The revelation came as Headley faced cross examination for the third day in the trial of Tahawwur Rana, a Chicago businessman accused of taking part in the deadly 2008 Mumbai attacks.
Headley pleaded guilty to working for Pakistan's main intelligence agency and a Pakistani militant group on the Mumbai attack, as well as working on an assault plan on a Danish newspaper. He is testifying against Rana, his boyhood friend, who is accused of cooperating in the attacks by providing cover to Headley by allowing Headley to pose as a business associate.
"Kashmiri had people doing surveillance and asked me if there were weapons readily available to him" Headley said on the stand Tuesday. Kashmiri did not follow through on this plot.
Defense attorney Patrick Blegen spent the day trying to discredit Headley as a witness for the government. At one point he played part of a videotaped interrogation of Headley by FBI agents where Headley pretends to throw a football.
"That's a Hail Mary pass, isn't it Mr. Headley. It's a last minute desperation plan, isn't that right? After fourteen days of interrogation you couldn't get someone arrested. You knew that if no one else was arrested it would all be on you," Blegen said.
Headley agreed, saying he didn't bring up Rana as a co-conspirator until 14 days into his interrogation when U.S. Attorney Patrick Fitzgerald spoke to him directly and told him he had to tell the truth and talk about everybody.
Blegen brought up numerous lies Headley has been caught in since working for the government after being busted for heroin smuggling in 1988.
"You lied about connections to Kashmiri," Blegen said. Headley responded, "Yes."
"You lied about your wife's involvement. You lied about your uncle's involvement. You lied about your brother's involvement."
Again Headley replied, "Yes."
Blegen then read Headley's plea agreement and asked him if it is true that he is remorseful for what he did to the people killed in Mumbai.
"I feel bad for the methods I employed," Headley replied.
"Have you had a conversion in your thoughts?" Blegen asked.
"I'm in the process," Headley said.Before breaking for lunch, Headley said he is planning to write a book about his experience and he told his wife he will make huge amounts of money from it. He also admitted that he has undergone psychiatric treatment for a "mixed personality disorder."
Besides Rana, six others are charged in absentia, including Ilyas Kashmiri.
