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Union Calendar No. 491

------- House Report 102-857

THE INSLAW AFFAIR

INVESTIGATIVE REPORT

COMMITTEE ON THE JUDICIARY

together with

DISSENTING AND SEPARATE DISSENTING VIEWS

SEPTEMBER 10, 1992. — Committed to the Committee of the Whole House
on the State of the Union and ordered to be printed

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1992

iHf

COMMITTEE ON THE JUDICIARY

JACK BROOKS,

DON EDWARDS, California

JOHN CONYERS, JR., Michigan

ROMANO L. MAZZOLI, Kentucky

WILLIAM J. HUGHES, New Jersey

MIKE SYNAR, Oklahoma

PATRICIA SCHROEDER, Colorado

DAN GLICKMAN, Kansas

BARNEY FRANK, Massachusetts

CHARLES E. SCHUMER, New York

EDWARD F. FEIGHAN, Ohio

HOWARD L. BERMAN, California

RICK BOUCHER, Virginia

HARLEY O. STAGGERS, JR., West Virginia

JOHN BRYANT, Texas

MEL LEVINE, California

GEORGE E. SANGMEI STER, Illinois

CRAIG A. WASHINGTON, Texas

PETER HOAGLAND, Nebraska

MICHAEL J. KOPETSKI, Oregon

JACK F. REED, Rhode Island

Texas, Chairman
HAMILTON FISH, JR., New York
CARLOS J. MOORHEAD, California
HENRY J. HYDE, Illinois
F. JAMES SENSENBRENNER, JR-,
Wisconsin

BILL MCCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR S. SMITH, Texas
CRAIG T. JAMES, Florida
TOM CAMPBELL, California
STEVEN SCHIFF, New Mexico
JIM RAMSTAD, Minnesota
GEORGE ALLEN, Virginia

JONATHAN R. YaROWSKY, General Counsel
ROBERT H. Brink, Deputy General Counsel
JAMES E. Lewin, Chief Investigator
JOHN D. COHEN, Investigator
A r iv V r.nFFEV Minority Chief Counsel

(II)

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transmittal

Hon Thomas S. For.
Speaker of the House
Washington, DC.

Dear Mr. Speak

"Udiciaty, i su b m i t h

INSLAW Affair ”

"* e committee on the
lgative report entitled “The

Jack Brooks, Chairman.

CONTENTS

I. Summary ]

A. INSIAW allegations 2

B. Committee investigation 3

1. Did the Department convert, steal or misappropriate
the PROMIS software

2. Was there a high level conspiracy? 7

C. Additional questions . 9

D. Evidence of possible coverup and obstruction 10

E. Judge Basons allegations against the Department 12

F. Conclusion 13

II. Committee investigation, prior studies, hearings and subcommittee

proceedings ■■ ; •••■ 14

III. Conflicts between the Department and INSLAW result in the

misappropriation of INSLAW’s Enhanced PROMIS 15

A. Project Manager Brewer: An inherent bias and potential conflict

of interest 18

B. Brewer and Videnieks threaten INSIAW 25

C. INSLAW attempts to demonstrate enhancement ownership 27

D. The Department misappropriated INSLAW’s software 30

E. INSIAW declares bankruptcy and pursues litigation 34

F. District Court Judge William Bryant’s decision on appeal of

the Bankruptcy Court’s ruling 36

Department’s position against judge’s decision is rebutted

on appeal 37

G. Appeals Court reverses INSLAW’s victory on primarily jurisdic-

tional grounds 38

H. Department asserts erroneous position before DOTBCA 39

I. Department encourages contract mediation while it hinders

settlement 41

IV. Significant questions remain unanswered about possible high level

criminal conspiracy • • 42

A. Allegations of conspiracy and intrigue continue to surround the

INSLAW controversy •_ 42

B. Enhanced PROMIS may have been disseminated nationally and

internationally ■ 45

1. Allegations that the Justice Department and Earl Brian

conspired to distribute PROMIS 49

2. Sworn statement of Michael Riconosciuto 50

3. Other sources allege widespread distribution of

INSLAW’s Enchanced PROMIS 55

4. Does the Government of Canada have the PROMIS

software? 55

5. Did the CIA assist in the sale of PROMIS? 57

6. Allegations of PROMIS distribution to agencies within

the Department

7. Ronald

ipartment

LeGrand

denies INSLAW’s assertions ,

8. The allegators 83

C. Other important questions remain 69

1. The death of Daniel Casolaro 69

2. Possible connection between Earl Brian, Michael

Riconosciuto, Robert Booth Nichols, and the Cabazon

Indian Reservation 72

V. Allegations of perjury, coverup, and retribution: A web of contradiction

and deceit 78

A. Judge BlacksheaFs recantation 75

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■ . 1 . . ■' V ; * <■ V ‘ . ’> J . H Vy

Page

B. Judge Blackshear’s statement to committee lacks credibility 75

C. Committee analysis of attempt to assign Harry Jones to the

INSLAW case . . 77

D. Bason allegations against Blackshear not adequately

considered 78

VI. The Department has proven to be incapable of a forthright investigation

of the INSLAW matter 82

A. Jensen failed to adequately investigate INSLAW’s concerns 82

B. OPR’s INSLAW investigations are deficient 84

C. GAO study of the Office of Professional Responsibility 86

D. The Department did not seriously consider the need for an

independent counsel 87

E. Department’s response to court findings of possible perjury 89

F. INSLAW request for independent counsel 91

VII. Top Department officials frustrated co mmi ttee’s investigation 92

A. Department attempts to thwart co mmi ttee inquiry 93

B. Authorization and oversight hearings 97

C. The Department reports key subpoenaed documents missing 98

D. Department interferes with Michael Riconosciuto’s sworn

statement to the committee — refuses request to interview DEA
agents 100

E. Department official may have attempted to influence a key

witness 101

VHI. Judge Bason’s allegations of Justice Department’s improper influence

on the judicial selection process 102

A. Confidential memorandum 104

B. Condition of the clerk’s office under Judge Bason 104

C. Department’s attempts to have Bason removed from INSLAW

case fail 106

IX. Conclusion 109

X. Findings 110

XI. Recommendations 113

VIEWS

Dissenting views of Hon. Hamilton Fish, Jr., Hon. Carlos J. Moorhead, Hon.

Henry J. Hyde, Hon. F. James Sensenbrenner, Jr., Hon. Bill McCollum,

Hon. George W. Gekas, Hon. Howard Coble, Hon. Lamar S. Smith, Hon.

Craig T. James, Hon. Tom Campbell, Hon. Steven Schiff, Hon. Jim

Ramstad, and Hon. George Allen 115

Separate dissenting views of Hon. Tom Campbell 121

■*

Page

>ility 75

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lequately

istigation

3ms 82

d for an

iury 89

ssing 98

's sworn
dew DEA

100

ce a key

101

influence

102

104

INSLAW

106

109

110

113

ead, Hon.
IcCollum,
lith, Hon.

Hon. Jim

115

121

102d Congress
2d Session

Union Calendar No. 491

( Report
102-857

THE INSLAW AFFAIR

September 10, 1992. — Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed

Mr. Brooks, from the Committee on the Judiciary, submitted the

following

INVESTIGATIVE REPORT

together with

DISSENTING AND SEPARATE DISSENTING VIEWS
BASED ON A STUDY BY THE FULL COMMITTEE

On August 11, 1992, the Committee on the Judiciary approved
and adopted a report entitled, “The INSLAW Affair.” The chairman
was directed to transmit a copy to the Speaker of the House.

I. SUMMARY

The Department of Justice has long recognized the need for a
standardized management information system to assist law en-
forcement offices across the country in the recordkeeping and
tracking of criminal cases. During the 1970’s, the Law Enforcement
Assistance Administration (LEAA) funded the development by
INSLAW 1 of a computer software system called the Prosecutor’s
Management Information System or PROMIS. This system was de-
signed to meet the criminal prosecutor workloads of large urban ju-
risdictions; and by 1980, several large U.S. attorneys offices were
using the PROMIS software. At this time, INSLAW (formerly

1 INSLAW, Inc., i8 a Washington, DC, based company engaged in computer software and ays-
terns analysis, particularly case management and decision support applications for legal and
criminal justice oriented organizations.

( 1 )

I i

i *

i 5

called the Institute for Law and Social Research) was a nonprofit
corporation funded almost entirely through Government grants and
contracts. When President Carter terminated the LEAA, INSLAW
converted the company to a for-profit corporation in 1981 to com-
mercially market PROMIS. The new corporation made several sig-
nificant improvements to the original PROMIS software and the re-
suiting product came to be known as INSLAW’S proprietary En-
hanced PROMIS. The original PROMIS was funded entirely with
Government funds and was in the public domain.

In March 1982, the Justice Department awarded INSLAW, Inc.,
a $10 million 3-year contract to implement the public domain ver-
J!*® of PROMIS at 94 U.S. attorneys’ offices across the country and
U.S. Territories. While the PROMIS software could have gone a
long wary toward correcting the Department’s longstanding need for
case man agement system, the contract between
INbLAW and Justice quickly became embroiled in bitterness and
controversy which has lasted for almost a decade. The conflict cen-
ters on the question of whether INSLAW has ownership of its pri-
vately funded “Enhanced PROMIS.” This software was eventually
installed at numerous U.S. attorneys’ offices after a 1983 modifica-
TXTor^ATin con ^ rac t- While Justice officials at the time recognized
INSLAWs proprietary rights to any privately funded enhance-
ments to the original public domain version of PROMIS, the De-
partment later claimed that it had unlimited rights to all software
supplied under the contract. (See section of report entitled, “The
Department Misappropriated INSLAW Software. )

INSLAW attempted to resolve the matter several times but was
largely met with indifference or hostility by Department officials.
Eventually, the Department canceled part of the contract and, by
February 1985, had withheld at least $1.6 million in payments. As
a result, the company was driven to the brink of insolvency and
was threatened with dissolution under chapter 7 of the bankruptcy
laws. Department officials have steadfastly claimed the INSLAW
controversy is merely a contract dispute which has been blown out
of proportion by the media. INSLAW’S owners, William and Nancy
Hamilton, however, have persisted in their belief that the Depart-
ment s actions were part of a high level conspiracy within Justice
to steal the Enhanced PROMIS software.

A. INSLAW Allegations

Based on their knowledge and belief, the Hamiltons have alleged
that high level officials in the Department of Justice conspired to
steal the Enhanced PROMIS software system. As an element of
this theft, these officials, who included former Attorney General
tnt or ^ .„® e8e and Deputy Attorney General Lowell Jensen, forced
INbLAW into bankruptcy by intentionally creating a sham contract
dispute over the terms and conditions of the contract which led to
the withholding of payments due INSLAW by the Department. The
Hamiltons maintain that, after driving the company into bank-
ruptcy, Justice officials attempted to force the conversion of
INSLAW’S bankruptcy status from Chapter 11: Reorganization to
Chapter 7: Liquidation. They assert that such a change in bank-
ruptcy status would have resulted in the forced sale of INSLAWS
assets, including Enhanced PROMIS to a rival computer company

called Hadron, Inc., which, at the time, was attempting to conduct
a hostile buyout of INSLAW. Hadron, Inc., was controlled by the
Biotech Capital Corporation, under the control of Dr. Earl Brian,
who was president and chairman of the corporation. The Hamiltons
assert that even though the attempt to change the status of
INSLAWS bankruptcy was unsuccessful, the Enhanced PROMIS
software system was eventually provided to Dr. Brian by individ-
uals from the Department with the knowledge and concurrence of
then Attorney General Meese who had previously worked with Dr.
Brian in the cabinet of California Governor Ronald Reagan and
later at the Reagan White House. According to the Hamiltons, the
ultimate goal of the conspiracy was to position Hadron and the
other companies owned or controlled by Dr. Brian to take advan-
tage of the nearly 3 billion dollars’ worth of automated data proc-
essing upgrade contracts planned to be awarded by the Department
of Justice during the 1980’s.

Information obtained by the Hamiltons through sworn affidavits
of several individuals, including Ari Ben-Menashe, a former Israeli
Mossad officer, and Michael Riconosciuto, an individual who claims
to have ties to the intelligence community, indicated that an ele-
ment of this ongoing criminal enterprise by Mr. Meese, Dr. Brian
and others included the modification of the Enhanced PROMIS
software by individuals associated with the world of covert intel-
ligence operations. The Hamiltons claim the modification of En-
hanced PROMIS was an essential element of the enterprise, be-
cause the software was subsequently distributed by Dr. Brian to in-
telligence agencies internationally with a “back door” software rou-
tine, so that U.S. intelligence agencies could covertly break into the
system when needed. The Hamiltons also presented information in-
dicating that PROMIS had been distributed to several Federal
agencies, including the FBI, CIA, and DEA.

B. Committee Investigation

Due to the complexity and breadth of the INSLAW allegations
against the Department of Justice, the committee’s investigation fo-
cused on two principal questions: (1) Did high level Department of-
ficials convert, steal or otherwise misappropriate INSLAWs
PROMIS software and attempt to put the company out of business;
and, (2) did high level Department of Justice officials, including At-
torney General Edwin Meese and then Deputy Attorney General
Lowell Jensen, and others conspire to sell, transfer, or in any way
distribute INSLAWs Enhanced PROMIS to other Federal agencies
and foreign governments?

I. DID THE DEPARTMENT CONVERT, STEAL OR MISAPPROPRIATE THE
PROMIS SOFTWARE?

With regard to the first question, there appears to be strong evi-
dence, as indicated by the findings in two Federal court proceed-
ings as well as by the committee investigation, that the Depart-
ment of Justice “acted willfully and fraudulently,” 2 and “took, con-

2 1 SLAW, Inc., v. United States, opinion of U.S. District Court Judge William Bryant, at p.

verted and stole,” 3 INSLAW’S Enhanced PROMIS by “trickery,
fraud and deceit.” 4 * It appears that these actions against INSLAW
were implemented through the project manager from the beginning
of the contract and under the direction of high level Justice Depart-
ment officials.

Just 1 month after the contract was signed, Mr. C. Madison
“Brick” Brewer, the PROMIS project manager, raised the possibil-
ity of canceling the INSLAW contract. During an April 14, 1982
meeting of the PROMIS Project Team, Mr. Brewer, and others dis-
cussed terminating the contract with INSLAW for convenience of
the Government. Mr. Brewer did not recall the details of the meet-
mg but said that if this recommendation was made, it was made
in jest. Based on notes taken at this meeting by Justice officials,
Bankruptcy Court Judge George Bason found that Mr. Brewer’s
recommendation to terminate the INSLAW contract,

. . . constituted a smoking gun that clearly evidences Brewer’s in-
against INSLAW, his single-minded intent to drive
INbLAW out of business....” 6 By his own admission, Mr. Brewer
became upset when INSLAW claimed that it had made enhance-
ments to the public domain version of PROMIS using private
funds. In his view, under the contract all versions of PROMIS were
the Government’s property. It is clear from the record that Mr.
Brewer and Mr. Videnieks (the PROMIS contracting officer), sup-
ported by high level Justice officials continued to confront INSLAW
at every turn. As Senior District Court Judge Bryant stated in his
ruling on the case: “There was unending contention about pay-
merits under this contract and the rights of the respective parties.”

Over the life of the contract, INSLAW made several attempts to
reach an agreement with the Department over its proprietary
rights to the Enhanced PROMIS software. The Department, how-
ever, steadfastly refused to conduct any meaningful negotiations
and exhibited little inclination to resolve the controversy. In the
meantime, INSLAW was pushed to the brink of financial ruin be-
cause the Department withheld at least $1.6 million in critical con-
tract payments on questionable grounds, and in February 1985 was
forced to file for protection under chapter 11 of the Bankruptcy
Code in order to stay economically viable. INSLAW at this time
had installed PROMIS at the 20 largest U.S. attorneys’ offices
across the country as required by the contract. 7 * * * The Department
had earlier canceled installation of PROMIS at the 74 smaller of-
fices.

r , e / using t0 cn « a K e in good faith negotiations with
INbLAW, Mr. Brewer and Mr. Videnieks, with the approval of high
level Justice Department officials, proceeded to take actions to mis-
appropriate the Enhanced PROMIS software. These officials knew
that INSLAW had installed Enhanced PROMIS at the 20 sites.
Yet, without notice, and certainly without permission, the Depart-

3 INSLAW, Inc., v. United States, Ch 11. Case No. 85-00070, Adv. No. 86-00069 transcriot

of oral decision at 9 (Bankr.D.D.C. September 28, 1987). ’ P

‘INSLAW, Inc., v. United States, 83 B.R. 89 (Bktcy. D. Diet. Col. 1988) at 158 (Finding 399)

Sworn statement of C. Madison Brewer, In the matter of: Office of Professional Responsibil-

ity Investigation No. 88-0137, June 29, 1988, p. 35. ^

*INSLAW, Inc., v. United States, 83 B.R. 89 (Bktcy. D. Dist. Col. 1988) at 123 (Finding 165)

There were two additional sites (Southern District of California and District of New Jersev)

which were used as pilot sites prior to the award of the March 1987 contract to INSLAW J

ment of Justice illegally copied INSLAW’S Enhanced PROMIS soft-
ware and installed it eventually at 25 additional U.S. attorneys’ of-
fices. The Department reportedly also brought another 31 U.S. at-
torneys offices “on-line” to Enhanced PROMIS systems via tele-
communications. INSLAW first learned of these unauthorized ac-
tions in September 1985, and notified the Department that it must
remove the Enhanced PROMIS software or arrange for license
agreements. When the Department refused, INSLAW subsequently
hied a claim against Justice in the Federal Bankruptcy Court
which eventually led to the Bankruptcy’s Court’s finding that the
Departments actions “...were done in bad faith, vexatiously in
wanton disregard of the law and the facts, and for oppressive rea-
sons to drive INSLAW out of business and to convert! by trick-
ery, fraud and deceit INSLAWs PROMIS software.” When the
case was appealed by the Department, Senior District Court Judge
William Bryant concurred with the Bankruptcy Court and was very
cntical of the Department’s handling of the case. In his ruling S
49a, Judge Bryant stated:

The Government accuses the bankruptcy court of looking
beyond the bankruptcy proceeding to find culpability by
the Government. What is strikingly apparent from the tes-
timony and depositions of key witnesses and many docu-
ments is that IN SLAW performed its contract in a hostile
enviromnent that extended from the higher echelons of the
Justice Department to the officials who had the day-to-day
responsibility for supervising its work. [Emphasis added.]

Recently, the posture of some Department officials has been to
attempt to exonerate the Department’s handling of the INSLAW

Ranlfmi!X Cltln ^ the , 9 0l J rt of Appeals has vacated the

ankruptcy and District Courts judgment involving illegal mis-

S U nl° f ' he Department including violations of the automatic
stay provisions of the Bankruptcy Code. However, the D C Cir-

and primarily on jurisdictional questions

and did not address the substantive merits of the findings of fact

the Bankmptcy court ° r L ruih *

Based on the facts presented in court and the committee’s review

fLhfd P ;n r J iI M nt R eCOrds ’ i vr d 1 ed appear that Justice officials,

including Mr. Brewer and Mr. Videnieks, never intended to fully

proprietary rights of INSLAW or bargain in good faith
with the company. The Bankruptcy Court found that:

. . . [The Department] engaged in an outrageous, deceitful,
fraudulent game of cat and mouse, demonstrating con-
tempt for both the law and any principle of fair dealing
[Finding No. 266 at 138.] s

As the Bankruptcy and District Courts found on the merits, it is
very unlikely that Mr. Brewer and Mr. Videnieks acted alone to
violate the propnetaiy rights of INSLAW in this matter. In ex-

£!oV n !n g * Mr ' Brewer > the Project manager, has re-

ac ^ g out an y Personal vendetta
against INSLAW and that high level Department officials including
LoweH Jensen were aware of every decision he made with regard
to the contract. Mr. Brewer stated, under oath that “...there was

somebody in the Department at a higher level, looking over the
shoulder of not just me but the people who worked for me ” 8
The PROMIS Oversight Committee, headed by Deputy Attorney
General Lowell Jensen, kept a close watch over the administration
of the contract and was involved in every major decision Mr Jen-
sen, who worked with former Attorney General Edwin Meese in the
Alameda County district attorneys’ offices, stated under oath that
f® Attorney General regularly informed of all aspects of

the INSLAW contract. The PROMIS Oversight Committee readily
Mr. Brewer’s recommendation to cancel part of
lWbLAW s contract for default because of the controversy regarding
the installation of PROMIS in word processing systems at the 74
smaller U.S. attorneys’ offices. Mr. Brewer’s proposal was ulti-
mately rejected only because a Justice contracts attorney advised
the oversight committee that the Department did not have the
itfor * a «r- on j y . to , do so - Curiously, the recommendation to find
I INSLAW m default occurred shortly after INSLAW and the De-
partment signed a modification to the contract (Mod. 12) which
wa s supposed to end the conflict over proprietary rights. '

Mr. Jensen, who is currently a Federal District Court judge in
San Francisco, served at the Justice Department successively as
Assistant Attorney General in charge of the Criminal Division As-
sociate attorney General and Deputy Attorney General between
1981 and 1986. The Bankruptcy Court found that he “had a pre-
viously developed negative attitude about PROMIS and INSLAW”
from the beginning (Findings No. 307-309) because he had been as-
sociated with the development of a rival case management system
while he was a district attorney in California, and that this experi-
ence at the very least, affected his judgment throughout his over-
sightot the contract. During a sworn statement, Judge Jensen de-
nied. being biased against INSLAW, but averred that he did not
have complete recollection of the events surrounding his involve-
ment in the contract. However, based on the committee’s own in-
ves-igation it is clear that Judge Jensen was not particularly inter-
ested or active in pursuing INSLAW’s claims that Department offi-
cials were biased against the company and had taken action to
harm the company. Perhaps most disturbing, he remembered very
few details of the PROMIS Oversight Committee meetings even
though he had served as its chairman and was certainly one of its
most influential members. He stated that after a meeting with
former Attorney General Elliot Richardson (representing INSLAW)
regarding the alleged Brewer bias, he commissioned his deputy
Mr. Jay Stephens, to conduct an investigation of the bias charges’
Based on this investigation, Judge Jensen said he concluded that
there were no bias problems associated with the Department’s han-
ding of the INSLAW contract.

This assertion, however, contradicted Mr. Stephens, who testified
during a sworn statement that he was never asked by Judge Jen-
sen to conduct an investigation of the Brewer bias allegations
raised by Mr. Richardson and others. Mr. Stephens’ recollection of
the events was sharp and complete in stark contrast to Judge Jen-
sen s. As a result, many questions remain about the accuracy and

* INSLAW , Inc., v. United States, 83 B.R., op cit., p. 17.

th™ PROMIS od U rteh? e p Sen ’ S If C ° lleCtion ? and sta tements. As for
inlJ iw jit ^ Committee, committee investigators were

told that detailed minutes were not kept at any of the meetings

° f Specific discussions by its members If
£ ^ INSLAw extract. The records that were available were

how aSd wL dS!a„“te°r^ade d " 0t inC ' Ude ° ny ba '*‘' round °f

,3° t te ’ f ° rmer Attorney General Meese denies having knowl-
°i f a H y b '. as . against INSLAW by the Department or any of its

ment with ' the^NST AW^ °f th ’ that ¥ d little > if an y> mvolve-
discusTion controversy and that he recalls no specific

INSLAW, y *£ e ’r ,acludin g Department officials about

PROMTS t Justlce regarding the use or misuse of the

ww? , Ware ' statement is in direct conflict with Judge
Jensens testimony that he briefed Mr. Meese regularly on this

ronll a ? d l A at ^ eese was ver y interested in the details of the
contract and negotiations.

One of the most damaging statements received by the committee

Bur a „lt r offi?“f e p nt f made Attorney feneralXold

1988 °[J r ° feSS ; i0 ^ a ' Responsibility (OPR) investigators

n 1988. In this statement, Mr. Bums stated that Department at-

INST.AWs ' are ? dy advised him (sometime in 1986) that
NbLAWs claim of propnetary rights in the Enhanced PROMIS

rtVhYs 3 ™ Tif S Sglt i, mate and tha t the Department had waived any
rights in these enhancements. Mr. Bums was also told by Justice
attorneys that the Department would probably lose the case in
court on this issue. Accepting this statement, it is incredible that
t e Department, having made this determination, would continue
to pursue its litigation of these matters. More than $1 million has
i Pet V a ^gation on this case by the Justice Department
even though it knew in 1986 that it did not have a chance to win
the case on merits. This clearly raises the specter that the Depart
ment actions taken against INSLAW in this matter represent
abuse of power of shameful proportions. present an

2. WAS THERE A HIGH LEVEL CONSPIRACY?

The second phase of the committee’s investigation concentrated
on the allegations that high level officials at the Department of

t0 ^ !?? LAW int0 inso] vency and steal the
PROMIS software so it could be used by Dr. Earl Brian a former

Briln a "b fnend ° f then . Attorney General Edwin Meese. Dr
Bnan is a businessm an and entrepreneur who owns or controls
severa 1 businesses including Hadron, Inc., which has contracts with
J a® t,ce Dejiartment, CIA, and other agencies. The Hamiltons
and others have asserted that Dr. Brian conspired with high level

agen ci e s woHd wide. 6 PR ° MIS to kw a " d

En ' ot Richar dson, counsel to INSLAW,
PROMiq g ! d ft that the , circums tances involving the theft of the
PROMIS software system constitute a possible criminal conspiracy
invoking Mr. Meese, Judge Jensen, Dr. Brian, and several cuS
and former officials at the Department of Justice. Mr. Richardson
. ind, ™iuals involved in the theft of the En-
hanced PROMIS system have violated a plethora of Federal crimi-

nal statutes, including but not limited to: (1) 18 U.S.C 654 (officer
or employee of the United States converting the property of an-
other); (2) 18 U.S.C 1001 (false statements); (3) 18 U.S.C 1621 (per-
jury); (4) 18 U.S.C 1503 (obstruction of justice); (5) 18 U.S.C 1341
(mail fraud) and (6) 18 U.S.C. 371 (conspiracy to commit criminal
offenses). Mr. Richardson further contends that the violations of
Federal law associated in the theft of Enhanced PROMIS, the sub-
sequent coverup and the illegal distribution of PROMIS fulfill the
requirements for prosecution under 18 U.S.C. 1961 et seq. (the
Racketeer Influenced and Corrupt Organizations— (RICO)— stat-
ute).

As discussed earlier, the committee’s investigation largely sup-
ports the findings of two Federal courts that the Department “took,
converted, stole* INSLAW’S Enhanced PROMIS by “trickery, fraud
and deceit,” and that this misappropriation involved officials at the
highest levels of the Department of Justice. The recent ruling by
the D.C. Circuit Court of Appeals does nothing to vitiate those con-
clusions, the product of an extensive record compiled under oath by
two Federal jurists. While the Department continues to attempt to
explain away the INSLAW matter as a simple contract dispute, the
committee’s investigation has uncovered other information which
plausibly could suggest a different conclusion if full access to docu-
ments and other witnesses were permitted. 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 ob-
jectives for the United States. While it should be acknowledged at
the outset that some of the testimony comes from individuals
whose past associations and enterprises are not commendable, cor-
roborating evidence for a number of their claims made under oath
has been found. It should be observed that these individuals pro-
vided testimony with the full knowledge that the Justice Depart-
ment could— and would probably be strongly inclined to — prosecute
them for perjury if they lied under oath. Moreover, we note that
the Department is hardly in a position to negate summarily testi-
mony offered by witnesses who have led less than an exemplary life
in their choice of associations and activities. As indicated by the re-
cent prosecution of Manuel Noriega, which involved the use of over
40 witnesses, the majority of whom were previously convicted drug
traffickers, a witness’ perceived credibility is not always indicative
of the accuracy or usability in court of the information provided. Al-
though the committee’s investigation could not reach a definitive
conclusion regarding a possible motive behind the misappropriation
of the Enhanced PROMIS software, the disturbing questions
raised, unexplained coincidences and peculiar events that have sur-
faced throughout the INSLAW case raises the need for further in-
vestigation.

One area which requires further investigation is the allegations
made by Mr. Michael Riconosciuto. Mr. Riconosciuto, a shady char-
acter allegedly tied to U.S. intelligence agencies and recently con-
victed on drug charges, alleges that Dr. Brian and Mr. Peter
Videnieks secretly delivered INSLAWs Enhanced PROMIS soft-
ware to the Cabazon Indian Reservation, located in California, for
“refitting” for use by intelligence agencies in the United States and

abroad. When Dr. Brian was questioned about his alleged involve-
me ? xi n JNSLAW case, he denied under oath that he had ever
met Mr. Riconosciuto and stated that he had never heard of the
Cabazon Indian Reservation.

C. Additional Questions

De P ar tment of Justice conspiracy to steal
INSLAWs PROMIS were fbeled when Danny Casolaro — an inves-
tigative writer inquiring into those issues— was found dead in a
o? * if 001 ? ln Martinsburg, WV, where he was to meet a source
that he claimed was critical to his investigation. Mr. Casolaro’s
body was found on August 10, 1991, with his wrists slashed numer-
ous times Following a brief preliminary investigation by local au-
tnonties, Mr. Casolaro s death was ruled a suicide. The investiga-
tion was reopened later as a result of numerous inquiries from Mr.
Casolaro s brother and others regarding the suspicious cir-
cumstances surrounding his death.

The Martinsburg Police investigation subsequently concluded in
January 1992, that Mr. Casolaro’s death was a suicide. Subse-
quently, Chairman Brooks directed committee investigators to ob-
tain sworn statements from the FBI agent and two former Federal
Urganized Crime Strike Force prosecutors in Los Angeles who had
information bearing on the Casolaro case. Sworn statements were
obtained from former Federal prosecutors Richard Stavin and
Marvin Rudmck on March 13 and 14, 1992. After initial resistance
trom the Bureau, a sworn statement was taken from FBI Special
Agent Thomas Gates on March 25 and 26, 1992.

Special Agent Gates stated that Mr. Casolaro claimed he had
found a link between the INSLAW matter, the activities taking
place at the Cabazon Indian Reservation, and a Federal investiga-
tion in which Special Agent Gates had been involved regarding or-
ganized crime influence in the entertainment industry

Special Agent Gates stated that Mr. Casolaro had several con-
versations with Mr. Robert Booth Nichols in the weeks preceding
his death. Mr Nichols according to documents submitted to a FecL
eral court by the FBI, has ties with organized crime and the world
of covert intelligence operations. When he learned of Mr. Casolaro’s
death, Special Agent Gates contacted the Martinsburg, WV Police
Department to inform them of the information he had concerning
Mr. Nichols and Mr. Casolaro. The Martinsburg Police have not
commented on whether or not they eventually pursued the leads
provided by Special Agent Gates.

f ,, the e yl de " ce colle cted by the committee, it appears that
• f ^ ky Danny Casolaro in pursuing his investigation

into the INSLAW matter brought him in contact with a number of
dangerous individuals associated with organized crime and the
world of covert intelligence operations. The suspicious cir-
cumstances surrounding his death have led some law enforcement
professionals and others to believe that his death may not have
been a suicide. As long as the possibility exists that Danny

worked t °-i he W« m i ,ton '“ stating that Mr. Videnieka had

worked lor the CIA and had threatened him with retribution if he talked to committee investiga-

Casolaro died as a result of his investigation into the INSLAW
matter, it is imperative that further investigation be conducted.

D. Evidence of Possible Coverup and Obstruction

One of the principal reasons the committee could not reach any
definitive conclusion about INSLAWs allegations of a high criminal
conspiracy at Justice was the lack of cooperation from 8ie Depart-
ment. 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
since 1988. The Department initially attempted to prevent the Sen-
ate Permanent Subcommittee on Investigations from conducting an
investigation of the INSLAW affair. During this committee’s inves-
tigation, Attorney General Thornburgh repeatedly reneged on
agreements made with this committee to provide full and open ac-
cess to information and witnesses. Although the day before a
committee meeting to consider the issuance of a subpoena
the Department promised full access to documents and witnesses
the committee was compelled to subpoena Attorney General
Thornburgh to obtain documents needed to complete its investiga-
tion. Even then, the Department failed to provide all the docu-
ments subpoenaed, claiming that some of the documents held by
the Department’s chief attorney in charge of the INSLAW litigation
had been misplaced or accidentally destroyed. The Department has
not provided a complete accounting of the number of documents
missing nor has it conducted an investigation to determine if the
documents were stolen or illegally destroyed.

Questions regarding the Department’s willingness and objectivity
to investigate the charges of possible misconduct of Justice employ-
ees remain. That Justice officials may have too readily concluded
that witnesses supporting the Department’s position were credible
while those who did not were ignored or retaliated against was,
perhaps, most painfully demonstrated with the firing of Anthony
Pasciuto, the former Deputy Director, Executive Office of the U S
Trustees.

Mr. Pasciuto had informed the Hamiltons that soon after
INbLAW filed for chapter 11 bankruptcy in 1985, the Justice De-
partment had planned to petition the court to force INSLAW into
chapter 7 bankruptcy and liquidate its assets including the
rKOMIS software. His source for this information was Judge
Cornelius Blackshear who, at the time, was the U.S. Trustee for
the Southern District of New York. Judge Blackshear subsequently
provided INSLAWs attorneys with a sworn statement confirming
what Mr. Pasciuto had told the Hamiltons. However, following a
conversation with a Justice Department attorney who was rep-
resenting the Department in the INSLAW case, 10 Judge
Blackshear recanted his earlier sworn statement. Moreover, Judge
Blackshear, under oath, could not or would not provide committee
investigators with a plausible explanation of why he had recanted

Di J n a " October 26, 1988, FBI Interview of James Garrity, Garrity (who was Judge
lilackshears attorney) stated that DOJ lawyer Dean Cooper had called him (Garrity) and said
that Judge HlacksheaFs testimony was wrong and that DOJ was concerned that something
should be done to correct it. Mr. Garrity informed Judge Blackshear of this information who
later recanted his testimony. Mr. Garrity was an attorney with the Department at that time.

his earlier statements to INSLAW, Mr. Pasciuto and others regard-
ing the Justice Department’s efforts to force INSLAW out of busi-
ness. He did confirm an earlier statement attributed to him that
his recantation was a result of “his desire to hurt the least number
of people However, he would not elaborate on this enigmatic
stdt6Tn6nt.

oimuariy Mr. rasciuto, under strong pressure from senior De-
partment officials, recanted his statement made to the Hamiltons
regarding Judge Blackshear. It appears that Mr. Pasciuto may
have been fired from his position with the Executive Office of U S
Irustees because he had provided information to the Hamiltons
and their attorneys which undercut the Department’s litigating po-
sition before the Bankruptcy Court. 11 This action was based on a
frvTirv. 111 T n ° a ^ 10n rna< ^ e ky toe Office of Professional Responsibility
j In a , memorandum to Deputy Attorney General Burns
dated December 18, 1987, the OPR concluded that:

In our view, but for Mr. Pasciuto’s highly irresponsible
actions, the department would be in a much better litiga-
tion posture than it presently finds itself. Mr. Pasciuto has
wholly failed to comport himself in accordance with the
standard of conduct expected of an official of his position.

Mr. Pasciuto now states he regrets having allowed himself to be
coerced by the Department into recanting and has stated under
oath to committee investigators that he stands by his earlier state-
ments made to the Hamiltons that Judge Blackshear had informed
him that the Department wanted to force INSLAW out of business.
Certainly, Mr. Pasciuto s treatment by the Department during his
participation in the INSLAW litigation raises serious questions of
how far the Department will go to protect its interests while de-
fending itself in litigation. Not unexpectedly, Mr. Pasciuto’s firing
had a chilling effect on other potential Department witnesses who
might have otherwise cooperated with the committee in this mat-
ter. Judge Blackshear, on the other hand, was not accused of
wrongdoing by the Department even though he originally provided
essentially the same information as had Mr. Pasciuto.

Despite this series of obvious reversals, the Department, after
limited investigation, has apparently satisfied itself that the swom
statements of its witnesses, including Judge Blackshear, have
somehow been reconciled on key issues such that no false state-
ments have been made by any of these individuals. This position
is flatly m opposition to the Bankruptcy Court’s finding that sev-
eral Department officials may have perjured themselves which was
never seriously investigated by the Department. In addition, there
are senous conflicts and inconsistencies in sworn statements pro-
vided to the committee that have not been resolved. Equally impor-
tant, the possibility that witnesses’ testimony were manipulated by
the Department in order to present a “united front” to the Congress
and the public on the INSLAW case needs to be fully and honestly
explored. The potential for a conflict of interest in the Department^

a Ja ? u ?P' 2 S. ! ? 88 . letter to Mr. Pasciuto from B. Boykin Rose, Associate Deputy Attor-
ney General, Mr. Pasciuto was informed he was being terminated. Mr. Rose describes Mr.
rasciuto s providing information to the Hamiltons as "atrocious judgment.”

independent Sra^ny isTSj’ed hi8h ’ ‘ f ' " 0t prude " tly >n d

E. Judge Bason’s Allegations Against the Department

Judge Bason testified, under oath, before the Economic and Com-
mercial Law Subcommittee that the Department’s actions against
its critics may have extended into blocking his reappointment as a
bankruptcy judge in 1988 because of his ruling in INSLAW’S case
S e m n a t son was replaced by Martin Teel, Jr., who, priorto his ap
pomtment, was a Justice Department attorney heavily involved in

?oc DCP lw entS u lltlgatl0n of the INSLAW case. 12 The committee
was unable to substantiate Judge Bason’s charges. If such undue
mfluence did occur, ,t was subtle and lost in the highly private
manner in which judge selection procedures are conducted While

n7r!!id emen , W r?u not , taken ’ the committee investigators
rnterv'ewed several of the judges involved in the selection process

had Tlf ed \° P ro V de interviews all stated that they

inclnHto! f! rsthand knowledge “> which to evaluate the candidates,

Hto al d rLn h i'L C T. bent r ( ge - f s a result > the members of the Ju-
didal Council had to rely on the findings of the Merit Selection
Pa md beaded by Judge Norma Johnson. selection

p Merit Selection Panel’s findings were provided to the Judi-

menS U n C lL b r JU i dge i J ° ( . bnS0: t ^ hose oral Presentation was instru-
n tb S fina i s ® , ® ctl °n. Judge Johnson had previously worked
at the Department of Justice with Stuart Schiffer, who led the De-

from m the t INs\ t AW t t0 h m® ^ e , ?i stri . ct Court remove Judge Bason
trom the INSLAW case. Mr. Schiffer is also the official who argued

the 1 ^ TNqT S Awf gainS - the appomtm , ent of an independent counsel on
ArttoVr n W Cas T e j n a memorandum to Deputy Attorney General
Arthur Burns. Judge Johnson also served in the D.C. Superior
Court with Judge Tim Murphy from 1970 through 1980. Judge
- b r q aentlv worked directly for Mr. Brewer on the
PROMIS contract. The committee, however, has not at this date

whh d Jr ny qTi enCe that Judge , Johns T had specific discussions
with Mr Schiffer or anyone else at the Department of Justice

sel°ecLn U p?ocess SOn ’ * INSLAW case or the bankruptcy judicial

w^ h L.r«Ii lmitt f ee,S i ’? vest, jg ation revealed that the selection process
was largely informal, undocumented and highly subjective For ex-
ample, several members of the Judicial Council indicated that one
ot the primary factors influencing the nonreappointment of Judge
Bason, was the poor administrative condition of his court These
same members admitted that thev had no firsthand knowledge of
tne admmistrative condition and based this opinion on the reDorts

S a eleCti ° n Panel and Judge Johns ™- This was cS
rated b y the discovery of a confidential memorandum written by a
member of the Merit Selection Panel which was highly critical of

rhe procedures for the selection of a bankruptcy judge include: (1) Public notice of the ™
cancy, (2) applicants submit an application illustrating they meet the minimum qualifications
^etTT 1 ex f ut,TO . 3) the applications are reviewed by a Merit Select Panel l^ bv a
?he^ Ct l“ dg f and appointed by the Judicial counsel or counsel delegates, (4) the panel evaluates
and tjpphcants and selects the four most qualified candidates baBed on a review'of applications
the Jud^lT ° f ‘‘ pp ' canta ^interested parties, and (5) the selecS are to

r.»L S a Vf 1 wh’eh reviews the report of the panel and recommends at least three nomi-
nees to the Court of Appeals which makes the final selection.

Court Whfil fv d the admi nistrative condition of the Bankruptcy
SS memorandum had been seen by several j^E

tn ^L th selection process, committee investigators were unable

ifidl n hlS SW hu m S j afcem ent to committee investigate™ that^under
Ji B “ on ’ the administrative condition of thecourt vastly im
proved. These sentiments were echoed by Chief Judge Auhre^Rnh
mson who consistently complimented Judge Bason on Iris effete to'
improve the administrative condition of the Bankmotev Court to
his remarks to the Annual Judicial Conference P Y

F. Conclusion

HrI^t blS n 0ry -n f t be Department’s behavior in the INSLAW case
dramatically illustrates its (1) reflexive hostility and ‘Wcle the
wagons approach toward outside investigations; (2) inability or un
willingness to look objectively at charges of wrongdoing lL high

™ d a '\^ a " st;

proL W ution raay haVG committed wrongdoing from investigation a5d

alread y documented and confirmed by two Federal judges the
Department’s actions in the INSLAW case have greatly lXed the

pX P “ y h a iNSLAVVtovIr th^^ actions ’ as. they pertain to the dis-
Lre were tek^ wi?rihi h f ,T! Sapp [ opnat, °n of the PROMIS soft-
Justtce Sals The herm f ul knowledge and support of high level
b^sSeding^ high levKM® com P an y was further perpetuated

nfjhe Of Justice is this nation’s most visible Guarantor

spective ol the identity of the actors involved Moreover ito men

derm toe Cpublc P £^® c ^ zen ® from illegal activities that un-
tmqt aw P b trust - 1116 Department’s handling of the
INSLAW case has seriously undermined its credibility and rennto?
ion in playing such a role. Congress and the executive must P take
immediate anE forceful steps to restore public confidence^ faRh
° ar s y ste m of justice, which cannot be undermined by the very
? g ®,”d entrusted . with enforcement of our laws and protections a£

S AW V 7- Clt T'i. In view of the history surrounding the
INSLAW affair and the serious implications of evidence presented

?L ytbaHa ? dt ? nS ’ tw ° court P r °ceedings in the judicial branch and
the committee s own investigation, there is a clear need for further

IN V SLA w<! 0 toj Th t • comm ittee believes that the only way in vrifich
INSLAWs allegations can be adequately and fully investigated i s

fW 0i nn m M nt ° f , an '"dependent counsel. The committee is
i November 13 1991, Attorney General Barr ap-
pointed Nicholas Bua, a retired Federal judge from Chicago, as his
special counsel to investigate and advise him on the INSLAW con-

!Zr er Zi The co n? m ittee eagerly awaits Judge Bua’s findings; how-
ever, as long as the investigation of wrongdoing by former and cur-

le : ( el Ju f t ?. ce o ffi « a l8 remains under the ultimate control
epartment ltse^ If, there will always be serious doubt about
the objectivity and thoroughness of the inquiry.

