The INSLAW Octopus
WIRED MAGAZINE
Mar/April, 1993
Software piracy, conspiracy, cover-up, stonewalling, covert action: Just another decade at the Department of Justice
By Richard L. Fricker
The House Judiciary Committee lists these crimes as among the possible violations perpetrated by "high-level Justice officials and private individuals":
>> Conspiracy to commit an offense
>> Fraud >> Wire fraud >> Obstruction
of proceedings before departments,
agencies and committees >>
Tampering with a witness >> Retaliation against a witness
>> Perjury >> Interference with commerce by threats or
violence >> Racketeer Influenced and Corrupt
Organizations (RICO) violations >> Transportation of
stolen goods, securities, moneys >> Receiving stolen
goods
Bill Hamilton, Inslaw & PROMIS
Who:
Bill Hamilton and his wife, Nancy Hamilton, start Inslaw to nurture PROMIS (Prosecutors Management Information Systems).
Why #1:
The DOJ, aware that its case management system is in dire
need of automation, funds Inslaw and PROMIS. After creating a
public-domain version, Inslaw makes significant enhancements
to PROMIS and, aware that the US market for legal automation
is worth $3 billion, goes private in the early '80s.
Why #2:
Designed as case-management software for federal prosecutors,
PROMIS has the ability to combine disparate databases, and to
track people by their involvement with the legal system.
Hamilton and others now claim that the DOJ has modified
PROMIS to monitor intelligence operations, agents and targets,
instead of legal cases.
By late November, 1992 the nation had turned its attention from
the election-weary capital to Little Rock, Ark., where a new
generation of leaders conferred about the future. But in a small
Washington D.C. office, Bill Hamilton, president and founder of
Inslaw Inc., and Dean Merrill, a former Inslaw vice president,
were still very much concerned about the past.
The two men studied six photographs laid out before them.
"Have you ever seen any of these men?" Merrill was asked.
Immediately he singled out the second photo. In a separate line
up, Hamilton's secretary singled out the same photo.
Both said the man had visited Inslaw in February 1983 for a
presentation of PROMIS, Inslaw's bread-and-butter legal
software. Hamilton, who knew the purpose of the line-up,
identified the visitor as Dr. Ben Orr. At the time of his visit, Orr
claimed to be a public prosecutor from Israel.
Orr was impressed with the power of PROMIS (Prosecutors
Management Information Systems), which had recently been
updated by Inslaw to run on powerful 32-bit VAX computers
from Digital Equipment Corp. "He fell in love with the VAX
version," Hamilton recalled.
Dr. Orr never came back, and he never bought anything. No one
knew why at the time. But for Hamilton, who has fought the
Department of Justice (DOJ) for almost 10 years in an effort to
salvage his business, once his co- workers recognized the man
in the second photo, it all made perfect sense.
For the second photo was not of the mysterious Dr. Orr, it was
of Rafael Etian, chief of the Israeli defense force's anti-terrorism
intelligence unit. The Department of Justice sent him over for a
look at the property they were about to "misappropriate," and
Etian liked what he saw. Department of Justice documents
record that one Dr. Ben Orr left the DOJ on May 6, 1983, with a
computer tape containing PROMIS tucked under his arm.
What for the past decade has been known as the Inslaw affair
began to unravel in the final, shredder-happy days of the Bush
administration. According to Federal court documents, PROMIS
was stolen from Inslaw by the Department of Justice directly
after Etian's 1983 visit to Inslaw (a later congressional
investigation preferred to use the word "misappropriated"). And
according to sworn affidavits, PROMIS was then given or sold at
a profit to Israel and as many as 80 other countries by Dr. Earl
W. Brian, a man with close personal and business ties to
then-President Ronald Reagan and then-Presidential counsel
Edwin Meese.
A House Judiciary Committee report released last September
found evidence raising "serious concerns" that high officials at
the Department of Justice executed a pre-meditated plan to
destroy Inslaw and co-opt the rights to its PROMIS software.
The committee's call for an independent counsel have fallen on
deaf ears. One journalist, Danny Casolaro, died as he attempted
to tell the story (see sidebar), and boxes of documents relating
to the case have been destroyed, stolen, or conveniently "lost"
by the Department of Justice.
But so far, not a single person has been held accountable.
Page 2 >>
The INSLAW Octopus (continued)
WIRED has spent two years searching for
the answers to the questions Inslaw
poses: Why would Justice steal PROMIS?
Did it then cover up the theft? Did it let
associates of government officials sell
PROMIS to foreign governments, which
then used the software to track political
dissidents instead of legal cases? (Israel
has reportedly used PROMIS to track
troublesome Palestinians.)
The implications continue: that Meese profited from the sales of
the stolen property. That Brian, Meese's business associate,
may have been involved in the October Surprise (the
oft-debunked but persistent theory that the Reagan campaign
conspired to insure that US hostages in Iran were held until
after Reagan won the 1980 election, see sidebar). That some of
the moneys derived from the illegal sales of PROMIS furthered
covert and illegal government programs in Nicaragua. That Oliver
used PROMIS as a population tracking instrument for his White
House-based domestic emergency management program.
Each new set of allegations leads to a new set of possibilities,
which makes the story still more difficult to comprehend. But
one truth is obvious: What the Inslaw case presents, in its
broadest possible implications, is a painfully clear snapshot of
how the Justice Department operated during the Reagan-Bush
years.
This is the case that won't go away, the case that shows how
justice and public service gave way to profit and political
expediency, how those within the administration's circle of
privilege were allowed to violate private property and civil rights
for their own profit.
Sound like a conspiracy theorist's dream? Absolutely. But the
fact is, it's true.
