Military officials have theorized that the Karbala attack was orchestrated by Tehran in retaliation. But the U.S.'s initial probe of the incident found no evidence of direct Iranian involvement. Instead, the picture that emerged cast suspicion chiefly on senior Iraqi officials known to the Americans, as well as local thugs and associates of al-Sadr. The report on the investigation, which has been released only to the families of the soldiers who were killed, found that "it is too coincidental that the attackers, already argued as outside professionals, knew and raided only the two rooms where the Americans resided and were able to isolate the barracks-area soldiers and rooftop defenders." The report adds that many Iraqi police seemed to disappear moments before the assault and that the attackers seemed to know that the Americans would initially go to the rooftops during an attack, a drill U.S. troops had practiced in front of the senior Iraqi officers.
IraqSlogger summarizes thusly:
Though TIME's sources say that the investigation indicated the involvement of Iraqi police officials, no charges have been brought against any. The sense seems to be that it would cause problems for the long-term American agenda to pursue justice in the deaths of the five American soldiers, but the apparent involvement of so many Iraqis brings into question what the US can actually achieve when it has to to rely on such duplicitous partnerships.
About the only "evidence" anyone had of Iranian involvement was that the operation was "too sophisticated" for plain old insurgents, because it cannot be expected that after four years of war the insurgents would have learned something about operational planning, the use of radios, or have acquired the ability to gather intelligence on American forces. In reality there was never any solid evidence of Iran's involvement; only wild speculation, and that speculation is proving to be completely unfounded.