II. COMMITTEE INVESTIGATION PRIOR STIJDTFS
HEARINGS AND SUBCOMMITTEE PROCE^EDINGS’

December 5, 1990, Chairman Brooks convened a hearing of
the Subcommittee on Economic and Commercial Law to review At-

m^f G ?i nera J Th ° rnbur « h ’ s re ,? eated ^fUsal to provide e t he W com-
Rpn^ jn if nd T n ac eess to aH INSLAW documents and records.
Representatives from the GAO, Mr. Steven R. Ross, the General

nnn£j e K to m 6 ° f a be o US ' House of Representatives (accom-
MiZ d l T Mr ' A Ch ^ les T i, efer > Deputy General Counsel, and Mr
L fbrhlrrknn , C °™ n sel ] ) ’ £ or ™ er Att °rney General Elliot

an i” M M (of M ,r ban , k ’ Tweed > Hadley & McCloy), Mr. William

and Mrs. Nancy Hamilton (INSLAW’S corporate officers) mid

Judge George F. Bason testified at the hearing 13 ana

Messrs. Richardson and Hamilton outlined their allegations of a
criminal conspiracy in the Department’s handling of the INSLAW
contract and the theft of the Enhanced PROMIS software Judge

a« aS lZ.t eStl i ed th , at he bel, ® ved that his failure to be reappointfd
as bankruptcy judge was the result of improper influence on the

fitidin ® a actl ? n by the Justice Department because of his

^ rff 1 * 1 °T ln lts bankruptcy proceedings. Mr.

Ross refuted the Justice Department’s rationale for withholding
documents related to possible wrong doing by Justice officials im
volved with the INSLAW contract. GAO representatives described
a wide range of deficiencies in the Department’s Information Re-
tracts 68 Management Office and its administration of the ADP con-

After the December 1990 hearing, the Attorney General once
again vowed to cooperate with the committee. By June 1991 how-
ever, it was clear that the Department was not going to provide the
committee with a substantial number of the documents that had
i ro 7, este ' A j a result, Committee Chairman Brooks an
nounced plans to address this and other issues related to INSLAW
at the full committee hearings on the Department of Justice Au-
18]991 0n f ° r Appropnatlons he anngs scheduled for July 11 and

J ^ y U ’ l 9 ^ 1 ’ Congressman John Conyers, Jr., chairman of
the Government Operations Committee; Congressman Frank Hor-
ton, the ranking minority member of that committee; and Con-
gressman Robert Wise, Jr., chairman of the Subcommittee on Gov-
ernment Information, Justice, and Agriculture, testified before the
committee. Also appearing before the committee were Mr. Steven

D^ter^' 19M"lei U af nH ^° mmittee ' 8 Subcommittee on Economic and Commercial Law,

Ross, General Counsel to the Clerk of the U.S. House of Renresent-

CAO ha ^ eS A/cif fer ’c Deput y General Counsel to the Cle*rk- and
G U» 4 ti' a S: Mdton Socolar, Richard Steiner, and Richard Fogel

committee^m 6 ^?;?^^ 0 W3S s * aduled to a PPear before the

T m Departn,ent d »~

naw^L du ]^ \ 991, tbe comr nittee reconvened to review the De-

qu^Tlnd 8 tn LZ y th ar f 19 t 92 authan ' zation f or appropriations re-
q est and to hear the testimony of Attorney General Thombureh

However, according to the chairman, the Attorney General notiffed
the committee the night before the hearing that he refuse™™ a?

the heari^ f2T ,S that ,, th , e committee Press release annoiZing
in\ofZm g h fte d ,u eer I undu, J aggressive and contentious and not
nH/wffV."? X* teno L t of an oversight hearing. The chairman
f dd d , tbat tbe Attorney General seems to be objecting to a robust
at f7 cban g® °f views that is an essential part of the give-and-take
at the heart of the political process.” K

On July 25, 1991 the Subcommittee on Economic and Commer-
cial Law met to authorize the issuance of two subpoenas to the De

rC e of °an J Offic C e e; of n r e f °V? SLM r do ™™nts a°nTtL to othe e r fo e ;
a cop y of an Office of Legal Counsel Opinion regarding FBI’s au-

thont y to arrest individuals overseas. The subcommittee author
iqqi 1S fp an Q e . of a sab P°ena by a vote of 10 to 6. 15 On July 31
cpivpH Z Subcommittee on Economic and Commercial Law re-

ner^Z fl I°Ua e n Ubp r nae ?i, INSLAW documents from the Attor-
ney GenerM. The Department however, claimed that 51 documents

or files were missing and could not be found. 16 To date the suh

nartmenfo^h n °Z e $ eived an adequate explanation from the De-'
partment on how the documents came to be missing. 17

m R T^n^ LIC P BETWEEN THE DEPARTMENT AND INSLAW

DOsals N °(RFpf r f’ 1981 ’ f tbe :. De P art ment issued a request for pro-
posals (RIP) for installing public domain PROMIS on

RFp C Z PUt 1 rS a a d wc l rd processors. Prior to the issuance of the
BE P > s f vera l vendors, including INSLAW, advised the Department
ZniV 17 t0 Pe/form PROMIS functions on word processing equip-
tenstep eC «nH e the , case manugement activities were computetion-in-
computers d « ***** t0 * performed on Ml function micro-

na° ne umvA?To by s H cb 30 approach was inherently flawed was be
cause PRO MIS involved over 500,000 lines of Common BusTn ess

w Stete e ni“f'Tr^> Comm,t 'T bearing, July 11, 1991, Serial No. 12, p. 3.

dal L^^'^^ting^ a Aulhon^:e C !l88uanoe of a”subw)^ia X l^ 1 l)' t ^ ee and Commer-

of Justice,” July 26 1991 poena for Documents From the Department

w - - - *- «

•' ... .,o

Oriented Language (COBOL) program code and required a very
large-capacity computer at that time. INSLAW further advised the
Department to move toward the use of full function micro-
computers that could perform both case management and word
processing. However, word processors remained in the Depart-
ments plan. Only 2 of the 104 firms that requested the RFP sub-
mitted proposals m the 30 days allowed— INSLAW and Systems
Architects, Inc. INSLAW was selected for the contract since Sys-
jjpp 19 c ‘ 11 *' ec * ,s > * nc > was considered to be non-responsive to the

Even before the contract was awarded, there was discussion be-
tween the Department and INSLAW over a period of 2 months on
the subject of public domain software as opposed to privately fund-
ed enhancements. INSLAW was explicit in stating to the Depart-
ment that its version of PROMIS had been enhanced with private
tunds and future enhancements funded outside the Department’s
contract were expected . 20

In March 1982, INSLAW was awarded a $10 million, 3-year con-
tract to install the public domain version of PROMIS on
minicomputers in 20 large U.S. attorneys’ offices and on word proc-
essors in 74 smaller offices. According to Judge Bryant, of the U.S.
District Court for the District of Columbia, in commenting on the
Department s appeal of the Bankruptcy Court’s ruling:

. . . the contract sought proposal for ( 1 ) implementing the
computerized ‘piJot version” of PROMIS as supplemented
on 6 ,, [Bu reau °f Justice Statistics] enhancements in

40 large U.S. attorneys’ offices; (2) creating and imple-
menting a noncomputerized version of that software for
word processors in the remaining U.S. attorneys’ offices;
and (3) providing necessary training, maintenance and
support for 3 years . 21

Shortly after receiving the contract to implement PROMIS at the
; ™ S af tt< ? rne L s offices - INSLAW’S counsel sent a detailed letter
to Mr. Stanley Morns, then an Associate Deputy Attorney General
at the Department. This letter, with an attached memorandum
written by Mr. Hamilton, notified the Department of INSLAWs in-
tent to market an enhanced version of PROMIS as a fee-generating
product to public and private sector customers . 22 This claim to ex-
elusive proprietary rights by INSLAW would naturally require the
Department to pay _ INSLAW license fees if it chose to use En-
hanced PROMIS. INSLAW based this claim on the fact that several
non- Federal sources paid for continued funding of PROMIS’ devel-
opment and implementation . 23

lice «f^We n da U te fr ° m Peter Videnieks . Contracting Officer, Department ofjua-

d»fj ,em0ra , nd rT. 0f G the , U -? District Court for the District of Columbia concerning the consoli-
dated appeal of the final judgment entered by the U.S. Bankruptcy Court in favor of INSLAW
November 22 1989 p. 22a. Also see January 14, 1982, letter from 6r. Dean C. M^rill INS LAW
Vl “ President, to Mr. Peter Videnieks, Department contracting officer p 9

ibid., p. 21a.

22 Letter with attached memorandum to Mr. Stanley E. Morris, Associate Deputy Attorney

Lathlm & Wa?kins7A^ril°2, 19^2 ° Ver8ight Committee ' Mr - M Hills,

“ n ™f"°( andum INSLAW's counsel, an INSLAW employee stated that, during the pe-

mffiio^of^fr,^ ay ! NSL ^ d T'°Pn d a number of enhancements uaing ov^l
million of private funds and that no Federal funds were expended on these enhancement.

As detailed by the Bankruptcy Court in its chronology of events
surrounding the INSLAW matter, Mr. C. Madison (Brick) Brewer
nad just assumed the departmental position of PROMIS Droiect
manager a t the time of contract award. Mr. Brewer reacted nega-
r INSLA ^ S e 7 orts to P r °tect its proprietary interest and in
inqtaw" c ° n 1 8ldered canceling the Departments contract with
INSLAW just 1 month after it was initiated. A Department team
meeting, including Messrs. Brewer, Videnieks (Justice Contracting
Officer), and Rugh (Acting Assistant Director for Office of Manage-

Support — OMISS), was held on April
14, 1982, in Mr Brewer’s office to discuss Mr. Hamilton’s “scur-
rilous memo. According to Mr. Videnieks’ notes of the meeting:

Discussed INSLAW’s “PROMIS II” memo . . . Termination
tor Convenience discussed . 25

^Brewer apparently also discussed other reprisals against
IN SLAW on its other contracts with the Department 26 However
when subsequently questioned in the course of litigation, there de-
veloped a severe memory loss with respect to the Department wit-
nesses recollection of this meeting, as noted by Judge Bason:

All of the DOJ witnesses who attended the April 14
1982, meeting professed a total lack of memory about it
1 hey testified they had no recollection of any such meet-
m S: 'This court disbelieves that testimony. None of them
could offer any credible explanation, or indeed any expla-
nation, of the meaning of Videnieks’ handwritten notes
other than what this court finds to be their meaning in
this Finding of Fact No. 165. These notes constitute a
smoking gun that clearly evidences Brewer’s intense bias
TMQ 1 T 1 i t w IN ? L ^^’ hls sin g le -minded intent to drive
plicity 27 ° Ut ° f busmess > and ^h’s and Videnieks’ com-

In i ar L- a{ ? P , arent t° respond to the concern raised by Depart-
ment officials over whether the Department or INSLAW would own
any enhancements to the PROMIS software, INSLAW’s attorney
Mr. James Rogers, wrote on May 26, 1982, to Associate Deputy At-
tomey funeral Stanley E. Morris. In this letter, Mr. Rogers pro-
vided a detailed description of what the company planned to do to
market the software commercially, and asked that the Department

ro S F° n M t 0 J NSLAW to ensure that these representations are cor-
rect. Mr. Rogers went on to explain:

e « X o Pre i S ? d u ™ c ™,, about the software itself,
PROMIS 82, which INSLAW proposes to license to users
tor a fee commencing in June of 1982. We are prepared to
make the following representations, which should alleviate
the Department s concerns:

PROMIS 82 is the sum of only three parts:

hiblt T ndUm to Jim R ° gere ’ Latham - Watkin8 & Hills, frem Joyce Deroy, June 17, 1982, Ex-

83 B R ' 89 (Bktey - D - C »'- «W) 123 (Finding 165).

“Findings of Fact and Conclusions or Law, No. 165, at 84
ZT Ibid., at 84-85.

(1) the Original PROMIS, that is, the public domain
software as of May 15, 1981 as memorialized in tapes de-
livered to the Bureau of Justice Statistics;

(2) enhancements undertaken by INSLAW at private ex-
pense after the cessation of LEAA funding; and

(3) the so-called printed inquiry enhancement, which
was created under contract to the Bureau of Justice Statis-
1982 and dellvered to tbe Department of Justice on May 17,

PROMT q a P pa . rent ( • th at „- both Mr - B / ewer and Mr. Videnieks, the
PKOM!S contracting officer, reacted very strongly to INSLAWs no-
tice that it had developed Enhanced PROMIS with private funding

f mc Zr a Very an t a g oni stic meeting between Mr. Brewer
and INSLAW representatives soon after INSLAW’S assertions of
P r °f. neta ry claims to PROMIS. 28 Messrs. Brewer and Videnieks
continued to believe that, because the Department was currently

TN n q d T aw he ,m .P! emeatati ° n of PROMIS, thev could ignore
INSLAWs propnetaiy interest m the privately funded enhance-
ments made to the PROMIS software

f£ r ’ n an August 1982 response to INSLAW, Mr. Stanley
pH T De pa rt ments Associate Deputy Attorney General, stat-
ns nHnVn 6 - on ? ma ! ] ! PROMIS, , as well as an enhancement known
as printed inquiry, 2 ® was m the public domain. He added that, to

enhancements to PROMIS were privately
d T^QT J luV AW i j nd not s P®cified to be delivered to the Depart-
haw “ bLAW C ° U d aSS6rt whatever P ro P r ietary rights it might

A. Project Manager Brewer: An Inherent Bias and Potential
Conflict of Interest

For those who have formally reviewed the INSLAW matter, both
l n an ri d legislative branches, the selection of Mr. Brewer

Mnau 18 " 1 P Ty A° n ™A^J xecutive 0ffice of U.S. Attorneys
(EOUSA) to serve as the PROMIS project manager looms as a curi-
ous choice when matters of the conflict of interest, appearance and
actual are considered. 31 Indeed, Mr. Brewer worked for Mr. Ham-
ilton between 1974 and 1976 as general counsel for the Institute
tor Law and Social Research, a not-for-profit corporation owned by

G>;] 1 l Tn i t0n ^ hlch later became INSLAW. Mr. Hamilton has tes-
tified that in this capacity, Mr. Brewer was unable to perform the
duties required of him; and, as a result, he was asked to leave. 32
Mr. Hamilton testified that he provided Mr. Brewer with a suffi-

No ' 170 ' «*■ -d sworn .Utement of

toi«oarjitw* madc to promis p™ 1

uyfr* 1 August 11, 1982, Morris responded:

ij_ the “"S'"® 1 PROMIS, as defined in your letter of May 26, 1982 is in the pub-

extenthat hat the P n , nt «^ inquiry enhancement is in the public domain. To the
« ®ny enhancements to the system were privately funded by INSLAW and not

f the Department of Justice undSr any Contract or othertrrangement
ris S AMo^Tlt y T?f ^ ^? tever jropnetaiy rights it may have.” [Letter from Mr. Stanley E. Mor-
nB iiif Deputy Attorney General to James Rogers, Esq., August 11 1982 p 1 1

i^l E ° USA in Ja " Ua ^ 1982 ’and'fmcially^a £ tile PROMIS

Findings of Fact and Conclusions of Law, No. 101, 103, pp. 110-11.

cient time period to find a job rather than summarily forcing him
out of the company. After the initial conflict with Mr. Brewer flared
up over the PROMIS software enhancement issue in April 1982
INSLAW formally complained to Mr. Morris that Mr. Brewer was
biased against INSLAW because he had been asked to resign his
position with the company; and that in any event, the Department
should have placed another official in charge of managing the
project who was not tainted with past direct (and very possibly
negative) associations with the company. Mr. Hamilton strongly be-
lieved that Mr. Brewer harbored antagonistic feelings about his
past working relationship with Mr. Hamilton. Department officials
were apparently impervious to these concerns and stated that Mr.
Brewer s skills and prior employment with INSLAW were impor-
tant factors in his hiring by the Department. Mr. McWhorter Dep-
uty Director of the EOUSA, who was involved in Mr. Brewer’s hir-
ing, believed that Mr. Brewer’s employment by INSLAW qualified
him to:

•••run the implementation of a case tracking system for
U.S. attorneys to ... basically direct the implementation of
a case tracking system in U.S. attorneys offices. 33

It is difficult to understand, however, how Mr. McWhorter could
make this statement. By Mr. Brewer’s own admission, he had very
little, if any, experience in managing computer projects and Gov-
ernment ADP procurement law at the time he was hired. Perhaps
even more damaging, while under oath to committee investigators,
he admitted to a lack of experience or detailed understanding of
computers or software:

... I was not a computer person. We talked about my role,
viewed as being liaison, the person who would make things
happen, a coordinator. It was not contemplated that I
would, by osmosis or otherwise, learn computer science. 34

Even after interviewing Mr. Brewer’s supervisor (Mr. Tyson) and
other Department personnel involved with his hiring, committee in-
vestigators were unable to determine how Mr. Brewer came to be
considered for the position. Still unexplained — given the appear-
a . c °nflict of interest created by his past employment with
Mr. Hamilton and his total lack of experience and training in ADP
contracting — is why the Department would have considered him
prepared, much less best qualified, for the job.

As project manager throughout the implementation of the con-
tract, Mr. Brewer was involved in all major contract and technical
decisions— inducling the development of the Department’s position
on INbLAW s claim of proprietary software enhancements made to
the public domain version of PROMIS. Significantly, Mr. Brewer,
DDrxIfr ) c? r A ed oa tbe Progress on the contract to the Department’s
PROMIS Oversight Committee, a senior level decisionmaking com-
mittee organized in 1981 as part of the Department’s overall con-
trol point for the PROMIS project. 36

“Deposition of Laurence S. McWhorter, June 12, 1987, pp 11-12.

~ Sworn statement of C. Madison Brewer, September 13, 1990, p.

The PROMIS Oversight Committee reviewed and approved pla
and the EOUSA for implementing the PROMIS software into the

Continued

39.

ns developed by Mr. Brewer
EOUSA district offices. The

In ves tig a ti°ns by both the Senate and GAO into the INSLAW
matter flagged serious concerns about Mr. Brewer’s appointment
and tne possible conflict of interest his appointment represented
the Permanent Subcommittee on Investigations (PSI) drew the
same conclusion as the GAO’s audit manager that Mr. Brewer’s ap-
pointment as project manager created an undeniable appearance of
conflict of interest that snould have been avoided at all costs by
the Department. The PSI report stated:

The staff finds that the Department exercised poor judg-
ment in ignoring the potential for a conflict of interest in
its hiring of the PROMIS project director [Brewer], and
then, after receiving allegations of bias on his part, in fail-
ing to follow standard procedures to investigate them in a
timely manner. 36

The potential conflict of interest was an unsatisfactory situation
irrespective of his admittedly negative feelings about his forced res-
lgnation from the company. Had Mr. Brewer taken actions which
could have been construed to unduly favor INSLAW throughout the
me ot the contract, similar questions of potential conflict could iust
as easily have arisen either from within the Department or from
outside competitors of the company. In either situation, the Depart-
ment had placed itself in an undeniable ethical situation that could
have been easily avoided had it followed basic procedures to pre-
vent any possible appearance of a conflict. On this point, Judge
Jensen stated that: ’ e

I would think that the better path of wisdom is not to
do that Lhire an alleged fired employee to direct the con-
tra* of his former employer] if that’s possible to do... I
think that it s better to have these kinds of issues under-
taken by people who don’t have questions raised about
them one way or the other whether they are biased in
favor of or against the people they deal with. 37

White phrased in the abstract, Judge Jensen and other Depart-
ment officials apparently ignored the circumstances surrounding
Mr. Brewer s departure from INSLAW and did not consider the po-

"‘f i . n ' e ' nberah ! p originaHy consisted of the Associate Attorney General (Rudolph W
(William’ p th T^n'T= 1 s D , ep ? ty Attorney General (Stanley E. Morris), the Director of EOUSA
Admi niaVi-nV ' ? nd J “ st ice Management Division’s (JMD) Assistant Attorney General for
' A? socla te Attorney General was the Chairman of the
committee. See memorandum from Mr. Kevin D. Rooney, Assistant Attorney General for Ad-
miniatratrciri and Mr. William P. Tyson, Acting Director, EOUSA to Deputy Attorney General

l7ir 1 imnS? lm t U t t8 ’ A t g 'ts IV 98 , 1 ’ P ' 3 (borei natter Rooney and Tyson memorandum),
it is important to note that Mr. Jensen was heavily involved in the Department’s PROMIS
project. Mr. Brewer has testified that Judge Jensen, who was the Assistant m£ney£e neral
t ! VleK,n l *: tween 1981 ar ! d ear, y 1983 1 attended most, if not all, of the PROMIS

Mr 7ireuver TZa S 88 ? P art,c,pan ‘ and ; later . the chairman of the committee.

Mr. Brewer indicated that Judge Jensen attended these meetings before he became Associate

WM 1 8 " d ( halrman ° f the Oversight Committee) because PROMIS implementation
was a very high pnonty program, and representation from all departmental offices was re-
quired. During early 1983, as Associate Attorney General and later as Deputy Attorney General
Judge Jensen was ranking Chairman of that Committee and one of its most influential members
13 r ^0 OU p t p th nlM5 l r thS PROMIS contract - Sworn statement ofC. Madison Brewer, September

with S I t N«i S iw y i 0rA 'L eg ^ on n Pertaining to the Department of Justice’s Handling of a Contract
with INSLAW, Inc., by the Permanent Subcommittee on Investigations, Senate Committee on
Governmental Affairs, September 1989, p. VII. ° n

34 0,71 ce of Professional Responsibility Deposition of Judge Lowell Jensen, June 19, 1987, p.

tential bias or conflict of interest issues either before or after his
rw!£’ In ^ aCt ’ ^ r ' brewer stated that no formal inquiry into these

Dire! in'l985 m On De P®rtment until after tie Yon tract ex-

J n ™e l ssue of his departure from INSLAW Mr

Brewer stated under oath to OPR investigators that: ’

"° t,n3 . e dl d he [Mr. Hamilton] ever say you are fired
and at no time did he [Mr. Hamilton] ever indicate wilt
dissatisfaction with my performance. great

I don’t believe anything Mr. Hamilton did regarding my
employment or relationship with the Institute was
th3t 1 WaS diSCharged ’ ,et a ^ on ^ wrong-

investigators^ Bgain 3SSerted this P° sition under oath to committee

, 1 " ever thought that he asked me to leave. It has always
been my understanding that I was not asked to leave I

r e , n ? ver v j? w ® d m y departure from the Institute as ei-
ther being a discharge, or forced.

However in other parts of his testimony to OPR and the committee
investigators he appears to acknowledge that Mr Hamilton asked
'him toleave. For example, he stated to OPR: asked

. . .it has been my view that Mr. Hamilton obviously
wanted me gone. I had been sending these signals if not
directly indicating a job dissatisfaction, since April ’ and it

trfeating myself 317 ’ a1m ° St ‘ ^ lato “ d 1

^nVruY'f e !i' S K Sta ite inents that he was not asked to leave are also
rafin ted by 0t j- er Wltnesses ’ statements on this point As indi-
cated above, according to Mr. Hamilton, Mr. Brewer was unable to

to 3 « e Mr Ut H S am1?to r>6d ° f and; aS a result > he was asked
PiJwoJln- t ban'll ton s account was corroborated by Mr John

M wl ?° 5 t ? ted under oath that Mr. Hamilton mentioned

that Mr. Brewer had been asked to resign and Mr Hamift^n asked
for advice on how Mr. Brewer could be removed wS pYeseS
hl | Professional dignity and feelings. 39 preserving

Mr. Brewer appears to contradict his own assertions that hp

ssst!” * Mr - 1 “»"- At

...on one occasion Mr. Hamilton came and said to me

he ?d U “W P n luacl3? I I explained that I couldn’t. ... And
• P i f a d ’ what I have to say over lunch I can say

right now. I think you ought to find [an] alternative-— that
you ought to leave the Institute.”

■ JA e circ umstances surrounding Mr. Brewer’s departure from the

abo t ut U INS a £\w r and 0 > haVe h j d , a A T 3J u infl uence over his views
asserted t^Mr d t -Hamilton. Several witnesses
INSLAW and Mr Ram if er f’dukited considerable bias against
iiNoLiAW and Mr. Hamilton during critical points of the contract.

Findings of Fact and Conclusions of Law pp. 49-52.
Testimony of John Gizzarelli at trial, July 22, 1987, p. 473.

When asked about his relationship to Mr. Hamilton, Mr. Brewer
stated:

He was very supportive, and I thought that he was a
very dynamic and creative person, a very skilled commu-
nicator and a very talented individual, but as to some as-
pects of life, one who did not have a realistic viewpoint on
some things ... he had said some things to me on occasion
that made me think that he was somewhat of a zealot
about his pursuits and the things he did. ... Mr. Hamilton
is a difficult person to deal with, or that he is not realis-
tic 40

However, several witnesses provided a considerably different de-
scription of Mr. Brewer’s feelings toward INSLAW and Mr. Hamil-
ton. Mr. Gizzarelli stated under oath that:

I also had occasional contact with Mr. Brewer during the
period of his employment with INSLAW. .. specifically, he
thought that Mr. Hamilton was insane. And I think he
meant that literally. He did make comments about his ra-
tionality, his sanity, thought he wasn’t capable of leading
an organization. The tenor of his remarks were to me very
startling.

*******

. . . mental observation . . . was used to describe a person
for whom that process might be advisable, mental observa-
tion being a psychiatric evaluation to determine whether
or not a person is or is not afflicted with a psychosis. And
Mr. Brewer used that term to describe Mr. Hamilton. He
said he was M.O., [mental observation] which is a collo-
quialism — means he should be examined by a psychiatrist.

* * * * * * *

After he became the project manager ... a flood of memo-
ries about his prior involvement with INSLAW and his
characterization of Bill Hamilton came back, and I was
afraid that his bias would be overwhelming — would over-
whelm him. 41

Mr. Gizzarelli later stated by memorandum to Mr. Dean Merrill
that Mr. Brewer:

...has made no secret of his dislike of Bill Hamilton. In
his present job, he is in a position to demonstrate his dis-
like. Bill, however, has kept his distance from the project
and probably will continue to do so, until and unless there
are large problems which Bill — in his role as president —
must deal with personally. It is entirely possible — and I
believe likely — that Brick will escalate the level of con-
troversy until he draws Bill into the project, at which time
he will be able to “lord it over him” and show who’s boss.

40 Sworn statement of C. Madison Brewer, September 13, 1990, pps. 11 and 75,

41 Gizzarelli sworn testimony, pp. 474—476.

I don’t think Brick will ever be at peace with his feelings
about Bill and therefore, with us. 42

*? r - Sherzer, INSLAW’S attorney, made similar assertions

about Mr. Brewer’s bias against INSLAW during the trial:

... I think the most descriptive answer is to say that Mr.
Brewer exhibited an animus toward INSLAW and toward
Mr. Hamilton.

, • • skepticism and negativism and some

hostility INSLAW’S allegations with regard to its financial
condition. And I recall specifically that I reached the con-
elusion at that time that, and I recall expressing it to him
that he had a problem, that he seemed to think there was
something wrong with a contractor benefiting from a gov-
ernment contract. Let me be more specific on that point.

The gist of what he seemed to be saying was that by per-
forming this contract INSLAW and Mr. Hamilton, specifi-
cally, was making an effort to expand the company . . . And
there seemed to be a negative inference toward INSLAW’S

ability to use the base created by this contract to expand
.And I recall explaining to him that that was perfectly le-
gitimate, and, indeed, that the Government often in its ef-
forts to support congressionally the appropriations for the

• * . o - u — — —rr • v r * mu

space program and other programs often points out that a
byproduct of a space program is a better toaster oven be-
cause various alloys [are] created or what have you. It’s a

common phenomenon whereby the ... by-product of Gov-
work is the ability to benefit both the company
the Government and the community generally in a broader
way. And Mr. Brewer seemed to resent the fact that
INSLAW might use the benefits of this large contract to
expand its company, which at that time it was doing. 43

On this same issue the Bankruptcy Court concluded that:

On the basis of the ... evidence taken as a whole, this
court is convinced beyond any doubt that ... Brewer was
consumed by hatred for and an intense desire for revenge
against Mr. Hamilton and INSLAW, and acted throughout
this matter in a thoroughly biased and unfairly prejudicial
manner toward INSLAW.

In reviewing Judge Bason’s substantive findings of fact and con-
clusions of law, the District Court also concluded that:

The nature and circumstances of his separation from
that employment are somewhat in dispute, but it is clear
that Brewer was not happy in his job when he left it after
being urged to do so by Hamilton.

*******

INSLAW attributed its troubles to an acute bias on the
part of Brewer, who according to it was intent on running
the company out of business. INSLAW lodged many com-

“ Memorandum from Mr. John Gizzarelli to Mr. Dean Merrill, July 1, 1982. pp. 1 - 3 .
Testimony of Harvey G. Sherzer, INSLAW’s attorney, June 30, 1987, pp. 63-64.

plaints of bias and made several request of DOJ to inves-
tigate these complaints and give some relief from what it
perceived to be grossly unfair treatment. DOJ made no
meaningful response to these complaints, and INSLAWs
fortunes did not change.

INSLAW’S problems began soon after the contract was awarded
and immedmtely after its assertion of proprietary enhancements to
public domain PROMIS. Mr. Brewer’s animosity toward INSLAW
^A fc ^ ngIy mani , fested in a meeting (April 19, 1982) to discuss
INSLAW’S proposal to market its Enhanced PROMIS software, as
noted in an INSLAW memorandum on the meeting:

Brewer . seized upon this issue and launched into a ti-
rade which was very emotional, unorganized and quite il-
logical. He said that:

“}■ the memo was typical of INSLAW and Bill Hamilton
and that it was self-serving and unnecessary.

“2 that how did they know that we might say work was
not finished under our Government contracts and the next
week copyright the work and begin selling it back to the
Justice Department.

3. that the press release about the contract award was
not accurate in that it described West Virginia as a suc-
cessful implementation when in fact, they had spent an
additional 20K on the project and Lanier was doing all the
work

7. that the memo had caused all kinds of problems in
Justice and had many people upset.

8. that if you ask Namely, Illinois Criminal Justice Co-
ordinating Council, Michigan Prosecuting Attorney’s Asso-

Voight and others, they would tell you that
INbLAW did not do good or successful work.

9. that Bill Hamilton started the PROMIS system as an
employee of the D.C., U.S.A.O. and that all of the software
was developed with Federal funds and what right did
Hamilton have to tiy to claim ownership of the software.”

All of these comments were based with an obvious dis-
like of Bill Hamilton and a resentment for the success of
INSLAW personified in him. 44

After this meeting, INSLAW complained to Associate Deputy At-
torney General Morris that Mr. Brewer was obviously biased
against INSLAW because he had been asked to leave his employ-
ment at the company. On this basis, INSLAW requested that Mr
Brewer be recused from further Department consideration of the
proprietary software enhancement issue. Subsequently, Mr. Morris

txtct a 10 remove Mr - Brewer from face-to-face negotiations with
INSLAW officials on the enhancement issue. By note dated May
27, 1982, Mr. Laurence McWhorter, Deputy Director of the Execu-
tive Office of U.S. Attorney, stated that he was directed by Mr.
Morris to “take the point outside the Department” on the propri-
etary enhancement issue. It is clear from this action that Mr. Mor-
ris was concerned about the possibility of an appearance of a con-

44 April 21, 1982, INSLAW Memorandum to File from J. F. Kelly and J. Doroy.

Ss Ct thf hav ^ ng 80 ex-employee of INSLAW operating

epfirtmei fits project manager on a contract involving the
same company. However, this solution was only superficial because
^ m /rfi Wer i :0n i ,nUed to have substantive inflLnce over the man-
^ administration of the INSLAW contract. Mr. Brewer
acknowledged under oath that he remained involved in the Depart-
ment negotiations with INSLAW on all important issues incluS

lss H e throughout the life of the contract. He also
stated that Mr Hamilton had “shot himself in the foot” and created

INSIAW^aH 1 W ' ”, withi . n the Department by asserting that
TmItTw had P™.P netar y interest in the PROMIS software 45

i^?WV?fl S eXpand, r g Problems with the Department are detailed
in the following sections of the report.

B. Brewer and Videnieks Threaten INSLAW

the Department acknowledged

enabkd INsfAWf^ o Uat,0n by '" s - ertit ] g a contract clause tlat
. . IJN bLAW to receive payment in advance of the Department

imfo V1 * I u g £ nd a PP ro vmg finished products. 46 During November
1982 the Department learned that INSLAW had assimed Govera-
me P^, inv ° 1 .c e s to a financial institution to secure a line of credit
fNSI^W V tW n > kS ’ by Ie aT d , ate p November 10, 1982, asserted to
the S ^ftact 47 1 W3S m default of the advance payments clause of

Cancellation of the advance payments would have had a dev

SgSKStS “ ■SKL'JS.

w r 1 thlI i k m general I was advised that they were
m bad financial condition. 48

tio^oPpROMT^wnE^h W3S sa PP ortin g the Department’s utiliza-
PROMIS with its proprietary enhanced software through

w^re J^n? ° n \ mainframe. The Department, lacking the hard
nfNNST A^! ement .P ubhc do ™ ain PROMIS, moved to obtain a copy
of INSLAW’S proprietary Enhanced PROMIS software as described
m an internal memorandum dated March 7, 1983" ’

Of course, an INSLAW failure at any time prior to con-
tract completion would have a detrimental effect on the
implementation project. Currently, programmatic risk is
very high. So long as INSLAW continues to support U S
attorney offices m a timesharing mode, withholds time-
anng [the enhanced] PROMIS software, and fails to

«^! tatement ° fC . M ) adis “ n Brewer, September 13, 1990, pp. 155-156.

that: * rhc amount ° f advance

lioo'ooo nn & ^ nths 2 K? lr0U ^ 30 ofrontrac ‘ performance and
® L h .L b l an . C fc° f the P erform ance of the contract-

account was that a loan INSLAWhaT ^h^rBan^onSh!.^^ ,NSLA Y? ad 7? , ? ce Payment
placed on payments received bv INS! AW frnm th 0 _ , Desda, pursuant to which a lien was

S.Jthe confra^t and pl^^^e*GOTmimenHrrfinandsd 0 riik/ n0t th0 aCC ° ant it8e '°- “»*™*

Sworn statement of Peter Videnieks, November 5, 1990, p. 62.

complete delivery of at least one system operating on a
Government furnished Prime computer and at least one
system operating on a Government-furnished Lanier word
processor, programmatic risk will remain high . 49

Mr. Videnieks told committee investigators under oath that:

We were afraid if they indeed were for financial reasons
required to close their doors... then we would have to re-
vert to a manual PROMIS in these U.S. attorneys offices,
bo the reason for requesting copies of this data and docu-
mentation were to be able to continue, if indeed INSLAW
were to close its doors, automated PROMIS on Govern-
ment computers. 50

An internal Department analysis notes, however, that:

Because DOJ’s computers were not in place, DOJ pur-
chased time on INSLAW’S computer. INSLAW retained the
software to use for time-sharing purposes in its offices and

flees ^ y6t de hvered ifc to the vari °us U.S. attorneys’ of-

Judge Bryant pointed out that:

On November 19, 1982, DOJ’s technical representative
formally requested a copy of the PROMIS software that
was then in use by the U.S. attorneys’ offices. According to
the Justice Department the request was motivated by con-
cern over the financial viability of INSLAW. It is without
dispute that because the Government had not obtained the
minicomputer hardware for each office, INSLAW arranged
for the largest U.S. attorneys’ offices to use PROMIS on a
time-shanng basis.

Mr. Brewer stated in a December 9, 1982, memorandum that he
was concerned with the possibility of INSLAWs bankruptcy, the

mfniurfo need for m ; h ° us e EOUSA personnel to take over the
J ROMIS project, and the possibility of terminating the PROMIS

iNQTAm December 1982, Mr. Videnieks demanded that
fJNbLAW turn over all computer programs and supporting docu-
mentation relating to the contract. 52 INSLAW responded that it
would not do this without the Department modifying the contract
to acknowledge that proprietary enhancements had been inserted
into the Department s public domain version of PROMIS INSLAW
required this acknowledgment because INSLAWs other
faring customers also used this proprietary version of

The Department responded that the contract called for software
I" *e Government had unlimited rights, and asked that

fJNbLAW identify those portions of the software that it claimed

l 9 ??’ Department of Justice internal memorandum, entitled "PROMIS ImDlemen-

M ™ ° n lNs “ w ■■ ■ •-

Harold G. Christensen, Deputy Attorney General, March 31, 1989. OPR Footnote 13, pp. 24-1
December” 6^1982^ p Videniek8 ' contracting officer, to Mr. John Gizzarelli, INSLAW, Inc.,

were proprietary. INSLAW offered to provide the enhanced soft-
ware if the Department agreed to INSLAWs rights and controlled
its dissemination. Mr. Videnieks stated to committee investigators
that the department believed that it had unlimited rights to anv
tat^t°*\it> 0 ^ PROMIS, and data rights restrictions would not satisfy
INSLAW s obligation under the contract . 63

INSLAW proposed that the Department use its enhanced soft-
ware at the 94 U.S. attorneys offices at no additional cost, but that
the Government not disseminate the Enhanced PROMIS beyond
those offices. The Department objected to this proposal and made
a counter-proposal that a contract modification be made which, in
exchange for the software and documentation requested previously
Do™™? 1 ? rtmer l t , would agree not to disseminate Enhanced
PROmS beyond the 94 offices and the EOUSA pending resolution
of the enhancement dispute. 54

Mr. Videnieks further proposed that, if INSLAW could dem-
onstrate that the software contained enhancements to which the
Department was not entitled, the Department would either direct

tatot a tit bLA remove the enhancements or negotiate with
INbLAW regarding inclusion of the enhancements. 55

C. INSLAW Attempts To Demonstrate Enhancement
Ownership

mSLAW and the Department ostensibly resolved their dispute
by good-faith action on a contract modification (Mod. 12) dated
April 11, 1983. As a result, DOJ agreed to continue to provide ad-
vance payments to INSLAW. 56 According to Judge Bryant, under
this agreement:

The parties reaffirmed their understanding that their
initial contract governs the rights to the disputed software.

By letters dated April 5, and April 12, 1983, INSLAW attempted

d ^ nons t ra ^ that its enhancements were privately funded but
the Department did little to assist INSLAW in determining what
would be acceptable. 57 By letter dated April 21,
1983, Mr. Videnieks reiterated that the contract entitled the Gov-
ernment to a version of PROMIS with no restrictions, and de-
manded that INSLAW:

....provide all information necessary to demonstrate
that the change was developed both at private expense and
outside the scope of INSLAW’s performance of any Govern-
ment contract.

ter 3 March 1 3? “ligation by the Office of Professional Responsibility in the INSLAW Mat-

“ March 18, 1983, letter to Harvey Sherzer, Esq., INSLAW’s attorney, from Peter Videnieks
P '“jbid.,p.2.

y Fijnds were placed^ by the Department into an account at the Bank of Bethesda. INSLAW
si^tlTyMn' Vi£niek^° m aCC ° Unt °" eXpenS “ lncurTed > °">y ^ a voucher was

A^^Td April S Shmer ' INSLAW C ° UnSe1 ’ Pettjt & Marti "’ to thE Ue P artm:nt >

H-R. 102-857 0-92-2

Se i t a , not ^ er Proposed methodology to demonstrate nri-
sponded ?haf iVlAW ^ y 4 ’ 1983 ‘ Mr - Videnieks P "

»■££? -Ma Brass i

Mr. Jack Rugh, the Department’s Acting Assistant Director for

wSTthe^Nsf A e w en V In ^° rmation Systems Support (OMISS), ana-
nanced PROMTS^ ^ missi0 . ns supporting its contentions that En-
ItUnrin tk S n d i been Pnvately funded. Mr. Rugh stated under
fW uunng the Bankruptcy Court hearing that it was his opinion

flawed a^d M t>5 USed ** ! NSLAW to s upport its assertion was
laalai f 1 j at the c ? m Pany s presentation ''probably” [emnhasis

further stewed ,^ ccaantin g records to support its claims. Mr. P Rugh
rther stated that he could not recall if he had informed INSLAW
concerns regarding their lack of accounting r^ords to Sub-
stantiate their claims. Mr. Rugh said that although he could see no
rnnfd 11 Why he would _ withhold this information from INSLAW he

thaUNST AWU| n f ° r ,n ,? luding i **“ Mr - Rugh stated, however,
that IN SLAW had an excellent method of documenting the changer!
(enhanced) source code, so that those changes could fe consKd
£r ; P r '®, tary ! f they were attributed to a particular private source «
This admission caused the bankruptcy judge to conclude-

P ™ C T °t comparing the enhancements proofs with
the previously-provided PROMIS software could have been
performed easify by INSLAW with DOJ’s assistance in the
summer of 1983, when INSLAW attempted to negotiate
this issue with DOJ and submitted to DOJ its memoranda

Ev° INST AW lfiC enhancements. AH of the documents used
by INSLAW in this proceeding to identify the funding of
I s enhancements existed at the time the negotiations
should have occurred. As Mr. Rugh conceded at trial the

the < fnh > a ffe c red hy t INSLAW , would have satisfied him ’that
the enhancements were indeed privately funded. (Rugh, T

« v-j ■ 1 D0J was required to negotiate then, in 1983

12 TserPPFF S &^ a R y K h f d P : 0p0sed under Modification
1 ii j F 228-236) but instead it wrongfully and cvni-

veaf to ai INSr e Aw r t0 negotda Ji e j n good faith or even to ?e-
I a ,5?, IN , W any Purported concerns of Messrs. Rugh
and Videnieks at that time with INSLAWs proposed meth-
od of proof (see PPFF 246-250). 62

n™;J idCnie u S never acce P ted a ny INSLAW attempts at defining
Fh rw^ en ha n cernents, and Department officials concluded that

raOMIS ^F t H had fi, he K 7 Sa T unliraited rig hts to Enhanced
rKUMlb as it had with public domain PROMIS. This posture was

WSLAW C0UnEC '' PettU & Martin - *° ^ter
& M^JZe 10, r iS er p V 2 ,den,ek8 ' C ° ntract 'ne «®». to Mr. Harvey G. Shelter, Esq. Pettit

28”l9l7, i pXf en dUring lnC ' ^ UnUed StateS - h * Mr ' Jack Stanley Rugh, July

„ Ibid., pp. 1517-1518.