The Background
Imagine you are in charge of the legal arm of the most powerful
government on the face of the globe, but your internal
information systems are mired in the archaic technology of the
1960s. There's a Department of Justice database, a CIA
database, an Attorney's General database, an IRS database,
and so on, but none of them can share information. That makes
tracking multiple offenders pretty darn difficult, and building
cases against them a long and bureaucratic task.
Along comes a computer program that can integrate all these
databases, and it turns out its development was originally
funded by the government under a Law Enforcement Assistance
Administration grant in the 1970s. That means the software is
public domain ... free!
Edwin Meese was apparently quite taken with PROMIS. He told
an April 1981 gathering of prosecutors that PROMIS was "one of
the greatest opportunities for [law enforcement] success in the
future." In March 1982, Inslaw won a $9.6 million contract from
the Justice Department to install the public domain version of
PROMIS in 20 US Attorney's offices as a pilot program. If
successful, the company would install PROMIS in the remaining
74 federal prosecutors' offices around the country. The eventual
market for complete automation of the Federal court system
was staggering: as much as $3 billion, according to Bill Hamilton.
But Hamilton would never see another federal contract.
Designed as a case-management system for prosecutors,
PROMIS has the ability to track people. "Every use of PROMIS in
the court system is tracking people," said Inslaw President
Hamilton. "You can rotate the file by case, defendant, arresting
officer, judge, defense lawyer, and it's tracking all the names of
all the people in all the cases."
What this means is that PROMIS can provide a complete
rundown of all federal cases in which a lawyer has been
involved, or all the cases in which a lawyer has represented
defendant A, or all the cases in which a lawyer has represented
white-collar criminals, at which stage in each of the cases the
lawyer agreed to a plea bargain, and so on. Based on this
information, PROMIS can help a prosecutor determine when a
plea will be taken in a particular type of case.
But the real power of PROMIS, according to Hamilton, is that
with a staggering 570,000 lines of computer code, PROMIS can
integrate innumerable databases without requiring any
reprogramming. In essence, PROMIS can turn blind data into
information. And anyone in government will tell you that
information, when wielded with finesse, begets power.
Converted to use by intelligence agencies, as has been alleged
in interviews by ex-CIA and Israeli Mossad agents, PROMIS can
be a powerful tracking device capable of monitoring intelligence
operations, agents and targets, instead of legal cases.
<< Page 1 Page 3 >>
The INSLAW Octopus (continued)
At the time of its inception, PROMIS was
the most powerful program of its type. But
a similar program, DALITE, was developed
under another LEAA grant by D. Lowell
Jensen, the Alameda County (Calif.)
District Attorney. In the mid-1970s, the
two programs vied for a lucrative Los
Angeles County contract and Inslaw won
out. (Early in his career, Ed Meese worked
under Jensen at the Alameda County
District Attorney's office. Jensen was later appointed to Meese's
Justice Department during the Reagan presidency.)
In the final days of the Carter administration, the LEAA was
phased out. Inslaw had made a name for itself and Hamilton
wanted to stay in business, so he converted Inslaw to a
for-profit, private business. The new Inslaw did not own the
public domain version of PROMIS because it had been developed
with LEAA funds. But because it had funded a major upgrade
with its own money, Inslaw did claim ownership of the enhanced
PROMIS.
Through his lawyers, Hamilton sent the Department of Justice a
letter outlining his company's decision to go private with the
enhanced PROMIS. The letter specifically asked the DOJ to
waive any proprietary rights it might claim to the enhanced
version. In a reply dated August 11, 1982, a DOJ lawyer wrote:
"To the extent that any other enhancements (beyond the public
domain PROMIS) were privately funded by Inslaw and not
specified to be delivered to the Department of Justice under any
contract or other agreement, Inslaw may assert whatever
proprietary rights it may have."
Arnold Burns, then a deputy attorney general, clarified the DOJ's
position in a now-critical 1988 deposition: "Our lawyers were
satisfied that Inslaw's lawyers could sustain the claim in court,
that we had waived those [proprietary] rights."
The enhancements Inslaw claimed were significant. In the 1970s
the public- domain PROMIS was adapted to run on Burroughs,
Prime, Wang and IBM machines, all of which used less-powerful
16-bit architectures. With private funds, Inslaw converted that
version of PROMIS to a 32-bit architecture running on a DEC
VAX minicomputer. It was this version that Etian saw in 1983. It
was this version that the DOJ stole later that year through a
pre-meditated plan, according to two court decisions.
The Dispute Grows
On a gorgeous spring morning in 1981, Lawrence McWhorter,
director of the Executive Office for US Attorneys, put his feet
on his desk, lit an Italian cigar, eyed his subordinate Frank
Mallgrave and said through a haze of blue smoke: "We're out to
get Inslaw."
McWhorter had just asked Mallgrave to oversee the pilot
installation of PROMIS, a job Mallgrave refused, unaware at the
time that he was being asked to participate in Inslaw's
deliberate destruction.
"We were just in his office for what I call a B.S. type
discussion," Mallgrave told WIRED. "I remember it was a bright
sunny morning.... (McWhorter) asked me if I would be interested
in assuming the position of Assistant Director for Data
Processing...basically working with Inslaw. I told him...I just had
no interest in that job. And then, almost as an afterthought, he
said 'We're out to get Inslaw.' I remember it to this day."
After Mallgrave refused the job, McWhorter gave it to C.
Madison "Brick" Brewer. Brewer at one time worked for Inslaw,
but was allowed to resign when Hamilton found his performance
inadequate, according to court documents. Brewer was then
hired into the Department of Justice specifically to oversee the
contract of his former employer. (The DOJ's Office of
Professional Responsibility ruled there was no conflict of
interest.) He would later tell a federal court that everything he
did regarding Inslaw was approved by Deputy Attorney General
Lowell Jensen, the same man who once supervised DALITE, the
product which lost a major contract to Inslaw in the 1970s.
