unrelated to terrorism."

The investigators also found that some local analysts had written inappropriate and potentially illegal reports about constitutionally protected activities of American citizens. Homeland Security officials prevented most from being disseminated.

The Homeland Security Department could not say for sure how much federal money had been spent on the centers, the subcommittee found, providing a range of $289 million to $1.4 billion.

Homeland Security officials took issue with the conclusions, saying they resulted from a "fundamentally flawed" investigation. "The committee report on federal support for fusion centers is out of date, inaccurate and misleading," said spokesman Matthew Chandler.

Homeland Security Secretary Janet Napolitano has lauded the centers, which are located in nearly every major metropolitan area. In March 2010, Homeland Security Undersecretary for Intelligence and Analysis Caryn A. Wagner praised them as "the linchpin of the evolving homeland security enterprise."

The Senate report rebuts statements by Homeland Security officials that the centers helped uncover terrorist plots, including a 2010 attempt to blow up a sport utility vehicle in Times Square, saying that the same work would have been done through previously existing channels.

One of the most significant terrorism cases in which officials have claimed a success for fusion centers was that of Najibullah Zazi, an Afghan immigrant who traveled in 2009 from Colorado to New York City, where he has admitted that he planned to blow himself up on the subway around the anniversary of the Sept. 11 attacks.

Napolitano claimed in a speech in 2010 that "it was a fusion center near Denver that played the key role in 'fusing' the information that came from the public with evidence that came in following the suspect's arrest by the FBI."

But that claim was not true, the investigation found. The Colorado Information Analysis Center's involvement consisted of checking a few public databases and addressing media inquiries. The crucial role, the report said, was played by Colorado state troopers assigned to the center who were also assigned to help the FBI. The report found that the troopers would have been doing what they did whether or not there was a fusion center.

In preparing the report, the committee reviewed intelligence that had been edited to protect classified information. Homeland Security officials said that these redactions limited the investigators' ability to assess the usefulness of intelligence generated by local analysts.

One of the country's largest federally funded fusion centers covers most of Southern California. The Joint Regional Intelligence Center in Norwalk has more than 80 full-time staff members and stitches together information from 166 law enforcement departments.

Deputy Chief Michael Downing, head of the LAPD's counter-terrorism bureau, said his department had gotten "a lot of value" from the increased cooperation: "There's a lot of white noise, but there are occasionally gold nuggets."

In the last year, Downing said, the Norwalk-based center has helped start terrorism investigations by sharing information about Muslim extremist literature found in the back seat of a car during a traffic stop and about an individual who went into a youth group meeting at an Islamic center and tried to recruit young Muslims to "kill infidels."

He did not know whether any of these cases had led to a conviction.

In some cases, the investigation found, fusion centers have also made embarrassing intelligence errors.

Last year, for example, the Illinois Statewide Terrorism and Intelligence Center in Springfield published a report asserting that a hacker in Russia had stolen an unknown number of user names and passwords to sensitive utility control systems and used that information to break into a local water district's computerized control system.

In fact, the "hacker" was a utility employee who had accessed the system legitimately while on a family vacation, the report found.

A spokeswoman for the center, Monique Bond, would not comment on the report, but said, "Fusion centers and the information shared by local, state and federal agencies enhances law enforcement's efforts in fighting everyday crime and homeland defense."

The subcommittee report also pointed to fusion center reports on activities protected by the U.S. Constitution.

One draft intelligence report examined a reading list from a Muslim community group: "Ten Book Recommendations for Every Muslim." Four were written by individuals with records in a U.S. intelligence counter-terrorism database, the Terrorist Identities Datamart Environment, known as TIDE.

"We cannot report on books and other writings of TIDE matches simply because they are TIDE matches," wrote a Homeland Security reviewer of the draft report. "The writings themselves are protected by the 1st Amendment unless you can establish that something in the writing indicates planning or advocates violent or other criminal activity." The report was not published.

ken.dilanian@latimes.com

brian.bennett@latimes.com