M J^hi n L V T ^2S&3£5.“ <Bktey D - ^ Co >- at 107 (Finding 83).

Vi± C V ear i fr0ni a variefcy of sources, including Messrs. Brewer and

this » as

Question: At this April 19th meeting, do you recall mak-

laAsraai - the

JSt&SZJ** W “ ° Ur P ° Siti ° n throu e h °“* «>i*

Question: What is your view today on that?

Mr Brewer: I maintain that we negotiated for and re-
ceived unlimited rights and data.

vfaLlfi d pRnMTS S ° H be l! e r d u that the Department had title to En-
hanced PROMIS, which he characterized while discussine his nn«i

»“ m X a e? ng M ° dfficati< '" 12 in a *»“"> depolS b g e?ore P E

Initially I’m the one who wanted no modification I
wanted only a letter saying, “Give us the data,” because if
we we don t need any signatures, if we can get the goods
M y words. The goods were ours under the contract All we
*° effeCt 0f 1 lh «“ d.od» were

nofaSSri sX a .r4TfSSi, a STS

sMi*f- e if Wa f tha f Bl r! 1 Sn ! der ( the Department’s legal coun-
sel] felt strongly that there should be a Modification 12

rtS % nion was supported by Patricia Rudd, who was
the Chief Procurement Officer at that time

we m Procurement, the hands-on people, thought
frn? Q Jr e fi c ? ntract I s stands had the mechanism in there
for satisfying the Program Officer’s needs. But the lawyers
on all sides felt that we needed to write escrow agreements
and make the thing look pretty, I guess. 63 g

Mr. Videnieks, by letter dated July 21, 1983, told INSLAW that:
We agree with you that Modification No. P0012 to the

ffie PROMTS^ 1168 \° hm >t dissemination of that version of
the PROMIS computer software specified in the modifica-
tion Modification No. POO 12 will continue to apply in the

Clause *2*' “IV 6 9° V >. rnme [! t ir ?vokes the provisions of
Clause 22 Disputes, in that the Government will limit

SSTSSiffi* 1 * 3 C0ntraCtir * 0ffic -’s ^nal Deei-

jD r o gr ith^ NS LA W^ counsel JJn ^ re sol u t i on P ffth e^con tmci? p rotf

Jensen and other members of the PROMIS Oversight
Committee approved the termination of the word processing m>r-

had fliwf , contract for default based on their view that INflAW
had failed to perform this portion of the contract" Howeverfin

“Sworn statement or Mr. pet e r Videnieks, Novembers 1990 d 94

cer 21 19M Sh "" r * INSLAW ' B AttOT "<*. Mr. Peter Videnieks, contracting offi-

Fmdings of Fact and Conclusions of Law, No. 316 and 317, p. 144 .

February 1984, Department procurement counsel William Snider
issued a written legal opinion showing that the Department lacked
sufficient legal justification for a default termination. Instead, the
PROMIS Oversight Committee approved the termination of the
word processing portion of the contract for convenience. Shortly
thereafter, Mr. Brewer notified Mr. Hamilton by telephone that
Judge Jensen had decided to only terminate the word processing
portion of the INSLAW contract at the 74 smaller U.S. attorneys
offices for convenience of the Government. 66

D. The Department Misappropriated INSLAW’s Software

The Department’s position that it owned Enhanced PROMIS was
founded on amendments to the RFP 67 that (1) made available to
all offerors copies of the pilot project software and (2) stated that
the RFP does not anticipate redevelopment of the public domain
PROMIS software used in the pilot offices. The RFP also stated
that:

All systems enhancements . . . performed pursuant to this
contract shall be incorporated within the systems which
have already been installed in the U.S. attorneys’ offices,
including systems installed pursuant to other contracts

According to Department officials, this language was included to
ensure that offices already using PROMIS would benefit from the
enhancements and modifications to the Government-furnished soft-
ware during performance of the new contract. Unfortunately, this
language may also have blinded Department management to the
idea that INSLAW had made privately funded enhancements that
were its property, notwithstanding the Department’s claims to the
contrary.

INSLAW attempted to convince Department officials that it held
proprietary rights to Enhanced PROMIS over a period of several
years, but to no avail. The Department steadfastly ignored
INSLAW’s requests, and even fought two judgments that it be-
lieved were in error based on technical, legal issues rather than on
the merits of the case. Department officials have continued to
maintain that they enjoy total control of Enhanced PROMIS since
they obtained it from INSLAW in 1983.

After Modification 12 was signed and the Department obtained
Enhanced PROMIS and terminated the installation of PROMIS at
the 74 smaller U.S. attorneys offices, INSLAW again attempted to
define its enhancements to the Department while the Department
continued to use INSLAW’s software and services. Each attempt
was rebuffed by Mr. Videnieks. He issued a series of determina-
tions in response to INSLAW’s claims between November 1984 and
September 1986. Finally, almost 3 years after signing Modification
12, Mr. Videnieks declared, on February 21, 1986, that INSLAW
had no enhancements that were proprietary to it, and denied
INSLAW’s claim of $2.9 million for licensing fees.

60 Ibid., p. 144.

67 RFP amendments 1 and 2, Novembers, 1981, and November 16, 1981, respectively.

The Bankruptcy Court took the position that the Department ob-
tained INSLAW’s Enhanced PROMIS through “fraud, trickery, and
deceit.” As stated by Judge Bason:

Under Modification 12, it is undisputed that INSLAW
delivered Enhanced PROMIS to DOJ on the basis of an ex-
plicit commitment by DOJ which had three components:
first, to bargain in good faith to identify the proprietary
enhancements; second, to decide within a reasonable time
which enhancements it wanted to use; and third, to bar-
gain in good faith with INSLAW as to the price to be paid
for such enhancements. On the basis of the foregoing and
all of the evidence taken as a whole, this court finds and
concludes that the Department never intended to meet its
commitment and that once the Department had received
Enhanced PROMIS pursuant to Modification 12, the De-
partment thereafter refused to bargain in good faith with
INSLAW and instead engaged in an outrageous, deceitful,
fraudulent game of “cat and mouse,” demonstrating con-
tempt for both the law and any principle of fair dealing. 68

The Department’s unilateral claim of ownership rights to En-
hanced PROMIS, coupled with Mr. Videnieks’ denial of INSLAW’s
claims to proprietary enhancements, demonstrates at the very
least, a mechanistic approach to procurement policy that always fa-
vors the Department, which just happens to be in a most favored
negotiating position at every turn. At worst, it reflects a biased
view that denied due process and full and fair consideration, for
whatever reason. Most disturbing, Mr. Brewer and Mr. Videnieks
the persons in charge of the PROMIS project, refused to consider
the software ownership concepts involved in INSLAW’s assertions.
The judge, in the Bankruptcy Court’s findings of fact and conclu-
sions of law, stated:

Brewer was not given and had not considered INSLAW’s
January 13, 1982 letter, or any of the pre-contract cor-
respondence between INSLAW and Videnieks; therefore,
Brewer’s subsequent positions regarding INSLAW’s propri-
etary rights were taken without consideration of this let-
ter. 69

This position which seemed to be predicated more in the fear of
giving up an advantageous position, than reaching a determination
on the merits, is corroborated in an August 15, 1984, memoran-
dum, in which Mr. Brewer stated that:

...the proposal would substantially alter our rights in
data (e.g., we would become a licensee — and thus give up
the unlimited rights we currently enjoy). [Emphasis
added.] 70

™ INSLAW Inc. y. United States. 83 B.R. 89 (Bktcy D. Diet. Col. 1988) at 138 (Finding 266).

loid., at 118 (rinding 141).

^Memorandum from Mr. C. Madison Brewer, Director, OMISS, EOUSA, to Mr. Kama] J.
Rama], Director, Procurement and Contracts Staff, Justice Management Division, August 15,

This belief, was shared by other officials at the Department In
“Jill °£,“ d ' NSLAW prop 08 * 1 , dated April 30, 1985, an EOUSA

prieto^EcIme^ DePartmentI ' W "» P™’

A11 proposes received from INSLAW. ... attempt to
torce the Department into acknowledging INSLAW’S pro-
prietary interest in the U.S. attorneys version of PROMIS

Tn tJqt Aifn agreement 1 for software maintenance.

SsT Awl ri SL ^ S tK Pr ° P ^ Sal would - in effect . ratify
fh! S ^ AW claim that the software is proprietary; not only
the micro-computer version which INSLAW proposes to de
op, but also the Prime mini-computer version currently
operational in 20 districts. 71 y

settlement ^r 1985, counter Proposal to an INSLAW

iYision ’ s General Counsel

tinnJ™y ni< ? d St i tes w ® not pay INSLAW any addi-
tract y f ° r software obtained pursuant to this con-

n-l/y SLAW i Wil i rac0gniz , e ^ hat the United States has the
right to unrestricted use of the software obtained or deliv-
ered under this contract for any Federal project, including
projects that may be financed or conducted fey instmmen
tahties or agents of the Federal Government such as its
independent contractors.

ni?f h L D Tl ment ° f 'i.’fstice will agree not to make or
an / dis -f °? ur f or distribution of the software other

FrferS law S '?‘“ d ab ° Ve ta 2 above) ° r > s squired by

Between August 29, 1983, and February 18, 1985 INSLAW im
plemented Enhanced PROMIS in 20 U.S. attorneys office^

ret, even as negotiations were underway, the Department he

PROMH^ft 24 ’ 198 f’ and , September 2, 1987, installed EnhafeJed
KOMIS software at 25 additional sites. 73 According to INSLAWs
counsel, Elliot Richardson, Enhanced PROMIS was fllegally copied

sites* ^were brought^V^” si - tes a , nd subsequently 31 a/ditional
sues were brought on line via telecommunications This action

was considered an explicit breach of the bankrupt^ rules govern
respective actions of creditors and debtors in a reorganiza-
tion situation As stated m the findings of facts the automatic stav
provisions of the Bankruptcy Code prohibit “any act to obtain pos y
session of property of the estate or of property from the estate or

Ofnce n foi^U?S°^AttOT^e^' 8 d^b^ April^ a " analy8i8 b * the Executive

SgS&JSE SB*

S J i™ s r;S:Srs, c rris JMD - » »,

Chnstensen, Deputy Attorney General, March 31. 1989 dd 36 The renort '

INSI^wrenhan^ed^ " 0t inC ' Ude tW ° PR ° MIS pi ' 0t site8 'which Sso insWl£

to exercise control over property of the estate.” 74 The Department
violated^the provismns of the stay by installing Enhanced PROMIS
at the additional sites, and also accomplished this deed over the

t»"d™, P DepaS m 1„uh J W ' Se ^ mber 9 > 19 « 5 . Hamilton

ufacture copies of the PROMIS software for customization
cTc Q V? 8t ^L latl ° n . in additional U.S. attorneys offices, spe-

Cnhfillr • th mif- m a® 1 ' Louis > Missouri, and Sacramento,
California. This action occurs at the very time that the De-
partment of Justice and INSLAW are attempting to re-
solve, by negotiation, INSLAW’S claim that the U.S. attor-
neys version of PROMIS contains millions of dollars of pri-

, 6 fmci Mii en ^j n J eme ! lts fbat are proprietary prod-
ucts of INSLAW and for which INSLAW has, to date, re-
ceived no compensation. 75

Not only did the Department proceed with the national installa-
°- f Enhanced PROMIS, but it also may have used its “unlim-
ited rights posture as a pretextual basis for its national and inter-
aat *° nal distribution of Enhanced PROMIS outside of the Depart-
report ° etai S ° f thls distribution are discussed in section IV of this

According to Judge Bryant:

Although INSLAW and the Justice Department nego-
tiated over the enhancements that INSLAW indicated that
it had included in the proprietary version of PROMIS the
P a rUf could not agree that the enhancements had been
paid for with non-government funds. While INSLAW made
several efforts to demonstrate the private financing of the
enhancements, the Government did not accept its meth-
odology for allocating funding. When asked to provide an

oSSStdSSriT lhat wou,d h* ac “ ptable ’ lba

_ J h !i department proceeded in its unilateral actions despite inter-
lipil^k that f INSL ; AWs claims were not frivolous and in fact

dated j? 1 ivVTq^fi n f d coart challenge. Pursuant to a letter
dated July 9, 1986, from Senator Mathias, Mr. Arnold Burns the

General, conducted an inquiry into the status of
the INSLAW litigation and was told that INSLAW wanted the De-
partment to pay royalties. As a result of this briefing, Mr. Burns
suggested that the issue should be turned around and that a claim
against INSLAW should be made for INSLAW to pay royatties to
the Government since he believed that PROMIS waJ the Depart-

Mr n Burns Perty Department resear cb provided a shocking result to

25a' NS,AW ‘ ,nC " V ' United S ‘ ateS ’ ° pinion of U S - Districl Court Judge William Bryant, at p.

answer that * sot, which I wasn’t terribly happy
inj** 7 acc fP ted > was that there had been a^
f tW C ° rre f, po ? d ?nce and back and forthing [sic] and

wor aw fc j of that > our lawyers were satisfied that
INSLAW could sustain the claim in court, that we had
wawed those rights, not that I was wrong that we didn’t
have them but that somebody in the Department of Justice

[sic! had r in efr er t S ’ 88 1 [ n this back and forthing
added.] ’ ff ’ WOlVed h ° Se rishts - 77 ®mphasis

m?r 4 w ng that the Deputy Attorney General was aware of
can onlv j P ro t ) j le ta r y rights, the Department’s pursuit of litigation
can only be understood as a war of attrition between thp nfnar-f

fitfnnp- Y 13881 ^?: tax-supported resources and INSLAWs desperate

come In hSofMr R sh "nking (courtesy of the Department) in-
^ ^ Mr. Bums revelation, it is important to notp that

thatTime 6 found "° surviving documentation (from

aie , trame) which reveal the Department’s awareness of the

INS LA W of ' pos . lt,ons °. f the Department and INSLAW on
Bum^ W t0 propnetar y enhancements referred to by Mr

E. INSLAW Declares Bankruptcy and Pursues Litigation

. ? y Feb ? a 7 u 198 5. at least $1.6 million in contract payments had
for nR^? he ii by the P epar tment and INSLAW was fS to file
f°r. ch apter 11 reorganization in the Bankruptcy Court fo! the D s

Jud™ JT I’, 1986 ' IN ?^ ■ ComplSn,

Qto, 79 j U ugment, and for an order Enforcing Automatic

BarC S r am 5l^ Wi,lbl1 Vi °lation of Automat^Stay in the
c te n C R In pleadin gs, INSLAW asserted tLt Mr
PRnmq tv, n B if W ! r ’u w k° was responsible for implementing
£5? nisi5w U &h \ Departme nt, was instrumental propel
I^IAW^ ^ bankruptcy and that he thereafter hindered
LAW in its development of a reorganization plan 81 INST. AW
also aUeged that the Department had improper!? converted ande^
e cised control over INSLAW’S proprietary Enhanced PROMIS and
that its concerns were made known to the highest level? of nln*?

“On Ju a iv a 20 m i e q 1 87 W i 1 h h< ° Ut a " y de Partmenta? response. 82

and invoLn 0 ’ 1987 ’ court began a trial that lasted 2V 2 weeks

and involved sworn statements from over 40 witnesses and thnn

sands of pages of documentary evidence. 83 On September 28 1987
Bankruptcy Court Judge Ba/ou issued an oral ml! "g „„

77 Swam statement of Arnold I. Bums, by OPR March 10 iq«s 7 „ .

tract WUh^INSLAW.Inc.^^th^^Ti^ifen^^^o^mfttel^on f Han r dlin S of A Con-

° n8 UWd rnmental A(ra ' rB| U S ' Senatc . September 1989, p. 5. Committee

“Ibid.'

83 Ibid., p. 9.

iMct U *n 7 g l”!? 31 ) a key Department official was biased aeainst
JNSLAW and that the Department “took, converted andTtole”

oTj^Ir^ n 2 h 5 an !988 PR the M h S ^ “ t T ick ?*f fraud > and deceit.” 84

INSLAW *6.8 il, in

infp^Tw’ Vlnlated l th f bankruptcy Court’s automatic stay: Dur-
ing INSLAWs period of chapter 11 bankruptcy the Den/rimoni
proceeded to copy and use INSLAWs Enhanced PROMIS^ and Tven
spread its use— in violation of the automatic stay. By letter dated
WSTAW’ 4, 1986 > shortly after INSLAW declared bankruptcy
that C ° Un n ° tlfied the Department’s contracting officer

R a rceeRi y pRA^o ed ^ U8e by tbe Department of the [En-
h a nced] PROMIS software without the consent of INSLAW
and the use of the software without any agreement as to
the payment of license fees contravene INSLAWs property
rights, its nghts as a debtor in possession under the Bank-
™ P ^ Cy CO p? k andl * f wrongful exercise of control over
property of the debtor s estate in violation of the automatic
stay now in effect. Furthermore, the Department’s disclo-
sure and dissemination of the PROMIS software to third
substantially dissipate, if not completely
waste the commercml value of this major INSLAW asset
We will hold the Department of Justice liable for any such
loss of the value of INSLAWs property rights and if nee
essary will take such actions as are required to prevent
such a loss. ... If the Department of Justice causes a loss

PROMT^T^l V3,Ue of INSLAWs principal asset,
“> 11 may be ^sponsible for destroying the com-

The Bankruptcy Court found that the Department had violated

SoKtesai 8 fec “

p ate relief for violations of the automatic stay by DOJ.
*******

Jj? < j er . ^ 362(h), [a]n individual injured by any

willful violation of a stay provided by this section shall re-
cover actual damages, including costs and attorneys’ fees
and, in appropriate circumstances, may recover punitive

84 Ibid.

cen March" ' NSLAW COUn8el > Mr ' Peter Videnieks, con tracing ofR-

*******

A “willful” violation does not require a specific intent to
violate the automatic stay. Rather, the statute provides for
damages upon a finding that the defendant knew of the
automatic stay and that the defendant’s actions which vio-
lated the stay were intentional. Whether the party believes
in good faith that it had a right to the property is not rel-
evant to whether the act was “willful” or whether com-
pensation must be awarded.

*******

The judge concluded that the Department was liable for actual
damages, including costs and attorneys’ fees, and that INSLAW
could recover punitive damages.

F. District Court Judge William Bryant’s Decision on Appeal
of the Bankruptcy Court’s Ruling

The Department appealed the Bankruptcy Court rulings in the
, stn J^ C ? urt for the District of Columbia. On November 22,
1989, the District Court upheld the Bankruptcy Court’s orders re-
garding liability and damages against the Department. District
Court Judge William Bryant in his ruling stated:

The government accuses the bankruptcy court of looking
beyond the bankruptcy proceedings to find culpability by
the government. What is strikingly apparent from the tes-
timony and depositions of key witnesses and many docu-
ments is that INSLAW performed its contract in a hostile
environment that extended from the higher echelons of the
Justice Department to the officials who had the day-to-day
responsibility for supervising its work. 88

In its decision upholding the ruling of the Bankruptcy Court, the
District Court:

r,.w^ np ^ las ' ze ^ ^at the Department knew Enhanced
PROMIS represented INSLAW’S central asset and that
ownership of the software was critical to the company’s re-
organization.

Held that the Department’s unilateral claim of owner-
ship and its installation of Enhanced PROMIS in offices
around the United States violated the automatic stay.

Concurred with the bankruptcy court’s conclusion that
the Department never had any rights to Enhanced
PROMIS.

The District Court also agreed with Bankruptcy Judge Bason’s
finding that:

...the government acted willfully and fraudulently to
obtain property that it was not entitled to under the con-
tract

and found

5o7 mSLAW ’ InC ' V ' United S ‘ ates < opinion of U.S. District Judge William Bryant, at pp. 49a-

IIL

... convincing, perhaps compelling support for the find-
ings set forth by the bankruptcy court The cold record

sappo J, ts hls [Bason’s] findings under any standard of re-
view. S7

The District Court also found that the Department unlawfully vio-
lated the automatic stay provision of the Bankruptcy Code and
agreed that the Department attempted to convert INSLAW’S bank-
ruptcy standing from a chapter 11 reorganization to a chapter 7
liquidation. The court also upheld the Bankruptcy Court’s order re-
gar ding assessed damages as a result of the Department’s unlaw-

Pi?ftMr| rC,S i ng C u° n , t / 0 ! 0Ver an , d P r »Bferating INSLAW’S Enhanced
PROMIS and upheld the award of attorneys’ fees, but reduced com-
pensatory damages by $655,200. 88

department’s position against judge’s decision is rebutted on

appeal

The Department’s legal defense was found to be deficient on ap-
pea b I Dl * tnc 1 t Court Judge Bryant. 89 The Department contended
that the Bankruptcy Court lacked jurisdiction over INSLAWs
claim because the Department had not waived its immunity from
monetary judgments against the United States. Judge Bryant ruled
against the Departments position stating that the Department’s
actions throughout the litigation suggested a calculated decision to
assert a claim against INSLAW until it appeared that the Depart-
ment had more to lose than gain.

The Department also argued that the Bankruptcy Court should

the c i as /^m^?f p . artl l ient of Transportation Board
of Contract Appeals (DOTBCA) for judgment because INSLAW’S

twi W mcT a 4 w ° n c °!?H act law - However, Judge Bryant found
that the INSLAW case did not involve a contract claim but was
grounded in bankruptcy law, whereby INSLAW sought relief for
violations of the automatic stay provisions of bankruptcy laws.
Judge Bryant also found that Bankruptcy Judge Bason used his
discretion to decide the legal ownership of Enhanced PROMIS that
was necessary for determining whether there had been a violation
ot the automatic stay.

The Department also argued that INSLAW did not prove that
i e j 3 j t S ma *' 1 f had keen violated. However, Judge Bryant con-
eluded that the facts established in the Bankruptcy Court support
the multiple violations of the automatic stay that the Bankruptcy

PRnMiQ UI ' d Judg f A^ ted that the Department knew that

PROMIS represented INSLAW’ s principal asset and that, without
ownership of the software, the company’s economic viability was
threatened. Judge Bryant found that the Department acted will-
fully and fraudulently to obtain property that it was not entitled
to under the contract and that, once the software was in the pos-
session of the Department, there was no evidence that it ever nego-
tItot fadh over the Proprietary enhancements claimed by

INSLAW. Judge Bryant noted that, instead of following the proce-

50?“' lnC " V ' United StaUs ' °P’ nion of U.S. District Court Judge William Bryant, at

“WSL4VV fnr v 1,'°,"'®’ ° P ’ nion ° f ,Vf- Pi8t " ct Judge William Bryant at pp. 56a.

56a. ’ l d S ’ 0pln ’° n ° f U S ' District Jud S e William Bryant at pp 31a-

du. re established by the Bankruptcy Code for resolving the owner-
ship dispute and seeking relief from the automatic stay, the De-
pn nu e To t h l d Pursued a course of self-help by claiming Enhanced
States IS 10 bC ltS property and installin g it throughout the United

De P ar tment also charged that Judge Bason exhibited the ap-
pearance of bias and should have recused himself, and requested
T„atr W p na ba f ed - on this assertion. The Department also accused
Judge Bason of using the bankruptcy proceeding to find culpability
by the Government. Judge Bryant responded that the Department
had previously been denied its reversal request by the District
It ™ n sjdenng the earlier denial, no new trial would be
granted. Judge Bryant further stated that, while the bankruptcy
review must focus on Department actions taken after INSLAW
iled for bankruiJtcy, the Department’s actions cannot be under-
stood without understanding the events leading up to the bank-
ruptcy. He added that what was strikingly apparent from the evi-
dence was that IN SLAW performed its contract in a hostile environ-
ment from the higher echelons of the Justice Department to the offi-
cials who had responsibility for supervising its work. Judge Bryant
also noted that Judge Bason’s attention to detail, in both his oral
a " d 'Y r ’ tten rulings, demonstrated a mastery of the evidence and
loifZhi c ,°r? pelllng s u P port for his findings. Judge Bryant con-
cluded that the record adequately supported the bankruptcy judge’s
findings under any standard of review.

The Department also stated that the award of damages by the
Bankruptcy Court exceeded its authority and urged that no attor-
ney fees be awarded. However, Judge Bryant determined that the
Bankruptcy Court discharged its responsibility to assess damages
portable 1 BVldenCe P rovided at trial, and its decision was sup-

G. Appeals Court Reverses INSLAW’S Victory on Primarily
Jurisdictional Grounds

On October 12, 1990, the Department appealed the District
Court decision to the U.S. Court of Appeals for the District of Co-
lumbia. The Department raised some of the same issues previously
raised in its appeal to the District Court and requested a reversal
2” jV e h »sis of the facts found in the Bankruptcy Court. In its brief
for the appellants, the Department stated that:

In the district court, the Government set out the clear
errors underlying these findings of facts at great length
and with great specificity. The district court’s decision is
deficient in not discussing any of these specific conten-
tions. Of necessity, our factual contentions on appeal are
more limited. 90

The following issues were raised by the Department on appeal to
tne Court of Appeals: (1) that the Department’s use of computer
software in its possession did not violate the automatic stay and
was more properly the subject of a contract dispute under the Con-
tract Disputes Act, which should be heard in DOTBCA - (2) that

60 October 12, 1990, brief for the appellants, p. 16.

since there was no motion to convert INSLAW from a chapter 11

rw iv? ap n r 7 >, ther ? was no violation of the automatic stay; (3)
that the Department did not file a claim and therefore, did not
waive its sovereign immunity; and (4) that damage awards for vio-
lation of the automatic stay can only be paid to individuals not cor-
porations.

On May 7, 1991, a panel of the U.S. Court of Appeals for the Dis-
trict of Columbia reversed both the Bankruptcy Court’s and Dis-
tnct Courts judgments on primarily jurisdictional grounds the Cir-
cuit Court found that the Bankruptcy Court was an inappropriate
forum to litigate the issues it decided and furthermore that the De-
had T- ™ ,at . ed the automatic stay and dismissed
INSLAWs complaint against the Department. The Court of Ap-
pe a| s noted that both courts found that the Department had
fraudulently obtained and then converted Enhanced PROMIS to
its own use. The court further noted that: “Such conduct, if it oc-
curred, is inexcusable.” 92

On October 9, 1991, INSLAW filed an appeal for a writ of certio-

Suprem ® Court of the United States. On January 13
1992, the Supreme Court denied the writ. ’

H. Department Asserts Erroneous Position Before DOTBCA

tJot f w ition t0 | nitia ting proceedings in the Bankruptcy Court,
tktSHKu pi V sued ren l edies an der the Contract Disputes Act.
IN SLAW filed notices of appeals with the Department of Transpor-
tation Board of Contract Appeals (DOTBCA) in February 1985, and
m Mav and November 1986. On June 23, 1986, the first complaint
was filed before DOTBCA. Additional claims were filed on Septem-
ber 19, 1986, and August 24, 1987. P

INSLAWs claims before DOTBCA fell into six categories - (1)

m T e Mo T a rw g char & e s associated with the computer center
operated by INSLAW and used by several U.S. attorneys’ offices;
(2) contract target fees and voucher payments withheld by the De-
partment and additional fees due INSLAW as a consequence of
changes in the scope of work ordered by the Department; (3) indi-
rect costs, including overhead; (4) direct costs; (5) costs, including
legal fees, allegedly incurred by INSLAW because of the termi-
nation for convenience by the Department of the word processing
portion of the contract; and (6) costs incurred because the Depart-
ment withheld payments.

These claims were held in abeyance pending the outcome in the
bankruptcy adversary proceeding. INSLAWs claims against the
araw m rat!T .V j 8 *562 and ttle Department’s claims

nnTRPi • t S t ?l ed , ft 1 ’ 216 ’ 752 - On November 13, 1991,

WS™ Ws e cate 9 * hed ° ct ° ber 13> 1992 ’ as the trial date to hea^

Unfortunately , the Department took the spurious position that it
has successfully defended itself against assertions of illegality, as

81 Ibid., pp. 16, 24, 28, 30, 45.

INsli UnUe $ S !S! e %jL No - 9 °- 6063 and United States of America v.
1991, p. 15. ’ ' CaBC N °‘ 90 “ 05052 ' U S - Court of Appeals decision on the appeal, May 7,

o/jtt^fiaf. case I^^609^N^emtei^KL^9L^*49. maaer Apartment

defined in two courts and based on some of its own internal analv-
®' s ’ by J’aypg convinced the Appeals Court to vacate the earlier
courts decisions based on jurisdictional grounds — a ruling that had

efatfnf nlr ft i evidence P res ? nted - The Department is op-
®^ mg , under the belief that it has been exonerated of any mis-

»un"e‘ SeTuSfc ' IM1 ' hearing brfore D0TBCA - De P» rt -

.iSi'S.? for themselves - and *"*>

However, the DOTBCA judge responded:

There is one problem. The fact that a judge or a court
doesnt have jurisdiction doesn’t mean that the court is
completely ignorant. True, Mr. Bason rthe bankruptcy
court judge] and Mr Bryant [the judge that heard the^nu
tial appeal] did not have jurisdiction, but they did make
some eery serious findings on the basis of sworn Simony

they had been truly vacated, and it may be that all the
statutes to run have run and they cant go anywhere
Those cases may be dead forever. But it has left a cloud
over the respondent [the Department], [Emphasis added.] 95

( .Pj us ’ still another adjudicating judge found that the rulings of
the two courts that reviewed the INSLAW litigation ran counter to
whaHtf^ 6 "! 8 intransigent approach to recognizing formerly
T internal analysis had suggested in confidence When
P reaction to the finding of the District Court, Attorney

General Meese responded that the ruling: y

. . . seems totally at odds with everything I have learned
Hrp b !f f ^ d whl,e 1 was in the Department of .Jus-
tice peoplP W3S any wron g doin g on the part of Jus-

“ the D0TBCA heari " gs ponded to the

"i th al I due respect, those orders were va-
Th t pv V,t nd the , effec .t of the vacating is to make them void,
they have no force in effect whatsoever. They are as if they
never happened. They — it would be improper for a court or
a board or any other judicial tribunal to rely, in any way
shape or form, on those decisions. [Emphasis added.] 97 ’

Certainly, the Department may be correct in asserting that there

abSr£ ?h° egaf f r e L° the cou J ts 1 ’ ruhngs on terms of enforce-
abihty. But that result is because of the jurisdictional defects and

Sto&ZJV' ** cas f e ’. which had ^en adjudicated in two sepa
clude^ th^he 18 aot “rrect for the Department to con-
ude that the INSLAW matter has been resolved or that it should

04 Ibid., p. 37.

, , Proceedings of a hearing before the DOTBCA In the matter nf INSI aw n

of Justice, et al, case No. 1609, November 13, 1991 p 37 ' INSLAW - Inc - v - Department

^bworri sUtement of Mr. Edwin Meese, July 12, 1990 p 48

of^ZT rnc. ..Department

be considered as if it “never happened.” The Department has nni
yet compensated INSLAW for its illegal and improne? use of s^ft
FWfh that WaS T found to he proprietary to INSLAW P by two courts
h^. rthen ?S re, A JuStl , ce cannot escape accountability merelv

^ the D 2 TB S A judge concluded, there definitely remains a

pnH n ^f Pa r rt 'i al T qu J.7 needs to be undertaken to assess the facts
mn^s^ 16 ^ 18 ccipab'iffy of the actions involved. Strategic games

the fl :"- "“sht and

Pst Twi c 0f ., e Government is pitted against a private inter-

or wr,,ngfu, act - and <2 > this
°I - a congressional reference case is fully adversar-

. . whether the demand is a legal or eauitable claim nr

r gra iu lt ‘T , T a . nd i-he amount, if any, legally or equitable due
from the United States to the claimant. 5 ** Q due

INS^A Vfn 8 u Pc^ibihty that the extent of damages to

^‘"‘i P mntmmtTher ! dhtri, j ution » f PROMIS to at least one

spread Itn.uZ^tZ ° f ™ d «'

I. Department Encourages Contract Mediation While It
Hinders Settlement

diSe 1 th^INSIA t W 0 f r° C T ent th . at . another equivocal effort to me-
fKa n 6 le t V dls P ute was initiated on June 28 1990 when
mqi i^Ti! 11 A req \’f sted the Appellate Court ^o consider
LAW for the Appellate Mediation Program. 100 This action on

“See Shane supra at 304.

“28 U.S.C. 1 2509(c).

1 988, ^aml a mended f 35* iBsued November 28,

Continued

tbe Department’s part appeared significant because it was it’s first
mediation request out of the 13 appeals submitted since January
1989. However, the success of this program requires that confiden-
tiality be ensured throughout the mediation process. Information
concerning cases screened by the Chief Staff Counsel’s Office is not
to be shared with judges or with anyone outside the court. The
judges do not know which cases are selected for mediation. 101

However for some unexplained reason, the Department failed to
comply with this most basic requirement. On October 3, 1990 Ms
Lmda Fuiklestein, Circuit Executive of the District of Columbia
Circuit Court, contacted INSLAW’S counsel and referred to an Oc-
tober 1, 1990, Washington Post article, which revealed that medi-
ation had been requested by one of the parties. The article, cited
to a departmental spokesman stated:

that the department has requested that the matter
lINbLAW] be considered for mediation by the appeals
court, m an attempt to settle the long-running dispute. 102

This disclosure was completely contrary to the standards of the
Appellate Program pursuant to the order of the court. The effect
was to force INSLAW to withdraw from the program after only 3
months. It is difficult to understand the Department’s strategy by
this action. It may be that the Department wanted to maintain the
facade of working diligently to settle a sticky contract dispute while
tmci u f . t ' ie , scenes to sabotage it and keep pressure on
INbLAW by forcing it to expend additional resources on legal sup-
port during the mediation process. If this is the case, the Depart-
ment was successful. But the Department also succeeded in main-
taining a near-flawless record of seeking delay over resolution and
raising the level of suspicion about its motives to a point where the
J U bt * n ^* e untarn ished pursuit of justice is subject to grave

IV. SIGNIFICANT QUESTIONS REMAIN UNANSWERED

ABOUT POSSIBLE HIGH LEVEL CRIMINAL CONSPIRACY

A. Allegations of Conspiracy and Intrigue Continue To
Surround the INSLAW Controversy

The Hamiltons have alleged that high level Department officials
conspired to steal the PROMIS software system. According to their
allegations’ the theft involved a number of stages which included-
(1) the failure of the Department to comply with the terms and con-
ditions of the contract with INSLAW; (2) attempts to force into
bankruptcy and force the sale of PROMIS through liquidation of
the company; (3) the attempted hostile buyout of INSLAW by a
computer company owned by Dr. Earl Brian, a friend and former
associate of Attorney General Meese; (4) the providing of the En-
hanced PROMIS system to Dr. Brian by high level Department offi-
cials; (5) the modification of the PROMIS system by individuals as-

of some of the issues, through an independent and neutral mediator. Source: Brochure issued
bytee^court entitled, “Appellate Mediation Program."

p 24 <JCt0ber l ’ 199 °’ Washin S^° n Post article, entitled: “Obsessed by a Theory of Conspiracy,"

■

han^H d p^nMUJ wo ^ d of covert intelligence operations so that En-
hanced PROMIS could be distributed worldwide to intelligence and
law enforcement organizations; and finally, (6) the actual distribu

ffi^rnLioLD nha "t C L d tL PR L MIS i * oftware system domestically and

edge and support of the CI ^ and

asserted that the first step in the conspiracy
f? J^? 1 PROMIS system occurred when the Department inten-

troof'y Pa ! ed to comply With the terms and conditions of the con-
W iS '!w d en ^ red '"to with INSLAW. The Hamiltons believe
that INSLAW’S contract with Justice did not include the enhanced
version of the PROMIS software. In November 1982, the Depart-

PRnM d i| ma r n r ?d turn over the enhanced version of

PROMIS stating that INSLAW had no title to it. Further, the
have ass jrtf d the Department’s project manager, C.
^ adl j°£ B n ewer ; a A d the contracting officer, Peter Videnieks, di-
rected by Deputy Attorney General D. Lowell Jensen, Attorney
General Edwin Meese and other high level officials, resisted any
type of negotiated arrangement with INSLAW in order to put the
com p any out of business. The Hamiltons claim that by withholding
$2 milhon m contract payments to INSLAW during this dispute
the Department intentionally forced INSLAW into bankruptcy The

^n^il^TOGi a Aw a / Serte u that the De P ar tment then attempted to
convert mSLAW from chapter 11 to chapter 7 bankruptcy, so that

PROMTS r* th V ale of INLAW’S assets, including Enhanced
PKUMIb, to a rival computer company controlled by Dr. Brian
n ™ Hamiltons have contended that high level officials in the De-
partment of Justice conspired to steal the PROMIS software svs-
an eIe ment of this alleged theft, these officials, which In-
cluded former Attorney General Edwin Meese and Deputy Attorney
General Lowell Jensen, forced INSLAW into bankruptcy by inten-
tioMfly creating a sham contract dispute over the terms and condi-
c ° ntract whic h led to the withholding of payments due

rni^!^YL by w the ■u epar l ment - 1 After drivin g the company into bank-
ruptcy, the Hamiltons have claimed that Justice officials attempted
to force the conversion of INSLAW’S bankruptcy status from chap-
rnnfli ^ chapter 7. They have stated that this change in bank-
ruptcy status would have resulted in the forced sale of INSLAW’S
assets, including PROMIS, to a rival computer company called

tik buvnnt'nf djquw fc b ,s tlTne was attempting to conduct a hos-
tile buyout of INSLAW. Hadron, Inc., was controlled by the Biotech
Capital Corporation which was under the control of Dr Earl Brian
who was president and chairman of the corporation. This is the
campaa y »? which Mrs. Ursula Meese had invested with
money loaned to her by Mr. Edwin Thomas, a mutual friend and
associate of Mr and Mrs. Meese and Dr. Brian. 103 The Hamiltons

’ msTA \im d L ha4 i even though the att empt to change the status
promts ft bankruptcy case was unsuccessful, the Enhanced
PKUMIb software system was eventually provided to Dr. Brian
Ihis was allegedly done by individuals from the Department with
the knowledge and concurrence of then Attorney General Meese

34^36 ReP ° rt ° f the inde P endent ““"Bel concerning Edwin Meese III, September 20, 1984, pp.

who had earlier worked with Dr. Brian in the cabinet of California
Governor Ronald Reagan and later at the Reagan White House. Ac-
cording to the Hamiltons, the ultimate goal of the conspiracy was
to position Hadron, Inc., and the other companies owned or con-
trolled by Dr. Brian, to take advantage of the nearly 3 billion dol-
lars’ worth of automated data processing upgrade contracts
planned to be awarded by the Department of Justice during the
1980 s.

Mr. Meese and Dr. Brian served together in the cabinet of then
California Governor Ronald Reagan from 1970 through 1974 Dr
Bnan was the controlling shareholder in Biotech Capital Corpora-
tion which in turn had a substantial stake in a computer firm
called Hadron, Inc. At that time, Dr. Brian was chairman and
president of Biotech Capital Corporation and was on the board of
directors of Hadron, Inc. The Hamiltons have asserted that after
the election of 1980, Dr. Brian moved quickly to put Hadron, Inc.,
in a position to take advantage of ties to Mr. Meese and others in
the newly elected administration. The Hamiltons have claimed that
Hadron, Inc. s first post-election moves were to acquire companies
supporting Federal law enforcement efforts to control the smug-
gling of drugs across the Mexican border. Hadron, Inc., entered into
several Government contracts with U.S. Customs and various intel-
ligence agencies. The Hamiltons have claimed that in April 1983
Dominic Laiti, president and chairman of Hadron, Inc., contacted
them and attempted to purchase Enhanced PROMIS. When they
declined to sell PROMIS, he told them that he had ways of making
them sell. The Hamiltons have alleged that Mr. Laiti also told
them that as a result of contacts at the highest level of the Reagan
administration, including Edwin Meese, Hadron, Inc., was able to
obtain the Federal Government’s case management software busi-
ness The Hamiltons have asserted that after declining to sell the
PROMIS system, INSLAW became the target of a hostile buyout
attempt.

The Hamiltons have alleged that after the Enhanced PROMIS
software was stolen, it was illegally disseminated within the De-
partment of Justice, to other Federal Government agencies and to
governments abroad. This dissemination included the distribution
of PROMIS to U.S. intelligence agencies, the FBI and the DEA.
The Hamiltons have also claimed that the PROMIS software was
sold to foreign governments for use by their intelligence and law
enforcement agencies. The Hamiltons have strongly asserted that
prior to PROMIS being distributed, it was modified by individuals
connected with covert U.S. intelligence operations. These modifica-
tions possibly allowed for the creation of a “back door” into the sys-
tem which would allow U.S. intelligence agencies to break into the
systems of these foreign governments whenever they wished.

The Hamiltons have alleged that the Department furthered the
conspiracy, when Department officials and others, including Judge
Cornelius Blackshear, William Tyson, Thomas Stanton, Laurence
McWhorter and William White, committed perjury and obstruction
of justice during the investigation of the theft of PROMIS and dur-
ing the trial in front of Judge Bason.

Former Attorney General Elliot Richardson, counsel to INSLAW,
has described the circumstances surrounding the INSLAW case as

a possible cnminal conspiracy involving Edwin Meese, Judge Low-
ell Jensen, Dr. Earl Brian and several current and former officials
at the Department of Justice. Mr. Richardson has stated that the
individuals involved in the theft of the PROMIS system, the subse-
quent coverup and its illegal distribution may have violated several
Federal criminal statutes including: (1) 18 U.S.C. §654 (officer or
employee of the United States converting the property of another);

■ U' S C - § 1001 (false statements); (3) 18 U.S.C. § 1621 (per-
<<> ^, 8 , U S ;P- § 1503 (obstruction of justice); (5) 18 U.S.C.