Brewer, who now refuses to comment on the Inslaw case, was
aided in his new DOJ job by Peter Videnieks. Videnieks was fresh
from the Customs Service, where he oversaw contracts
between that agency and Hadron, Inc., a company controlled by
Meese and Reagan-crony Earl Brian. Hadron, a closely held
government systems consulting firm, was to figure prominently in
the forthcoming scandal.
<< Page 2 Page 4 >>
he INSLAW Octopus (continued)
According to congressional and court
documents, Brewer and Videnieks didn't
tarry in their efforts to destroy Inslaw.
After Inslaw's installation of public domain
PROMIS had begun, the DOJ claimed that
Inslaw, which was supporting the
installation with its own computers running
the enhanced version of PROMIS, was on
the brink of bankruptcy. Although Inslaw
was contracted to provide only the public
domain PROMIS, the DOJ demanded that Inslaw turn over the
enhanced version of PROMIS in case the company could not
complete its contractual obligations. Inslaw agreed to this
contract modification, but on two conditions: that the DOJ
recognize Inslaw's proprietary rights to enhanced PROMIS, and
that the DOJ not distribute enhanced PROMIS beyond the
boundaries of the contract (the 94 US Attorney's offices.)
The DOJ agreed to these conditions, but requested Inslaw prove
it had indeed created enhanced PROMIS with private funds.
Inslaw said it would, and the enhanced software was given to
the DOJ.
Once the DOJ had control of PROMIS, it dogmatically refused to
verify that Inslaw had created the enhancements, essentially
rendering the contract modification useless. When Inslaw
protested, the DOJ began to withhold payments. Two years
later, Inslaw was forced into bankruptcy.
As the contract problems with DOJ emerged, Hamilton received a
phone call from Dominic Laiti, chief executive of Hadron. Laiti
wanted to buy Inslaw. Hamilton refused to sell. According to
Hamilton's statements in court documents, Laiti then warned him
that Hadron had friends in the government and if Inslaw didn't
sell willingly, it would be forced to sell.
Those government connections included Peter Videnieks over at
the Justice Department, according to John Schoolmeester,
Videnieks' former Customs Service supervisor. Laiti and Videnieks
both deny ever meeting or having any contact, but
Schoolmeester has told both WIRED and the House Judiciary
Committee it was "impossible" for the pair not to know each
other because of the type of work and oversight involved in
Hadron's relationship with the Customs Service. Schoolmeester
also said that because of Brian's relationship with then-President
Reagan (see sidebar), Hadron was considered an "inside"
company.
The full-court press continued. In 1985 Allen & Co., a New York
investment banking concern with close business ties to Earl
Brian, helped finance a second company, SCT, which also
attempted to purchase Inslaw. That attempt also failed, but in
the process a number of Inslaw's customers were warned by
SCT that Inslaw would soon go bankrupt and would not survive
reorganization, Hamilton said in court documents.
Broke and with no friends in the government, on June 9, 1986,
Inslaw filed a $30 million lawsuit against the DOJ in bankruptcy
court. Inslaw's attorney for the case (he was later fired from his
firm under extremely suspicious circumstances -- see sidebar)
was Leigh Ratiner of the Wash- ington firm Dickstein, Shapiro &
Morin. Ratiner chose bankruptcy court for the filing based on the
premise that Justice, the creditor, had control of PROMIS. He
explained recently, "It was forbidden by the BankruptcyAct for
the creditor to exercise control over the debtor property. And
that theory -- that the Justice Department was exercising
control -- was the basis that the bankruptcy court had
jurisdiction.
"As far as I know, this was the first time this theory had been
used," Ratiner told WIRED. "This was ground-breaking. It was, in
fact, a legitimate use of the code."
It worked, but to only a point. In 1987, Washington, D.C.,
bankruptcy judge George Bason ruled in a scathing opinion that
Justice had stolen PROMIS through "trickery, fraud and deceit."
He awarded Inslaw $6.8 million in damages and, in the process,
found that Justice Department officials made a concerted effort
to bankrupt Inslaw and place the company's enhanced PROMIS
up for public auction (where it would then be fodder for Brian's
Hadron). Bason's findings of fact relied on testimony from Justice
employees and internal memoranda, some of which outlined a
plan to "get" PROMIS software.
Bason cited the testimony of a number of the government's
defense witnesses as being "unbelievable" and openly questioned
the credibility of others. In his 216-page ruling, Bason cites
numerous instances where testimony from government
witnesses is contradictory. (In a private interview with WIRED
he noted that as a bankruptcy judge he was precluded from
bringing perjury charges against government employees, but he
had recommended to various congressional panels that an
inquiry was necessary.)
<< Page 3 Page 5 >>
The INSLAW Octopus (continued)
When the DOJ appealed, a federal district
court affirmed Bason, ruling that there was
"convincing, perhaps compelling support for
the findings set forth by the bankruptcy
court." But the D.C. Circuit Court of
Appeals reversed the case on a legal
technicality, finding that the bankruptcy
court had no jurisdiction to hear the
damages claim. A petition to the Supreme
Court in October 1991 was denied review.
The IRS got into the act as well. Inslaw was audited several
times in the course of their battles with the Department of
Justice. In fact, the day following the bankruptcy trial, S. Martin
Teel, a lawyer for the IRS, requested that Judge Bason liquidate
Inslaw. Bason ruled against Teel. As a coda to the lawsuit,
Bason, a respected jurist, was not re-appointed to the bench
when his term expired. His replacement? S. Martin Teel. (Bason
has testified before Congress that the DOJ orchestrated his
replacement as punishment for his rulings in the Inslaw case.)
