The basic story is pretty well known, although the business about setting it up as a pretext for an attack on Egypt sounds pretty far fetched. The Liberty was an intelligence (aka spy) ship whose mission was to monitor the communications of both sides during the 1967 Arab-Israeli War. It was attacked by the Israeli Navy and Air Force, who claimed they thought it was Egyptian. The ship was covered with large US flags...whether or not the Israeli fast movers saw them or not before they opened fire has always been an issue.