’a nd ’ V? SC - § 371 (conspiracy to commit

onense). Mr. Richardson also believes that the circumstances sur-
rounding the INSLAW case fulfill the requirements necessary for
prosecution under 18 U.S.C. 1961 et seq. (the Racketeer Influenced
a C ,°. rrupt Organization— (RICO)— statute). 104
As discussed in the first section of this report, the committee in-
vestigation largely supports the findings of two Federal courts that

PRnMiTWi. took j. C0 P v erted, stole” INSLAW’S Enhanced
PROMIS by trickery, fraud and deceit,” and that this misappro-
priation had to involve officials at the highest levels of the Depart-
ment of Justice. The Department deliberately ignored INSLAW’S
proprietary data rights, took the Enhanced PROMIS software and
improperly distributed it to numerous Justice Department offices
'£ ere not entl P e d use it under the Department’s contract
with the company. Certainly this was a high risk venture in which
Department officials had to have known would be vigorously chal- ’
lenged by the Hamiltons. Nonetheless, the Department expended

toot’aw • enei i gy and mone y pursuing its conflict with

lNSLAW including almost 7 years of litigation. The Department
took this course of action even though high level Justice officials
knew, at least as early as 1986, that INSLAW had legitimate pro-
pnetary rights to the Enhanced PROMIS software and that the De-
partment would not likely win the case in court on its merits. This
raises the troubling question of why the Department would go to
such great lengths to contest a relatively small $10 million procure-
ment when there are certainly more pressing criminal justice mat-
ters to attend to The inability of the Department to provide a plau-
sible answer to this key question has fueled concerns that a more
sinister explanation exists.

t] ? e Department continues to explain the INSLAW conflict
as a simple contract dispute, the committee’s investigation has un-
covered or identified information which suggests a different and
much more involved explanation.

B. Enhanced PROMIS May Have Been Disseminated
Nationally and Internationally

After INSLAW became a for-profit organization, its business ob-
jective was to enhance revenues from the licensing, 105 sale or leas-

Jan^^4 ra i992Te^ f-’m'’’ C ° Un8el> Judge NichoIa8 Bun from Elliot L. Richardson, Esq.,
^ 06 Courts have defined a “license* in the following ways:
leeall v* dnflhfiS n !fb WhlCh • gives t J ,e 6 r « nt ^ permission to do something which he could not

Continued

ing of PROMIS and maintenance fees earned by its PROMIS soft-
ware on a worldwide scale. INSLAWs international sales of
PROMIS were conducted under the corporate name INSLAW Inter-
national, 106 which licensed PROMIS in Ireland, Scotland Aus-
tralia, Holland and Italy. 107 Nationally, INSLAW’S objective was to
market PROMIS to state and local jurisdictions, the Federal Gov-
ernment, and private businesses such as law firms. 108

As previously discussed, INSLAW had long asserted— and was
supported in the courts — that it owned proprietary rights to its en-
hanced version of PROMIS that were turned over to the Depart-
ment in Apnl 1983. It was the court’s position that the Department
stole and improperly distributed INSLAW’S Enhanced PROMIS Al-
though later overturned by the Circuit Court, the Bankruptcy and
District Courts held that the Department had violated an auto-
matic stay and was liable for license fees for unlawfully using En-
hanced PROMIS (as described in other sections of this report) 109
T 5 t D^»i?ro appear l’ however > that the Department’s distribution of
PROMIS may have gone far beyond its own boundaries because
there are documentation and corroborating statements which indi-
cate that PROMIS may have been distributed by Department offi-
cials to locations worldwide.

* ?. n AP r d 15, 1983, Mr. Brick Brewer asked Mr. Jack Rugh, the
Acting Assistant Director, OMISS, EOUSA about any discussions
that he may have had regarding the availability of the various Fed-
eral versions of PROMIS to organizations other than U.S. attor-
neys offices. In a Department memorandum dated April 22 1983
Mr. Rugh wrote that:

Since INSLAW made their claim of proprietaiy interest
in our enhanced version of PROMIS, I have qualified the
possibility of the availability of that version. Prior to that
claim, / told several of the organizations discussed below,
that EOUSA enhancements could be provided to them at
some future date. [Emphasis added.]

As part of our solicitation for computer equipment, Gov-
ernment owned versions of PROMIS were made available
to potential bidders for use in benchmarking their equip-
ment. All four LEAA versions (DEC, IBM, Wang, and Bur-
roughs) as well as the EOUSA Prime pilot version were
supplied. ...No restrictions were placed on the usage of that
software. [Emphasis added.]

Also as part of our computer buy, a copy of the EOUSA
Prime pilot version of PROMIS was supplied to Mr. Dave
Hudak who contracted with us to develop certain bench-

° n “ PartiCU ‘ ar bU8inC88 ° r 40 ™
use" 230's W P 2d E 77o y, 775 ,,CenB<! ' 8 8 perBOnal P rivile S K <Ir permission with respect to some
693 BeCaUSe a licen8e re P™ scnU on, y a personal right, it i B generally not assignable.” 34 N.Y.S.
New°Ycrk ) LaW Dictionary ’ Mr - Steven H - Gifis . Barron’s Educational Series, Inc., Woodbury,
Memorandum to INSLAW from Peabody, Rivin, Lambert & Meyers, April 16, 1979 p 1

Memorandum of interview with Mr. Hamilton, January 30, 1992 , p. 1 .

io» rSllf 1 of m William Hamilton to the Honorable Harold R. Tyler, February 23, 1979 p 1
.T we™. unaware that Deputy Attorney General Bums had deter-

mined in 1986 that INSLAW owned its enhanced version of PROMIS and the Department would
lose in court on this issue.

mark programs. Again no restrictions were placed on soft-
ware usage. [Emphasis added.]

In early 1982, I supplied a copy of the EOUSA Prime
pilot version of PROMIS to Bob Bussey of the Colorado
District Attorneys’ Council, at Bricks [Brewer’s] re-
DrSyj'Vro l V^ntly, I discussed the availability of our
PROMIS enhancements, funded through the LEAA con-
^mc£, once they were installed on our Prime equipment with
1 also Provided him with a copy of the LEAA
DEC version of PROMIS in early 1983. [Emphasis added.]

1 provided Jean Gollatz from the Pennsylvania State
Government with a copy of our computer RFP in early

18 ha Y, e Ms - G°H atz on several occasions that
our Prime pilot version of PROMIS is available for their
use, and that our enhanced Prime version should be avail-
able by mid-summer, 1983. [Emphasis added ]

I have discussed the availability of EOUSA Prime pilot
version of PROMIS as well as the enhanced version with
Don Manson of the Bureau of Justice Statistics on a num-
ber of occasions. Mr. Manson is particularly interested in
pmvidmg a copy of our enhanced software to the U.S. Vir-
gin Islands. [Emphasis added.]

D “ rin g of , April n ’ 1983 > INSLAW dem-

onstrated PROMIS in the Boston U.S. attorneys’ office to
a group of people from the State of Massachusetts. Joe
Creamer, our system manager in Boston, called me late in
the week. He said someone from State [the State Govern-

i alled r him to ask about the availability of
PROMS software from sources other than INSLAW. I told
Joe that the LEAA versions and our Prime pilot version
were certainly available, but that there was a current dis-
pute with INSLAW regarding our enhanced version. I do
not know if Joe provided this information to the State
LEmphasis added.]

I nave held a number of informal discussions with per-
sonnel in the Criminal Division regarding their possible
use of our enhanced version of PROMIS and the possibility
of their using one of our optional Prime machines. We have
also discussed the possibility of cooperating on PROMIS
software maintenance and enhancements in the future.
[Emphasis added.] 110

A Department memorandum also shows that the Department

made at least the LEAA version of PROMIS available to an inter-

££ 6,15&, rn. R U ^ r * , SUS vern '”' nt - ,n a dated

Reference my memorandum to file dated April 22, 1983
on the same subject. Brick Brewer recently instructed me
to make a copy of an LEAA version of PROMIS available
to Ur. Ben Orr, a representative of the Government of Is-
rael. Dr. Orr called me to discuss that request after my
earlier memorandum was written. I have made a copy of

1983. JflCk S ' RUgh ’ Acting Assistant Director, OMISS, EOUSA, memorandum to file, April 22,

the LEAA DEC version of PROMIS and will provide it
along with the corresponding documentation, to Dr. Orr be-
fore he leaves the United States for Israel on May 16. [Em-
phasis added.] 111

Given the international dimensions to the decisions, it is difficult
to accept the notion that a group of low-level Department personnel
decided independently to get in touch with the Government of Is-
rael to arrange for transfer of the PROMIS software. At the very
least, it is unlikely that such a transaction occurred without the
°f high level Department officials, including those on the
PROMIS Oversight Committee. Interestingly while Department
documents show that “public domain” PROMIS was turned over to
Israel, it is uncertain what version actually was transferred. De-
partment managers believed that all versions of the Enhanced
PROMIS software were the Department’s property. The lack of de-
tailed documentation on the transfer, therefore, only creates new
questions surrounding allegations that Enhanced PROMIS may
have been sold or transferred to Israel and other foreign govern-
ments. It certainly raises questions, discussed infra, about allega-
tions surrounding Dr. Brian’s involvement in the sale of Enhanced
PROMIS to Israel. In particular, it has been asserted by several in-
dmduals that the Enhanced PROMIS had been delivered to Dr.
Brian for such a transfer by Mr. Videnieks. Mr. Videnieks was
asked to provide a sworn statement to committee investigators on
this subject, but to date committee attempts to arrange such a
statement have been unsuccessful. 113

By memorandum dated May 12, 1983, Mr. Rugh turned PROMIS
over to Mr. Brewer for submission to the Government of Israel:

Enclosed are the PROMIS materials that you asked me
to produce for Dr. Ben Orr of the Government of Israel.
These materials consist of the LEAA DEC PDP 11/70 ver-
sion of PROMIS on magnetic tape along with the printed
specifications for that tape, as well as two printed volumes
of PROMIS documentation for the LEAA version of the
system. 114 [Emphasis added.]

In a memoranda to Judge Bua, Elliot Richardson maintains that
documentary evidence such as travel memoranda, reflect a plan by
the U.S. Government for direct accessing of foreign government in-
telligence and enforcement activity:

One important motive for the theft of Enhanced
PROMIS may have been to use it as a means of penetrat-

„ “‘Mr. "lack s. Rugh, Acting Assistant Directnr, OMISS, EOUSA, memorandum to file May
b, 1983.

112 See section of the report titled, ‘The Allegators.”

112 Mr. Videnieks provided an initial sworn statement to the committee on November 5, 1990.
On March 21, 1991, Michael Riconosciuto provided a sworn affidavit to the Hamiltons in’ which
he described an alleged relationship between Mr. Videnieks and Dr. Brian. On March 22, 1991
committee investigators attempted to schedule a second deposition with Mr. Videnieks through
his attorney, Charles Ruff, to discuss these new allegations. On March 25, 1991, Mr. Rufif stated
that Mr. Videnieks would not agree to provide a second deposition. Subsequently, Mr. Ruff was
contacted on another occasion in which he again stated that Mr. Videnieks would not provide
a second deposition. It should also be noted that at the Justice Department’s request Mr.
* ‘uenieks testified at the trial of Michael Riconosciuto (see infra).

Mr. Jack S. Rugh, Acting Assistant Director, OMISS, EOUSA, memorandum to C. Madison
Brewer May 12, 1983. Also, note that this action took place after Modification 12 was signed
on April 11, 1983, and the Enhanced PROMIS was turned over to the Department

ing the intelligence and law enforcement agencies of other
governments. The first step in this scheme was the sale to
the foreign government of a computer into which had been
inserted a microchip capable of transmitting to a U.S. sur-
veillance system the electronic signals emitted by the com-
puter when in use. ... Enhanced PROMIS has capabilities
that make it ideally suited to tracking the activities of a
spy network.

Several INSLAW informants formerly affiliated with
United States or Israeli intelligence agencies claim that
both the United States and Israel have relied on “cutout”
companies to provide ongoing support for the PROMIS
software 116

In still another departmental memorandum, reference is found to
making Enhanced PROMIS available to outside sources after the
contracting officer had ruled against INSLAWs claims to the en-
hancements. As described in Mr. Rugh’s August 12, 1983, memo-
randum:

On Wednesday, August 10, Don Manson called to in-
quire about the availability of our Prime [Enhanced] ver-
sion of PROMIS for distribution to state and local organi-
zations, specifically the Virgin Islands. I explained to Don
that INSLAW had claimed that the U.S. attorneys 7 version
of PROMIS contains proprietary software and cannot be
distributed beyond the U.S. attorneys’ organization. I told
Don that even though I expected the dispute to be resolved
in favor of the Government, we could not supply a copy of
the software at this time. Don indicated that he planned to
make a formal written request for the software, indicating
an urgent need in the U.S. Virgin Islands. [Emphasis
added.] 116

It is uncertain whether this request was made and, if so, what
the outcome was. Several individuals 117 however, have provided
sworn statements that Enhanced PROMIS was in fact distributed
by the Department or its agents beyond EOUSA.

1. ALLEGATIONS THAT THE JUSTICE DEPARTMENT AND EARL BRIAN
CONSPIRED TO DISTRIBUTE PROMIS

Several individuals 118 have stated under oath that the Enhanced
PROMIS software was stolen by high level Justice officials and dis-
tributed internationally in order to provide financial gain to Dr
Brian and to further intelligence and foreign policy objectives of the
United States. While some of this testimony comes from individ-
uals who given their past activities and associations, might be
viewed as less than credible, the committee has uncovered corrobo-
rating evidence supporting a number of the aspects of these wit-

!reM emorandum to Judg ? Nicho ! aa Bua from Mr. Elliot Richardson, p. 34.

12 1983 ** aC k ** u £* 1 ’ Acting Assistant Director, OMISS, EOUSA, memorandum to file, August

h'Z'Phggg allegations are explored in depth in the section of the report entitled. “The
Allegators. ’

u *Ibid.

nesses’ sworn testimony. 119 Although the committee’s investigation
could not reach a definitive conclusion regarding the motives be-
hind the misappropriation of the Enhanced PROMIS software, the
disturbing questions raised, unexplained coincidences and peculiar
ei TXTor a ^have SUI *f ace d throughout the committee’s inquiry into
the INSLAW case raises the need for further investigation.

Finally, as documented infra, the committee’s investigation was
unfortunately hampered by numerous obstacles which prevented it
from conducting a complete review of several allegations during the
investigation of the INSLAW case. This was particularly true of the
allegations involving a possible criminal conspiracy by high level
^vemment officials to steal, sell, and disseminate INSLAWs
abroad i 2 ° S ° ftWare ^ Secret or covert programs domestically and

Other events including the arrest and conviction of a key in-
formant and the death of a reporter covering the INSLAW mat-
ter— have only generated more questions about the INSLAW mat-
ter. Numerous potential witnesses refused to cooperate, for the
stated reason that they were fearful for their jobs and retaliation
by the Justice Department or that attempts had already been made
to intimidate them against cooperating. Other witnesses directly
contradicted the statements attributed to them by the Hamiltons
ana were clearly distressed that their names had been drawn into
the web of the INSLAW conspiracy theoiy. Mr. Riconosciuto and
others claimed to have direct knowledge of a conspiracy by high
level Department officials to turn INSLAW’S PItOMIS software
oyer to former Attorney General Meese’s friend and former associ-
ate, Dr. Earl Brian. 1 Finally, many witnesses have given conflict-
ing and inconsistent testimony which may involve perjury and ob-
struction. The following is a brief discussion of these issues.

2. SWORN STATEMENT OF MICHAEL RICONOSCIUTO

Mr. Michael Riconosciuto, a self-described computer expert who
in the past has been involved with contract computer and muni-
tions work for U.S. intelligence agencies, was brought to the atten-
tion of the committee in June 1990. Mr. Riconosciuto alleged that
he had access to information that clearly linked Dr. Earl Brian to

''"Thor-t- is some measure of irony in the reaction of some current and former Department
oihaals m their attempt to discredit automatically these allegations simply because of the oast
activities of certain witnesses who have worked "both sides” of the enforcement or intelligence
communities. The Department showed no similar reluctance or moral fastidiousness in its recent
prosecution of Manuel Noriega, which involved the use of over 40 witnesses, the majority of
whom were previously convicted drug traffickers. Obviously, a witness’ perceived credibility is
" ia?!?L ay8 „ lndlcatlve of the accurac y or usability in court of the information provided.

I he Department’s unwillingness to allow congressional oversight into its affairs in spite

T erup ™ f " rml h’ dom R' gre«Hy hindered the committee’s investigation of the
11001*117 a The Department delayed and hindered congressional inquiries into the

1 XNSGAW matter over several years. This committee consumed almost 2 years and had to resort
to a subpoena to obtain key information. Even then, key Department files subpoenaed by the
committee were reported lost and other key investigative files are still being denied on the basis
that these files contain criminal investigative material. The committee also encountered serious
problems with obtaining cooperation from U.S. intelligence and law enforcement agencies. While
Borne limited level of assistance was eventually provided from these groups, it often took months
to arrange even minimum cooperation. The committee also encountered virtually no cooperation
r n 'iS } nvea *js a .b° n or the INSLAW matter beyond U.S. borders. The Government of Canada re-
iused to make its officials available to committee investigators for interviews without strict limi-
tations on the questioning. AIro, see discussion in section entitled, "INSLAW Request for Inde-
pendent Counsel,” for greater detail.

^See section of report entitled, 'The Allegators.”

the Department’s theft of Enhanced PROMIS software. Mr.
Riconosciuto alleged that Dr. Brian was given the software as a re-

W - 122 i vork ae had done for the Reagan Presidential cam-
paign. In a sworn statement to Mr. and Mrs. Hamilton, Mr
Riconosciuto stated that in the early 1980’s both he and Dr. Brian
were associated with the Wackenhut Corporation 123 to work on a
covert project onthe Cabazon Indian Reservation located near
Indio, California. 124

On March 21 1991, Mr. Riconosciuto provided the Hamiltons a
sworn affidavit detailing his involvement with Dr. Brian and Peter
Videnieks, the Department’s contracting official. Mr. Riconosciuto
stated that while employed by the Wackenhut Corporation he was
involved with the modification of proprietary Enhanced PROMIS
software during calendar years 1983 and 1984. Mr. Riconosciuto
further stated that the software was provided to him by Dr. Brian
who had obtained it from Mr. Videnieks. Mr. Riconosciuto alleged
that the software modifications were made to facilitate implemen-
tation ol PROMIS software— m particular, porting PROMIS to the
systems in two Canadian agencies, the Royal Canadian Mounted
(RCMP) and the Canadian Security and Intelligence Service
tL&Ib}. According to Mr. Riconosciuto, the modified PROMIS soft-
ware was implemented by these agencies, and Dr. Brian brokered
the sale to the Canadian Government. 126

In his March 21, 1991, affidavit, Mr. Riconosciuto stated that in
February 1991, Peter Videnieks told him in a telephone conversa-
tion that it would be beneficial for him to refuse a committee re-
quest for an interview. 126

Despite the alleged interference by the Department, Mr.
Riconosciuto provided a sworn statement to committee investiga-
tors on April 4, 1991. In his statement, Mr. Riconosciuto directly
connected his involvement with modifying PROMIS to Dr. Brian
and Mr. Videnieks. Mr. Riconosciuto also provided information con-
cenung the February 1991 telephone conversation with Mr
Videnieks, which he referred to in his March 21, 1991, statement
to the Hamiltons. Mr. Riconosciuto further alleged that he had in
his possession two copies of the tape recorded conversation at the
time or his arrest and that the tapes are currently in the posses-
sion of the DEA agents who arrested him. 127

Mr. Riconosciuto described his role and work with Dr. John Nich-
ols and the Wackenhut/Cabazon joint venture. 128 According to Mr.
Riconosciuto, Dr. John Nichols was the director of the Wackenhut/
Cabazon joint venture in Indio, CA. 129 Mr. Riconosciuto said that
Dr. Nichols and Mr. Brian worked closely on a variety of inter-
national projects; and, during the joint venture, Dr. Nichols was

toiT^ M l ^ morandiim to the record, June 21, 1990, prepared by William A. and Nancy B. Hamil-

FiL^ he n W K ' cke /’ hut Corporation is an investigation and security firm based in Coral Gables
tio™ and oth“ rovoVSto Wa< * enhut haa bcen “" d -t -vert invest^

- ftod° ra p a MA^o 1 sS, P ' 2 fi,e "** the

126 Ibid., p. 3.

i 28 ^k° w 8t ? tement Mudui e l Riconosciuto, April 4, 1991, pp. 59-71.

■ lo Wack e nhut. Ca ba^° n joint venture sought to develop and/or manufacture certain mate-
2 8 ? 1 111 m, \ ,tary and security operations, including night vision goggles,

machmeguns fuel-air explosives, and biological and chemical warfare weapons
bworn statement of Michael Riconosciuto, April 4, 1991, pp. 5-6.

constantly being visited by “high profile people currently employed
in various agencies of the United States Government. . . ” Mr
Riconosciuto further stated that Dr. Nichols was able to get him
into secure areas of military facilities at Picatinny Arsenal during
this venture. • 0 According to Mr. Riconosciuto, he obtained access
to secure areas in connection with the joint venture during 1981
and this was when he first met Mr. Videnieks. Mr. Riconosciuto

TMQTlur iP ve . n » a the proprietary version of

INSLAWs PROMIS by Mr. Videnieks and Dr. Brian. 131 Mr.
Riconosciuto alleged that at that time Dr. Brian was spearheading
plans for the worldwide distribution of PROMIS. 132

, Mr. Riconosciuto granted the committee access to storage facili-
ties where computer software 133 and documents were recovered by
committee investigators.

Mr. Riconosciuto told committee investigators that Robert Booth
Nichols could provide additional information concerning the
Cabazon Indian Reservation and the conversion of the PROMIS
software. 134 (See page 72.)

Dr Brian’s connection to former Attorney General Meese: Mr.
Hamilton alleged in his affidavit and in testimony before this com-
mittee that Dr. Brian exploited a friendship with former Attorney
General Meese to gain control of INSLAWs Enhanced PROMIS. 138
In their sworn statements to the committee, Mr. Meese and Dr.
Brian stated that they had previously worked together as part of
Ronald Reagan s cabinet while he was Governor of California, but
their contacts since that time have been sporadic, limited, and so-
cial. Dr, Brian stated that he neither asked Mr. Meese to intercede
on his behalf in any Government contracts nor did he discuss any
Government contracts with him. Dr. Brian denied having any

130 Ibid,, p. 6.

131 During the sworn statement of Michael Riconosciuto on April 4, 1991, pp. 41-42 he stated
that during a luncheon _ attended by Earl Brian, Peter Videnieks, James Hughes and

ORri 113 ' ■ ie Enhanced PROMIS software was loaded into his car

Ibid., p. 43,

Analysis of Riconosciuto tapes: The committee requested that GAO analyze the tapes and
disks received from Riconosciuto. On November 12, 1991, GAO reported to the committee that
it could recover data from only one of the five magnetic media, which it provided to the commit-
tee. The tapes and disks were several years old and had been kept in unsuitable storage facili-

,Pj e magnetic media was dirt encrusted and warped possibly from the excessive heat and
humidity. The readable media appeared to be a corporate data file of accounts containing pri-
manly individuals names and addresses and was neither encrypted, as had been alleged by an
acquaintance of Riconosciuto, nor did it contain any versions of the PROMIS software Lacking
in-house expertise in repairing severely damaged media, GAO contracted with a professional en-
gineenng nnm to:

<U Pm* 1 ™. »n engineering evaluation of the four remaining media to determine whether they
could be repaired to the point that data could be retrieved from them; 9

(2) repair the media, if possible; and

(3) retrieve any data found on the media.

rJ5L!2?fZ da ^d March 23 1992, GAO reported on its work on the Riconosciuto media. GAO
reported that all four of the damaged media were analyzed, but that only one contained readable
data According to GAO the readable media was a tape that contained what seemed to be in-
structions for installing a modification to what appeared to be a word processing software pack-
age. the format and command seauence, according to GAO, resembled those seen on non-IBM
minicomputer. One disk appeared to contain some sort of instructions but could not be read
d it !??,* December 1991 telephone conversation with committee investigatore, Robert
Booth Nichols said that he (Nichols) and Michael Riconosciuto had worked together at the
Cabazon Indian Reservation in the early 1980’s. Robert Booth Nichols stated that he had been
hired by John Phillip Nichols who worked with Mr. Riconosciuto on the joint venture. During
this December telephone conversation, Robert Nichols requested that his associate Peter
Zokosky, an arms manufacturer, also be present during a future interview with committee in-
vestigators. Robert Nichols added that Mr. Zokosky had also known Michael Riconosciuto.
(Memorandum of interview on file with committee.)

136 Affidavit of William A. Hamilton, December 22, 1989, p. 7.

Dr BHm h ^ t ]? ie a ! ,uded to by Mr. Hamilton.

mLcTT stat f d — based on advice from his counsel— that after Mr
Meese encountered problems during the 1984 independent counsel
inquiry, he had no contact with Mr. Meese until after he resinned

edffiafh^hf/k ri tt0 ? ey ? eneral in 1988 ‘ Dr Brian further ftat-
ed that he has had only a few conversations with Mr Meese since

then because their relationship had chilled.

w< r r ®7 however, strong ties between Dr. Brian and Mr
Meese. An lndmendentcounsef investigation by Jacob Stein of Mr
Meese, initiated in April 1984, identified certain financial dealings
Mr ' and M . rs - Meese, Dr. Brian, and Mr. Edwin W. Thom-

association wX Dr "r ° f tHe iavesti B ation ’s focus was Mr. Meese’s
hituv. 1 J . B I? an > wbo was secretary of the agency for

Edwin Thnn^« lfai ih ^ G ° Ver , nor Jkagfu’s administration, g a n/ Mr.
Edwin Thomas, who was a close friend of Dr. Brian and purchased

?^ Ck J n iu 0m A? nieS **, w bi c h Dr. Brian was interested. Mr. Thomas
loaned Mrs. Meese $15,000 to purchase 2,000 shares of stock in a

rnlvFT? Ca led ?'5 teC j Ca P ital Corporation, which was a venture
capital firm created and controlled by Dr. Brian. 137 Before he actu-
ally made the loan, Mr. Thomas was offered a position as sistant

1Q«n SC ° r t T 6 President by Mr. Meese in or about late December
19 80 or early January 1981. 338 Mr. Stein concluded that there was
substantial ^contradicted evidence that the Counselor position
was offered by Mr. Meese to Mr. Thomas based on a longstanding
personal and professional relationship between the two men Fol-
tf? t b® loal3 > Mr. Thomas was named chief of the General Serv-
ice_ Administration s San Francisco, CA, regional office.

, B J ian ™ ade . a $100,000 loan to Mr. Thomas to fund the pur-
f Vlrglnia townhouse during the same period; however
i WCTe ™ >s % used to purchase stock. 139 Mr. Meese stat-
® d be knew Dr Brian from Reagan’s governorship and had
perha P s a dozen times from 1974 through 1984 During
the first 2 years of the administration of President Reagan Dr*

p 6 Gha ’ rman of a White House Health clreCost
Reduction Task Force which reported to Mr Meese Dr Brian at
efther his or Mr Thomas’ behest, was nominated by the Presklent
Meesl^o 11003 Science Board based on a recommendation by Mr.

withdrew°n mi ?n WaS app f raved by Pre8ident Reagan, but later
SSJftW i h W °l n 8tatemen t to the committee, Dr. Brian
stated that the reason he did not receive the position was due to

Meese IH - September 20, 1984.

w! d Brian. e Ad^HOTiSrt i the i S SSJSSTrftlte theTOmp^/B^d^flTrl

Brian headed a fim “!„V h 19?) ™ funding Biotech in 1979,

Ingtee cha^This articl?

^I^^p f 234- I 23 d 5 Pendent C °" n6e1 ’ op - dt - P- 72 '

visor. 1 * 31 d " P ' 244 ' A,8 °’ ° r ' Brian ’ s app,kation fOT «“* listed Mr. Meese as his super-

i-!n S , 0n p lity .r. nf1iCt , b ? tween himseIf and the head of the National
Pour ’ dat,on - Information in the FBI background report and
the independent counsel report prepared by Mr. Stein directly con-
tradicted Dr. Brian s statement to the committee about the reason
■ 'a a PP° intment was withdrawn. According to the report of the
erft£n n h ent COuns f e !’ Dr - Brian ’s name was withdrawn from consid-
FfU Pm . ° f 1 ,ssues ] . ra,sed in the background report by the
„ L£ u C ° TdS al v. md . 1Cate that Dr ’ Brian was a candidate for
dr^ as wX P ° ° n m 1974 and that nomination ^s with-

During an interview by committee investigators, a confidential
> a lS? ent source, 141 who previously had been a member of
Governor Reagans cabinet, stated that he personally knew Dr
Brian and was aware of his close relationship with Mr. Meese The

whiclf nl S V aid that He Wa !, a i vare of a sit uation in the 1970’s in
the StS 5 nr accused of using computer software owned by
State of California for his [Dr. Brian] personal gain 142 The

-r\ ,ttCe s m vestigation revealed that in 1974, Dr. Brian was in-
volved in a controversy over the use of 3,000 reels of computer
tapes owned by the State of California. According to a news ac

Dr U Brian nn^° S ^I* 8 these ta P es transferred to

llr. Brian under questionable circumstances which on the surface

share some similarity with certain aspects of the INSLAW affair
as alleged by Mr. Hamilton. unduaw artair,

The newspaper report stated that during the final days of Gov-

to*Dr Brhfn d H agan ’ S administr ation, computer tapes were given
to Dr Brian under a no-cost contract awarded by then chief deputv

st^n Ct M w 6 ? tat f of California Health Department, David Wim
ston. Mr. Winston later became an employee of Dr. Brian’s. After

Cna!d^« r h R l!f gan left 0f T 1Ce ’ the new health director, Robert
Gnaidza, held a news conference and stated he was canceling the
contract, which entrusted the computer tapes to Dr. Brian befause
the tapes were of incalculable value as a research tool and that
handing them to Dr. Brian was, in effect, “a gift of public property
for pnvate purposes. 44 Dr. Brian apparently acknowledged^hav-
mg obtained the tapes, but he denied that the tapes were & a gift to
him. According to the news account, he stated: P

,7 be entire matter is a blatant political ploy intended to
obfuscate the abortive Gestapo raid ordered by the
[present] health director. 145

int?r d ZX ent C ° UnS . el investigation did not include an inquiiy
mto the possuble connections between Mr. Meese and Dr Brian
and the theft of Enhanced PROMIS. 146 ’

UJU™ 0 ™"'!'™ interview on file with the committee.
i 4 irl m0ran ^ um °f* nterv i ew on file with committee,
p g February 14, 1975 edition, Log Angelea Times, “Ex-Health Director Defends Tapes Move,”

144 Ibid.

145 Ibid., p. 3.

Ha J™lton, in his alfidavit, asserts that had their connection been known at the time
PROMIS^oftwr« COUn investigation might well have included the theft of INSLAW's

3. OTHER SOURCES ALLEGE WIDESPREAD DISTRIBUTION OF INSLAW’S
ENHANCED PROMIS

Fn^lnniri n pRnl^| tion i ° f unauthorized distribution of INSLAW’s
q,?eif ii ed PROMIS software have been brought to the committee

puter dealer Ar?B?n b M n "X ^ C T harl , es A ^ ayes (a surplus com-
puter dealer), An Ben-Menashe and Juval Aviv (former Israeli in-
telligence officers) and Lester Coleman (self-professed^ writer and
been n !flA C0 D SU ^ itant). These sources have stated that PROMIS has

Canada for y i P Q ?Vlded or T so,d t° foreign governments including
^ m Israel, Singapore, Iraq, Egypt, and Jordan. 147 g

W ofi re S1 i e ’ tae allegations were investigated to the extent
possible. Yet, the committee’s work was subject to great limitations

m<.nfil I ! Ptine secure cooperation by both private and govern-
mental sources. In some cases, the person or government nrovidincr

whirh 0I h^d tte t Wit Ki iafornlat . ion abruptly halted such cooperation 6
which had ostensibly begun m good faith. Such was the case with

wf JOV -fKk m m n L° f j anada - In other cases, individuals appeared to
have withheld key documents which allegedly linked the Justice
Department and CIA to the sale of the Enhanced PROMIS soft-
ware internationally. The possible involvement of the CIA and for-
eign governments presented, in the end, insurmountable obstacles
to the committee s attempts to thoroughly investigate the allega-
tions raised m . this matter. The CIA was not fully response ^In-
quiries from the committee, and would, under no circumstances
P- Vlde ^ be cam uutta e or GAO with the needed access to its files
and fiersonnel. Further, Congress is generally powerless to inves-
allegations regarding activities outside the United States
without the assistance of the host government. For these reasons
the information presented in the folkiwing sections is limited bv the
restrictive conditions that prevented a fully probative fo wiry nec
essary to resolve a host or still unanswered questions and allega
Hons surrounding INSLAW. Where possible, sworn stetements

ized r^MlSsS?™' d'SSkn egi " g

4. DOES THE GOVERNMENT OF CANADA HAVE THE PROMIS SOFTWARE’

P, u " ng Novem ber 1990, the Hamiltons informed the committee
that they received information from Mr Marc Valois a Canadian

fN^rpROMSirr 1 of

imolaw s PROMIS software was being used to support 900 loca
iqqi S fu r0 H gh °^ the - 9 anad ian Government. 148 During January
t T he l Iam 1 1 tons informed the committee they were told by m 7
Denis LaChance, a Canadian Government Department of Commu-

w a ^ u s in g°INS LA W s ’ V ro m Canadian M ° unted Police (RCMP)

was using INSLAW’s PROMIS to support its field offices. 149

In a February 26, 1991, letter, the committee requested that the

mbassador of Canada, His Excellency Derek H. Burney, assist the

hancid P ROMIs a hav^ 1 ^nade fl by ^ unnam^ 8 U°S. 8 Govermiien f U ^!r’ d ® etri butiona ofEn-

(on file with the mmmTttefr ’ Hamilton affidavit, December 22, 1989

'r n ,if rV1 o e 'y 0n fi,e with the committee.

Sworn affidavit of Ma. Patricia C. Hamilton, Feb. 18, 1991, p. 2.

committee investigators in contacting knowledgeable Government
officials to determine what version of the PROMIS software is
being used by the Canadian Government. Subsequently, Mr. Jona-
than Fried, Counselor for Congressional and Legal Affairs in the
Canadian Embassy (Washington, DC), contacted the committee to
express reluctance to fully cooperate with the committee because
“Canadians had been burned once before by Congress.” Mr. Fried
insisted that the following specific conditions be met: (1) that inter-
views for individuals be conducted only in the presence of both the
legal counsel for the Departments involved and their superiors; and
(2) that no Canadian public servants would be witnesses in any for-
eign investigative proceedings. By letter dated March 19, 1991, the
committee reluctantly agreed to the Canadian Government’s condi-
tions and identified Marc Valois and Denis LaChance as the two
Canadian officials the committee wished to interview.

On March 22, 1991, committee investigators interviewed Mr. Va-
lois and Mr. LaChance, the two Canadian officials who had alleged
that the Canadian Government was using INSLAW’S PROMIS soft-
ware. Prior to the questioning of the two witnesses, the Govern-
ment’s counsel informed committee investigators that Mr. Valois
and Mr. LaChance could only respond to questions specifically ad-
dressing the PROMIS software. He further stated that these two
officials would not respond to questions concerning any allegation
that four software programs that may have been acquired by the
Canadian Government may be derivatives of the PROMIS software.
The Canadian counsel informed the committee investigators that
the committee would have to request in writing any information
concerning the Canadian Government’s involvement relating to the
four software programs alleged to be derivatives of PROMIS. 150

Mr. Valois and Mr. LaChance stated that they had incorrectly
identified INSLAW’S PROMIS as the software being used by the
Canadian Government. They further stated that, the PROMIS soft-
ware identified to the Hamiltons as being their product was actu-
ally a project management software also named “PROMIS,” devel-
oped by the Strategic Software Planning Corporation. 151 They also
denied any knowledge, or use, of a derivative of INSLAW’S
PROMIS. Subsequently, the president of the Strategic Software
Planning Corporation acknowledged in a sworn statement to com-
mittee investigators that his company had sold a few copies of his
firm’s PROMIS software to the Canadian Government in May
1986. 152

By letter dated October 23, 1991, to the Canadian Ambassador,
the committee again requested full cooperation with the commit-
tee’s investigation. The Canadian Government was requested to
provide information regarding software packages allegedly being
used by the RCMP and CSIS identified as derivatives of INSLAWs
Enhanced PROMIS by the Hamiltons. Additionally, it was re-
quested that investigators be provided the names of knowledgeable

100 Memorandum of interview on file with committee.

181 Interviews of Mr. Marc Valois, Mr. Denis LaChance, March 22, 1991, pp. 7 and 4, respec-
tively, and Mr. Ed Bercovitz, March 7, 1991, pp. 4-8.

152 Sworn statement of Mr. Massimo Grimaldi, president of Strategic Software Planning Cor-
poration, March 19, 1991, pp. $-10.

RCMP and CSIS personnel who could provide insight into the soft-
ware used by these agencies.

On December 4, 1991, the Ambassador responded by letter that
neither the RCMP nor the CSIS were using INSLAW’S PROMIS
software. He further stated that none of the software packages be-
k® derivatives of PROMIS were in use by any branch of
the Canadian Government. According to the Ambassador:

. . . The RCMP and CSIS reported . . . they do not use any
case management software 163

The Ambassador’s conclusoiy statement did not provide an offer
or an opportunity for further verification of the allegations received
concerning the Government of Canada. 164 Without direct access to
RCMP , CSIS and other Canadian officials, the committee has been
effectively thwarted in its attempt to support or reject the conten-
tion that INSLAW software was transferred to the Canadian Gov-
ernment.

o. uiu itlf, urn AOD 1 IS 1 LIN In r. SAU5 UP FKUM1S"

On November 20, 1990, Chairman Brooks wrote to CIA Director,
William H. Webster, requesting that the Agency:

... cooperate with the committee by determining whether
the CIA has the PROMIS software or any derivative and
to have the knowledgeable person or persons available for
interviews by committee investigators. . . .

„ P n December 11, 1990, the CIA’s Director of Congressional Af-
fairs, Mr. E. Norbert Garrett, responded that:

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 indica-
tion that the Agency ever obtained PROMIS software.

The chairman notified the CIA on February 15, 1991, that the
committee appreciated the initial inquiry performed by Mr. Gar-
rett. The chairman stated, however, that a more thorough and com-
plete review was needed to determine if the PROMIS software or
a derivative is, or has ever been, in the possession or control of the
Agency, or any of its contractors, consultants, and operatives.

The chairman advised the Director that the committee received
information that, in 1983, the Agency began operating a “floating
point system that operates a “Data Point” software program al-
ia ’’T’ H . is Excellent Derek H. Burney, Ambassador of Canada to the Honorable Jack

Brooks December 4, 1991, p. 2.

“‘Although the Canadian Government haB continued to deny that it has INSLAW’b PROMIS
software, information continues to surface indicating the opposite to be true. As recently as
Aprd 1992, reports of the use of the PROMIS software by the Canadian Government have been
a,r “ thc ’T, tle , n J™ televised media. These media releases include a 1-minute report

on CJOH, Ottawa titled, “RCMP Using Stolen INSLAW Software;” an April 16, 1992 article
in a Canadian magazine titled “Out of Canada;” an article on March 3, 1992, in a Canadian
newspaper titled, The Globe and Mail;” and a February 28, 1992 article in the Canadian news-
paper titled, “The Financial Post

Of particular interest is a report that Statistics Canada, a Canadian governmental agency
recently admitted previous use of a public domain version of the INSLAWs PROMIS software
According to officials contacted by William Hamilton, the version of the software that had been
used was obtained through the LEAA in the late 1970’s. (See memorandum of interview on file
with the committee). While the use of this version of the PROMIS software would be legal the
Canadian Government had previously denied any knowledge of the use of INSLAW’s PitOMIS
software by any of its agencies.

leg ed to b e ? derivative of PROMIS. 155 The chairman also in-
formed the Director that it has been alleged that the PROMIS soft-
„ b ? operating under the name “Data Plus” or
PROMIS Plus and it might currently be used at military intel-
ligence locations. The chairman stated that the committee had also
received information that the CIA may have assisted the Egyptian
Government m acquiring this software through the Foreign Mili-
tary Assistance Program (MAP). Finally in the letter dated Feb-
ru a 1 ! j ’ 1992 ,’ tbe chairman inquired of the Director whether the

11 awarded several contracts to Dr. Earl Brian, or a company
called Hadron, Inc. J

Several months after the chairman’s February 15, 1991, letter
the comimttee staff met with CIA representatives. They indicated
an „ extensive searcb within the Agency, no versions of the
u tj S0 \^ va ?* 1 e were found. They also indicated that they
checked specifically to see if the software had been supplied to the
Government of Egypt and that no evidence of this transaction oc-
curring exist at the Agency. 156

A letter dated November 18, 1991, was received from the CIA
Deputy Director, Richard Kerr, who denied that the Agency had

PROMIS software. He further stated
that the PROMIS software currently being used by CIA compo-
nents was manufactured by Strategic Software Planning Corpora-

pr" iVo Ca « bndg !’ MA (This is the same firm that sold its
PKUIVHb software to the Canadian Government, described in a pre-
vious section ) Mr. Kerr also stated that the Agency has had some
coatract f with Hadron Inc., but they were not related to PROMIS
and that the Agency had no record of being in contact with Dr
Earl Brian in connection with any of these contracts 137 The Dep-
uty Director also denied that the CIA assisted the Egyptian Gov-
ernment in acquiring INSLAWs PROMIS or similar software. 158
He, however, added an important caveat:

Of course, we have no way of knowing whether any
Agency contractors at some point ever acquired PROMIS
software, but none did so on behalf of the Agency. More-
over, although we have no indication that any such acqui-
sition took place, we cannot rule out the possibility that an
.Agency employee acting on his own behalf and without any
official authorization or funds acquired PROMIS for his
own personal use. 159

■ T a "1 th “ mmittee investigators, William Hamilton provided information he

had obtained from Charles Hayes and Juval Aviv, regarding the distribution of the PROMIS
ton on re fi?« C . a k y ° nd tc?ma t'onally. (See December 22, 1989, affidavit of William Hamil-
ton, on file with the committee.) In this conversation Mr. Hamilton stated that the PROMIS
software was distributed to the CIA. For greater detail see the section of the report titled, ‘The

r /• , meeting, and as a result of information received from several sources

* r of the report titled, The Allegators”) subsequent to the February 15 1991

l^ C °.T mittee ,n ^ est, § at 7’ 8 ,n ^ u i r ® d whether a number of other countries, including ’Israel!