But Inslaw's troubles did not end with bankruptcy. Frustrated by
Attorney General Dick Thornburgh's stubborn refusal to
investigate the DOJ or appoint an independent prosecutor, Elliot
Richardson, President Nixon's former attorney general and a
counsel to Inslaw for nearly 10 years (he retired this January),
filed a case in U.S. District Court demanding that Thornburgh
investigate the Inslaw affair. In 1990, the court ruled that a
prosecutor's decision not to investigate -- "no matter how
indefensible" -- cannot be corrected by any court. Another loss
for Inslaw.
Broke and still attempting to revive itself, Inslaw has not refiled
its suit, preferring to wait for a new administration and a new
DOJ.
By this time, the spinning jennies of the conspiracy network had
grasped the Inslaw story and were all-too-eager to put their
stitch in the unraveling yarn. According to documents and
affidavits filed during court cases and congressional inquiries,
the Hamiltons and their lawyers began receiving phone calls,
visits and memos from a string of shadowy sources, many of
them connected to international drug, spy and arms networks.
Their allegations: That Earl Brian helped orchestrate the October
Surprise for then-candidate Reagan, and that Brian's eventual
payment for that orchestration was a cut of the PROMIS action.
Brian and the DOJ then resold or gave PROMIS to as many as 80
foreign and domestic agencies. (Brian adamantly denies any
connection to Inslaw or the October Surprise.)
These sources, which include ex-Israeli spy Ari Ben Menashe and
a computer programmer of dubious reputation, Michael
Riconosciuto, allege that PROMIS had been further modified by
the DOJ so that any agency using it could be subject to
undetected DOJ eavesdropping -- a sort of software Trojan
Horse. If these allegations are true, by the late 1980s PROMIS
could have become the digital ears of the US Government's spy
effort -- both internal and external. Certainly something the
administration wouldn't want nosy congressional committees
looking into.
The diaphanous web of more than 30 sources who offered
information to Inslaw were not "what a lawyer might consider
ideal witnesses," Richardson admitted. But their stories yielded a
surprising consistency. "The picture that emerges from the
individual statements is remarkably detailed and consistent," he
wrote in an Oct. 21, 1991 New York Times Op Ed.
The Congressional Investigation
The string of lawsuits and widening allegations caught the eye
of House Judiciary Committee Chairman Jack Brooks, D-Texas,
who in 1989 launched a three-year investigation into the Inslaw
affair. In the resulting report, the Committee suggested that
among others, Edwin Meese, while presidential counselor and
later as attorney general, and D. Lowell Jensen, a former
assistant and deputy attorney general and now a US district
judge in San Francisco, conspired to steal PROMIS.
"High government officials were involved," the report states. "...
(S)everal individuals testified under oath that Inslaw's PROMIS
software was stolen and distributed internationally in order to
provide financial gain and to further intelligence and foreign
policy objectives."
"Actions against Inslaw were implemented through the Project
Manager (Brick Brewer) from the beginning of the contract and
under the direction of high- level Justice Department officials,"
the report says. "The evidence...demonstrates that high-level
Department officials deliberately ignored Inslaw proprietary rights
and misappropriated its PROMIS software for use at locations
not covered under contract with the company."
<< Page 4 Page 6 >>
The INSLAW Octopus (continued)
The Committee report accuses former
Attorney General Dick Thornburgh of
stonewalling congressional inquiries, turning
a blind eye to the possible destruction of
evidence within the Justice Department,
and ignoring the DOJ's harassment of
employees questioned by Congressional
investigators.
Rep. Brooks told WIRED that the report
should be the starting point for a grand jury investigation. The
owners of Inslaw, Brooks said, were "ravaged by the Justice
Department...treated like dogs."
Brooks' committee voted along party lines, 21-13, to adopt the
investigative report on Aug. 11, 1992. The report asked
then-Attorney General William Barr to "immediately settle
Inslaw's claims in a fair and equitable manner" and "strongly
recommends that the Department seek the appointment of an
Independent Counsel."
As he did with the burgeoning Iraqgate scandal and as his
predecessor did before him, Barr refused to appoint an
independent counsel to the Inslaw case, relying instead on a
retired federal judge, in this case Nicholas Bua, who reported to
Barr alone. In other words, the DOJ was responsible for
investigating itself.
"The way in which the Department of Justice has treated this
case, to me, is inexplicable," Richardson told WIRED. "I think the
circumstances most strongly suggest that there must be wider
ramifications."
The Threads Unravel
Proof of those wider ramifications are just starting to leak out,
as DOJ and other agency employees begin to talk, although for
the most part they spoke to WIRED only on condition of
anonymity.
On Nov. 20, 1990, the Judiciary Committee wrote a letter asking
CIA director William Webster to help the committee "by
determining whether the CIA has the PROMIS software."
The official reply on December 11th: "We have checked with
Agency components that track data processing procurement or
that would be likely users of PROMIS, and we have been unable
to find any indication that the Agency ever obtained PROMIS
software."
But a retired CIA official whose job it was to investigate the
Inslaw allegations internally told WIRED that the DOJ gave
PROMIS to the CIA. "Well," the retired official told WIRED, "the
congressional committees were after us to look into allegations
that somehow the agency had been culpable of what would
have been, in essence, taking advantage of, like stealing, the
technology [PROMIS]. We looked into it and there was enough
to it, the agency had been involved."
How was the CIA involved? According to the same source, who
requested anonymity, the agency accepted stolen goods, not
aware that a major scandal was brewing. In other words, the
DOJ robbed the bank, and the CIA took a share of the plunder.