^So S S^'fAm?he c'lA q a " d ‘ ran ’ ^ PR ° MIS 8 ° ftWare - T °

ahil’El' Bria "ii ’2 his 8W ,°™ »te'.ement of September 20, 1990, described the business relation-
ship between Hadron and the U.S. Navy, the intelligence community, and specifically the CIA.

munitj^ C (p?23-27^ adr0n had 30 ^° Fedcral Government contracts with the “intelligence corn-
in' t0 , Hi® No n ° rab le Jack Brooks from Richard J. Kerr, Deputy Director CIA, November
lo. 1991, pp. 1 2, and 3.
ia * Ibid.

Allegators.”
1B ®In additio

Thus, the CIA has not fully addressed the questions raised in the
chairman s February 15 1991, letter. While the CIA indicated that
they could not locate PROMIS within the Agency, the Agency itself
acknowledged that this did not preclude independent contractor
usage.

, J n ye fP an T S9 t? the allegation that the Egyptian Government ob-
tained INSLAWs Enhanced PROMIS software using Foreign Mili-
tary Assistance Program funds between 1980 and 1990 the com-
mittee requested GAO to determine if this fund was used to assist
in the purchase of the software. 160 On June 14, 1991, following a
study by its National Security, International Affairs Division GAO
advised the committee that their review failed to produce evidence
supporting the allegation regarding the purchase of the PROMIS
software by the Egyptian Government. 161 During discussions with

Tmau J S 7 h ° con ducted the study, the committee
learned that MAP funds cover broad categories which make it ex-
tremely difficult to identify individual purchases.

6. ALLEGATIONS OF PROMIS DISTRIBUTION TO AGENCIES WITHIN THE

DEPARTMENT

fW U li ng r. this mitigation, the committee received allegations

n=ffL e pRnAA T o nf °X Cement ^ dministration had been mandated to
^ 6 ij t software - Allegations were also made that the FBI

INSIA System <F0IMS) is based »"

V 990 ’ the commi ttee inquired into an allegation that
the DEA had been mandated to use PROMIS software. This allega-
tion originated from the former DEA Deputy Assistant Adminis-
trator for Planning and Inspections, Carl Jackson, who told com-

Th^K lnv v f stlgator j i t bat > in 19 ?, 8 > Attorney General Richard
Thornburgh ordered DEA to install PROMIS software. He stated
that he recalled some discussion during a monthly ADP Executive
Committee of senior DEA officials in late 1988 or early 1989 con-
cerning the fnandate. 162 However, DEA eventually developed a
case tracking system called CAST (Case Status System). The
committee investigators reviewed the minutes of the ADP Execu-
Volo °rj£ mittee . moathl y meetings conducted in late 1988 and early
i98y - /.^review disclosed no evidence that PROMIS was dis-
cu . S8ed ’ but did corroborate DEA’s plan to implement CAST.

With regard to the allegations concerning the FBI, committee
start inquired into charges made by Mr. Terry Miller, president of

ereuah^ffi^ 10 H ° n0rab ' e CharlCB BOW8her ’ C °»>- G *n-

fnrsi^iT rei JT t , t ° th S Ho , n ?, rable Jack B ™ lks fr 01 " Mr. Joseph Kelley, issue Area Director
iMrvi Unty and ^ nlerna bonal Relations, GAO, June 14, 1991.
tee). Memorandum of interview of Mr. Carl Jackson, August 31, 1990 (on file with the commit-

1M lbid.

198^ C ° Plea of minutes of the ADP Executive Committee Meetings, December 1988 through May

H.R. 102-857 0-92-3

government sales, Consultants, Inc. 165 On January 9, 1991 166 Mr
Miller informed FBI Director William Sessions that he had reason
to believe that the software system, FOIMS, used throughout the
FBI to track cases, had been stolen from INSLAW. He offered the
FBI what he called a simple solution to determine the truth of his
allegation— a “code compare” between PROMIS and FOIMS. The
FBI’s January 25, 1991, response to Miller’s allegation was in the
nature of an unresponsive form letter. 167 In his February 5, 1991,
response to the FBI, Mr. Miller accused the FBI of being very de-
fensive. Mr. Miller further stated that the FBI had requested that
he provide, among other things, descriptions of the victim and the
thief, if any.

In a February 11, 1991, letter, the FBI’s Deputy Assistant Direc-
tor for the Technical Services Division responded to Mr. Miller. 168
The Deputy Assistant Director stated that he conferred with the
Department’s attorney handling the INSLAW matter and deter-
mined that the Federal courts were the appropriate forum for adju-
dicating his concerns.

7 ’ the FBI followed up with another letter to Mr.
Miller. • In this letter the Assistant Director for the Inspections
Division pointed out that they would need additional information
before the FBI’s OPR could assess the substance of his allegation.
On June 13, 1991, Mr. Miller responded that he did not know if
FOIMS contained stolen software, but that several people had
claimed that FOIMS contains software stolen from INSLAW. 170
Mr. Miller reiterated that it would be rather easy to do a code com-
pare between PROMIS and FOIMS to resolve this issue.

It is the committee’s understanding that no code comparison has
been made between FOIMS and PROMIS to determine if there is
any similarity. 171 FBI officials did inform committee investigators
that the Bureau began developing FOIMS in-house around 1978
and that in 1981 the Bureau decided to use the AD ABAS 172 data
base management system. 173 These officials provided documenta-
tion to the committee which indicated that implementation at the
first pilot office began during 1979, and that implementation of
FOIMS at all FBI field offices began in 1985 and was completed
m 1989.

^ ® 32-year veteran of the computer business. His interest in this matter re-

sulted from his belief that INSLAW was being unfairly treated by the Department. In a series
ot letters to the FBI, he requested that the FOIMS system be compared to INSLAW’s PROMIS
software. Additionally, he has requested that he be given permission to perform the comparison.

tiSSJ®!™ FBI has failed in his view k* satisfactorily answer his questions. Mr. Miller and
a INSLAW confidential informant, who is a career official in the Justice Department, have both

nnnnHnH i .. t „ tl II : 1 « L' L 11 1 n i- ...r.. . .... _

186 On file with the committee.

J!I The FBI s January 25, 1991, response to Mr. Miller is on file with the committee.
168 On file with the committee.

160 On file with the committee.

170 On file with the committee.

l In a June 23, 1992, letter from FBI Director William Session to Judge Bua, Special Coun-
sel to the Attorney General, the Director stated that a code comparison between FOIMS and
PROMIS would be performed by a neutral third party. Since the arrangements for this code
comparison are now in progress, no findings have been made.

7 ADABAS (Adaptable Data Base System) is a relational data base management system with
a number of utility programs.

l73 Memorandum of interview on file with the committee.

According to the FBI, INSLAW demonstrated its PROMIS soft-
ware in 1982 and at that time the Bureau’s technical support per-
sonnel determined that the PROMIS would not meet the agency’s
reqmrements. The FBI concluded that, to use INSLAW’s PROMIS
the Bureau would need to spend a considerable amount of time and
money to modify and/or convert existing systems to accommodate
the new software. While there is no specific evidence that PROMIS
is being used by the FBI, the matter could be resolved quickly if
an independent agency or expert was commissioned to conduct a
code comparison of the PROMIS and FOIMS systems 174

IN } n e w r ’ by ! C tn r 7 > 1992 > Judge Bua stated to

INSLAW counsel Elliot Richardson that he had decided to “retain
my own expert to conduct the examination necessary to compare
the software. 773 This action followed the FBI Director’s agreement

IVTnoxr e Tc Wltb .u a com P? rison ° f the FOIMS software to
INSLAW’s PROMIS, with a number of conditions that included:

The examiner must advise the FBI of any FOIMS soft-
ware code which, in his or her judgment, was derived from
the enhanced version of PROMIS. This notification will
provide the FBI with an opportunity to document the ex-
istence of the questioned software code to avoid possible
subsequent disputes. 176

7. RONALD LEGRAND DENIES INSLAW’S ASSERTIONS

The committee received allegations that Ronald LeGrand, former
DEA agent former chief investigator for the Senate Judiciary Com-
txtot A’m an “ lawyer, had received crucial information about
INoLAW matters from a trusted source who was a senior Depart-
ment career official “with a title” whom Mr. LeGrand had known
for 15 years. In the Third Supplemental Submission of INSLAW
m Support of Its Motion to Take Limited Discovery (Bankruptcy
case No. 85-00070), counsel for INSLAW states:

INSLAW had sought to depose these officials because of
highly specific allegations that Mr. Ronald LeGrand, then
Chief Investigator of the Senate Judiciary Committee, had

i n tv!??NC?AW 9 '' i990 .'- c0 . mm ’) tee investigators requested cooperation and technical assistance
*NSLAW investigation from the General Services Administration’s (GSA) Office of Tech
nology Assessment. Although GSA agreed to cooperate with the committee aftwlvear GSA
prov1< fe? »ny assistance to the committee’s numerous requests. In ’an April Tl 1991
c< JI nm,ttoe “ ch,ef investigator, Jim Lewin, from ThomasAuckholte, Coi^rissioner In-’
foromtion Resource Management Services, GSA, Mr. Buckholta said that he had consisted ivith

StoiaTShi fter ^“^'ne ‘he fommittee’s request and that Deputy Attorney General
Me wart ocmffer informed him that GSAs compliance with the committee’s reauest “would not

^h^SAt„dtaJ, ,b „fH h0n £“** Il )' SLAW1 - >°"e «» GSA P C"eSit ofj£ti«
pqj and reports and any responses GSA received.” Mr. Buckholta added that

GSA had decided to provide all information developed by GSA to the Department if the services
Rnally >„ Ml ;’ Buckholta said that the committee mSIT^

ffd^llnSoTS frfthe **

welter i U Rpn^ Ch t 0laB Ji,? Ua * ™ ot >’• Ricfiardson, E»q„ dated July 7, 1992.
the A^cy^cn™, *S3 ^ 1 S p “ 2 ”° n8 * Mr ’ Nicholaa J ’ S P** a > Counsel to

0 [ W j niam Hamilton in WSLAW, Inc. v. Dick Thornburgh

timeiteis alleged “? e ^"ate Judiciary Committee at the

me is alleged that his trusted source provided him information regarding INSLAW.

conveyed to William A. and Nancy B. Hamilton the nrin-
cipal owners of INSLAW, in May 1988. P

According to LeGrand, a trusted source, described to the

that^thp 1 ? 8S 8 se . nior „ D0 ^ official with a title, had alleged
that the two senior Criminal Division officials were wit-

!? U r h gr I a ^ er malfeasance against INSLAW than
on q.frh n dy found h y the Bankruptcy Court, malfeasance
ser J ous sc ale than Watergate. LeGrand
told the Haxniltons that D. Lowell Jensen did not merely
fail tp invesbgate the malfeasance of Videnieks and Brew-
,ns . te 5 < ?. had , engineered” the malfeasance “right
he mnJr Stai ^ ui° * hat I ^? LAW ’ S software business could

StaSStrSS^ 10 P0l,ll “ 1 «'"■*> «f ' “» R«»ea^B» s h

LeGrand” fr ° m - ¥ r l^ eGr J 1 " d - Aft - er 5 months of negotiationsf Mr

19^)179 S LefVanH Wed by S 0 ^ investigators on May 31,
. Mr - .LeGrand was asked to identify the “trusted source”
so that committee investigators could contact this person to obtain

idcSt hl„ e “Xr"” Mr - LaGranf Sd thaS

ouia contact his source and determine whether he was willing to
be interviewed. Mr. LeGrand was also asked if he woulHro^de
a f wo ™ statement, and he indicated that he would if the commit-
tee made a request to Chairwoman Cardiss Collins of the House
Government Operations Subcommittee on Government Activities
and Transportation, iso Pursuant to Mr. LeGraS Request Chair
X ^° te t0 Chair 5 r °man Cardiss ColfinsTi Jufy 20

l The chairman requested that committee investigators be al’
lowed to obtain a sworn statement from Mr LeGranf concerein^
his knowledge of the INSLAW matter. concerning

1 ins rnrnmif f o in ^ an affirmative response from Chairwoman Col-
lins committee investigators made numerous attempts to schedule

thenTft SfT-?. f ™ m ^ LeGrand to no avail. Mr. LeGrand
tbe Washington DC, area without informing the commit-

November^20 ° Ca ^ ed ’ fche committee wrote to him on

r 1 l 990 ’ an d renewed its request that he cooperate with

the comrmttee by providing a statement under oath. On February
LeGrand provided a sworn statement to committee
investigators. During this statement Mr. LeGrand provided lit
tie corroboration of the Hamilton’s allegations. According to Mr
LeGrand the first problem with the remarks attributed toliim was
the unintentional merging of comments from different persons
which the Hamiltons had attributed to Mr. LeGrand’s “trusted

several imT .j e G. ral \ d stated that he gathered information from
several individuals during his inquiry into the INSLAW matter
However, Mr. Hamilton attributed alf the information he had re-
ceived from Mr. LeGrand as coming from his “trusted source.”

° fINSLAW in S ~ of Ite Motion to Take Limited Dis-
i«OM C T r ?. ndum of i " tcrvi ® w or > file with the committee
Octo her r isea rand ' eft th ® Senate Judiaary ComrnitU * end joined the House subcommittee in
Sworn statement on file with the committee.

,.L M J - ii Le< ? rai ! d I. however > stat ed that his trusted source provided
the following information pertaining to the INSLAW matter:

taen Deputy Attorney General Lowell Jensen was going to
award the case tracking software business to friends 183
Jensen relied on some of the most senior political and career
officials in both the Criminal Division and the Justice Manage-
ment Division to carry out this plan. 183

Other senior Criminal Division officials not involved in the
a‘'cge d wrongdoing have knowledge of it and are upset about
it but are unwilling to expose themselves to possible reprisals
by coming forward with what they know. 184

Mr LeGrand was asked whether his source provided the follow-
ing statement as described by INSLAW counsel in the Bankruptcy
Court proceedings: J

moo° r ^ DOJ’s public announcement on May 6

1988, that DOJ would not seek the appointment of an
independent counsel in the INSLAW matter and that it
had cleared Mr. Meese of any wrongdoing, the source told
Mr. LeGrand that “the INSLAW case is a lot dirtier for the
Department of Justice than Watergate was, both in its
breadth and in its depth.”

Mr. LeGrand responded that his source indicated that there was
more to this than people were currently aware of and that there
was a comparison to Watergate; however, he did not recall ref-

depth” i 88 ^ ° r thC Phmse <t|b0th in its breadth and in

Mr. LeGrand was again asked to provide the name of his source
and to date he has refused to do so. 186

At the department’s request, Mr. LeGrand later submitted an af-
refuting INSLAW’S claim In the affidavit, Mr. LeGrand
stated, . I did not convey "highly specific’ allegations to Mr. or
t [ S 'A ami j°f' Ins j ead > 1 fcold them of general allegations, rumors,
rJ heard from different sources about various persons within
^Department of Justice.” After several years ofmakingTtate
ments to William Hamilton, the Senate Permanent Subcommittee
on Investigations, and this committee, Mr. LeGrand’s latest affida-
vit was striking in its assertion that his source had no personal
knowledge of the Department’s handling of the INSLAW matter.

8. THE ALLEGATORS

following is a discussion of the evidence provided by several
additional individuals who claim to have detailed and, in some
cases, firsthand knowledge of the Justice Department’s alleged con-

fwd™ R ^Q CmCnt ofRonald LeGrand, February 14, 1991, pp. 20, 46, 52.

184 Ibid"’ o. 2L

185 Ibid., p. 41.
j 88 Ibid. p. 82.

taGrand R ‘ ,nkru P tc y Case No. 85-0070, Declaration of Ronald

Mr- Hamilton later alleged to the committee that Roger Pauley was LeGrand’s contact
?n 8 ° U i rC i^ W,thln W 6 Department Mr. Pauley is the Director of the Office of Legislation

spiracy to steal and to transfer or sell the PROMT'S
eign intelligence or other parties Not »11 - 5 , 1 , softwa r e to for-
sworn testimony regarding thefr cWroI nk du ? S wou,d Provide
has been given to those who « f Obviously, greater weight
vits to the committee Provided sworn statements or affida-

formSS iSiliS? “T“ hC ^ ™der

the Israeli Defense Forces and the i & e '?. ce 1:> officer who served in
from August 1977 through N^mbe/ 1989 Dnrin/ 111 ' 8 ^! ° ffice

ss?ssris £

^^sa^xten^on^nd^) 6 prmdde^^m^mmui^^f^^^ Arrange ^for
tion relating to the information n^d d!I ^ fr . om any P rosecu -
garding the illegal distribution and/ docarn ents he possessed re-
by Dr Earl Brian tnSi sa,e of Enhanced PROMIS

fused. On May 29 1991 Ber^Men a m ea V Jb e request was re-
without any conditions. t«« h provided a sworn statement

ertMcFarfand^ the^ormer Director SS’ ® ri »" R°b-

Enhanced PROMIS to tha T®rfaf S ^ n ^ i? when Dr. Brian sold
Singapore Armed Forces and community and the

pletecf approximately $5.5 milliM was^Iced'In^f 3 6 ® W t re i Com '

count to which Earl Brian had acceTs ^ M^ bank ac-

a SS

0f Mr r Be n n i M 1983 } f nd 10 Iraqi Government iS 7 "gP i “ tionB

mittee that hfhaslnfomltlon ^ut Com '

version of PROMIS bv the Israali the sae , °/ a public domain”
in 1986 and thesale If the enhancSl *» the Soviet Union

e ™njent coordinated by Earl Brian i^ Mr^Ben £ Ca £ adi f n G° v -
ed that various unnamed ■ f‘ R en_ Menashe also stat-

the

«ilb ! d ’ pp ' 3 ' 8> and 14 '

Of PROMIS^ Iraq ‘by Dr Bnalt bX'4 a bvT n S, Mr ^ Be " Men ? she ^ted that the Bale
Cardoen of M,Li i r FL,TndCh R ,le m ' kered by a " a ' ,eged internatk ™ 1 »"» deafer namrf
’ pp ' n ' 12 ' an o 28.

193 Ibid., p. 3.

attorney’s office for the Eastern District of Kentucky located in
°7 t o° n ^ med * he PROMIS software. 194 Mr Hayes Sated
£.l U ' S k attflrn ^ 8 °f lce had Provided him 5 Virincf compter
£ sks , when be purchased the excess equipment and that he be

ware ^ 686 ^ conta,ned LAW’S Enhanced PROMIS soft-

na^°t Vember ? 8 ’ 1990 ’ the committee chairman wrote to the De-

nn?il? enfc reqU u Stlng access to the equipment and documents seized
under a search warrant served on Charles Haves The

t a he°n eqU ^ ted ?i es coace ming the dispute between Mr Hayes and

On Fe e bru^ e i2 1M1WT attorney handling tL case.

OffW efT^P- }*• *V V- Lee Rawls Assistant Attorney General
Office of Legislative Affairs, responded to the chairman tfiatT ’

. . . we can arrange for the committee staff to see the
equipment and examine the manuals and other documents
Lrit n/n 6 retn ? ved with the equipment pursuant to a civil
We Ca , nn ?u’ however . either arrange for
to operate the equipment or provicfc the
ommittee with a pnnt-out of the information contained in

t janS e 3l’ 199? f w m d ly raque f s ^ d by committee staff
nuf nf r 199 J- We do n °tyet have a complete print-
out of the information contained in the equipment More-
over disclosure of this information would compromise an
ongoing criminal investigation. compromise an

Mr. Rawls also stated that:

m^ts C fn n fhl a r ra u g n- f °- r .committee access to certain docu-
“{“£? the P 1 '? 1 Dmsi on files because their disclosure
might adversely impact a pending criminal investigation
relating to this matter. These include non-public Sess
statements prepared by the witnesses, portions of Civil Di-
vision attorney notes of witness statements, Civil Division

JrosecuUs draft? o? n T S ^ i0nS ^ Cri minal Division
drafts of pleadings and memoranda that
would disclose thought processes of the Criminal Division

neSftfJ®’ and °i tber m ? terial that could compromise \he
PjCodmg criminal investigation. We also are unable to dis-
close the exhibits that were sealed by the court. 196

On February 13, 1991, Mr. Hayes provided a sworn statement
ge committee attesting to his assertions. During ' the slatemeS
Mr. Hayes explained that he believed the PROMIS software had
beenjoped onto the disks ft™ the original PROMIS software by

maTon A Oo h Ju„“?7 b ' i l B ^ i ToT™* Mr - Phased did contain sensitive infer-

“^W^OTevio 6 ^P'^^ri^^^'aaierriaHlaw'that: ^ om P tro ^ er General/trati-

[Justice’s W eak D P *S ecuri ty U Com oro m?s r m> n* la8t summer at Lexington, Kentucky.

6, Mar. 21, Version) gX5/IMTEC-91-

to contain highly sensitive data ;. y the 7 - “U 0 ™# office was later found

fidential informants. How this could have^^eni m ^ V° n regarding con *

mg is that it happened again. As recentlv as ™ g but even m °re shock-

cautioned Federal and local officials that Ac«in Pa f! Februapf a different U.S. attorney's office
i^iastP’ agents and witn«tiK» n^^d^L^^been^rnipromised » ,n ^ ori „ati 0 n that could potentially
coZtlS" BtatCment ° f Mr - Chari “ FebrTry m, ,ri991, pp. 5 and 23, on file with the

Department of Jusfee"Februa^ C 12 fl 99 ^ p™^ 7 *** Raw,s ’ Ass ' 8ta nt Attorney General,

personnel at the U.S. attorney’s office. At this time, Mr. Hayes
gave the disks and related material to committee investigators. 197
Committee investigators identified the 5V4-inch disks and related
materials as nothing more than training programs for the Lanier
computers used by the Lexington office. Mr. Hamilton told commit-
tee investigators that it was ^highly implausible” that the 5 Winch
disks would contain Enhanced PROMIS. Mr. Hamilton further
stated that if PROMIS was being used on the Lanier word process-
ing equipment, it would have to be the public domain version
which is not the subject of the legal dispute with the Department.

Mr. Hayes continued to have frequent conversations with Mr.
Hamilton and his attorneys. Mr. Hamilton provided the committee
staff a memorandum, dated October 22, 1990, that memorialized
several telephone conversations in which Mr. Hayes allegedly told
Mr. Hamilton that: 198

He can identify about 300 places where the PROMIS soft-
ware has been installed illegally by the Federal Government.

Dr. Brian sold PROMIS to the Central Intelligence Agency
in 1983 for implementation on computers purchased from
Floating Point Systems and what the CIA called PROMIS
“Datapoint.”

Dr. Brian has sold about $20 million of PROMIS licenses to
the Federal Government.

Department officials hinted to CIA officials that they should
deny that they are using PROMIS.

In addition, Mr. Hayes repeated to committee investigators on
numerous occasions many of the same claims that were contained
in Mr. Hamilton’s October 22, 1990, memorandum. Mr. Hayes also
told committee investigators that he had received information from
unnamed sources within the Canadian Government that Dr. Brian
sold the PROMIS software to the Canadian Federal Government in
1987. He made numerous promises to committee investigators that
the documentation regarding these sales by Dr. Brian would be
provided to the committee by the unnamed Canadian officials.
However, on August 16, 1991, Mr. Hayes stated that the Canadian
officials decided not to cooperate with the committee.

While these allegations are intriguing, Mr. Hayes has not pro-
vided any corroborating documentation.

Lester K. Coleman: As part of the bankruptcy proceeding involv-
ing INSLAW a sworn affidavit was obtained from Lester K. Cole-
man. (Adversary Proceeding No. 86-0069.) Mr. Coleman described
himself as a freelance writer, editor and security consultant, who,
in 1988, was an employee of the Defense Intelligence Agency. Mr.
Coleman stated that during April and May 1988, he worked with
Eurame Trading Company, Ltd., a DEA proprietary company in
Nicosia, Cyprus. Mr. Coleman said that at that time he found that
the DEA was using the trading company to sell computer software
called “PROMISE” or “PROMIS” to drug abuse control agencies in
Cyprus, Pakistan, Syria, Kuwait, and Turkey. Mr. Coleman also
said that he witnessed the unpacking of reels of computer tapes

197 Sworn statement of Mr. Charles Hayes provided to committee investigators on February
13 1991, at Lexington, KY (on file with the committee).

8 Memorandum from Mr. William Hamilton to Mr. Elliot Richardson, Esq., and Mr. Charles
Work, Esq., October 22, 1990, pp. 1-2, on file with the committee.

and computer hardware at the Nicosia Police Force Narcotics
Squad. The boxes bore the name and red logo of a Canadian cor-
poration with the words “PROMISE” or “PROMIS” and “Ltd ” Ac-
cording to Mr. Coleman, the DEA’s objective in aiding the imple-
mentation of this “PROMIS(E)” system in these Middle East coun-
tnes > drug abuse control agencies was to augment the United
State s ability to access sensitive drug control law enforcement and
intelligence files.

Mr. Coleman further stated that a DEA Agent (Countiy Attache)
was responsible for both the Eurame Trading Company, Ltd., and
its initiative to sell “PROMIS(E)” computer systems to Middle East
countries for drug abuse control. Mr. Coleman stated to the court
under oath that he believed the agent’s reassignment in 1990 to a
DEA intelligence position in the State of Washington prior to Mi-
chael Riconosciuto s March 1991 arrest there on drug charges was
more than coincidental. Mr. Coleman stated he believes that the
agent was assigned to Riconosciuto’s home State to manufacture a
case against him. Mr. Coleman stated he believes this was done to
prevent Mr. Riconosciuto from becoming a credible witness concern-
ing the U.S. Government’s covert sale of PROMIS to foreign gov-
ernments.

Mr. Coleman stated under oath that he had been contacted by
a reporter named Danny Casolaro on August 3, 1991. Mr. Coleman
stated that Mr. Casolaro told him that he had leads and hard infor-
mation about (1) Department of Justice groups operating overseas,
(2) the sale of the PROMIS(E)” software by the U. S. Government
to foreign governments, (3) Bank of Credit and Commerce Inter-
national (BCCI), and (4) the Iran/Contra scandal. 199

Juval Aviv: Mr. Juval Aviv stated to the committee that he is a
former member of the Israeli Mossad who currently serves as presi-
dent and chief executive officer of Interfor, Inc., a private investiga-
tive firm specializing in international investigations. In January
1991, Mr. Aviv told committee investigators that he could provide
information that Dr. Brian sold INSLAW’S Enhanced PROMIS soft-
ware to U.S. Government agencies outside the Department, includ-
ing the CIA, National Security Agency, National Aeronautics and
Space Administration, and the National Security Council. Mr. Aviv
also stated that Dr. Brian sold the PROMIS software to Interpol
in France, the Israeli Mossad, the Israeli Air Force, and the Egyn-
tian Government. 200

Mr. Aviv stated that Dr. Brian sold the software to Egypt
through the use of the foreign military assistance program and that
the software was called either Data Plus or PROMIS Plus. He also
stated that INSLAW’S Enhanced PROMIS software was converted
for use by both the United States and British Navy nuclear sub-
marine intelligence data base.

Mr. Aviv stated that there are witnesses and documents to cor-
roborate his allegations. Following Mr. Aviv’s meeting with com-
mittee investigators in January 1991, he has refused to provide a
sworn statement or any further information.

Sworn affidavit of Lester K. Coleman, INSLAW, Inc. v. United Slates et at, Adversary Pro-
ceeding No. 86-0069. J

„”f r ' Aviv met y> th investigators on January 25, 1991, at Interfor, Inc., offices in New York
City. See memorandum of interview on file with the committee.

John Schoolmeester: The committee received information from
Mr. and Mrs. Hamilton that John Schoolmeester, a former Customs
Services program officer, had direct knowledge of ties between Mr.
Videnieks and one of Dr. Brian’s computer companies called
Hadron, Inc., prior to Mr. Videnieks’ employment with the Justice
Department. 2 " 1 Mr. Hamilton asserted that Mr. Videnieks con-
spired with Dr. Brian and other Hadron, Inc., management to
transfer INSLAWs PROMIS software to the company. In two
sworn statements provided to the committee, Mr. Schoolmeester
stated that Mr. Videnieks, as a contracting officer for the Customs
Service, was involved with several Hadron, Inc., contracts, and that
Mr. Videnieks would necessarily have met with Dominic Laiti (a
former Hadron, Inc., chief executive officer) on a regular basis be-
cause that was the way Mr. Laiti conducted business. However,
Mr. Videnieks stated under oath that he did not know or have any
conversations with Dominic Laiti or Dr. Brian. 202 Mr.
Schoolmeester stated that Dr. Brian was “the behind the scenes
guy at Hadron, Inc.,” but he was not certain whether Mr. Videnieks
had met with him. 203 Mr. Schoolmeester also stated that Dr. Brian
was well connected in Washington and that he had connections
with Mr. Meese and several congressional figures. 204

Lois Battistoni: The committee also received allegations from Mr.
Hamilton that Ms. Lois Battistoni, a former Justice Criminal Divi-
sion employee, had information which could support the allegation
that Dr. Brian had arranged with Justice officials to transfer
PROMIS to Hadron, Inc. According to Mr. Hamilton, Ms. Battistoni
stated that a Criminal Division employee had told her that there
was a company chosen to take over INSLAW’S contracts and that
this company was connected to a top Department official through
a California relationship. Mr. Hamilton stated that she believed
that Hadron, Inc., was a possibility because Dr. Brian and Mr.
Meese served together in Governor Reagan’s administration. 206

Ms. Battistoni, however, stated under oath to committee inves-
tigators that she has little firsthand knowledge of the facts sur-
rounding these allegations, nor did she provide the name of the
Criminal Division employee who had provided her with the infor-
mation about this matter. She indicated that Department employ-
ees are afraid to cooperate with Congress for fear of reprisals by
the Justice Department. 206

Ms. Battistoni also raised a number of allegations about the in-
volvement of Department employees in the destruction (shredding)
of documents related to the INSLAW matter. 207 While the commit-
tee was unable to obtain any direct information about the alleged

201 December 22, 1989, affidavit of William Hamilton in INSLAW, Inc. v. Dick Thornburgh,
et al. t p. 12.

202 Sworn statement of Peter Videnieks, November 5, 1990, p. 104 (on file with the committee).

203 Sworn statement of John Schoolmeester, October 10, 1991, pp. 5-6 (on file with the com-
mittee). ...

204 Sworn statement of John Schoolmeester, November 6, 1991, p. 17 (on file with the commit-
tee).

208 December 22, 1989, affidavit of William Hamilton, INSLAW, Inc. v. Dick Thornburgh, et
al, pp. 18-19.

208 Sworn statement of Lois Battistoni, October 2, 1991, p. 54. See also numerous memoranda
of interview on file with the committee.

207 Memorandum of interview, February 14, 1992 (on file with the committee).

shredding provided by Ms. Battistoni, the issue stands open and
calls for further investigation.

C. Other Important Questions Remain

1. THE DEATH OF DANIEL CASOLARO

On August 10, 1991, the lifeless body of Mr. Daniel Casolaro, an
investigative reporter investigating the INSLAW matter, 208 was
discovered in a hotel room in Martinsburg, WV. Mr. Casolaro’s
body was found in the bathtub with both of his wrists slashed sev-
eral times. There was no sign of forced entry into the hotel room
nor of a struggle. A short suicide note was found. Following a brief
preliminary investigation by the local authorities, the death was
ruled a suicide. 209 The investigation was reopened following nu-
merous inquiries by Mr. Casolaro’s brother and others into the sus-
picious circumstances surrounding his death. On January 25, 1992,
after expending over 1,000 man-hours investigating his death, the
local authorities again ruled Mr. Casolaro’s death a suicide.

The committee did not include the death of Daniel Casolaro as
part of its formal investigation of the INSLAW matter. Neverthe-
less, it is a fair statement to observe that the controversy sur-
rounding the death continues to be discussed in the press and to
other figures connected to the INSLAW litigation. These questions
appear to be fostered by the suspicious circumstances surrounding
his death and the criticism of in the Martinsburg Police Depart-
ment’s investigation. 210

Other sources have been quoted in the media indicating that Mr.
Casolaro did not commit suicide, and that his death was linked to
his investigation of INSLAW, Bank of Credit and Commerce Inter-
national (BCCI), and other matters such as the Iran/Contra af-

308 Daniel Casolaro had indicated to a number of individuals that the INSLAW affair was part
or a much deeper tangle of intrigues that he called the Octopus. They included the Iran-Contra
arms deals and BCCI.

.™f^ elephone ~ nterview of Sergei Swartwood, Martinsburg, West Virginia Police, August 12
1991. Sergeant Swartwood told committee investigators that Mr. Casolaro’s death had been han-
nl®d as a suicide and that the scene had not been protected.

0 Elliot Richardson, a former Attorney General, now representing INSLAW, called for a Fed-
eral investigation of Mr. Casolaro’s death:

believe he was murdered, but even if that is no more than a possibility, it is a possibility
!! t l^ Ch x, 8im ? er , implications as to demand a serious effort to discover the truth.” [October
21, 1991, New York Times.]

In a memorandum to Department of Justice Special Counsel Judge Nicholas Bua Mr Rich-
ardson urges that further investigation of Mr. Casolaro’s death is needed. Mr. Richardson stated
that:

Dunng the 3 days preceding his [Mr. Casolaro] death he told four friends in the course of
four different telephone conversations that he was about to go to West Virginia to meet someone
from whom he confident ^of receiving definitive proof of what had happened to the PROMIS

software and to INSLAW. There is no apparent reason why Casolaro would have lied to those
four friends, nor is there any apparent reason why his friends would deliberately and
conceitedly misrepresent what he said to him. It is not likely, on the other hand, that Casolaro
had unrealistic expectations either toward the significance of the evidence he anticipated receiv-
ing or toward the prospect that it would be delivered. He had, after all, been on the INSLAW
case for 1 year, and he was bound to know as well as any other of the investigative reporters
then pursuing it that promises of hard evidence had often been made and just as often dis-
appointed.

In the light of these facte, the key question is, with whom was Danny Casolaro expecting to
meet and with whom did he meet? In our view the answer to that question should be relent-
lessly pursued.

[Elliot Richardson memorandum to Judge Bua, January 14, 1992, pp. 43-44 (on file with the

fair. 211 It has been reported that Mr. Casolaro had confided to sev-
eral people that he was receiving death threats because he was get-
ting close to concluding his investigation. Furthermore, he told
family and friends not to believe that, if he died, it was by accident.
According to his brother, Mr. Casolaro’s investigation began to
come together during the summer of 1991. Several people indicated
he was upbeat and that on the weekend of August 10, 1991, he was
in Martinsburg, WV, to receive significant information for his
project from a source. 212

Mr. Casolaro died on August 10, 1991, and his death was offi-
cially ruled a suicide on January 25, 1992, over 5 months later. The
criticism of the investigation of Casolaro’s death by the Martins-
burg, WV, police center on the following areas: Prior to any coro-
ners’ investigation and before his family was notified, Mr.
Casolaro’s body was embalmed, which may have limited the effec-
tiveness of autopsies or toxicological examinations. Some evidence
has also surfaced indicating that immediately following the discov-
ery of the body, the room was not sealed by the Martinsburg au-
thorities, potentially allowing for the contamination of the possible
crime scene. Additionally, it was reported that the room in which
Mr. Casolaro was found was cleaned before a thorough criminal in-
vestigation could be conducted.

Information received from other sources reveal other curious cir-
cumstances surrounding Mr. Casolaro’s death that may or may not
have been considered by Martinsburg authorities. In a sworn state-
ment to the committee, Richard Stavin (a former Department of
Justice Organized Crime Strike Force prosecutor) stated:

I received a call from Danny Casolaro approximately 1

week before he was found dead He spoke to me about

INSLAW. He spoke to me about a group he called, the Oc-
topus. I believe he mentioned Robert Nichols, and possibly
also John Phillip Nichols, in this conversation, and was ex-
tremely interested, intrigued and frustrated in his inabil-
ity to get a grasp on what he called the Octopus.

He had indicated that he had met with — again I believe
it was Robert Nichols on several occasions, that Robert
Nichols was extremely talkative to a point, but when Mr.
Casolaro would ask specific questions, he [Nichols] would
become somewhat evasive. 213

William Hamilton and Michael Riconosciuto both told committee
investigators that Robert Booth Nichols was Danny Casolaro’s pri-
mary source of information in his investigation into the theft of the

211 Washington Poet, January 27, 1992, p. B2.

212 Telephone interview of Anthony Casolaro, M.D., August 12, 1991. Dr. Casolaro also told
committee investigators that on August 5, 1991, Danny Casolaro said to him, “someone else told
me I better back off the story.” Dr. Casolaro also said that Olga Mokros, Danny Casolaro’s
housekeeper, received a phone call in which the caller said, “you’re dead, you bastard.” Olga
also told Dr. Casolaro that following Danny Casolaro’s death, she noticed that a stack of typed
pages that usually sat on top of Danny Casolaro’B desk was missing. Dr. Casolaro told the Wash-
ington Post (January 27, 1992, p. B2) that it was suspicious that none of Mr. Casolaro’s inves-
tigative notes or papers were found in his car, hotel room, or at his home after his body was
discovered. Mr. Casolaro’s brother thought that this was suspicious because all throughout the
time that Mr. Casolaro had been conducting hiB investigation, he always carried his notes with
him. Mr. Casolaro’s brother said:

“Somebody cleaned out his car and his room. If my brother did that, it seems as though [his
papers] should have been found.” Washington Post, January 27, 1992, p. B2.

Sworn statement of Richard Stavin, March 13, 1992, pp. 23-24 (on file at committee).

PROMIS software system. In a later telephone interview, Mr. Nich-
ols told committee investigators that he was acting as a sounding
board for Mr. Casolaro and providing direction and insight for his
investigation into the INSLAW matter. 214 Mr. Nichols would not
provide a sworn statement to committee investigators.

•I n addition, committee was informed by three separate indi-
viduals— Mr. Riconosciuto’s attorney, a private investigator and a
FBI agent — that a current FBI field agent, Thomas Gates, likely
information relating to Danny Casolaro’s efforts to investigate
the INSLAW matter. At the request of the committee, Director Ses-
sions agreed to allow Special Agent Gates to provide the committee
a f worT ? statement. Though Special Agent Gates’ statement covered
a broad range of subject matter areas, some speculative and some
reflecting first person accounts, he indicated under oath that he
had received several calls from Mr. Casolaro, beginning approxi-
mately 4 weeks before his death. 215

, Special Agent Gates stated that he was very suspicious about
Mr. Casolaro’s death for several reasons, including:

In his conversations with Casolaro, even days before the report-
er’s death, Gates had felt that Casolaro sounded very “upbeat” and
not like a person contemplating suicide.

Mr. Casolaro had a phone book which contained his (Special
Agent Gates’) telephone number. Special Agent Gates said that the
phone book had not been located during the police investigation.

The Martinsburg Police Department told him that the wounds to
Mr. Casolaro’s arms were “hacking” wounds. Special Agent Gates
felt that the amount of injury to the arms of Mr. Casolaro were not
consistent with injuries inflicted by an individual who had slit his
own wrists. Special Agent Gates said he was told by Martinsburg
Police investigators that:

... he [Mr. Casolaro] hacked his wrists . . . the wrists were
cut, but they were cut almost in a slashing or hacking mo-
tion

An open bottle of wine was allegedly found in the room, but the
contents had not been tested at the time of Special Agent Gates’
conversation with Martinsburg authorities.

Special Agent Gates said that he made his suspicions known to
Martinsburg authorities, and that he called the local FBI office and
suggested that they investigate because it was possibly related to
criminal activity which falls within the jurisdiction of the FBI. 216

In his sworn statement, Special Agent Gates concluded that:

. . . based upon my prior testimony concerning my con-
tacts with Casolaro and also with the Captain of the Mar-
tinsburg Police Department, there is cause for suspicions
to be raised. . . , 217

214 Memorandum of interview with Robert Booth Nichols, January 21, 1992 (on file with the
committee).

218 Sworn statement of Special Agent Thomas Gates, March 25, 1992, p. 10 (on file with the
committee).

218 Interstate Transportation in Aid of Racketeering (ITAR). Sworn statement of Special Agent
Thomas Gates, March 26, 1992, p. 56. ^

2 ”Ibid., p. 61. It should be noted that throughout his deposition, Agent Cates repeatedly con-
nected various strands of his conversations with Casolaro, as well as other aspects of the

Continued

2. POSSIBLE CONNECTION BETWEEN EARL BRIAN, MICHAEL

RICONOSCIUTO, ROBERT BOOTH NICHOLS AND THE CABAZON INDIAN

RESERVATION

Mr. Riconosciuto has alleged in a sworn statement to the com-
mittee 218 that Dr. Brian and Mr. Peter Videnieks secretly deliv-
ered INSLAWs PROMIS software to the Cabazon Indian Reserva-
tion, located in California, for “refitting” for use by intelligence
agencies in the United States and abroad. Mr. Riconosciuto could
not provide evidence other than his eyewitness account that Dr.
Brian was involved in the PROMIS conversion at the reservation.
Dr. Brian flatly contradicts Riconosciuto’s claims in his own sworn
statement to committee investigators. 219 In addition in a sworn af-
fidavit provided on April 2, 1991, in connection with the INSLAW
bankruptcy case, Dr. Brian stated that he had never heard of, or
was associated with, the so-called Wackenhut/Cabazon Indian joint
venture, nor had he ever met, or had conversations with Peter
Videnieks 220 — all in direct opposition to the Riconosciuto deposi-
tion as well as to certain law enforcement information on file at the
committee. 221 In light of these disputed versions of events, the
committee is not in a position to make findings of fact on Dr.
Brian’s role, but would strongly recommend that further investiga-
tion be given to ascertaining the role, if any, of Dr. Brian in
INSLAW-related matters including, but not limited to, questions
surrounding the Department of Justice’s alleged conversion of the
PROMIS software and its possible dissemination to other cus-
tomers beyond the intended usage of the public domain version. 222

INSLAW investigation, to a single individual, Robert Booth Nichols. In making certain state-
ments, Gates acknowledged that Nichols had filed a law suit against him because of another
crime investigation in which he participated which was centered in southern California. Never-
theless, Gates maintained that important and highly pertinent information regarding the past
history of Nichols existed in sealed wiretap and confidential grand jury investigations which,
by law, Agent Gates is prohibited to disclose in the absence of a subpoena. In this regard, the
committee was provided by Richard Stavin with a 72-page affidavit submitted by Special Agent
Gates to a Federal court which contained the results of a FBI wiretap on individuals in the en-
tertainment industry suspected of having ties to organized crime. The committee takes no posi-
tion on any of Gates’ assertions or suppositions vis-a-vis Nichols, except to note again that they
were duly sworn statements.

218 Sworn statement of Michael Riconosciuto, April 4, 1991 (on file with the committee); Bee
discussion supra, at pp. 99-102.

210 Sworn statement of Earl Brian, September 20, 1990 (on file with the committee).

220 April 2, 1991, affidavit of Earl Brian, INSI^AW, Inc. v. United States, et al.. No. 85-0070,

p. 2.

221 Riverside Countv District Attorney’s Office Special Operations Report, October 10, .1991,
pp. 2—4 (on file with the committee).

222 It should be noted that other information was received by the committee relating to wheth-
er Dr. Brian was involved with other individuals in various Wackenhut { Inc./Cabazon Indian
Reservation business ventures in California during the early 1980’s. While any degree of cor-
roborating evidence on this point does not establish whether Dr. Brian was involved in
IMSLAW-related matters under investigation, it has been cited by others for the proposition that
Dr. Brian, contrary to his sworn affidavit, had indeed heard of Wackenhut/Cabazon enterprise
thus casting into doubt other assertions. According to a law enforcement police report on file
with the committee, Dr. Brian together with Michael Riconosciuto, among others, attended a
weapons demonstration at Lake Cauchilla gun range in Indio, CA, during the evening of Sep-
tember 10, 1981. See Riverside County District Attorney’s Office Special Operations Report, Oc-
tober 10, 1991, pp. 2-4 (on file with the committee).

Further, in an article which appeared in the March 30, 1992, edition of the Washington Busi-
ness Journal, Art Welmas, the former chairman of the Cabazon Tribe stated that Dr. Brian had
been seen on the reservation and that his name was frequently mentioned by Mr. Riconosciuto
and Dr. John Nichols the manager of the reservation’s operations. “Brian must have been in-
volved,” WelmaB said in the article. “His name was mentioned and discussed on a daily basis.”
See, Washington Business Journal, March 30, 1992.

Finally, there have been a number of speculative reports and fragmentary records purporting
to link Robert Booth Nichols, through a company called Meridian Arms Corporation, and Mi-
chael Riconosciuto to certain covert intelligence activities, including a joint venture between the

™Jb^£ GATI0NS 0F PERJURY, COVERUP, AND

RETRIBUTION. A WEB OF CONTRADICTION AND DECEIT

The committee encountered numerous situations that pointed to
a concerted effort by Department officials to manipulate the litiga-

tmqt A f w h p INSLA , bailk ruptcy, as alleged by the president of
IN b LAW. For example, there were several possibly perjurious con-
tacts and contradictions among witnesses of the alleged Depart-
ment attempt to convert INSLAW from a chapter 11 reorganization
to a chapter 7 liquidation. 223 During this controversy, one key De-
partment witness was harassed and, ultimately, fired because the
department decided, based on its own information, that the find-
ings of the Bankruptcy Court were erroneous and the witness’ in-
formation sharing to INSLAW was a dismissible offense.

Gn A ^*V rc b 17, 1987, William Hamilton and his wife Nancy met
with Anthony Pasciuto, then-Deputy Director of the Justice Depart-
ment 3 Executive Office for U.S. Trustees (EOUST). Mr. Pasciuto
provided them information obtained during a January 12 1987
conversation with Judge Cornelius Blackshear, the U.S. Bank-
ruptcy Court judge for the Southern District of New York. 224 This
conversation led to an allegation that Thomas Stanton, the EOUST
Director, sought to have INSLAW’S bankruptcy status converted
from a chapter 11 reorganization to a chapter 7 liquidation of the
company s assets, allegedly through the help of Harry Jones, 225 the
Assistant U.S. Trustee for the Southern District of New York and
an expert in chapter 11 bankruptcy law. 226 According to Mr.
Pasciuto Judge Blackshear stated that Mr. Stanton had pressured
Judge Blackshear to have Mr. Jones sent to Washington to take
over the INSLAW case, and that Judge Blackshear didn’t like it
Voni in ^T SW £ rn .testimony to committee investigators on June 4,
1991, Mr. Pasciuto stated that he attended a January 1987 lunch-
eon meeting with Judge Blackshear, Judge Lawrence Pierce (a U.S.
Lircint Court judge and a long time associate of Pasciuto), Mr.

asciutOj J°nes and Mr. Elliott Lombard (an acquaintance of
Pascmtos). Mr. Pasciuto stated that Judge Blackshear described
Mr. btanton s attempt to pressure him into sending Mr. Jones to
work on the INSLAW bankruptcy and that it was clear in his
’te-dge Blackshear implied that Mr. Stanton wanted
INSLAW converted to chapter 7 status and needed Mr. Jones to ac-
complish this. 227

Cabazon Indian Reservation and Wackenhut, Inc. The continuing intersection of the
Michael Riconosciuto, Dr. Karl Brian, Robert Booth Nichole and the Cabazon Indian Reservation
are certainly intriguing and curious "associations” but without the requisite degree of causation

10 draw " >nC,UaionS at thiB «-TIZ%ffi 0 ^oing

18 10 ' NSLAW ' 8 c,aim that the Department attempted to put the com-

pany rontmIM bTl>r an FarMt n Cr V pnn 7Ef 1 1 ““Ot Enhanced PROMIS to hadron, Inc., a com-
P 5. ts E Bna ”> fonner Attorney General Meese’s friend and associate.

IT J g d r B,ack ? h “ r ® as appointed to the bench in November 1985. Prior to this time he was
theU.S. Trustee for the Southern District of New York.

J”; " h ° haa professed ignorance of a possible role in any attempt to convert the

c ^ ia P^ er ^ status, is now a bankruptcy judge.

4 1991 W °m P Sf!X-‘ 0 >K /r.£ hC H n me Comm ittee on the Judiciary, June

*• 1 rS i Y PP ' 18 r;? 0 ’ , 29 ’ 47 - A,s °. Proffer of Anthony Pasciuto provided to the Senate Perma-
nent Subcommittee on Investigations, July 16, 1988, pp. 1-2. senate perma-

that he lsTf^I^Tw nt r^“TT'! te ? m^ieators on April 24, 1991, Mr. Stanton denied
that he wanted INSLAW converted, but stated that he called Judge Blackshear to reauest Mr
Jones about handling the INSLAW bankruptcy because of his experience in bankruptcy cases.

Continued

Judge Jane Solomon, a New York City judge, told committee in-
vestigators that on March 18, 1987, Judge Blackshear provided her
an identical story on the key points of INSLAWs conversion and
the Jones transfer to Washington. According to Judge Solomon,
Judge Blackshear stated that he had been asked by Mr. Stanton
to assign Mr. Jones to the INSLAW case, and he refused without
an Attorney General directive. Judge Blackshear also told Judge
Solomon that Mr. William White, the U.S. Trustee for the Wash-
ington, DC, area, told him that Mr. Stanton pressured Mr. White
to move in court to convert the INSLAW bankruptcy from chapter
11 to chapter 7 and steal the PROMIS software. 228 While she was
willing to provide a limited and hostile interview to committee in-
vestigators, Judge Solomon refused to provide a sworn statement
to the committee about Judge Blackshear’s discussion with her on
the INSLAW matter.

On March 23, 1987, Mr. William White provided his first deposi-
tion to INSLAW counsel. Mr. White stated that he received an in-
quiry from Stanton about the INSLAW case, and he reported back
to EOUST on the case’s status. Mr. White denied that he was ever
directed to take any action regarding INSLAW by the EOUST or
anyone else, including filing to convert. Mr. White did state that
Judge Blackshear told him that Judge Blackshear’s assistant,
Harry Jones, was going to be detailed to Washington. 229 Mr. White
was involved with the INSLAW case when the company filed a con-
fidentiality motion with the Bankruptcy Court to protect certain
proprietary information from public disclosure. INSLAW filed this
motion because of allegations that confidential information was
being provided to the Department by the EOUST. Mr. White stated
that INSLAW’S confidentiality motion raised the perception that
his office was not independent and, because of this concern, White
inserted language in the order that restricted Justice Department
access to confidential INSLAW information to his immediate staff.
Mr. White also believed this would preclude Mr. Harry Jones from
having access to INSLAW materials if he were detailed to Wash-
ington.

On March 25, 1987, Judge Blackshear stated, under oath, to
INSLAW counsel that Mr. White told him that Mr. Stanton pres-
sured Mr. White to move in court to convert the INSLAW bank-
ruptcy from chapter 11 to chapter 7. Judge Blackshear also stated
that Mr. Stanton planned to have Harry Jones loaned to Washing-
ton to manage the INSLAW case and to arrange for INSLAWs con-
version. 230 As previously indicated, Judge Blackshear spoke with

Mr. Stanton stated that, in his view, Judge White and his support staff were relatively inexperi-
enced in bankruptcy matters and Mr. Stanton:

. . was afraid that our staff there was not up to a complex situation if a complex situation

developed.”

Mr. Stanton stated that Judge Blackshear informed him that he could not spare Mr. Jones
from his New York duties, and Mr. Stanton stated the issue went no further.

298 Staff study, dated September 1989, by the Permanent Subcommittee on Investigations,
Senate Committee on Governmental Affairs, on Allegations Pertaining to the Department of
Justice’s Handling of a Contract with INSLAW, Inc., p. 29.

228 Sworn statement of William C. White, In n: INSLAW, Inc., Bankruptcy case No. 85-00070,
March 23, 1987, pp. 16, 20-23. „ ,

230 Sworn statement of the Honorable Cornelius Blackshear, In re: INSLAW, Inc., Bankruptcy
Case No. 85-00070, March 25, 1987, pp. 8-11. Mr. Stanton provided a sworn statement to
INSLAW counsel and stated that he had asked Judge Cornelius Blackshear to detail his then
First Assistant, Harry Jones to Washington to take over the management of the INSLAW case.
Mr. Stanton further stated, however, that he never pressured, directed, or suggested to Mr.

■

Judge Solomon on March 18, providing her an identical story on
the key points of INSLAWs conversion and the Jones transfer to
Washington.

A. Judge Blackshear’s Recantation

Judge Blackshear stated that he called Mr. White immediately
after he gave his deposition to INSLAWs attorneys to discuss his
statement. At that point, according to Judge Blackshear, Mr. White
told Judge Blackshear that he was mistaken because they never
discussed converting INSLAW. 231 The next morning, Judge
Blackshear’s attorney — James Garrity, an assistant U.S. attorney —
received a call from Dean Cooper, a trial attorney in the Depart-
ment’s Civil Division. According to Mr. Garrity, Mr. Cooper told
him that Judge Blackshear’s statement was wrong, and the De-
partment wanted something undertaken (such as a letter) to cor-
rect the error. Mr. Garrity spoke with Judge Blackshear by tele-
phone, and Judge Blackshear took the advice of his attorney and
decided to correct his alleged errors. 232 It is highly questionable
how the Department could ethically represent both itself and Judge
Blackshear in the INSLAW litigation. In effect, the Department
was a defendant in the case while one of its attorneys (Mr. Garrity)
at the same time was representing a key witness (Judge
Blackshear) for the plaintiff (INSLAW).

On March 26, 1987, Judge Blackshear submitted an affidavit to
the court correcting his previous statement. In this affidavit Judge
Blackshear stated that Mr. White never told him that Mr. Stanton
was pressuring him to convert INSLAW to a chapter 7 bankruptcy,
and that he had confused such an effort with Internal Revenue
Service (IRS) pressure on Mr. White to convert United Press Inter-
national (UPI) to a chapter 7. 233

B. Judge Blackshear’s Statement to Committee Lacks
Credibility

Judge Blackshear provided a sworn statement to committee in-
vestigators on January 25, 1991. In contrast to Mr. Stanton’s asser-
tion that he contacted Judge Blackshear directly about Mr. Jones,

White or anyone else that INSLAW be converted. Sworn statement of ThomaB J. Stanton, In
re: INSLAW, Inc,, Bankruptcy Case No. 85-00070, pp. 26-33.

231 Record of FBI interview of Cornelius Blackshear, November 10, 1988, p. 3.

^Record of FBI interview of James Garrity, assistant U.S. attorney, dated October 26, 1988,

p. 2.

233 In an interview with committee investigators on March 27, 1992, Judge Martin S. Teel,
Judge Bason’s replacement, said that, prior to his appointment as bankruptcy judge in February
1988, he was the Assistant Chief of the Department’s Tax Division. At that time, he supervised
the tax portion of both the UPI and INSLAW matter for the Department. Judge Teel refused
to provide a sworn statement about his activities with the Tax Division.

Judge Teel said the decision to ask the court to convert INSLAWs bankruptcy status from
chapter 11 to chapter 7 in 1987 originated with the IRS — not the Department — ana had nothing
to do with the Department’s conflict over the INSLAW contract. Judge Teel said that, by statute,
the Department of Justice is responsible for representing the IRS in tax cases. Judge Teel said
that the Department of Justice cannot initiate tax litigation but can only act in response to re-
quests from its client (IRS). Judge Teel said, however, that on occasion, there can be a “back-
wards flow” in which the Department suggests to the IRS to request filing a conversion but
added that this (INSLAW) wasn’t one of those times. When asked if there was a conflict of inter-
est when one part of the Department was being sued, and another part of the Department was
suing the same business, Judge Teel responded, that it was the policy of the Tax Division to
administer tax laws equally. Judge Teel said that no one is insulated from the U.S. Tax Laws
and that if INSLAW believed that they were insulated from tax laws they were mistaken. Judge
Teel refused to provide a sworn statement on this matter.

S e ^I a 3f hear Stated that the information he provided in his
p lor depositions was not based on personal knowledge but on
hearsay information provided by other sources 2 § 4 j, lf w

>f V? toSfTKeTS Ltl INSLAw'case

havey -J Stanl0 " '™ 8 *«

he haf‘ he B ard C fchp n* 64 ^ *1* inf ° rmed Jud & e Solomon that
aa neard that the Department was attempting to get INST AW

sions prior to his Marches’ depositio^. 238 Xdge BlackC^steted

thfstoVcfin™^ ab ° Ut ‘ NSLAW fr ° m " r Pa “ iat » »" d

At the time I was telling the story before the recanta-
*;! on ’ > am y™nd, that’s the way it had occurred My mind
moni g r e it after having talked to Bill White. But my Y state

ter but ' e iiSt^£5>°i? dl t " 0t C i lange the facts of mat -
w>,’ifo ^J t , b . n y Ranged as to the fact that Bill
^ite did not tell me that. Now I remember that it was
Tony Pascmto that told me those things. 237

ts a,“:

SH Sffir mss

f i!° *?, r T™ u ; b - trustees, but he could not specifically identify
the situations or trustees involved. 238 p y iaentuy

Wh iio 8 rnof aC !i S! \ e u c ° uld " ot ex P ,ain to committee staff why Mr
White contends that he did not discuss the UPI bankruptcy case
with him. Judge Blackshear could not recall who brought up thl
Hnn rT Wher ; he contacted Mr. White after the March25 depos®
tori. He was also confused as to the general timeframe when Mr

Bkckshear °sa e iH^ described the UPI bankruptcy case to him. Judge
oiackshear said, however, he was certain that he used UPI as an

coSic\™rd^ i r e8 > a c t ? re ° n A P rfl 24 < 1991. Mr. Stanton

Blackshear to request Hany Jones handline 'the Tn^a^'k^wT 111 , 8ta , Led that he called Judge
m bankruptcy cases. Mr. Stanton stated that in bis k^® U8e of his experience

re,ative|y fnipenencx. in bankrep^ a " d his "Wt were

develop^.* that ° ur 8tafr there waR not “p to « complex situation if a complex situation

the^ Jones "detafl^md what Judge' BUcL^ind^^r. ^ tW “". hia collection about
STlM that hB 8Prafica " y ta,ked to Jud 8 e Blackshear a^urrsi^ingTr^Jon^ toSS

8^ SWOrn 8tel0menl ° f Jud8B Corne,ius Blackshear, January 25, 1991, PP . 2. 59-60 69-73
“Mbid.,pp. 50-51.

“'Ibid., p. 157.

“•Ibid., pp. 73-76.

example at the ABA [American Bar Association] conference and on
several other occasions (although he could not specificalWecaB
these other occasions). 2 Judge Blackshear, in discussing the PSI

findings regarding Judge Blackshear’s “implausible” statements
told committee investigators: statements,

• 7 • ™ y statement concerning INSLAW was probably con-
sistent with Tony’s [Pasciutof because Tony advised me as
to what was going on with INSLAW. As far as the state-

taw I fWK r Ti?fe y PI r case ’ a11 1 can s «y is that I was
told that by Bill White It may have come up at the ABA

meeting* and it may have been informal as opposed to
[being] formally on the record. 241

thnt^Mr ^imu sb f ar stated under oath to committee investigators
that Mr White became extremely upset when Judge Blackshear
described what he had said about converting INSLAW. Mr. White
responded that they never had a conversation about an INSLAW

indicated 0 that to ^ d / ud f n . Blackshear that his (White’s) deposition
INST AW M at wi?u Stanton never pressured him to convert
INSLAW. Mr. White then asked Judge Blackshear to remember
when they discussed INSLAW, and Judge Blackshear could not
RWWuti SUCh \ conve \f a ^ lon - Ifc was at this point that Judge
fffiTm S3yS j he ^ a ]l eds ° me dlscuss ions with Mr. White about

™S?n1Sw S upi^ ,te ’ pn "" plin& decidad that he had

fK dud f® Blackshear also indicated to committee investigators that
the opposing statements raised difficult questions in his mind

Mr l Whi!vt her ^°j d be P e , rceiv e d as more credible than

Mr. White s in court. The judge stated:

...I knew that if we had to go to court, and he [Mr.
White] was saying that Tom Stanton did not pressure him
and I was saying that he told me that he did, that it would
become a credibility Question. They would probably give
my story more credibility than his. I did not wish to put

i^ fc t a u P lace , wh ere they would be judging our credibility
and taking mine over his. 243 3

C. Committee Analysis of Attempt To Assign Harry Jones to
the INSLAW Case

n ,!i"r„j r0US n Wi f neSSes involved in the Jones reassignment issue
£ rWlv° n ? ££ “u statements ; however, Judge Blackshear
ni„i u y atodds With everyone on this allegation. Judge
vll^h 1 f a M rn ^:? ta i nS tbat Mr - White had contacted him to al-
WifsFmrf Mr. Stanton was going to ask that Mr. Jones be sent to
Washington, (2) he spoke only with Mr. White and Mr. Jones and
(3) he never talked to Mr. Stanton about the Jones issue. Judge

“•Ibid., pp. 109-120.

243 fwd^ri^ToS 0 ' Cornel,us Blackshear, op cit., p. 156.
243 Ibid.’ pp. 78-79.

Blackshear stated that he told Mr. Jones that if he were contacted
regarding an assignment to the Washington office for handling
INSLAW, he was to decline and refer the matter to Judge
Blackshear.

In contrast to Judge Blackshear’s statements, Mr. Stanton stated
under oath that he called Judge Blackshear regarding the Jones
detail, and he is sure that he told Judge Blackshear why he wanted
Mr. Jones assigned. Also, Mr. White stated that Judge Blackshear
called him about Mr. Stanton’s request, and he had no knowledge
of this request before his discussion with Judge Blackshear. Mr.
White stated that Judge Blackshear told him that the call had been
made by Mr. Stanton directly to Mr. Jones, which would fit Judge
Blackshear’s pattern of denying any firsthand knowledge of
INSLAW matters.

In contrast to Judge Blackshear’s and Mr. White’s statements,
Mr. Jones claims in his sworn statements that he could not recall
any discussions regarding his possible assignment to the INSLAW
case. Mr. Jones denies having been contacted by either Mr. Stan-
ton, Judge Blackshear or Mr. White regarding an assignment to
the INSLAW case, or being aware that such a request had been
made. Judge Solomon also provided a recollection that indicates
that Judge Blackshear was contacted by Mr. Stanton to request
Mr. Jones. However, as mentioned earlier, she has refused to pro-
vide a statement under oath.

D. Bason Allegations Against Blackshear Not Adequately

Considered

Bankruptcy Judge Bason ruled that he believed INSLAW’S wit-
nesses had told the truth, while the Department’s witnesses had
not. The judge thought that the witnesses’ stories ranged from in-
tentionally lying to failure of recollection. According to Judge
Bason, Judge Blackshear in particular had conducted himself in a
way that called for strong action. On January 2, 1991, Judge Bason
filed a complaint to the Judicial Council of the Second Circuit U.S.
Court of Appeals against Judge Blackshear. In the statement of
facts accompanying the complaint, the judge stated that: 244

I have now regretfully concluded that Judge Blackshear
recanted not because of an honest mistake but because he
made a conscious choice to testify falsely. . . .

Nor can I now escape the conclusion that Judge
Blackshear attempted by his deliberately false testimony
to prejudice and obstruct the administration of justice in
the INSLAW bankruptcy-court proceeding. 245

Judge Bason added in his complaint that:

As the presiding trial judge in INSLAW I was outraged
at Department of Justice employees’ attempts to obstruct
justice by deliberately giving false testimony. That this

344 On October 24, 1991, at the request of the committee, Judge Bason provided a copy of his
complaint.

24,5 Judicial Council of the Second Circuit, Complaint Against Judicial Officer Under 28 U.S.C.
372 (c), filed by George F. Bason, Jr., former U.S. bankruptcy judge for the District of Columbia,
Statement of Facts, pp. 1-2.

charge can now legitimately be made against a sitting
judge is even more disturbing. 246

Unfortunately, there was no meaningful investigation of Bason’s
allegations. The Judicial Council of the Second Circuit appointed a
special committee consisting of several judges to consider Judge
Bason s allegation and provide a comprehensive written report.
However, both groups refused to address Judge Bason’s complaint
because Judge Blackshear’s alleged perjury dealt with matters out-
side of his judicial activities. On that basis Judge Bason’s com-
plaint was dismissed in its entirety on October 3, 1991.

Mr. Pasciuto’s Firing: Mr. Anthony Pasciuto was the Deputy Di-
rector for Administration in the Justice Department’s Executive Of-
fice for U.S. Trustees. As discussed previously, prior to the bank-
ruptcy trial, Mr. Pasciuto told the Hamiltons at a March 17, 1987,
breakfast meeting that Judge Blackshear had told him that Mr’
Stanton had pressured Mr. White to convert INSLAW to chapter
7 liquidation, and had retaliated against Mr. White for refusing to
do so. However, under strong pressure from senior Department offi-
cials, Mr. Pasciuto recanted his statement at the trial to say that
neither Mr. White, Judge Blackshear nor anyone else from the De-
partment had told him that Mr. Stanton had pressured Mr. White
to convert the case to a chapter 7. 247

In a March 17, 1988, letter, Mr. Pasciuto’s attorney asserted that
what Mr. Pasciuto had told the Hamiltons was true. The attorney
stated that Mr. Pasciuto had backed away from his original state-
ments at the trial because Judge Blackshear and Mr. White would
not acknowledge the truth and because Mr. Stanton was putting
pressure on Mr. Pasciuto to cooperate if he wanted to receive his
appointment as an Assistant U.S. Trustee.

Mr. Pasciuto’s sworn statement to committee investigators on
June 4, 1991, was consistent with his previous statements to the
Hamiltons. Mr. Pasciuto stated that at the January 1987 luncheon
meeting, Judge Blackshear described Mr. Stanton’s attempt to
pressure him into sending Mr. Jones to work on the INSLAW
bankruptcy, and that Judge Blackshear definitely implied that Mr.
Stanton wanted INSLAW converted to chapter 7 status and needed
Mr. Jones to accomplish this. 248 Mr. Pasciuto also told committee
investigators under oath that, prior to the January luncheon meet-
ing, Mr. White told him Mr. Stanton was putting pressure on him
regarding the INSLAW bankruptcy.

^ r - Pasciuto stated that he believed that the process to approve
his Albany, NY, appointment was manipulated to influence his
statement at the bankruptcy trial. 249 He cited as support his ap-

M 'Ibid, pp. 4—6.

Letter from Gary Howard Simpson, Pasciuto’s attorney, to Mr. Arnold I. Bums, Deputy
Attorney General, Department of Justice, March 17, 1988.

M, Swora statement of Anthony Pasciuto, June 4, 1991, pp. 18-20, 26-29.

219 Mr.- Stanton stated under oath that he recommended Mr. Pasciuto for the Assistant Trust-
ee position in Albany, NY. The Deputy Attorney General, Arnold Bums, was required to sign
as the approving official. Mr. Stanton, however, stated that, afler Mr. Pasciuto provided his
statement, the appointment paperwork was returned to Mr. Stanton, unsigned, from Mr. Bums’
office with no explanation. Mr. Stanton claims he never received an explanation from Mr. Bums
about why Mr. Pasciuto’s appointment was not approved. However, he inferred that discrep-
ancies between Mr. Pasciuto’s depositions and his statement at the June 1987 bankruptcy trial

Continued

W f S l beld U P for m °nths but was signed by Mr

Ippllfiill

SfjSyD^

n.?r±" u r 20 : 1988 ’ Boykin Rose, the Associate Deputy Attor-
from the D* partmen^On^^^^ removal

wrote to the Department on Mr. plsciuSs blha^f S a . ttor ?. e y

a n d C I NS LAW To n ver s ion . • tr J’ sf { r

nZl f^r t t d b a r n r 1 ?&

tjS

Sk^^^^Ss^55£SsS

concluded that: h C0UFSe ° f action ‘ 0PR unilaterally

review1,f n t he h Vivi| e ni! WS d “ ri ? g ou ^ 0 in< iuiry, and on our
dress7nir the Wi? n° nS June 18 memorandum ad-
rar i ! ’« J rul,ng ’ we conclude that the bank-

^Ptoy court s remarks were unsubstantiated and unfair
Although the blame for this injudicious result appears t«
rest squarely on the court’s shoulders, it is clear that th^
environ ment for his ruling was created largely because of

0^hS™ B b S rnt?nXn ! . n 2M^ 8iOn "" d ~ Hne Mr Pa8dUto ’ 8 a H»«»‘«-t Sw„rn statement
251 ?^ 0rn 8ta j cm ™ t Of Anthony Pasciuto, op. cit. pp. 4-69.

a^ataL^of miscondu^hy^AnUKln^P^eCTljtoh^at^^ DeP £, ty ^^7 Gen '

■>-*

Pasduto’s e ^^^e^^J|^gj^ l ^ 0 ™ U jJ^J r ^J^ s ^^J'?® ei ? O'* department and Mr. Pasciuto. Mr.
v.se Mr. Pasciuto that he ought not to stated that he wou ' d ad-

Pasouto would best be served b^going to TO^elUXre ^ ^ ^ partment and that Mr.

23Sm 0Wn t °* ally irr,,s P onsible statements and

^SLssA^jis&iSr real ■— »■

s&rizrSiTi s xs- 5 a*i

the’ WSLAW 1 at ? asciuto ’ s statements on

kss ss.

told the Hamiltons about a high level effort wffc- e ,^ ru J|h w h en he
to force INSLAW into chapter 7 TfrlnlSS? ml" tbe De Partment
evident given the contrStnLuS d ‘l 0 "’ Tb,s is Particularly
Judge Blackshear and nthor tatements made under oath by

Unfortunately, the Department decided this matter.

“s-sSa gffiSS: ™ B -

tice empPI SleXtSnrSs^f 5,1 SK J “‘

that the Department nlannod^* ’ i fc ^ as a PP aren t from this case
punishment to those * e , harshest Possible

iently overlooked inconsiK ^ were . disl ° yal while ifc «>nven-
made by witnesses that mSLSS per J urious statements

stated during the oral hKu t fe s D . epa rtment’s position. As

considerable expertise in person'nef law^conclude^thatf^’ Wh ° had

did sScinv^hit wo d 1n S k nd 8 re Pfimand for what he
^understand that in a way that I would not understand a

bjTl^ihoi^ ^^uto|*dated^D^^ n ^|? , i^ r

M “Ibid., p. 9.

^ffisTK& uX Jud^Sackfhear^ 1 ' ^^ h ^ De K Pa J tment ’ a Pub,ic Integrity
May 2, 1988, Acting Assistant AttareeV^ml Joh?T^L Wh,te , h " d “emitted perjur^On

.hiricp'ni r ?u‘ ;8ted that the FBI open a criminal invraSton' the n De P artn »n t ’ 8 Criminal
J Th p ackahear and Trustee White investigation into allegations of perjury by

and Mr. taSTSf! gff jSS^"SE5t^J& 0 ML Bla ^hcar, Mr. Stanton
W The n pm tne8S i e8 J *3 th fireth and knowledge tore fu to taeT^re^’T becau8e «“PPOsedly there
Slat FBI concluded that the description of even t* hv I„!£Tni Rl f. t ? , ’ Rn *■ °f these witnesses.

8 ThrK™ it reuM use K’r

self, ref^rrh^sSte^ti foT Mr^ 1 ^ H ^ Poured him-

ment decided not to pursue Mr. Pasciuto because Ste ton and Jud ^ e Blackshear. The Depart

and en^angmdldTcareer” 6 ^ PUnished ad « F «* hia re.e in this case. He lost his job

removal. I think the removal is punitive ... I cannot under-
stand somebody firing Mr. Pasciuto for this. 258

Fundamentally, the Department held Mr. Pasciuto very account-
able for his discussion with the Hamiltons — which was corrobo-
rated by other witnesses, including Judge Blackshear—while Judge
Blackshear was excused for making identical statements to Judge
oolomon and, under oath, to INSLAW attorneys. The Department
concluded that no perjury charge could be brought against Judge
Blackshear and Mr. White because it could not find evidence that
their statements were false. 269

VI. THE DEPARTMENT HAS PROVEN TO BE INCAPABLE OF

A FORTHRIGHT INVESTIGATION OF THE INSLAW MATTER

, Severai requests were made to the Department to investigate the
INoLA N matter. However, the Department focused its investiga-
tions on defending its supporters and either ignoring or attacking
whistleblowers. Further, the Department’s review of the need for
an independent counsel investigation appears to have been delib-
erately shallow, which allowed the Department to conclude that it
lacked sufficient evidence to warrant even a preliminary investiga-
tion of wrongdoing by the Department officials.

The Department also did little to resolve numerous conflicts and
contradictions that arose during INSLAW’S investigation of an al-
leged Department effort to liquidate INSLAW. A more thorough
study would have revealed a troubling pattern of incomplete, con-
traaictory, and possibly perjured testimony of key Government wit-
nesses. A more indepth investigation of Department witness state-
ments is clearly warranted to determine who lied and who told the
truth. Also, in a show of extraordinary force, the Department fired
an employee who merely relayed information to the Hamiltons
from what should have been a highly credible source. This action
no doubt had a chilling effect on other potential Department wit-
nesses.

A. Jensen Failed To Adequately Investigate INSLAWs
Concerns

On March 13, 1985, Elliot Richardson and Donald Santarelli, the
tormer Administrator of LEAA, met with Acting Deputy Attorney
Genera! D. Lowell Jensen and requested that: (1) He authorize im-
me .i fair ’ and ex P edited negotiations between the Department
and INSLAW to resolve the disputes that caused the withholding
of moneys and INSLAWs bankruptcy, (2) the Department give im-
mediate consideration to a new INSLAW proposal, and (3) he ap-
point someone to investigate INSLAWs repeated assertions that

h,™" ''f, ritten proceedings of the Oral Reply to Proposed Removal Action in the Matter of An-
th ™i&£ aS i Cmto ’ De P u ty D,rector for Administration, EOUST, dated March 23, 1988.

, o. . h® Rul ! e ', le Umted States need not prove motive to make out a perjury case. The Unit-
ed States must, however, present a jury with a realistic fact situation in order to have anv
chance to convince a jury that the defendant lied. While INSLAW may have convinced Judge
BaBon that the truth was completely diametrical to the testimony, I believe it highly unlikely
n! ® Ver 'll? a rotionaljory of this beyond a reasonable doubt” [Memorandum from
navid Green. Trail Attorney, Public Integrity Section to Gerald McDowell, Chief, Public InUw-
nty Section, June 14, 1989, p. 18.] ^

Department officials — particularly C. Madison Brewer— were bi-
ased against INSLAW. 60

Judge Jensen stated in a June 1987 deposition that he appointed
Jay Stephens, a Deputy Associate Attorney General, to conduct an
investigation of the bias allegations, and he recalled discussing the
results of Mr. Stephens’ review. He added that, based on Mr. Ste-
phens investigation, he did not consider that an investigation by
OPR was warranted. Judge Jensen stated that he wanted to be
sure that the Departments actions were not driven by personal
considerations or bias but were based on the merits of INSLAWs
concerns. On the point of Mr. Brewer’s alleged bias. Judge Jensen
stated that:

I would think that the better path of wisdom is not to
[hire an alleged fired employee to monitor the contract of
his former employer] do that if that’s possible to do. ... I
think that it’s better to have these kinds of issues under-
taken by people who... don’t have questions
raised . . . whether they are not biased in favor of or against
the people they deal with. 261

However, Judge Jensen concluded that, based on Mr. Stephens’
investigation, he was satisfied that decisions were made on their
merits and were justified, and Department officials did not intend
any personal animosity. 262 It is also interesting, in light of Mr.
Meese’s denials that he was ever involved in the details of the
INSLAW matter, 263 that Judge Jensen stated that:

I have had conversations with the Attorney General
[Meese] about the whole INSLAW matter... as to what
had taken place in the PROMIS development and what
had taken place with the contract and what decisions had
been made by the department with reference to that. 264

Mr. Stephens stated under oath that, in March 1985, Judge Jen-
Sen femu n im an INSLAW Proposal 265 and asked him to check
out INSLAWs proposal for new business and determine if there
was anything the Department could do with it. Mr. Stephens stated
under oath in direct contradiction of Judge Jensen’s statement that
he was never asked to investigate the bias issue. 266

Mr. Stephens stated that, after Judge Jensen asked him to re-
view the INSLAW new business proposal, he received several tele-
phone calls from both Charles Work and Elliot Richardson, who are
attorneys for INSLAW. He felt that they were lobbying the Depart-
ment very hard because they believed that INSLAW had some spe-
cial relationship with the Department. He added that they at-
tempted to convey that based on a longstanding relationship be-

“° Deposition of Judge D. Lowell Jensen, June 19, 1987. pp. 23-25.

M1 Ibid., p. 34.

^Ibid.

Meese stated in his interview with this committee that he could not recall any discussions
with Jensen about office automation or case tracking at the Department; he stated that if he
did, it would have been casual conversation. Interview of Edwin Meese III, July 12, 1990, p.

Deposition of Lowell Jense, op. cit, pp. 35-36.

, INSLAW submitted a proposal suggesting an approach for implementing PROMIS in the
smaller U.S. attorneys offices, since the Department terminated INSLAW's involvement in the
word processing portion of the contract

266 Sworn statement of Jay Stephens, July 12, 1991, pp. 14-17, 42.

s “ d “

the DeDartmcnls pos^on that INS LAWs new business proposal

gSjJ b s !i?"‘ B !?' h ° a8e ' ^ ud « e J en sen informed Mr. Richardson by
letter stating that the Department reviewed the proposal but it

jSfjT 3n immediate and would not act on the pro-

INSLAWs «n e P epart ™ ent did n °t adequately investigate
NbLAWs allegations, the company was forced into expensive
ime-consuming litigation as the only means by which the Depart-
ment s misappropriation of INSLAW’S Enhanced PROMIS could be
exposed. During an interview with the committee, Judge Jensen
was asked if he agreed with Judge Bason’s ruling pertaining to al-
bias by . the Department (which the Hamiltons cfaim is
ftatla fW of misbehavior by the Department). Judge Jensen
stated that mst because the Judge [Bason] made a ruling he didn’t

“v^Trf y “ Sree / hat ^ » lle S»ti.n s of bias were correct; W
' ver , the decision does raise concerns that there may have been
more bias toward INSLAW than he was aware of. 26 ^ The Bank-
ruptcy Court found that he “had a previously developed negative
attitude aboutPROMIS and INSLAW” from the beginning (Finding
of » S 309 because he had been associated with the development
• p n ,Y al case management system while he was a district attorney

ovcreightT^rremre* aff ““ d his iudgment W.

B. OPR’s INSLAW Investigations Are Deficient

As early as June 1986, OPR 2 ™ was aware of the allegations of
bias by senior Department officials— including then Deputy Attor-
JenSen ' The j e allegations included a claim that Judge
PROMIS 27 » INSLAW’S ^ bankruptcy and dislikfd

l KUMIb. In spite of a number of inquiries from Congress and

Bnrn«’ Sl l QRK eing fi FaiSe ^ in botb Judge Jensen’s and Mr. Arnold
Burns 1986 confirmation hearings, OPR did not begin to inves-
tigate the matter until November 1987. 272 B

*”Ibid., pp. 12-14-16-17.

Ibid., pp. 21-33.

■Z 5 li th , C0 S n,i » tee investigators, dated April 1990.

by the Bankruptcy Court ruling in the I NS I, AW case. On November lO^igs^OPH^n^fi^

nnrt" 8 r t .t a S ,t W r d P n>coed with the investigation of his referral SoiIra°’ March 31

port of the Investigation by OPR in the INSLAW Matter. source. March 31, 1989, Re-

Ironically, in 1986 OPR delayed investigating the INSLAW bias
issue because it planned to rely on the judgment of the Bankruptcy
Court. Robert Lyons, acting counsel for OPR, stated that the
tnas allegation was not an issue OPR would normally review and
that it would be more appropriate for the Bankruptcy Court to re-
solve the issue. 27 "* OPR changed its position after the Bankruptcy
Court concluded that there was serious bias up to Judge Jensen's
level. During its investigation OPR chose to ignore the court’s find-
ings and conclusions that there was bias against INSLAW at the
Department. Instead, OPR stated in its March 31, 1989, report that
it agreed with the Department’s brief on appeal to the District
Court that:

The bankruptcy court’s credibility determinations are
unbalanced, inexplicably savage, and based on unreason-
able inferences. They amount to nothing more
than . . . attacks on virtually every person who testified for
DOJ. . . .

OPR concluded that the court’s findings of misconduct on the
part of specified Department employees and of the Department
generEfily were wholly erroneous. Instead of investigating the pos-
sibility of Department collusion to misrepresent witnesses’ sworn
statements, OPR attacked the Bankruptcy Court position conclud-
ing trmt it mistrusted the Department’s witnesses. 275 OPR con-
cluded in its report that:

.. .based on our review of the record, this finding, [of the
Bankruptcy Court] and the subsidiary findings on which it
is based, are clearly erroneous. 276

OPR also concluded that the allegations of misconduct on the
part of Mr. Meese, Judge Jensen, and Mr. Bums were unsubstan-
tiated. OPR limited its investigation to the allegations of mis-
C 2 I iu Ct and ’ incredibly, it excluded any consideration of the merits
of the contract disputes (such as the data rights issue and possible
misappropriation of the PROMIS software). 277 Although it did not
investigate such issues, OPR gratuitously stated that:

There is no credible evidence that the Department took,
or stole INSLAWs Enhanced PROMIS by trickery, fraud
and deceit. Additionally, we have found no credible evi-
dence that there existed in the Department a plot to move
to convert INSLAW’S Chapter 11 bankruptcy to one under
Chapter 7 of the Bankruptcy Code. 278

District Judge Bryant’s November 22, 1989, memorandum in
favor of INSLAW contradicted the conclusions reached by OPR.
Judge Bryant stated that Judge Bason’s record was clear and that:

nn 27 1^3 C ° n . d S Cte ? I" 'T 1 '* 1 ™ of ‘ h . e bias i8soe8 in 1986 <*nd concluded that there was
i P n tK?NSLAW b ™tter 6 J ?" 8en - Source; March 31 - 1989 - RL ’P ,,rt of the Investigation by OPR

with “t^inv^t^d’a^^ay ^ STmO® and ° aVid a8 " 8tant C ° Un8el ° PR

thHNS^VLlter’pp ^ ^ InV ™ tiBat,0n by thB ° mce ° f Profe88i °" al Responsibility in
279 Ibid., p. 48.

278\« ay i 8, 1990, ’ nterview of Robert Lyons and David Bobzien, OPR.
the I.^lIw Mat^V^^L the ‘ nVe8tigati0n by the ° ffice nf Professional Responsibility in

. . . the Department violated the automatic stay when it
claimed Enhanced PROMIS to be its property and in-
stalled it in at least 45 offices throughout the United
States. 279

Even Department management recognized that the Enhanced ver-
sion of PROMIS was INSLAW’ s property. Mr. Burns stated in his
OPR deposition that the Department’s attorneys involved in the
INSLAW case were (sometime in 1986):

. . . satisfied that INSLAW could sustain the [data rights]
claim in court, that we had waived those rights. ... 280

Committee investigators were informed that Michael Shaheen
and Richard M. Rogers, Counsel and Deputy Counsel for OPR, re-
spectively, recused themselves from the INSLAW investigation be-
cause of their association with Deputy Attorney General Burns,
who was named in the allegations. 281 However, Mr. Rogers was
present during a sworn statement provided by then-Attorney Gen-
eral Meese, which contradicts his claim that he had recused him-
self from the investigation.

C. GAO Study of the Office of Professional Responsibility

The type of problems the committee found with OPR’s investiga-
tion of the INSLAW matter were illustrated in a 1992 GAO study
of the Office. GAO reviewed OPR’s operations, 282 and several of its
findings paralleled the one-dimensional nature of the OPR inves-
tigation of INSLAW. GAO found that:

OPR operated informally, did not routinely document key as-
pects of its investigations, and provided little background infor-
mation in its case documentation.