But the CIA was not the only place where illegal versions of
PROMIS cropped up. Canadian documents (held by the House
Judiciary Committee and obtained by WIRED) place PROMIS in
the hands of various Canadian government agencies. These
documents include two letters to Inslaw from Canadian agencies
requesting detailed user manuals -- even though Inslaw has
never sold PROMIS to Canada. Canadian officials now claim the
letters were in error.
And, of course, the software was transferred to Rafael Etian's
anti- terrorism unit in Israel. The DOJ claims it was the LEAA
version, but former Israeli spy Ben Menashe and others claim it
was the 32-bit version. According to Ben Menashe, other
government departments within Israel also saw PROMIS, and this
time the pitchman was Dr. Earl Brian. In a 1991 affidavit related
to the bankruptcy proceedings, Ben Menashe claimed: "I
attended a meeting at my Department's headquarters in Tel Aviv
in 1987 during which Dr. Earl W. Brian of the United States made
a presentation intended to facilitate the use of the PROMIS
computer software."
"Dr. Brian stated during his presentation that all U.S. Intelligence
Agencies, including the Defense Intelligence Agency, the Central
Intelligence Agency, and the National Security Agency and the
U.S. Department of Justice were then using the PROMIS
computer software," Ben Menashe continued. While the
credibility of his statements has been questioned, the Israeli
government has admitted that Ben Menashe had access to
extremely sensitive information during his tenure at the Mossad.
Asked why Israeli intelligence would have been so interested in
Inslaw and PROMIS, Ben Menashe said, "PROMIS was a very big
thing for us guys, a very, very big thing ... it was probably the
most important issue of the '80s because it just changed the
whole intelligence outlook. The whole form of intelligence
collection changed. This whole thing changed it." PROMIS, Ben
Menashe said, was perfect for tracking Palestinians and other
political dissidents.
<< Page 5 Page 7 >>
The INSLAW Octopus (continued)
(Ben Menashe's superior during this period
was Rafael Etian, or Dr. Ben Orr, as he was
known during his 1983 visit to Inslaw.)
Apparently, Israel was not the only country
interested in using PROMIS for internal
security purposes. Lt. Col. Oliver North also
may have been using the program.
According to several intelligence
community sources, PROMIS was in use at
a 6,100-square-foot command center built on the sixth floor of
the Justice Department. According to both a contractor who
helped design the center and information disclosed during the
Iran-Contra hearings, Oliver North had a similar, but smaller,
White House operations room that was connected by computer
link to the DOJ's command center.
Using the computers in his command center, North tracked
dissidents and potential troublemakers within the United States
as part of a domestic emergency preparedness program,
commissioned under Reagan's Federal Emergency Management
Agency (FEMA), according to sources and published reports.
Using PROMIS, sources point out, North could have drawn up
lists of anyone ever arrested for a political protest, for example,
or anyone who had ever refused to pay their taxes. Compared
to PROMIS, Richard Nixon's enemies list or Sen. Joe McCarthy's
blacklist look downright crude. This operation was so sensitive
that when Rep. Jack Brooks asked North about it during the
Iran-Contra hearings, the hearing was immediately suspended
pending an executive (secret) conference. When the hearings
were reconvened, the issue of North's FEMA dealings was
dropped.
A Thorough Cleaning at the White House?
If the case against the Department of Justice is so solid, why
hasn't anything been done? The answer is timing. The next
move belongs to retired Federal Judge Bua, since he was given
oversight by Attorney General Barr in lieu of an independent
counsel. And everyone, including Judge Bua, whose non-binding
report was pending at WIRED's early December deadline, seems
to be waiting for the new administration. Both the Clinton/Gore
transition team and House majority leader Richard Gephardt had
no comment on the Inslaw case pending Clinton's inauguration.
But a source close to Bua's investigation said the retired judge
may present the DOJ with a bombshell. While not required to
suggest a settlement, the source believes Bua will reportedly
recommend that Inslaw be given between $25 million and $50
million for its mistreatment by the DOJ. (In last-minute
negotiations, Inslaw attorney Elliot Richardson held brief
meetings with DOJ officials in mid-December. Richardson pressed
for a settlement ranging from $25 million to $500 million, but the
DOJ balked, according to newspaper reports.)
But the question remains: Can the DOJ paper over the willful
destruction of a company, the plundering of its software, the
illegal resale of that software to further foreign policy
objectives, and the overt obstruction of justice with $25 million?
Bua's final recommendation, expected sometime before Clinton's
inauguration, is that the Inslaw Affair "requires further
investigation," the source said. That conclusion mirrors the
House Judiciary Committee's report. Privately, many Democrats,
including Gephardt, have expressed a strong desire to get to the
bottom of the Inslaw case. Rep. Brooks will be pushing for yet
another investigation of the scandal, this time independent of
the Justice Department, according to Congressional sources.
Once Bua's report is out, the next and possibly final move will be
up to a new president, a new Congress, and, possibly, a
renewed sense of justice.
<< Page 6 Page 8 >>
The INSLAW Octopus (continued)
SIDEBARS to the Inslaw Article
Earl W. Brian - The Consumate Insider
Dr. Earl W. Brian has made quite a career
of riding Reagan and Meese's coattails.
After a stint in Vietnam, where he worked
as a combat physician in the unit that
supplied air support for Operation Phoenix,
Brian returned to California with a chest full
of ribbons and a waiting job - as Secretary
of Health - with then-Governor Reagan's
administration. (Operation Phoenix, a well-documented CIA
political assassination program, used computers to track
"enemies" in Vietnam.)