OPR generally did not record the complete scope of and ra-
tionale behind the investigations or of the decisions reached in
the course of the investigations.

OPR’s conclusions that allegations were or were not substan-
tiated were generally not explained.

In many instances, OPR did not pursue all available avenues
of inquiiy.

OPR counsel relied on the attorney’s judgment and informal
consulting among attorneys within OPR as the basis for mak-
ing decisions and reaching conclusions about specific investiga-
tions. 283

GAO concluded that OPR’s informal approach to investigations, the
limited scope of many of its investigations, and the minimal docu-
mentation contained in its files expose it and the Department to a
range of risks, including: 284

37o November 22, 1989, memorandum on appeal before Judge Bryant, U.S. District Court for
the District of Columbia, p. 38.

*” March 30, 1 988, interview of Deputy Attorney General Arnold Bums by OPR p. 12.

M1 May 18, 1990, interview of Robert Lyons and David Bobzien, OPR.

’“Employee Misconduct: Justice Should Clearly Document Investigative Actions,” Report to
the chairman, Government Information, Justice, and Agriculture Subcommittee on Government
Operations, House of Representatives, GAO/GGD-92-31, dated Februarv 7 1992
*® 3 Ibid. ’ ’

394 Ibid.

If OPR’s informality were to lead it to conclude an investiga-
tion prematurely, the integrity of the Department could be
compromised.

If asked to defend an investigation against a charge that it
was not aggressively pursued, OPR probably would not have
sufficient documentation to defend its efforts. A review of the
quality of an investigation based on the documentation would
yield little information.

GAO recommended, among other matters, that OPR:

Establish basic standards for conducting its investigations,
which could be obtained from other Department components.

Establish case documentation standards.

Follow up more consistently on the results of misconduct in-
vestigations done by other units and what disciplinary actions,
if any, were taken as a result of all misconduct investigations.

The Department, INSLAW and others would have been better
served had OPR conducted a full and complete investigation of the
INSLAW bias allegations rather than the cursory review it con-
ducted. Instead, OPR chose to attack the credibility of the Bank-
ruptcy Court rather than investigate wrongdoing by high level Jus-
tice officials.

D. The Department Did Not Seriously Consider the Need for
an Independent Counsel

On December 5, 1990, in testimony before the Subcommittee on
Economic and Commercial Law of the Committee on the Judiciary,
former Attorney General Elliot Richardson, representing INSLAw,
stated that he believed that “these attempts to acquire control of
PROMIS were linked by a conspiracy among friends of Attorney
General Edwin Meese to take advantage of their relationship with
him for the purpose of obtaining a lucrative contract for the auto-
mation of all the Department’s litigation divisions.” As a result of
this belief, Mr. Richardson advised his client, INSLAW, to contact
the Department in an attempt to obtain a fair and complete inves-
tigation of the matter.

Mr. Richardson stated that INSLAW’S attempts included (1) a re-
ferral to the Public Integrity Section of the Department’s Criminal
Division; (2) a referral to the Office of Independent Counsel McKay;
(3) an appeal to the U.S. Court of Appeals to request an independ-
ent counsel; (4) letters to the Attorney General; and, as a last re-
sort, (5) a petition for a writ of mandamus.

In February 1988, INSLAW submitted allegations raised from
the Bankruptcy Court’s January 1988 Findings of Facts and Con-
clusions of Law and other information developed by INSLAW to the
Public Integrity Section. In its complaint, INSLAW charged the De-
partment with (1) procurement fraud, (2) violation of the automatic
stay invoked by the Bankruptcy Court and (3) Department at-
tempts to change INSLAW’S chapter 11 (reorganization) to a chap-
ter 7 (liquidation).

Procurement Fraud: INSLAW alleged that the Department’s acts
criticized by Judge Bason were part of a larger “procurement

fraud” perpetrated by the Department. 285 INSIAW alleged that
Attorney General Meese and D. Lowell Jensen schemed to ensure
that INbLAW’s proprietary enhancements to PROMIS be obtained
hy the Department without payment and be made available to Dr.
Lari Brian, a businessman and entrepreneur who owns and con-
Sn w™ ^^nesses including Hadron, Inc., a software company
cies " aS contracts Wlt, b the Justice Department and other agen-

Violation of the Automatic Stay: INSLAW further alleged that
the Department violated the automatic stay under Federal bank-
PROMT^'ft by using INSLAWs proprietary enhancements to
PROMIS after the bankruptcy case was filed. Judge Bason’s opin-
lon found that the Department violated the automatic stay under
federal bankruptcy law, an act that could constitute an obstruction
f proceedings. Although Judge Bason’s ruling was

cK cVhAsS ‘"fra? 1 " 4, “ was " ltimat,,Iy ° verruled by th ‘
INSLAW’s Conversion: INSLAW also alleged that the Depart-
ment unsuccessfully attempted to have Harry Jones detailed from

\ht 0ff l Ce '? N t w York to Washington to take over

the ‘NbLAW bankruptcy for the purpose of causing INSLAW’s liq-
uidation. INSLAW s proof of this claim consisted of:

The sworn statement (later recanted) of Judge Blackshear
that he was Pres Sur ed to detail Harry Jones to Washington to
convert INSLAWs bankruptcy status, and
Director Stanton’s alleged unsuccessful pressure on U.S.
1 rustee William White to convert the bankruptcy case into a
chapter 7 liquidation.

The Public Integrity Section (the Section) notified INSLAW that
it would investigate some of the allegations made by the Hamil-
tons. Subsequently the Department reviewed INSLAWs allega-
tions under the independent counsel statute to determine whether
the information provided was sufficient to trigger a preliminary in-
vestigation of any person covered by the statute, 286 including
Edwin Meese, Arnold Bums, and Lowell Jensen. By memorandum
dated February 29, 1988, William Weld, the Department’s Criminal

S 1 Gener ? 1 - stated ^at the Section con-

eluded that INoLAW did not provide specific information sufficient
to constitute grounds to begin a preliminary investigation of the
need for an independent counsel. 287 The Department stated that
the tacts presented were essentially unsupported speculation that

fo.r7^hh kr l ! , ptey j udge ; f' eor 5 e . BaB °n. ™ieA in INSLAWs favor, and in a scathing opinion
found that the Department acted in bad faith, vexatiously, wantonly, and for opDres^ive rea-
sons. (Judge Basons opinion of September 2, 1987 [Opinion] at d 215) The *iurW further-
found that the Department “fraudulently-’ induced INSLAW into agrSring to Jrovidc^te prop“
etarvenhanccmente to the Department. (Opinion at p. 206 53 ) P * propn

m ... “unsel statute, 28 O.S.C. §§591-99, provides that, upon receipt of infor-

mation regarding the commission of a crime by a person covered by the statute the Department

to’tow" t 8 pre l s".r ary lnve8 r t '? atlon ,f the information is sufficient to ronstitute^rounds
to investigate; i.e., whether any of these persons “may have violated” any Federal criminaj law
The preliminary investigation is limited to a determination of the credibility of the source (the

«r28Tsc te ^\ n Mv$i a u Ns i^ w wa v md i h,e aoura) and the ^*4 scast

uon. 28 O.S.C. §591(dXl). The Attorney Genera] is a covered pereon under the independent

the ^ ta t u'te' U 28 U "T? ***** is a rove^p^n^

JHqfrhYai and 5 69 ,S D ‘ Low ': 1 ' Je, “® n is a covered person under 28 U.S.C.

5 M 7 »i ’ and 00 becau8e of his former positions with the Justice Department

29, 1988 m p r i ndUm ° f Wllliam R Weld > A68istant Attorney General, Criminal Division, February

P er Q S0 7,? covered by the independent counsel statute were involved
m a scheme to defraud. The Assistant Attorney General concurred

evidenc. r o“mSamy ■ U " revil " closed “*» to l«k of

aass £ fis ssrat

constructing legal defenses for its managerial actions rather than
mvestigatmg cfams of wrongdoing which, if proved, could under
tWt! weaken its litigating posture. Mr. Richardson also stated

ro,t! th o SeCt J ? i n i h ? d not .’ in / act - conducted a comprehensive, tW*
ough, or credible investigation, and that the investigation was a
cursory review of INSLAWs charges In a Mav llSLterto

We stated he believed that there was a conflict of interest arising

by Tns'lA W P wh d I fend ’ ng \ tself gainst a civil suit brought
oy irs oLAW while at the same time dealing with allegations of

tWW, C ? ndu ^ by top management that would, if proven, destroy
S! n epar i m e nt ;? defense. He also stated that it was apparent that
cAHl ^f a L rt !?K ntS 8 ~° ut * no-holds-barred defense in INSLAWs
Mr S!? 6 " pr ?^ ty , °ver the criminal investigation.

Mr. Richardson noted m this letter that no one from the Section
fW*±2 h T or Mr. Charles Work, INSLAWs counsel nordid
ft ln f° rmatl0n fro? 1 the Hamiltons. In addition, they failed

to contact witnesses who had provided information to INSLAW In
fact, in December 1988 the Hamiltons provided the Section with
the names of thirty individuals who could provide information Der-

tha e t n th?oMv «!r e 5 t,gatl0n ,-. I P hi l ,etter - Mr - Richardson concluded
that the only solution would be the appointment of an independent

counsel. On August 10, 1989, Mr. Work also wrote to the Denart
ment, calling attention to the inadequacies of the Section's dux-
ported investigation, but the Department did not reopen the mat-

E. Department’s Response to Court Findings of Possible

Perjury

1 Q 87 7 Ai f im^iative. Judge Bason recommended on July 17
1987, to Attorney General Meese that he designate an appropnate

INSIAW^nd^he^) 06 ^ 1 '^ 1116 / 1 ^ *5 review tbe disputesTSTen

and the Department and to give the Attorney General
independent advice on this matter 288

i "l Endings of Facts and Conclusions of
nnJvto l during the trial he observed the witnesses very closely
and reached certain definite and firm convictions” basedon their

fmnrnhBh-’l f 8 Til*® an ana| y sis of the inherent probability or
improbability of their testimony. On pages 172 through 177 of his

DeDartmerff’^ aC ^f’ Judge Bason .^ commented on the credibility of the
Department s witnesses and pointed strongly to a pattern of decen-
tly by employees. This pattern of decep-

t on suggests the possibility of penury and coverup that can only

D%rs 1 &Etia aKd by so ™ < ™ " h ° is

The following are extracts from Judge Bason’s statements:

* July 17, 1987, letter from Judge George Bason to Attorney General Edwin Meeue.

Lawrence McWhorter, Deputy Director for the Executive
Office for U.S. Attorneys (EOUSA) was “totally unbeliev-
able.”

Jack Rugh, Assistant Director, Information Systems
Staff for EOUSA was “also not believable.”

William Tyson’s (Director EOUSA), statement that Mr.
Brewer’s attitude toward INSLAW was positive, construc-
tive and favorable “. . . is so ludicrous in light of the evi-
dence taken as a whole it is difficult for this court to be-
lieve any of Mr. Tyson’s testimony.”

C. Madison Brewer, Director, Office of Management In-
formation Systems & Support, EOUSA “. . . was most unre-
liable, and entirely colored by his intense bias and preju-
dice against Hamilton and INSLAW.”

Peter Videnieks, Contracting Officer, Justice Manage-
ment Division was “. . . substantially unreliable. Videnieks
was under Brewer’s domination and was thoroughly af-
fected by Brewer’s bias.”

The testimony of Janis Sposato, Administrative Counsel,
Justice Management Division, “is to be viewed with consid-
erable skepticism. Given Sposato’s position as a DOJ eth-
ics officer, her casual treatment of repeated serious allega-
tions of outrageous misconduct by Brewer can only be de-
scribed, even charitably, as willful blindness to the obvi-

Judge Bason concluded his comments by stating that:

The acts of DOJ as described in the foregoing findings
of fact were done in bad faith, vexatiously, in wanton dis-
regard of the law and the facts, and for oppressive rea-
sons — to drive INSLAW out of business and to convert, by
trickery, fraud and deceit, INSLAWs PROMIS software.

Apparently in response to Judge Bason’s charges as well as
INSLAW s request for the appointment of an independent counsel,
Arnold Bums, the Deputy Attorney General, asked the Civil Divi-
sion for advice on the question of the appointment of an outside
party to review the INSLAW matter. The Deputy Assistant Attor-
ney General of the Civil Division, Stuart Schiffer, wrote to Richard
Willard, Assistant Attorney General, Civil Division, that the idea
“would not achieve productive results.” Both Mr. Schiffer and Mr.
Willard agreed that taking this “extraordinary step” would only
serve to highlight the matter and give those criticizing the Depart-
ment an opportunity to argue that resorting to this remedy proved
by inference that events warranted an investigation.

Mr. Schiffer crystallized the Department’s defensive posture on
this matter when he wrote that his reasons for supporting the de-
nial of an outside investigation were founded on whether the De-
partment could achieve any benefit from such a study. According
to Mr. Schiffer:

I remain convinced that this idea would not achieve pro-
ductive results — I have serious doubts whether we could
achieve any benefit from the outside person’s
study — [TJhe outside person might find instances in

which the Department could have better handled the con-
tract (with 20/20 hindsight this is not unlikely). These de-
ficiencies, no matter how minor, would be seized upon and
magnified by the court as admissions “at last” of the Gov-
ernment’s wrongdoing. 289

_ Mr. Schiffer concluded that the use of an outside person to inves-
tigate and report on the Department’s handling of the INSLAW
contract was, a “no-win” option and the leadership of the Civil Divi-
sion passed this recommendation on to Deputy Attorney General
Bums. 290

F. INSLAW Request for Independent Counsel

INSLAW filed a Petition for Writ of Mandamus on December 20,
1989, requesting that the District Court order a full and thorough
investigation of the INSLAW allegations and direct the Attorney
General to appoint an independent counsel. The petition asserted
that the Department had not made a serious effort to determine
whether or not INSLAW’S allegations, which were supported in
court, were true. The Department moved to dismiss the petition.

A thorough investigation of the Department’s handling of the
PROMIS contract was again denied INSLAW on September 8,
1989, when the D.C. Court of Appeals turned down INSLAWs re-
quest for an independent counsel to investigate alleged misconduct
by top Department management. This request was an appeal of the
Department’s May 4, 1988, determination that the appointment of
an independent counsel was not warranted. The court denied the
request because the Attorney General had not applied to the court
for the appointment of an independent counsel as required by law.
Therefore, the court concluded that it had no jurisdiction in the
matter.

On September 27, 1990, the court denied the petition. The court
added in a footnote that:

. . . the House Judiciary Committee is presently inves-
tigating the activities of the Department and its then-offi-
cials, employees, and friends as to the extent of a conspir-
acy of the type and magnitude alleged by INSLAW. The
Washington Post reports that “lalfter months of negotia-
tions, Attorney General Dick Thornburgh has now assured
the Judiciary Committee Chairman Jack Brooks (D-Tex.)
that his inquiry will have the full cooperation of the de-
partment. Committee investigators will have direct access
to department personnel and documents, and employees
will be assured that they can testify without fear of ret-
ribution — Clearly, this house committee is a body far bet-
ter placed in the governmental scheme of things than the
court (with resources unmatched in the judiciary) to un-
dertake such an evaluation.” 291

288 Memorandum from Stuart E. Schiffer, Deputy Assistant Attorney General, Civil Division,
to Richard K. Willard, Assistant Attorney General, Civil Division, July 7, 1987, p. 1-2.

^July 7, 1987, memorandum from Stewart Schiffer, Deputy Assistant Attorney General,
Civil Division, to Richard Willard, Assistant Attorney General, Civil Division titled: “INSLAW."

281 Unfortunately, the cooperation suggested by the District Court never occurred. Almost 1
year after the ruling, the committee was forced to issue a subpoena for the documents on July

Continued

H.R. 102-857 0-92-4

Sadly, such cooperation with this committee never materialized. In
fact, the committee remains embroiled in a conflict with the De-
partment over full access to information. As stated earlier in this
report, in July 1991 a subpoena even had to be issued to compel
the production of key Justice Department documents and files re-
lated to INSLAW. This occurred 2 full years after the initial re-
quest to Attorney General Thornburgh to cooperate with the com-
mittee’s INSLAW investigation. Even today, sensitive documents
are missing and certain files which the Department claims are re-
lated to ongoing criminal investigations and to sensitive law en-
forcement matters are still being denied the committee.

VII. TOP DEPARTMENT OFFICIALS FRUSTRATED
COMMITTEE’S INVESTIGATION

The committee’s investigation often encountered Department
barriers to documents and agency personnel. While the committee
could not prove that the Department deliberately conspired to con-
ceal evidence of criminal wrongdoing, serious questions have been
raised about the possible: obstruction of a congressional investiga-
tion; destruction of Department documents; ana, witness tampering
by Department officials. The following discussion demonstrates the
considerable effort by the Department to delay and deter this com-
mittee from conducting a complete and thorough investigation of
the INSLAW matter. Furthermore, it appears that these are simi-
lar to barriers faced by the Senate Permanent Subcommittee on In-
vestigations when it attempted to conduct its investigation into the
INSLAW allegation. 292

The committee eventually overcame many of the obstacles put in
its path by the Department and established several important
precedents. First, committee investigators were ultimately given
unrestricted access to all contract, personnel and administrative
files of the agency, which consisted, in the INSLAW case, of several
thousand documents. Second, access was given to the sensitive files
of the Office of Professional Responsibility (OPR) which included
not only the reports of that Office but individual interviews and
sworn statements conducted during OPR investigation. Third, for
the first time known to the committee, the FBI agreed to permit
one of its field agents, Special Agent Thomas Gates, to give a
sworn statement to committee investigators and to otherwise co-
operate with the committee. Fourth, the Department agreed to
allow Justice officials and employees to give sworn statements

25, 1991. See section II, entitled “Committee Investigation, Prior Studies, Hearings and Sub-
committee Proceedings.”

202 During April 1988, the Department began to hinder the investigation of the INSLAW mat-
ter by PSI. After failing to convince PSI not to conduct an inquiry, the Department not only
failed to cooperate with PSI, but also raised barriers to restrict subcommittee access to informa-
tion and to influence witnesses not to cooperate with the investigation (p. 46 of PSI rejxjrt). The
Department: (1) demanded that members of its INSLAW litigation team be present during inter-
views with Department personnel and (2) provided only limited information about the scope and
results of its investigations on the conduct of Department personnel.

PSI concluded that the Department’s roadblocks to the subcommittee’s investigation:

“...resulted in substantial delays and Beriously undercut the subcommittee’s ability to inter-
view, in an open, candid, and timely manner, all those Department employees who may have
had knowledge of the INSLAW matter — [I]n requiring departmental attorneys to simulta-
neously represent both the Department and individual Department employees in this investiga-
tion, the Department violated basic principles erf* conflict of interest and the attorney-client rela-
tionship."

without a Department attorney present. Finally, under the force of

by the subcomm 'ttee, the Department provided
more than 400 documents, which it had identified as related to on-
going litigation and other highly sensitive matters and “protected”
attorney-client and attorney tSJTJSdSt

A Department Attempts To Thwart Committee Inquiry

ft.^ e r>i. 0 ™ mittee D S m, vest -igation began with an August 1989 letter
from Chairman Brooks to Attorney General Thornburgh initiating
an investigation into a number of serious allegations regarding the

pNlSw n ^c 0f iH StlC e S ri ( r DOJ I handli "g of a conKr g vdfh

■tvT AW ’ and asked for the Department’s full cooperation
with committee investigators. perauon

Dn^ tt °vi ey General Thornburgh responded on August 21, 1989-

^tigS,T 0 S “L? Ue,t, “ nln6 the n “ d for a in:

nrtilo'r rtb e ^k S t J Can P. ,ed & e this Department’s full co-
operation with the committee in this matter, and I have so

agency employees, with the under-
standing that we will have to make arrangements to pro-
tect any information, documents, or testimony that we
may proffer to the committee from interested vendors and
litigants, including INSLAW. 293 aa

Armed with the Attorney General’s pledge of cooperation the
n ^ V - r t hel ? ss immediately encountered severe resistance
by Justice officials when they were asked to provide access to a«>n
c y , fiI f s ,, and P ersonnel - On September 29, 1989, Department offi-
cials told committee investigators that they would not be given full

wHh ft. mq C I 4 W , ; Ce f to . and individuals afsoctoted

with the INSLAW contract. The Department insisted that commit-

mstead go through the cumbersome and lengthy
process of putting all requests for documents, interviews and other
materials m writing. 294 Initially, even INSLAWs contrnei fiw
which were readily accessible & the General Acco“„t‘ng OffS

I ti nie i t0 committee. The Department also 1“
sisted that a Department attorney be present during any inter-

who had era .P loyees ' During this time even individuals
fiscal d w tb ? Department refused to be interviewed This re-
fusal possibly stems from pressure exerted by the Department
which strongly believed that: “Justice has to Jpeak through one
voice,” regarding the INSLAW matter. 296 mrougn one

tive A P ffltc f fml e i ae J? otiat r s the Department’s Office of Legisla-
tlTrnf f !i 0L ^ mformed committee investigators that some of

£iv^vTc?and f lr I Id atl0n W f° U d be ma t e a ™ lable > but because of
l t ad , e secret concerns the Department wanted the
chairman to put each request in writing. The alternative was for

mar^ ^tommitteaT o^th^Judi^my^Au^uar^l the H ° n °"* b,e »«*•. «*»*

chenr^^^ U, the Honorable Jack Brno*.,

Cole, *DepiTt^Chief of" th^Demirtment’s Si '°" VCT8ati ° n

frons the Honorable Jack 9 - «*>. W*-

the committee to obtain individual releases from as many as 50 in-
dividuals. The committee’s request for access to the Public Integrity
Section files was also denied. OLA also stated that the Office of
Professional Responsibility was concerned with the Privacy Act and
regarded its files “as highly sensitive, potentially hurtful, and is
concerned that the information could be misused.”

As a result of the Department’s position, the chairman stated in
a January 9, 1990, letter to the Attorney General that he could not
devise any better way to preclude an investigative body from ob-
taining objective and candid information, on any matter, than by
intimidating employees who otherwise may cooperate with an in-
vestigation. 96 He added that the presence of a Department attor-
ney would undercut the committee s ability to interview persons in
an open, candid, and timely manner, and he was deeply troubled
by the continued lack of cooperation by Department employees. The
chairman again personally informed the Attorney General of his
concerns about the continued delays and resistance to providing
needed information when they met on January 29, 1990.

The chairman requested immediate, full and unrestricted access
to Department employees and documents. 297 In a February 1990,
response the Department agreed to allow its employees to be inter-
viewed without Department counsel present. However, the Depart-
ment delayed access to numerous files and negotiated for several
months about the confidentiality of a variety of documents re-
quested for the investigation.

The Attorney General and the chairman reached another agree-
ment in April 1990 on access to information. At this time, the De-
partment agreed to provide free and unrestricted access to
INSLAW files and Department employees. At the Department’s fis-
cal year 1991 authorization hearings on May 16, 1990, Attorney
General Thornburgh again indicated that the Department had de-
cided to provide access to the committee for the INSLAW investiga-
tion:

... I have discussed with you and other members of this
and other committees, our willingness to examine on a
case-by-case basis any request that comes from the Con-
gress. . . . But rather than lay down a bunch of reasons why
we can’t release materials I prefer ... to discuss ways and
means in which we can work with you and your staff to
figure out ways that we can produce materials as I tbink
we have accomplished in your request regarding INSLAW
and Project Eagle. 298

The Attorney General’s statement clearly indicated a willingness
to supply the requested materials to the committee as long as some
agreement was reached to protect this material from being improp-
erly released. Unfortunately, the Department’s ability to abide with
its agreement was short lived.

On June 15, 1990, the Department informed committee inves-
tigators that there were 64 boxes of INSLAW litigation files which

296 Letter from the Honorable Jack Brooks to Attorney General Richard Thornburgh, January
9, 1990, pp. 1-2.

207 Ibid., p. 2.

“’’Committee on the Judiciary hearing, Department of Justice Authorisation for Appropria-
tions for Fiscal Year 1991, May 16, 1990, Serial No. 94, p. 48.

they listed on a 422-page index. At this time, Department officials
refused to give committee investigators the index because it in-
cluded “privileged” information that the Department was concerned
would be made available to INSLAW. 299 Finally, on June 28, 1990,
the Department’s Acting Assistant Attorney General for Legislative
Affairs agreed to provide the litigation file indices on the condition
that they not be released to the public by the committee. 300 How-
ever, Department officials refused to identify what documents were
privileged or available. At the same time numerous interviews and
sworn statements were being taken by committee investigators;
however, these interviews were impaired by the lack of documenta-
tion from which to draw investigation-related questions.

By letter dated September 6, 1990, the OLA Deputy Assistant
Attorney General again refused to permit committee staff access to
what he declared were “privileged” work-product and attorney/cli-
ent documents. 301 This judgment originated from Ms. Sandra
Spooner, lead Department counsel on INSLAW’S litigation, who re-
viewed each file and removed those she believed to be “privileged”
attorney/client or work product documents. Committee investiga-
tors finally gained access to the Department’s “INSLAW Files” in
late October 1990. However, soon thereafter the Department in-
creased the number of documents and/or files withheld from an ini-
tial 175 to 190. On November 19, 1990, the Department again in-
creased the number of documents and/or files withheld from the
committee to 193. 302

The chairman protested the additional obstacles raised by the
Department. The Attorney General responded that his pledge of
free and unrestricted access did not include, “privileged” attorney-
client or work product documents. 303 This posture became the
focus of a hearing on December 5, 1990.

The Judiciary Committee’s Subcommittee on Economic and Com-
mercial Law convened on December 5, 1990, to address the Depart-
ment’s refusal to provide access to “privileged” INSLAW docu-
ments. During this hearing Steven R. Ross, General Counsel to the
House Clerk, stated that:

...the Attorney General’s claimed basis for this with-
holding of documents is an attempt to create for himself
and his functionaries within the Department an exemption
from the constitutional principle that all executive officials,
no matter how high or low, exercise their authority pursu-
ant to law and that all such public officials are accountable
to legislative oversight aimed at ferreting out waste, fraud,
and abuse. 304

Mr. Ross added that the Department was attempting to redefine
committee investigations to mean that congressional investigations

200 House Judiciary Committee interview of Sandra Spooner, Department of Justice official,
on June 15, 1990.

300 House Judiciary Committee hearing, December 5, 1990, Serial No. 114, pp. 195-197.

301 Ibid., pp. 203-204.

302 The amount of material included approximately 970 files/documents.

303 Letter from Attorney General Thornburgh to the Honorable Jack Brooks, chairman, Com-
mittee on the Judiciary, September 26, 1990.

304 House Judiciary Committee hearing, December 5, 1990, Serial No. 114, p. 78.

are justifiable only as a means of facilitating the task of passing
legislation. Mr. Ross stated: 305

What that proposed standard would do would be to
eradicate the time-honored role of Congress of providing
oversight, which is a means that has been upheld by the
Supreme Court on a number of occasions, by which the
Congress can assure itself that previously passed laws are
being properly implemented.

After providing several examples of Department attempts to
withhold information by claiming attorney/client privilege, includ-
ing Watergate, Ross concluded by stating: 306

It is thus clear, in light of history of claims by the De-
partment that it may be excused from providing the Con-
gress in general and this committee in particular with doc-
uments that it deems litigation sensitive, that Congress’
broad power of investigation overcomes those litigative
concerns. 307

After the December 1990 hearings, Attorney General Thornburgh
once again agreed to provide the committee full and unrestricted
access to all INSLAW-related documents. 308 Both sides agreed to
a two-step procedure in which documents would be reviewed first
by committee investigators followed by a written request for copies
of a specific item . 30S Access was given for the first time in May
1991, to the files of the Civil Division’s Chief Litigating Attorney,
Ms. Sandra Spooner. These files consisted of documents and infor-
mation which had been consolidated from various quarters of Jus-
tice’s office complex, located at 550 11th Street, N.W., Washington,
DC. During the review of these files, committee investigators were
informed that Ms. Spooner had self-selected and removed approxi-
mately 450 documents on the purported basis of various asserted
privileges,” including “attorney work product” and “attorney cli-
ent” despite the agreement between the Branches and despite the
confidentiality safeguards established to protect just such docu-
ments. She also removed all documents related to communications
between the Department and Congress, as well as those related to
the Department of Transportation Board of Contract Appeals pro-
ceedings. Ms. Spooner also informed the investigators for the first
time that an indeterminate number of documents— and possibly en-
tire file folders — were missing.

300 Ibid.

“ I " th ® case of McCain v. Daugherty, the Supreme Court focused specifically on Congress’
authority to study charges of misfeasance and nonfeasance in the Department of Justice. The
court noted with approval the subject to be investigated by the congressional committee was the
administration of the Department, whether its functions were being properly discharged or
r negated or misdirected. In its decision, the Supreme Court sustained the contempt arrest
ol the Attorney Generals brother for withholding information from Congress, since Congress
would be materially aided bv the information which the investigation was calculated to elicit.”
thus the Supreme Court itself has declared null any attempt at pretensions that oversight could
be barred regarding 'whether the Attorney General and his assistant were performing or ne-
g’^ing their duties in respect of the institution and prosection of proceedings/

7 Committee on the Judiciary hearing, op cit., p. 81.

308 Letter from Attorney General Richard Thornburgh to the Honorable Jack Brooks chair-
man. dated April 23, 1991.

4 30 , 1 /; tU r r from the Honorable Jack Brooks to Attorney General Richard Thornburgh, dated
April 23, 1991.

On May 29, 1991, committee staff requested that the Department
abide by the Attorney General’s April 23 agreement and provide
copies of all documents contained in the INSLAW index. The De-
partment was also requested to explain why some of Ms. Spooner’s
files could not be found. 310

The Assistant Attorney General for Legislative Affairs wrote on
May 29, 1991, that the Attorney General’s April 23 agreement did
not include documents related to: (1) matters pending before the
District Court, (2) appellate litigation, or (3) matters pending be-
fore the DOTBCA. 317 Consequently, the committee was denied
over 400 documents and files. The Assistant Attorney General
made no mention of the missing files in his letter.

B. Authorization and Oversight Hearings

On July 8, 1991, the committee chairman announced his plans
to hold authorization and oversight hearings on July 11 and 18 to
discuss the Department’s fiscal year 1992 budget request. The
chairman indicated that as part of these hearings, he would be ask-
ing, among other things, Attorney General Thornburgh about his
failure to live up to the several previous commitments he had made
to the committee to provide full and open access to the Depart-
ment’s INSLAW files. Chairman Brooks opened the July 11, 1991,
hearing by noting that oversight of executive branch policy and ac-
tivity is at the heart of the congressional mandate as an integral
component of the checks and balances architecture of constitutional
government. He further noted that Department officials had contin-
ued to resist meaningful outside review of their activities by refus-
ing to cooperate with GAO and congressional investigations. Chair-
man Brooks expressed grave concern that the Department seemed
increasingly bent on pursuing controversial theories of executive
privilege and power at the expense of removing government from
the sunshine of public scrutiny and accountability. 312 This tend-
ency appeared to be an increasing problem under the stewardship
of Attorney General Thornburgh and had seriously hindered and
delayed several congressional investigations, including the
INSLAW case. 313

The chairman concluded the hearing by stating that the Judici-
ary Committee must carefully consider the actions needed to be
taken to require production of documents requested from the De-
partment and urged that all committee members attend the July

310 Letter from chief investigator of the House Judiciary Committee to Assistant Attorney
General J. Michael Luttig, dated May 29, 1991.

311 Letter from Assistant Attorney General W. Lee Rawls to the chief investigator of the House
Judiciary Committee, dated May 29, 1991.

312 House Judiciary Committee hearing, July 11, 1991, Serial No. 12, p. 1.

313 During the hearing, the chairman indicated that the Attorney General, who was scheduled
to appear before the subcommittee on July 18, 1991, was asked to be prepared to provide his
reasoning behind the interbranch conflicts over GAO and congressional access to Justice docu-
ments, including those related to INSLAW. Steven Ross testified that the Department’s actions
concerning the release of documents in the INSLAW matter were yet another instance in which
the Department has attempted to thwart a congressional inquiry into possible executive branch
wrongdoing. Mr. Ross noted that "8 months had lapsed since the last hearing on access to
records problems at Justice, and that committee investigators were still being refused access to,
let alone copies of, hundreds of INSLAW related documents.” Mr. Ross also stated that “the
same baseless arguments raised and rejected” at the subcommittee’s December 5, 1990, hearing
held to discuss this issue were again being trotted out by the Department.

18, 1991, hearing, during which Attorney General Thornburgh
would be asked to respond to these issues. 344

On July 18, 1991, the committee reconvened to review the Jus-
tice Department’s fiscal year 1992 authorization request for appro-
priations and to hear the testimony of Attorney General
Thornburgh. Unfortunately, the Attorney General decided at 7 p.m.
the night before to refuse to appear. 315

Committee Chairman Brooks responded to the Attorney Gen-
eral’s unprecedented nonappearance to a duly noticed hearing:

In light of the extreme importance of this proceeding, it
is particularly unfortunate and deeply disturbing that the
Attorney General notified us last night, late last night,
that he would refuse to appear before us this morning. He
refuses to attend for a myriad of reasons — even though his
appearance was duly scheduled for 1 full month. 316

The chairman noted the seriousness of the issues facing the De-
partment and the need to resolve them as quickly as possible. He
was particularly concerned with the Department’s lack of coopera-
tion with the committee on the INSLAW investigation. He con-
cluded by expressing concern over the “great damage” that had
been done to the relationship between trie Judiciary Committee
and the Justice Department stating:

I am shocked and saddened by the appearance of the
empty chair before us and all the other chairs that he
asked to be reserved for his people. The unanswered re-
quest and the delayed response are becoming the symbols
of an increasingly remote and self-centered Justice Depart-
ment that seems bent on expanding the accepted bound-
aries of executive branch power and prerogatives. 317

C. The Department Reports Key Subpoenaed Documents

Missing

On July 25, 1991, the Subcommittee on Economic and Commer-
cial Law issued a subpoena to the Attorney General requiring that
he provide all documents within the scope of the committee inves-
tigation listed in the subpoena. 318 On July 29, the Attorney Gen-
eral provided as many subpoenaed documents as possible, but stat-
ed that some documents were lost — including, but not necessarily
limited to, many documents from Ms. Spooner’s files, such as: 319

A memorandum to Ms. Spooner which allegedly involved a
discussion and chronology of INSLAW’S data rights claim.

314 Ibid., p. 134.

318 Attorney General Thornburgh stated: “I would also like to express my personal apprecia-
tion for the courtesy you have extended to me, Mr. Chairman, throughout my tenure as Attorney
General. It iB my impression that this committee has established a positive working relationship
with both my office and the many components of the Department.” Statement of Attorney Gen-
eral Richard Thornburgh before the House Committee on the Judiciary, regarding Department
of Justice Authorizations for fiscal year 1992, July 18, 1991.

316 House Judiciary Committee hearing, July 18, 1991, Serial No. 12, p. 137.

317 Ibid., pp. 137, 139.

318 The chairman’s July 31, 1991, statement before the House Subcommittee on Economic and
Commercial Law.

319 A total of 64 sensitive Justice documents and 14 files pertaining to INSLAW are still miss-
ing or incomplete.

Ms. Sandra Spooner’s notes to file concerning the transcript
of Peter Videnieks’ PSI deposition.

An August 10, 1989, facsimile with attachment from Ms.
Janis Sposato to Ms. Sandra Spooner concerning a response to
Chairman Brooks.

A May 28, 1989, routing slip from Elizabeth Woodruff to Ms.
Spooner concerning the whistle-blower protection statute.

Ms. Spooner’s notes described as numerous attorney notes.

An August 4, 1988, memorandum from Stuart Schiffer to
John Bolton transmitting a memorandum from Stuart Schiffer
to Thomas Stanton.

A September 21, 1989, memorandum from Roger Tweed to
Ms. Spooner regarding facilities for use by the INSLAW case
auditors.

Patricia Bryan’s notebook of outlines, notes, and documents
prepared by counsel to facilitate compromise discussions.

Also, many documents that were provided were incomplete (i.e.,
missing pages or attachments), or were of such poor quality that
they could not be read. Because Ms. Spooner’s files lacked an
index, it was also impossible to ascertain whether other documents
or files were missing as well. Based on the numbering system used
by the Department, however, it appears numerous additional docu-
ments are missing.

On July 30, 1991, Mr. W. Lee Rawls, Assistant Attorney General,
stated that Ms. Spooner’s documents not provided to the commit-
tee:

. . . ha[ve] not yet been found and neither Ms. Spooner
nor any other employee who would normally have access
to it knows how it may have been lost Under these cir-

cumstances, the litigation team under Ms. Spooner’s direc-
tion has endeavored to reconstruct the missing volume
from other files containing the same documents. We are
now providing the committee with a reconstructed volume
that contains all but eight of the fifty-one documents that
were contained in the original file. 320

It is unclear whether the Department formally investigated why
these documents disappeared, as the committee requested in June
1991.

During a July 31, 1991, subcommittee meeting convened to dis-
cuss the Attorney General’s noncompliance with the subpoena,
Chairman Brooks concluded:

My concern with the missing documents flows from the
fact that our investigation is looking into allegations by
those who claim that high level Department officials crimi-
nally conspired to force INSLAW into bankruptcy and
steal its software. It is alleged this was done to benefit
friends of then Attorney General Edwin Meese. Under
these circumstances, I fully expected that the department
would take great care in protecting all these documents.
Unfortunately, the fact of missing documents will now

330 Letter from Assistant Attorney General W. Lee Bawls to the chairman, dated July 30,
1991.

100

leave lingering questions in the minds of some who have
closely followed the investigation about whether docu-
ments may have been destroyed. 321

The question of unauthorized destruction of Government docu-
ments again came up recently when the committee received infor-
mation from Ms. Lois Battistoni, a former Justice Department em-
ployee, that Department employees were involved in the illegal de-
struction (shredding) of documents related to the INSLAW case.
This matter has not been investigated by the committee. 322

D. Department Interferes With Michael Riconosciuto’s

Sworn Statement to the Committee— Refuses Request To

Interview DEA Agents

On March 29, 1991, Mr. Riconosciuto was arrested by DEA spe-
cial agents for possession and distribution of a controlled sub-
stance. It is important to stress that Riconosciuto began cooperat-
ing with the Hamiltons and provided the committee with informa-
tion about the alleged conspiracy by the Justice Department to
steal INSLAWs PROMIS software well before the time of his ar-
rest.

The Department interfered with committee attempts to obtain in-
formation from Mr. Riconosciuto. Following Mr. Riconosciuto’s ar-
rest, the committee contacted his attorney, John Rosellini, to re-
quest that the committee be given permission to interview his cli-
ent. On April 1, 1991, arrangements were made to conduct the
interview with Mr. Riconosciuto. Facilities for a private interview
were made available by the Kitsap County chief jailer, Larrv
Bertholf, for the committee interview of Mr. Riconosciuto, which
was to be conducted on April 4, 1991.

During the negotiations with Mr. Riconosciuto’s attorney, the De-
partment called the committee and advised that, if the interview
was to be conducted at all, it would be held at the U.S. Court
House in Seattle, WA. Prior to commencing the interview of Mr.
Riconosciuto, the Department attorney handling Mr. Riconosciuto’s
prosecution was asked by committee investigators to provide a
sworn statement that the committee’s interview of Riconosciuto
would not be monitored or recorded by the Department. The De-
partment attorney refused to provide the statement, advising that
he would not under any circumstances agree to such a request. He
stated that it was not Department policy to record private con-
versations held between clients and their attorney, and he consid-
ered the committee as being in the same category.

Following Mr. Riconosciuto’s sworn statement, the committee
asked for permission from the Department to interview the DEA
arresting agents. This request was critical because Mr.
Riconosciuto nad alleged that a tape recording of a conservation be-
tween him and a Justice Official (Mr. Peter Videnieks) was con-
fiscated by DEA agents at the time of his arrest. This tape alleg-
edly shows that Mr. Videnieks threatened Mr. Riconosciuto with

321 The chairman’s July 31, 1991, statement before the House Subcommittee on Economic and
Commercial Law.

322 As mentioned before, Lois Battistoni is a former Department of Justice Criminal Division
employee.

101

retribution if he talked to the Judiciary Committee investigators.
As has been the practice throughout this investigation the Depart-
ment refused to cooperate with the committee’s request, using the
justification that Mr. Riconosciuto’s prosecution was an ongoing in-
vestigation. The Department has also refused to allow the commit-
tee access to its investigative files on Mr. Riconosciuto.

Since his arrest, Mr. Riconosciuto has been convicted of the drug
related charges, and he is currently imprisoned. Although this inci-
dent diminishes his credibility as a witness, the timing of the ar-
rest, coupled with Mr. Riconosciuto’s allegations that tapes of a
telephone conversation he had with Mr. Videnieks were confiscated
by DEA agents, raises serious questions concerning whether the
Department’s prosecution of Mr. Riconosciuto was related to his co-
operation with the committee. As described in other sections of this
report, the committee received sworn testimony and recovered doc-
uments which support aspects of Mr. Riconosciuto’s story, and ties
Mr. Riconosciuto, Dr. Brian, and an individual named Robert Booth
Nichols to U.S. intelligence agencies and in the case of Mr. Nichols,
possibly, organized crime.

E. Department Official May Have Attempted To Influence a

Key Witness

During the sworn statement of FBI Special Agent Thomas Gates
on March 25, 1992, he and his attorney, Richard Bauer, stated that
Ms. Faith Burton from the Department’s Office of Congressional
Affairs had told them that the committee, as a matter of policy,
provided the Department with copies of all depositions taken in the
INSLAW investigation. The clear implication was that the Depart-
ment would know everything that had been said by Special Agent
Gates in his sworn testimony. It was apparent that this lack of con-
fidentiality concerned Special Agent Gates’ attorney and this may
have had a chilling effect on Special Agent Gate’s testimony to the
committee. Special Agent Gates and nis attorney were informed
that the committee policy in fact prohibited giving copies of the
confidential sworn statements to anyone but the person who gave
the statement or to that person’s attorney. 323

On March 26, 1992, committee investigators met with Ms. Bur-
ton to discuss this issue. Ms. Burton stated that the allegations
made by Special Agent Gates and his attorney were “totally false,”
and that it didn’t make any sense because she “knew the policy
that the Department didn’t get the transcripts.” Ms. Burton stated
Special Agent Gates and his attorney must have misunderstood her
and attributed the misunderstanding to their long flight. Commit-
tee investigators asked Ms. Burton if she said anything to imply
directly or indirectly that the Department received or reviewed cop-
ies of the committee’s sworn statements, she responded “absolutely
not.”