In 1974, Brian resigned his cabinet post with Governor Reagan to
run for the Senate against Alan Cranston. After his defeat, Brian
moved into the world of business and soon ran into trouble. His
flagship company, Xionics, was cited by the Security and
Exchange Commission for issuing press releases designed to
boost stock prices with exaggerated or bloated information. The
SEC also accused Xionics of illegally paying "commissions" to
brokers, according to SEC documents.
At the close of the Reagan governorship, Brian was involved in a
public scandal having to do with - surprise - stolen computer
tapes. The tapes, which contained records of 70,000 state
welfare files, were eventually returned - Brian claimed he had a
right to them under a contract signed in the last hours of the
administration. (Brian said he just wanted to develop a better
way of doing welfare business.)
In 1980, Brian formed Biotech Capital Corp., a venture capital
firm designed to invest in biological and medical companies.
Ultimately, Brian has invested in and owned several companies,
including FNN (Financial News Network) and UPI, both of which
ended up in dire financial straits.
Ursula Meese, who like her husband knew Brian from the Reagan
cabinet, was an early investor in Biotech, using $15,000
(borrowed from Edwin Thomas, a Meese aide in the White House
and another Reaganite from California) to purchase 2,000 shares
on behalf of the Meese's two children, according to information
made public during Meese's confirmation hearings for Attorney
General.
It is those Reagan-Meese connections that continue to drag
Brian into the Inslaw affair. For why would Brian, of all people,
be the recipient of stolen PROMIS? PROMIS, after all, was a
major part in government automation contracts estimated at $3
billion, according to Inslaw President Bill Hamilton. That's quite a
political plum.
One possibility is Ed and Ursula Meese's financial connections to
Brian. Another is a payoff for Brian's role in the October Surprise
Even if he manages to evade the Inslaw allegations, Brian may
still be in hot water. As of this writing, Financial News Network's
financial dealings were under investigation by a Los Angeles
Grand Jury, according to sources who have testified before it. -
RLF
What A Surprise!
Earl W. Brian says he wasn't in Paris in October 1980, but
investors were told a different story
As Inslaw President Bill Hamilton moved his company from
non-profit status to the private sector in 1980, Ronald Reagan
was running for President, negotiations for the release of the
American hostages in Iran had apparently hit a snag, and Dr.
Earl W. Brian was touring Canada touting stock in his newly
acquired Clinical Sciences Inc.
History records that the hostages were released as Ronald
Reagan took the Presidential oath of office, and that shortly
thereafter, Inslaw received a $9.6 million contract from the
Department of Justice. At the same time, Earl Brian was
appointed to a White House post to advise on health-care
issues. Brian reported directly to Ed Meese. He also arranged
White House tours to woo investors in his government
contracting company, Hadron Inc., according to a Canadian
investment banker who took a tour.
But these seemingly random historical connections between
Inslaw, Hadron, the Reagan White House and Earl Brian take on
a new meaning when considered in light of the "October
Surprise," the persistent allegation that the Reagan campaign
negotiated with Iranian officials to guarantee that US hostages
would not be released before Reagan won election in 1980.
The October Surprise theory hinges in part on alleged
negotiations between the Reagan campaign and the Iranians on
the weekend of Oct. 17-21, 1980, in Paris, among other
places.The deal, according to former Iranian President Abol
Hassan Bani-Sadr, ex-Israeli spy Ari Ben Menashe, and a former
CIA contract agent interviewed by WIRED, included the payment
of $40 million to the Iranians.
According to several sources, Earl Brian, one of Reagan's close
advisors, made it quite clear that he was planning to be in Paris
that very weekend. Ben Menashe, who says he was one of six
Israelis, 12 Americans and 16 Iranians present at the Paris talks,
said, "I saw Brian in Paris."
Brian was interviewed by Senate investigators on July 28, 1992,
and denied under oath any connection with the alleged
negotiations. He told the investigators he did not have a valid
passport during the October 1980 dates. But according to court
documents and interviews, Brian told Canadian investors in his
newly acquired Clinical Sciences, Inc., that he would be in Paris
that weekend. Brian acquired controlling interest in Clinical
Sciences in the summer of 1980. Clinical Sciences was then
trading at around $2 a share. Brian worked with Janos P.
Pasztor, a vice president and special situations analyst with the
Canadian investment bank of Nesbitt, Thomson, Bongard Inc., to
create a market of Canadian investors for the stock.
Pasztor later testified in court documents that Brian said he
would be in Paris the weekend of October 17 to do a deal with
the Pasteur Institute (a medical research firm).
Two other brokers, Harry Scully, a broker based in Halifax, Nova
Scotia, and John Belton, a senior account executive with
Nesbitt-Thomson from 1968 to 1982 who is suing
Nesbitt-Thomson and Pasztor for securities fraud, also claim
that they were told that Brian was in Paris that weekend.
But if Brian went to Paris to see the Pasteur Institute, he seems
to have missed his appointment. An investigation by the Royal
Canadian Mounted Police into Clinical Sci-ences stock
transactions revealed that the Pasteur Institute had never
conducted business with, or even heard of Brian.
When asked by WIRED to elaborate on Brian's 1980 trip, Pasztor
said, "These are political questions and I don't want to become
involved." He refused further comment.Brian contends that the
dates of his trip were in error and that he went to Paris in April
1981, not October 1980. But the passport he turned over to
Senate investigators did not contain a French entry or exit
stamp for April 1981.
Through his lawyers, Brian refused to be interviewed for this
story. - RLF
Earl W. Brian: Closet Spook?
Michael Riconosciuto, a computer programmer and chemist who
surfs the spooky fringe of the guns-'n'-money crowd, is
currently serving a federal prison sentence for drug crimes. From
his jail cell he has given several interviews claiming knowledge of
Inslaw and the October Surprise (he also claims his jail term is
the DOJ's way of punishing him for his knowledge). Much of what
he claims cannot be verified, other statements have failed to be
veri-fied conclusively.
But prior to his arrest in 1991, Riconosciuto provided the
Hamiltons with an affidavit that once again brought Brian into
the Inslaw picture. "I engaged in some software development
and modification work in 1983 and 1984 on proprietary PROMIS
computer software product," he stated. "The copy of PROMIS on
which I worked came from the US Department of Justice. Earl W.
Brian made it available to me through Wackenhut (a security
company with close FBI and CIA connections) after acquiring it
from Peter Videnieks, who was then a Department of Justice
contracting official with the responsibility for PROMIS software. I
performed the modifications to PROMIS in Indio, Calif.; Silver
Springs, Md.; and Miami, Fla."
The modifications included a telecommunications "trap door" that
would let the US Government eavesdrop on any other
organization using the pirated software, Riconosciuto said.
Videnieks and Brian both told House investigators that they did
not know Riconosciuto. After Riconosciuto was interviewed by
House investigators, Videnieks refused to give Congress further
interviews.
Although Brian denies any involvement with Inslaw or
Riconosciuto, the House Judiciary Committee received a report
from a special task force of the Riverside County, Calif., Sheriff's
Office and District Attorney, stating that on the evening of
Sept. 10, 1981, arms dealers, buyers and various intelligence
operatives gathered at the Cabazon Indian Reservation near
Indio, Calif., for a demonstration of night warfare weapons. The
demonstration was orchestrated jointly by Wackenhut and the
Cabazon Indian tribe. (Many published reports allege that the
Wackenhut/Cabazon joint venture served as a weapons fencing
operation for Oliver North's Iran- Contra dealings.)
According to Indio city police officers hired to provide security,
those attending included Earl W. Brian, who was identified as
"being with the CIA," and Michael Riconosciuto. - RLF
US Deputy Attorney General Jensen Lost Once To Inslaw
Could It Be He Wanted to Even The Score? At the time of its
inception, PROMIS was the most powerful program of its type.
But a similar program, DALITE, was developed under another
LEAA grant by D. Lowell Jensen, the Alameda County, Calif.,
District Attorney. In the mid-1970s, the two programs vied for a
lucrative Los Angeles County contract and Inslaw won out.
Early in his career, Attorney General-to-be Edwin Meese worked
under Jensen at the Alameda County District Attorney's office.
Jensen was later appointed as Deputy Attorney General into
Meese's Justice Department.
C. Madison "Brick" Brewer, accused by the House Judiciary
Committee of deliberately misappropriating PROMIS, testified in
federal court that everything he did regarding Inslaw was
approved by D. Lowell Jensen, the same man who once
supervised DALITE.
Was Israel's PROMIS to Crush the Infitada?
Asked why Israeli intelligence would have been so interested in
Inslaw and PROMIS, ex-Israeli spy Ari Ben Menashe said:
"PROMIS was a very big thing for us guys, a very, very big thing
... it was probably the most important issue of the '80s because
it just changed the whole intelligence outlook. The whole form of
intelligence collection changed. This whole thing changed it."
Why? PROMIS, Ben Menashe said, was perfect for tracking the
Palestinian population and other political dissidents.
Did Oliver North Use PROMIS?
Apparently, Israel was not the only country interested in using
PROMIS for internal security purposes. Lt. Col. Oliver North also
may have been using the program. According to several
intelligence community sources, PROMIS was in use at a
6,100-square-foot command center built on the sixth floor of
the Justice Department. According to both a contractor who
helped design the center and information disclosed during the
Iran-Contra hearings, Oliver North had a similar, but smaller,
White House operations room that was connected by computer
link to the DOJ's command center.
Who Fired Inslaw's Lawyer?
As the Inslaw-DOJ battle was joined in bankruptcy court,
Inslaw's chief attorney, Leigh Ratiner, was fired from Dickstein,
Shapiro & Morin, the firm where he had been a partner for 10
years. His firing came after another Dickstein partner, Leonard
Garment, met with Arnold Burns, then- deputy attorney general
of the DOJ.
Garment was counsel to President Richard Nixon and assistant to
President Gerald Ford. He testified before a Senate inquiry that
he and Meese discussed the Inslaw case in October 1986, and
afterward he met with Burns. Two days later Ratiner was fired.
The terms of the financial settlement between Ratiner and his
firm were kept confidential, but WIRED has been told by
ex-Israeli spy Ari Ben Menashe that Israeli intelligence paid to
have Ratiner fired, and that the money was transferred through
Hadron Inc., the same company that Earl Brian used to
distribute illegal copies of PROMIS. Through informed sources,
WIRED has independently confirmed portions of Ben Menashe's
allegations.
Ben Menashe has told WIRED that he saw a memo in Israel,
written in Hebrew, requesting funds for "a lawyer." He claims to
have seen the memo at the office of a joint Mossad (Israeli
CIA), Internal Defense Forces and Military committee specializing
in Israeli-Iran relations. Israel admits that Ben Menashe handled
communications at this level and therefore would have had
access to such transmissions.
Ben Menashe said the money was used as Ratiner's settlement
payment. "The money was transferred, $600,000, to Hadron," he
said. As to why Hadron was used, Ben Menashe claims:
"Because [Brian] was involved quite deeply." He said Ratiner was
unaware of the source of the settlement funds.
Ratiner, contacted after the Ben Menashe interview, said he had
never disclosed the amount of the separation settlement to
anyone. He is limited contractually by his former firm from
discussing any specifics of the firing. Asked if Ben Menashe's
figures were correct, Ratiner said, "I can't comment because it
would be the same as revealing them." WIRED located a deep
background source who confirmed that the amount was "correct
almost to the penny."
Ratiner said he was shocked at the allegations of money
laundering. "Dickstein, Shapiro is the 10th largest firm in
Washington and I had no reason to think it was other than
reputable," he said. "Why is it that everyone who comes in
contact with the Inslaw case becomes a victim?" - RLF
A Dead Journalist Raises Some Eyebrows
Among the many strong conclusions of the "House Judiciary
Committee Report on the Inslaw Affair" was this rather startling
and brief recommendation: "Investigate Mr. Casolaro's death."
Freelance reporter Danny Casolaro spent the last few years of
his life investigating a pattern which he called "The Octopus."
According to Casolaro, Inslaw was only part of a greater story
of how intelligence agencies, the Department of Justice and
even the mob had subverted the government and its various
functions for their own profit.
Casolaro had hoped to write a book based on his reporting. His
theories, which some seasoned investigative journalists have
described as naive, led him into a Bermuda Triangle of spooks,
guns, drugs and organized crime. On August 10th, 1991, he was
found dead in a Martinsburg, W. Va., hotel room. Both wrists
were deeply slashed.
Casolaro's death has only deepened the mystery surrounding
Inslaw. Among the more unusual aspects of his death: He had
gone to Martinsburg to meet an informant whose name he never
revealed. He had called home the afternoon before his death to
say he would be late for a family gathering. Martinsburg police
allowed his body to be embalmed before family members were
notified and warned hotel employees not to speak to reporters.
The hotel room was immediately scrubbed by a cleaning service.
Casolaro had told several friends and his brother that if anything
ever happened to him, not to believe it was an accident. And his
notes, which witnesses saw him carry into the hotel, were
missing.
His death was ruled a suicide by Martinsburg and West Virginia
authorities several months later. Friends, relatives and some
investigators still cry foul.
A source close to retired Federal Judge Nicholas Bua (the Bush
Administration appointee who is investigating Inslaw) said Bua
will not come to any conclusions regarding Casolaro's fate. "I
don't know if he committed suicide or if it was murder," the
source said. "But the evidence is consistent with both theories.
There are things that bother me but ... certainly no one can be
indicted on the evidence that is available."
What does that mean? Either an independent investigation
drums up more evidence, or the case may never be solved.
The House Judiciary Committee may have written what could be
called the final word on Danny Casolaro's inexplicable death: "As
long as the possibility exists that Danny Casolaro died as a
result of his investigation into the Inslaw matter, it is imperative
that further investigation be conducted." - RLF
InslawGate?
Elliot Richardson, President Nixon's former attorney general (he
was fired when he refused to fire Archibald Cox during the
Watergate scandal) has been a counsel to Inslaw for nearly 10
years (he retired this January). In a Oct. 21, 1991 New York
Times Op Ed, Richardson wrote: "This is not the first time I have
had to think about the need for an independent investigator. I
had been a member of the Nixon Administration from the
beginning when I was nominated as Attorney General in 1973.
Confidence in the integrity of the Watergate investigation could
best be insured, I thought, by entrusting it to someone who had
no prior connection to the White House. With Inslaw, the
charges against the Justice Department make the same course
even more imperative.
"When the Watergate special prosecutor began his inquiry,
indications of the President's complicity were not as strong as
those that now point to a broad conspiracy implicating lesser
Government officials in the theft of Inslaw's technology."
A Well-Covered Coverup?
The House Committee Report contained some no-holds-barred
language on the issue of stonewalling:
"One of the principle reasons the committee could not reach any
definitive conclusion about Inslaw's allegations of a high criminal
conspiracy at Justice was the lack of cooperation from the
Department," the report states. "Throughout the two Inslaw
investigations, the Congress met with restrictions, delays and
outright denials to requests for information and to unobstructed
access to records and witnesses.
"During this committee's investigation, Attorney General
Thornburgh repeatedly reneged on agreements made with this
committee to provide full and open access to information and
witnesses ... the Department failed to provide all the documents
subpoenaed, claiming that some of the documents ... had been
misplaced or accidentally destroyed."
Rep. Jack Brooks and the House Committee On the Inslaw
Case
The string of lawsuits and widening allegations caught the eye
of House Judiciary Committee Chairman Jack Brooks, D-Texas,
who in 1989 launched a three-year investigation into the Inslaw
affair. In the resulting report, the Committee suggested that
among others, Edwin Meese, while presidential counselor and
later as attorney general, and D. Lowell Jensen, a former
assistant and deputy attorney general and now a U.S. district
judge in San Francisco, conspired to steal PROMIS.
"There appears to be strong evidence," the report states, "as
indicated by the findings in two Federal Court proceedings as
well as by the committee investigation, that the Department of
Justice 'acted willfully and fraudulently,' and 'took, converted
and stole,' Inslaw's Enhanced PROMIS by 'trickery fraud and
deceit.' "
"While refusing to engage in good faith negotiations with
Inslaw," the report continues, "Mr. Brewer and Mr. Videnieks,
with the approval of high- level Justice Department officials,
proceeded to take actions to misappropriate the Enhanced
PROMIS software."
Furthermore, the report states, "several individuals have stated
under oath that the Enhanced PROMIS software was stolen and
distributed internationally in order to provide financial gain to Dr.
Brian and to further intelligence and foreign policy objectives for
the United States."
Rep. Brooks told WIRED that the report should be the starting
point for a grand jury investigation. The owners of Inslaw,
Brooks said, were "ravaged by the Justice Department ...
treated like dogs."
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