On March 26, 1992, Special Agent Gates and his attorney were
informed of Ms. Burton’s response and Special Agent Gates was

323 Confidential statements such as Special Agent Gates’ are not made available or released
in any manner. However, other types of sworn statements may be included in the printed
record.

102

K q wa . s possible i that he misunderstood what Ms. Burton
had said. Special Agent Gates responded: burton

she sakT ayS P ° ssible ’ but {t was fairI y clear to me, what

Mr. Bauer further stated that there was:

...a clear indication that there was a receipt of tran-
scripts and a review of transcripts.

hfld a tild M rt;J BaU K r r and ^ P?cial A ^ ent Gates stated that Ms - Burton
that wi/ ,^ ef n e heir me f tin e with committee investigators

wronJfniil i’ h Z De V art ™,y J 1 ™ reviewed all transcripts and no
wrongdoing ruts been found. [Emphasis added.]

JUDGE BASON’S ALLEGATIONS OF JUSTICE DEPART
SELECTIOI^PROCESS INFLUENCE 0N THE JUDICIAL

unilpf^S fen who vES, “

* he judge for the District of Columbia. Judge^Bason

was the sole bankruptcy judge for the District of Columbia from
February 1984 through February 1988. As a result, he personally

INSLAW 6 lfri^tion^*^ 111611 ^ 8 *** ohserved the witnesses during the

toili 9 ? 7. Judge Bason sought reappointment pursuant to the
amendments and Federal Judgeship Act of 1984 Judge

Martin Ta^fT’ lost n hls ^appointment bid and was replaced by I.
Martin Teel, Jr., a Department attorney who had represented the

INS?Tw e h nt £ nd i Wh ° had appeared before JudgeTason fn the
INSLAW bankruptcy case. According to Judge Bason Martin Teel
was appointed to the judgeship through his primary’ expertise fo-

riencl 0 " 2 ^ aW Wlth extremely ,imited bankruptcy ^itigarion expe-

Wald.^Ohfe^.Judfrt^ LCS 0 of ApmjalfT V"* **.

a ^.^eTeel] has had

tice Department's Tax Division and rerSinwf^rh started as a tnal attorney in the Jus-

a reviewer for another period of years For the or approximately 10 years. He then became
section chief. As a rertewS- and ItTn airsLmtT,.!. f T. beer ! a re E onaI asfii8t *nt

Wald, Chief Judge, U.S. Court of Ap^aispii ^ ^ Ju< *® e ' the Hon «™ble Patricia M.

In a second interview conducted on March 27 1992 twi «« bankruptcy law.

Judge Teel stated that he was ^ h “ W*®"*-

sive bankruptcy experience; he was a legal scholar he had worked on rnlir^H^ exten-

103

that the Department

Judge Bason also stated that in Mav losfi Q

KeV h “ t a,,e ^ had »ss,x,ra/ —

conK ePartment 7^ Uggested t0 him ^at the Department
£!g mn™ CUre rem ° Val fr ° m the bench b y tha fol-

The district judge chairperson of the Merit Selection
Panel [Judge Norma Johnson] could have been arnirnncEert
privately and informally by Qne of ha e va b S7J7 r a u cbad

W SoH her e th fl a t yS r in thC JuStiC ,1 Uepartment. He ?ould
nave told her that I was mentally unbalanced as evi-
denced by my unusually forceful ‘anti-government om'n
ions. Her persuasive powers coupled with the fact that
other members of the Panel or their law firms miehta?

vo e teSrW’’ r 3 a « Htigating att0rneys couId ca ^ a them fo

bKafSS

was necessary and possible to remove from offW tw ^ batevar
job as* bankmptey judge futS Smlfn^in Jh^NSLA^caFa &

sSaSrrfS

selection. The other m of r0,e in the

firmly ran the MSP in MSP sa,d that Judge Johnson

^£1 a,»eAs flf»r“xH th “, t !; ey relied her

accessible to the Department because sh. d hfa JoflnS - 0n 7 as easdy
-^Stuart Schi ff er, P ,he VfciS £3 EX

«STp , « ' " ary C ° mmittee hearing ' December 6 ' 1990 ' S-M No. 114, PP . 53—65
“’ibid.

328 Interview of Jerome Barron, December 4, 1989 (on file with committee)

104

105

move to have Judge Bason removed from the INSLAW case. 329 The
committee has no information that Judge Johnson talked to Mr.
Schiffer about INSLAW, Judge Bason or the bankruptcy judge se-
lection process.

A. Confidential Memorandum

During the committee’s investigation, one of the judges provided
an apparently unofficial document that had been given to several
Appeals Court judges when Judge Bason requested that the deci-
sion of the Circuit Court regarding his nonreappointment be recon-
sidered. The document was a December 8, 1987, “confidential
memorandum” to Judge Johnson. The memorandum was unsigned
(though the judge who provided the document and a member of the
MSP identified the author of the memorandum as another member
of the MSP, that individual denied that he had written the memo-
randum) and was marked at the top “read and destroy.” The
memorandum states that “its purpose is to ‘help’ elucidate in par-
ticular our reasoning in ranking the candidates as we did.” 330

The memorandum describes each of the four final candidates for
the position of bankruptcy judge. What is striking about the memo-
randum is that the description of each candidate except Judge
Bason begins with positive commentary about the individual. The
section describing Judge Bason begins “I could not conclude that
Judge Bason was incompetent.” Other phrases used to describe
Judge Bason include “he is inclined to make mountains out of
molehills,” “Judge Bason seems to have developed a pronounced
and unrelenting reputation for favoring debtors,” and finally,
“Judge Bason evidenced no inclination to come to grips personally
with the management challenge posed by the terrible shortcomings
of the Office of the Clerk of our Bankruptcy Court.” 331

The written report of the MSP, which was very brief (consisting
of less than 2 pages and dated November 24, 1987), did not include
any of the observations included in the confidential memoran-
dum. 332 The Judicial Council met on December 15, 1987. The unof-
ficial confidential memorandum to Judge Johnson was dated on De-
cember 8, 1987. When the committee interviewed several of the
members of the MSP and the Council, they were shown a copy of
the memorandum but did not recognize it. When asked why the
memorandum was not destroyed as it indicated on the top of the
document, the judge who provided the committee with the memo-
randum stated that it was an important document and that it
would be improper to destroy it.

B. Condition of the Clerk’s Office Under Judge Bason

According to Judge Robinson, Judge George Bason inherited a
mess (administratively) in the clerk’s office when he took over for
former Judge Roger Whalen. However, several of the judges inter-

339 In a committee review conducted on July 22, 1992, Judge Bason also pointed out that
Judge Tim Murphy worked with Judge Johnson at the D.C. Superior Court from 1970 to 1980.
Judge Murphy left the bench on April 15, 1985, and worked for Mr. Brewer as his Assistant
Director on the Justice Department’s PROMIS implementation.

330 Confidential memorandum to Judge Johnson, December 8, 1987, p. 1.

331 Ibid., p. 2

332 Report of the Merit Selection Panel, November 24, 1987.

viewed believed Judge Bason was responsible for the deficiencies in
the Bankruptcy Court. 333 Committee interviews with members of
the MSP and several members of the Council echo the sentiments
that Judge Bason’s nonreappointment was heavily influenced by
the poor administration of the clerk’s office. Yet most of the district
and circuit judges interviewed said that they had little or no con-
tact with Judge Bason and were not in a position to have firsthand
knowledge of the condition of his court. Nonjudicial members of the
MSP said that: (1) No statistics were examined to determine the
condition of the court, (2) Judge Bason was not interviewed regard-
ing the condition of the court, and (3) neither the clerk of the Bank-
ruptcy Court, nor any members of Judge Bason’s staff were inter-
viewed regarding the condition of the court. In fact, the determina-
tion that the administrative condition of the court was “poor” was
based solely on the comments of “a couple” of lawyers, one female
member of the clerk’s office and two people who might have been
associated with the Administrative Office of the U.S. Court who ap-
parently were interviewed during the selection process.

Judge Bason stated that the only explanation ever offered him
regarding the reason behind his failed bid for reappointment was
related to inefficiency in the District of Columbia’s Bankruptcy
Clerk’s Office. It has also been reported that Judge Bason inherited
a Bankruptcy Court which was in an administrative shambles. 334
By May 1986, however, Judge Robinson said Judge Bason was get-
ting the system under control, which was reported in the Judicial
Conference report for the D.C. Circuit that year. Judge Robinson
also stated, in defense of Judge Bason, that “very few judges have
any knowledge of how to administer a court” and once the new
clerk was hired there was a vast improvement in the court’s oper-
ation. 335

Committee investigators interviewed Judge Bason, the current
bankruptcy clerk, and the former bankruptcy clerk. None of these
individuals were ever questioned during the 1987 bankruptcy judge
selection process about the administration of the Bankruptcy
Court. Judge Bason stated that there was no mechanism in place
for Circuit or District Court judges to personally evaluate the ad-
ministrative condition of the Bankruptcy Court. 336 According to
Judge Bason, there were no other judges, besides Judge Robinson,
in the D.C. Circuit or District Courts who were in a position to per-
sonally evaluate the operation of his court. 337

Considering that poor administrative controls seemed to be one
of the primary reasons for Judge Bason’s failed attempt at re-
appointment, it is unusual that neither Judge Bason nor the other
individuals most responsible for the administration of the court
were interviewed by the Panel. Judge Robinson made a telling com-
ment to committee investigators when he said it is unfortunate

333 House Judiciary Committee interviews of Judge Johnson, dated November 15, 1989, and
Judges Wald and Mikva, dated October 16, 1989.

334 Memorandum of interview of Judge Aubrey Robinson, March 9, 1992.

333 Ibid.

336 Swom statement of George F. Bason, March 20, 1992, p. 8.

337 Ibid.

106

bankruptcy judges are selected by judges furthest removed from
the Bankruptcy Court. 338

Mr. Martin Bloom, clerk of the Bankruptcy Court, told committee
investigators that “there were difficulties in many areas” when he
began employment with the D.C. Circuit Bankruptcy Court in
1986. He said the “financial books and records did not balance ...”
and “there were some critical areas in management, both in per-
sonnel resources and equipment resources, that were lacking.” Ac-
cording to Mr. Bloom, the relationship between Judge Bason and
the previous clerk had broken down, resulting in a decline in office
procedures. 339

Mr. Bloom added that problems may have existed in the clerk’s
office “because the office was not managed efficiently or effectively”
due to a lack of management capabilities and a lack of staff. When
asked if the Bankruptcy Court judge was responsible for this lack
of management capabilities he responded that “I can only relate to

the responsibilities in the clerk’s office. In no way or in any way
will I look towards the judge,” implying that the office had not been
managed properly by the previous clerk. 340 He added that when he

reported to the court “it seemed that no one . . . had any under-
standing of closing [cases].” 341 Mr. Bloom stated, however, that by
“the latter part of 1987, administratively, I think the court was up
to par.” 342 Mr. Bloom further stated that Judge Bason took an ac-
tive role in providing whatever assistance he could in improving
the administrative condition of the court.

C. Department’s Attempts To Have Bason Removed From
INSLAW Case Fail

Internal Department of Justice documents indicate that Justice
officials were concerned about Judge Bason’s handling of the
INSLAW case very early in the litigation. They believed that the
judge was not sympathetic to the Department’s position and that
he tended to believe INSLAW’S assertions. Those concerns in-
creased throughout the litigation to the point where, by the sum-
mer of 1987, the Department was actively seeking ways to remove
Judge Bason from the case.

Richard Willard, the Assistant Attorney General of the Civil Di-
vision, in a June 1987 letter to Deputy Attorney General Arnold
Burns, wrote that “Judge Bason’s conduct in this case was so ex-
traordinary that it warranted reassignment to another judge.” 343

The Department believed that Judge Bason disregarded the
sworn statements of Department witnesses. The Department also
believed that Judge Bason made lengthy observations regarding

338 Memorandum of interview of Judge Aubrey Robinson, March 9, 1992 (on file with the com*
mittee).

339 Sworn statement of Martin Bloom, March 4, 1992, p. 4.

340 Ibid., p. 11.

341 Ibid., p. 20.

342 Ibid., p. 5.

343 Memorandum from Richard K. Willard, Assistant Attorney General, Civil Division to Ar-
nold I. Bums, Deputy Attorney General, entitled: “Judge Bason’s Adverse Decision in INSLAW
June 19, 1987.

Apparently Department officials attempted to discredit Judge Bason by questioning his judg-
ment and judicial temperament. In his sworn statement to the committee, former Attorney Gen-
eral Edwin Meese said he was told by his staff* that Judge Bason was “off* his rocker.” Sworn
statement of Edwin Meese III, July 12, 1990, p. 46.

107

the credibility of its witnesses and that Judge Bason’s uniformly
negative conclusions were based on inferences not supported by the
record. 344

Mr. Bums asked the Civil Division to “consider initiatives for
achieving a more favorable disposition of this matter.” 346 In re-
sponse to this Stuart Schiffer, the Deputy Assistant Attorney Gen-
eral of the Civil Division, asked Michael Hertz, Director, Commer-
cial Litigation Branch, Civil Division, to investigate the possibility
of having Judge Bason disqualified from the INSLAW case on the
grounds of bias. 346 The Department hoped to challenge the judge’s
findings of fact by claiming them to be unsupported by the evidence
and reflecting a justification to reach a preordained conclusion.
This position was founded primarily on the Department’s observa-
tions that some of Judge Bason’s findings of fact were “rambling
and based on deductions that are both strained and have flimsy
support.” 347

Mr. Hertz informed Mr. Schiffer that the facts simply did not
support a legally sufficient case of bias to disqualify Judge Bason
from the remainder of the INSLAW case. Mr. Hertz also stated
that he was “fairly confident” that any motion to dismiss Judge
Bason would not succeed and the denial of any such motion could
not be successfully challenged on appeal. He cited the following
reasons: (1) The Department had no evidence that what they
viewed as “Judge Bason’s incredible factual conclusions or alleged
bias,” actually stemmed from an extrajudicial source, as the case
law required; (2) the research revealed that adverse factual find-
ings and inferences against the Government are insufficient to sup-
port a claim of bias; and (3) even adverse credibility rulings about
some of the Government’s witnesses in the prior phase of the
INSLAW proceedings were not on their own sufficient to disqualify
Judge Bason from the remainder of the proceedings. 348

Mr. Hertz advised that attempting to demonstrate bias by Judge
Bason could adversely affect any future appeal by the Department
on the Findings of Fact. He also advised Mr. Schiffer that as much
as the Department may disagree with Judge Bason’s findings:

. . . they are not mere conclusory statements. Instead
they reflect a relatively detailed judicial analysis of the
evidence, including reasons for believing certain witnesses
and disbelieving others, as well as consideration of what
inferences might or might not be drawn from the evi-
dence. 349

During August 1987, Assistant Attorney General Willard re-
ported to Mr. Bums that the Department:

344 Ibid.

345 Memorandum from Stuart Schiffer, Deputy Assistant Attorney General, Civil Division to
1987 ard Wil,ard ’ Ass ' 8tant Attorney General, Civil Division, entitled: "INSLAW,” July 7,

343 Memorandum from Michael F. Hertz, Director of the Commercial Litigation Branch, De-
partment of Justice, to Stuart E. Schiffer, Deputy Assistant Attorney General, Civil Division,
Department of Justice, entitled: "Feasibility of Motion to Disqualify the Judge in INSLAW,” July

’ 347 Ibid.

343 Ibid.

348 Ibid.

108

. . . developed a good trial record; however, there is vir-
tually no reason for optimism about the judge’s ruling.
Even though our witnesses performed admirably and we
believe we clearly have the better case, Judge Bason made
it apparent in a number of ways that he is not favorably
disposed to our position. 350

On September 28, 1987, Judge Bason removed any doubt when
ho ruled that the Department violated the automatic stay by using
trickery, fraud and deceit” to steal INSLAWs proprietary com-
puter software.

On October 29, 1987, Mr. Schiffer wrote in a memorandum to the
Chief of the Civil Division that:

Bason has scheduled the next [INSLAW] trial for Feb-
ruary 2 [1988]. Coincidentally, it has been my understand-
ing that February 1 [1988] is the date on which he [Bason]
will either be reappointed or replaced. 361

Judge Bason learned from Chief Judge Patricia Wald, U.S. Court
of Appeals, that he would not be reappointed to the bankruptcy
bench on December 28, 1987. 352

On January 19, 1988, the Department filed a motion that Judge
Bason recuse himself from further participation in the case, citing
that he was biased against the Department. This motion was filed
even though Michael Hertz had previously advised against such a
move. Following a hearing on January 22, 1988, the Bankruptcy
Court denied the Department’s motion. On January 25, 1988, the
Department argued a motion before Chief Judge of the District
Court Aubrey Robinson for a writ of mandamus directing Judge
Bason to recuse himself. Chief Judge Robinson denied the Depart-
ment’s writ ruling:

I can’t see anything in this record that measures up to
the standards that would be applicable to force another
judge to take over this case. There isn’t any doubt in my
mind, for example, that the Declaration filed [by the Jus-
tice Department] in support of the original motion is inad-
equate. 353

The Department again raised the issue of Judge Bason’s recusal in
its appeal to the District Court. District Court Judge William Bry-
ant upheld the two previous court rulings stating:

This court like the courts before it can find no basis in
fact to support a motion for recusal. 354

300 Memorandum from Richard K. Willard, Assistant Attorney General, Civil Division to Ar-
nold I. Bums, Deputy Attorney General, entitled: "INSLAW, Inc. v. Department of Justice un-
dated.

^Memorandum from Stuart Schiller, Deputy Assistant Attorney General, Civil Division to
Richard Willard, Assistant Attorney General, Civil Division, entitled: “INSLAW ” October 29
1987.

303 Memorandum from Stuart Schiffer, Deputy Assistant Attorney General, Civil Division to
Arnold Bums, Deputy Attorney General, entitled: “Recent Developments in INSLAW v. DOJ ”
February 12, 1988,

353 U.S. et a I, V. INSLAW, Inc., Advisory Proceeding 86-0009, opinion of Judge William Bry-
ant. See p. 48a.

364 Ibid., see 49a.

109

IX. CONCLUSION

Based on the committee’s investigation and two separate court
ru ings, it is clear that high level Department of Justice officials
deliberately ignored INSLAW’S proprietary rights in the enhanced
version of PROMIS and misappropriated this software for use at lo-
cations not covered under contract with the company. Justice then
proceeded to challenge INSLAWs claims in court even though it
knew that these claims were valid and that the Department would
most likely lose in court on this issue. After almost 7 years of liti-
gation and $1 million in cost, the Department is still denying its
culpability in this matter. Instead of conducting an investigation
into INSLAW s claims that criminal wrongdoing by high level Gov-
ernment officials had occurred, Attorney Generals Meese and
Thornburgh blocked or restricted congressional inquiries into the
matter, ignored the findings of two courts and refused to ask for
the appointment of an independent counsel. These actions were
taken in the face of a growing body of evidence that serious wrong-
doing had occurred which reached to the highest levels of the De-
partment. The evidence received by the committee during its inves-
tigation clearly raises serious concerns about the possibility that a
high level conspiracy against INSLAW did exist and that great ef-
forts have been expended by the Department to block any outside
investigation into the matter.

Based on the evidence presented in this report, the committee be-
lieves that extraordinary steps are required to resolve the INSLAW
issue. The Attorney General should take immediate steps to remu-
nerate INSLAW for the harm the Department has egregiously
caused the company. The amount determined should include all
reasonable legal expenses and other costs to the Hamiltons not di-
rectly related to the contract but caused by the actions taken by
the Department to harm the company or its employees. To avoid
further retaliation against the company, the Attorney General
should prohibit Department personnel who participated in any way
in the litigation of the INSLAW matter from further involvement
in this case. In the event that the Attorney General does not move
expeditiously to remunerate INSLAW, then Congress should move
ffuftkly under the congressional reference provisions of the Court
of Claims Act to initiate a review of this matter by that court.

Finally, the committee believes that the only way the INSLAW
allegations can be adequately and fully investigated is by the ap-
pointment of an independent counsel. The committee is aware that
on November 13, 1991, newly confirmed Attorney General Barr fi-
nally appointed Nicholas Bua, a retired Federal judge from Chi-
cago, as his special counsel to investigate and advise him on the
INSLAW controversy. However, at that time the Attorney General
had not empowered Judge Bua to subpoena witnesses, convene a
grand jury or compel the Department to produce key documents.

INSLAW officials have voiced concerns that Judge Bua, lacking
independent counsel status, would not be able to entice Depart-
ment employees who were knowledgeable of the INSLAW matter to
come forward and assist Judge Bua in bringing this matter to clo-
sure. Consequently, they are concerned that Judge Bua will not be

110

tive authority which included th^™ ted J f udge , Bua broad investiga-
te convene special grand juries H« Wer ^ subpoena witnesses mid
the Department reSSiJTw^^ ° f the a <*ions by

ys&sgsss^^

ant Attorney General for Administration ° eputy Assist '
Govemment Computer News, Mr. Cooper staid iht™™ the

him to ^dofancP that^ fme° f thtak a ^ or ? ey ? ener al wants

*■£ te SttSSLg &jSSSL ®an- wants

eraHBarr to or t ^m« y Gten-

lem rests with the fact that a7lnnl f th S patter— the prob-

domg by former and current i h T ln J estl gation of wrong-

under the control of the Department therein 6 ? fficial ® remains

mediate and forcefuf steps J br ?? ch must take im-

faith in our system of iustiee Ju- S v? 1 ? tb ? P ubbc confidence and
this painful andSoKate !ffato C l h e aS Sev f re,y eroded^?
sel should be appointed with full aif k Ucb j the inde Pendent coun-
all matters related to the Mlegat Li ?° WerS ta investigate

matter, including Mr CasnlWsT fU wr , ongdoing in the INSLAW
viduals ..sociat/dtih „"Se“d Sr d “* P ° SsibIe link to *"*-

x. FINDINGS

case nufna^me^ System 8 ignored* *aH ^ inl f plement a standardized
INSLAW-that PRCiMIS chnuw ' f a ^ Vlce J from , vendors-including
equipment. As predicted nrnhlem c 0t be adap ted to word processing
word procesoin^piS 0 ^"”* »■«> adapt™ PROMIS tf

lassr A « p 2r«2zstsasssaifes

owner, Mr. William Hamilton INS^Ws at Wlth . [FLAW’S
partment, which started JSi rZ £

111

er° with th^f Ch 1 ? 82, n e generated in large part by Mr Brew-

SSrT Sf -iS«K

-elects? p^a^ssLr 8 ^ 8 about why he was

fairness by key Department officials toward INS! AW mi’ L-i

msSwlT 4 1 Td? ^““ S “»nt™°rt'w“ r 8 s ®S3 r Ei

denieks ever deviated from their plan to harm INSLAW TRo
ft.nk„o k l"d by M 5 ssrs - Bre ^ and' ’vidonidr s™ere d^ 'vrth the
4 Peter Iffde^kTfhT n ' eve ! Departa “ officials.

t.atcslM^S^

sgsiassss

■, 5, Thereafter, the Department ignored INSLAW’S data ritrhtc
SS&SdS ° f itS PR0MI S software and misused itfpros

main whether INSLAWs EnhJSnTOl^^dSffiS Z

inS^XS^S^SST 11 S ° UrCeS ° UtSide thG ° e P artme "£

Rili, Saveral witnesses, including former Attorney General Fllint
Steffis S T r i statements or affida-

"“»■ ™u

nan. According to these witnesses the PROMTQ c n ft
subsequently converted for use byl^mestic ^^^0^11^

112

services. This testimony was provided by individuals who knew
that the Justice Department would be inclined to prosecute them
for perjury if they lied under oath. No such prosecutions have oc-
curred.

8. Justice had made little effort to resolve conflicting and pos-
sibly peijurious sworn statements by key departmental witnesses
about the alleged attempt by high level Department officials to liq-
uidate INSLAW and steal its software. It is very possible that
Judge Blackshear may have perjured himself and even today his
explanations for his recantation of his sworn statement provided to
INSLAW are highly suspicious. The investigation of this matter by
the Departments Office of Professional Responsibility was super-
ficial.

9. The Department’s response to INSLAWs requests for inves-
tigations by an independent counsel and the Public Integrity Sec-
tion was cursory and incomplete.

10. The reviews of the INSLAW matter by Congress were ham-
pered by Department tactics designed to conceal many significant
documents and otherwise interfere with an independent review.
The Department actions appear to have been motivated more by an
intense desire to defend itself from INSLAW’S charges of mis-
conduct rather than investigating possible violations of the law.

11. Justice officials have asserted that, as a result of the recent
ruling by the Appeals Court and the refusal of the Supreme Court
to hear INSLAWs appeal, the Findings and Conclusions of Bank-
ruptcy Judge George Bason and senior Judge William Bryant of
the District Court are no longer relevant. The Appeals Court deci-
sion, in fact, did not dispute the Bankruptcy Court’s ruling that the
Department “stole . . . through trickery, fraud and deceit” INSLAWs
PROMIS software. Its decision was Based primarily on the narrow
question of whether the Bankruptcy Court nad jurisdiction; the Ap-
peals Court ruled that it did not. This decision in no way vindicates
the Department nor should it be used to insulate Justice from the
criticism it deserves over the mishandling of the INSLAW contract.

12. The Justice Department continues to improperly use
INSLAWs proprietary software in blatant disregard of the findings
of two courts and well established property law. This fact coupled
with the general lack of fairness exhibited by Justice officials
throughout this affair is unbefitting of the agency entrusted with
enforcing our Nation’s laws.

13. Further investigation into the circumstances surrounding
Daniel Casolaro’s death is needed.

14. The following criminal statutes may have been violated by
certain high level Justice officials and private individuals:

18 U.S.C. §371 — Conspiracy to commit an offense.

18 U.S.C. §654 — Officer or employee of the United States
converting the property of another.

18 U.S.C. § 1341— Fraud.

18 U.S.C. § 1343— Wire fraud.

18 U.S.C. § 1505 — Obstruction of proceedings before depart-
ments, agencies and committees.

18 U.S.C. § 1512 — Tampering with a witness.

18 U.S.C. § 1513 — Retaliation against a witness.

18 U.S.C. § 1621— Perjury.

113

18 U.S.C. § 1951 — Interference with commerce by threats or
violence (RICO).

18 U.S.C. § 1961 et seq. — Racketeer Influenced and Corrupt
Organizations.

18 U.S.C. §2314 — Transportation of stolen goods, securities,
moneys.

18 U.S.C. §2315 — Receiving stolen goods.

15. Several key documents subpoenaed Dy the committee on July
25, 1991, were reported missing or lost by the Department. While
Justice officials have indicated that this involves only a limited
number of documents, it was impossible to ascertain how many
documents or files were missing because the Department did not
have a complete index of the INSLAW materials. The Department
failed to conduct a formal investigation to determine whether the
subpoenaed documents were stolen or illegally destroyed.

XI. RECOMMENDATIONS

1. The committee recommends that Attorney General Barr imme-
diately settle INSLAWs claims in a fair and equitable manner.

These payments should account for the Department’s continued
unauthorized use of INSLAWs Enhanced PROMIS and other costs
attributed to INSLAWs ongoing attempt to obtain a just settle-
ment for its struggle with the Department, including all reasonable
attorneys fees. If there continue to be efforts to delay a fair and
equitable result, the committee should determine whether legisla-
tion is required to authorize a claim by INSLAW against the Unit-
ed States, pursuant to 28 U.S.C. § 1492.

2. The Attorney General should require that any person in the
Department that participated in any way in the litigation of the
INSLAW matter be excluded from further involvement in this case,
with the exception of supplying information, as needed, to support
future investigations by a independent counsel or litigation, as ap-
propriate.

3. The committee strongly recommends that the Department ap-
point an independent counsel to conduct a full, open investigation
of the INSLAW allegations of a high level conspiracy within the
Department to steal Enhanced PROMIS software to benefit friends
and associates of former Attorney General Meese, including Dr.
Earl Brian, as discussed in this report. Among other matters, the
investigation should also:

Ascertain whether there was a strategy by former Attorneys
General and other Department officials to obstruct this and
other investigations through employee harassment and denial
of access to Department records.

Investigate Mr. Casolaro’s death.

Determine whether current and former Justice Department
officials and others involved in the INSLAW affair resorted to
peijury and obstruction in order to coverup their misdeeds.

Determine whether the documents subpoenaed by the Com-
mittee and reported missing by the Department were stolen or
illegally destroyed.

Determine if private sector individuals participated in (1) the
alleged conspiracy to steal INSLAWs PROMIS software and
distribute it to various locations domestically and overseas,

114

S 8 lSt,t ea " e8ed C0 ' ,erup of this through perjur, and

Vio,atio " s occurred involving:

18 U S P S ^~^T piraCy to commit an offense. g

° f the U " ited Stato

18 U.S.C. § 1341— Fraud.
i a Yi^ 1343 — Wire fraud.

“to do-

18 use I S^n?P- e ? ng with a witness.

18 uia 1 1621=SS' ,0n a6ainst * »*•"“<•

Jr\Y„leu C ce(mC0T I " te,/erenCe "‘ h COm "”>"» * «'»■*■

mpt^LS'nf Se »- Rad “ te »' Ihltcnced and Oor-

to U moneyl 231 ' l_Tra " SPOrtatio ” ° f stol<!n *»»*. «™rt-
18 U.S.C. §2315— Receiving stolen goods.

115

DI c S » G mo^head H hon H ^nry N j l 7 ! vhw JR ’ H0N -

LAMAR S. SMITH HON CR A t COBL E, HON.

BELL, HON. STEVEN SC^? TOM CAMp -

HON. GEORGE ALLEN SCHIFF ’ HON - JIM BAM ST AD, AND

jects the Comm ittee ln^ Ymfirin 1 Ves . tjgatl ve Report because it in-

teiisSST?

dorses findings by a bankruptcy judge inThTlNSr A W 6n_

the benefit of Committee nr s»Kc;™fl?uIl “if 1 . ,jAW cas e without
dispute that is the focus of the liHtrar tee ™ ari n gs on the contract
thus disseminates! charged of wrSoin. S Rep ° rt re P eate - and
tions even though the Committee £if L^iu an ^ am ¥ e ra P ut a-

concluslons ' on^^hethe^TOrious 6 alfeeptf 611 a -l y ca "nof arrive at
bankruptcy judge hndings-actually ofc£red The C^mm ft hey °n d

^^^fility'of* sealing Confess tonsils
private litigan^A^ifgreSona^re^r^ ° n ^ Arable to a

assdtKS-ss

The recitation in an official CommiH-«°j? CUrreat y ,. ln Progress,
of wrongdoing— in the absence nf m, ^ tee document of accusations
tee — is L uffortuna^ Commit-

practice makes it imperSe to loti Sv if ° f the Re P° rt - This
the Report does not reach ronewf^f i in °^ r filssent that

gations The H truth of many alle-

fe arass i

s&st&t Self raa

Department rfffiTta “SS SfS *•

software for U.S. Attorneys’ offices aSe ma nagement

JfflffJG=SLff a“^a?rF :::

pr.tect.cn, and Bankruptcy CSS'cffl KvK?

116

proceeding that the Department of Justice had engaged in im-
proper conduct.

The Report expresses basic agreement with Judge Bason’s view
of the evidence, although Members of the Committee on the Judici-
ary are not in a position to conclude one way or the other whether
Judge Bason s findings — hotly contested by the Department of Jus-
tice — accurately reflect what actually transpired. Members of the
Committee — other than possibly the Chairman— did not participate
in this long investigation conducted by Majority investigative staff
with the substantial assistance of GAO detaiiees. The testimony
the Subcommittee on Economic and Commercial Law received from
a few people involved in INSLAW litigation during a December 5,
1990, hearing on access to certain INSLAW documents is no sub-
stitute for direct familiarity with the voluminous record. We cannot
assess the credibility of the many government witnesses who testi-
fied in the bankruptcy court without the benefit of hearing from
them ourselves.

Although the district court affirmed the bankruptcy court’s order
in most respects, the United States Court of Appeals for the Dis-
trict of Columbia concluded that the bankruptcy court lacked juris-
diction and therefore reversed the district court and directed the
dismissal of INSLAW’S complaint. The United States Court of Ap-
peals for the District of Columbia— after noting that “[t]he bank-
ruptcy and district courts here both concluded that the Department
fraudulently obtained and then converted enhanced PROMIS [soft-
ware! to its own use’” — commented that “[sjuch conduct, if it oc-
curred, is inexcusable.” [Opinion, p. 15.] We find ourselves in the
similar position of criticizing the conduct described by lower courts
if it occurred.”

The Report erroneously claims that DOJ litigated the INSLAW
matter even though it knew in 1986 that it did not have a chance
to win the case on merits” — and observes that “[t]his clearly raises
the specter that the Department actions taken against INSLAW in
this matter represent an abuse of power of shameful proportions.”
The only support for these sweeping statements, however, appears
to be a misconstruction of a 1988 DOJ Office of Professional Re-
sponsibility interview with Deputy Attorney General Arnold Burns.
In that interview, Mr. Bums recounted that “I wanted to know, as
a lawyer, why we didn’t make a claim against INSLAW for the roy-
alties on the theory that we were the proprietary owners” [OPR
Interview, p. 12.]

This context relating to a possible DOJ counterclaim is critical to
understanding Mr. Bums’ comment that DOJ lawyers were “satis-
fied that INSLAW could sustain the claim in court, that we had
waived those rights. . . .” Mr. Bums goes on to point out in the Of-
fice of Professional Responsibility interview that he “had concluded
jn g°od faith . . . that unless there was movement on their
[INSLAW’S] part on that [proprietary rights] issue, not having any-
thing to do with our counterclaim then, just a question of whether
they have the right to collect royalties from us, that this was not
susceptible of settlement and I so advised Mr. Ratiner [INSLAW’S
attorney] on August 28, 1986.” [OPR Interview, p. 13.] Mr. Bums
apparently learned that DOJ had waived its rights to seek royalties
from INSLAW (by way of a counterclaim) for making the PROMIS

117

software available to others but never suggested that INSLAW had
a legitimate claim against the Department or that the Department
had waived its right to oppose such a claim. The August 28 1986
letter Mr Burns refers to states explicitly: “We believe that
Inslaw s claim for license fees is wholly without merit, and that
your client s expectations with respect to compensation in this re-
gard are entirely unjustified and unjustifiable.”

The unidentified correspondence that Mr. Bums refers to as
wminng nghts may be a subject of some discussion in the Report
i e ^ e P or t Points out that INSLAW s attorney, in a May 26
1982, letter to Associate Deputy Attorney General Stanley E. Mor-
ris, provided a detailed description of what the company planned
to do to market the software commercially....” Mr. Morris’ re-
sponse can be viewed as acquiescing to sales by INSLAW to third
parties.

In view of the Report’s heavy reliance on its construction of a
small part of a single interview with the Office of Professional Re-
sponsibility, it seems unusual that the Report cites no effort to
question Mr. Burns in the course of the Committee’s investigation,
this omission appears particularly glaring in view of other evi-
dence contradicting the Report’s perception of how DOJ viewed the
merits of its case. Justice Management Division General Counsel
Jams bposato, for example, “concluded [in 1985] that INSLAW’S
d D m o^° ! ts , P. rl ™ tel y financed enhancements had no merit.” [83
B.R. 89 at 154 (Bkrtcy D. Dist. Col. 1988).] Although the Report
claims that DOJ fought two judgments that it believed were in
error based on technical, legal issues rather than on the merits of
the case, DOJ s appellate brief in the district court contains 65
pages devoted to arguing that various factual findings by Judge
Bason are clearly erroneous. 6

The Report’s repeated references to the Department of Justice’s
violation of the automatic stay are confusing in view of the ruling
on this point by the United States Court of Appeals for the District
of Columbia in the INSLAW litigation. Circuit Judge Williams’
opinion for the Court states:

Inslaw claimed that the Department had violated the stay
provision by continuing, and expanding, its use of the soft-
ware program in its U.S. Attorneys 5 ^ offices. The bank-
ruptcy court found a willful violation . . ., and the district
court affirmed on appeal — Because we find that the auto-
matic stay does not reach the Department’s use of property
m its possession under a claim of right at the time of the
bankruptcy filing, even if that use may ultimately prove to
violate the bankrupt’s rights, we reverse. [Court of Appeals
opinion, p. 3.]

oco he r lo r er courts errone °usly construed Bankruptcy Code Section
362 [automatic stay] — and the Report perpetuates that mis-
construction in spite of the appellate decision.

Judge Bason’s opinion is particularly critical of the PROMIS
Project Manager in the Executive Office of U.S. Attorneys. At an
earlier point in his career, C. Madison Brewer had served as gen-

somebody in the Department of Justice, in a letter or letters, as I say in this back
and forthing [sic], had, in effect, waived those rights." [OPR Interview, p. 12.]

118

eral counsel for INSLAWs predecessor corporation. Although we do
not endorse DOJ s decision over ten years ago to select Mr. Brewer
mnr «nn Ct Manager — in view of his former association with
INSLAW’S predecessor— fairness to DOJ requires noting that the
r i ^ r employment had terminated more than five years before
Mr. Brewer s selection, DOJ did not know at the time of his selec-
tion that he apparently had been encouraged to leave his former
employment, and INSLAW waited until Mr. Brewer expressed
views it regarded as unfavorable before complaining to DOJ about
his service as Project Manager.

The Report is highly critical of DOJ’s response to allegations of
wrongdoing relating to INSLAW. In that connection, the Report
does not give appropriate credit to the Department for promptly
initiating an Office of Professional Responsibility investigation fol-
lowing Bankruptcy Judge Bason’s September 28, 1987, oral ruling
in which he said the Department of Justice took, converted, stole,
Inslaw s enhanced PROMIS by trickery, fraud, and deceit. . . ” [P.
9 of transcript.] Deputy Attorney General Arnold Burns asked OPR
to conduct a complete and thorough investigation into the allega-
tions of bias and misconduct by various Justice Department offi-
cials against Inslaw” in an October 14, 1987, memorandum [quoted
on p. 4 of OPR report]— preceding by over three months the filing

i QQQi™ 3 X 1 " ilrff A°L fact aa dc on .chisions of law (on January 25,
988) m the INSLAW case. OPR, in a detailed 91-page report, ulti-
mately concluded that the allegations relating to a number of indi-
viduals were unsubstantiated.

, February 1988 allegations from INSLAW’S Presi-

dent William Hamilton against high level Department of Justice of-
iji Mg" Integrity Section of the Criminal Division con-
cluded that (t]he facts submitted by Hamilton are not sufficiently
specific to constitute grounds to investigate whether any person
covered by the Independent Counsel statute committed a crime ” A
S pecial Division of the United States Court of Appeals for the Dis-
trict of Columbia recounts in a per curiam opinion:

Upon receiving the INSLAW material ... the Department
of Justice had promptly conducted a thorough review of
the allegations in conformance with the Independent
Counsel Act, determined that they were insufficient to
warrant a P re ‘imin ary investigation under the standards
o Zo U.D.C. 591(a) [footnote omitted], and accordingly
closed the^matter. [In Re: INSLAW, INC. at p. 4 (Septem-

The Report describes at great length a series of allegations of
wrongdoing— going beyond Judge Bason’s findings in the INSLAW
litigation— about which the Report does not reach conclusions. The
propriety of reciting such allegations in a public report— in the ab-
sence of sufficient evidence to reach conclusions — is questionable
the release of such raw data may cause needless injury to reputa-
tions I his modus operandi is antithetical to the criminal process
model in which the government does not disseminate allegations
unless the evidence justifies a criminal prosecution. Some of the al-
legations, in addition, relate to the conduct of foreign govern-
ments and dissemination of such material may have potential im-

119

pacts on our foreign relations. There are major problems also with
the credibility of some of the individuals whose allegations are
aired. One individual making allegations is referred to in the Re-
port itself as “a shady character ... recently convicted on drug
charges.”

The Report erroneously attributes the fact that “the Committee
could not reach any definitive conclusion about INSLAW’S allega-
tions of a high criminal conspiracy” in part to “the lack of coopera-
tion from the Department.” In reality, however, the Department
provided the investigators access to voluminous records and facili-
tated extensive interviews with its employees. The Report itself de-
lineates various “important precedents” that were established in
terms of access — an acknowledgment that clearly contradicts an ar-
gument that DOJ frustrated the investigation.

The Report concludes that “[i]n the event that the Attorney Gen-
eral does not move expeditiously to remunerate INSLAW, then
Congress should move quickly under the congressional reference
provisions of the Court of Claims Act to initiate a review of this
matter by that Court.” INSLAW, however, still has the opportunity
to appear before the Department of Transportation Board of Con-
tract Appeals. No conduct by the government has prevented
INSLAW from litigating this matter in a proper forum within the
period of the statute of limitations. It clearly is not the fault of the
United States that INSLAW and its attorneys decided to initiate a
proceeding in a court that lacked jurisdiction.

Strong policy reasons oppose permitting litigants against the gov-
ernment to avoid the strictures of statutes of limitation. Designed
to bar stale claims, statutes of limitation are predicated both on the
evidentiary problems involved in arriving at the truth many years
after events and on the potential injustice of greatly protracted
legal proceedings. We simply do not have equities justifying ex-
traordinary relief in the INSLAW matter in view of the fact that

sweeping allegations remain unproven by the Report’s own ac-
knowledgment.

The Report recommends the appointment of an Independent
Counsel in spite of the fact that a former federal judge [Nicholas
Bua of Chicago, a President Carter judicial appointee] is actively
investigating INSLAW and is subpoenaing witnesses to testify be-
fore a federal grand jury. There appears to be every indication that
Judge Bua and his staff are operating with complete independence

in the Department of Justice. An appointment pursuant to the
Independent Counsel statute is superfluous at this point however
one views the evidence — and is likely to result in unnecessary
delay, expense, and duplication of effort. Judge Bua’s investigation
must be permitted to go forward and reach a conclusion if we hope
to dispose of lingering allegations as expeditiously as possible. He
has the authority to get to the bottom of this matter — and his ef-
forts must be facilitated rather than circumvented.

All Committee Republicans
Investigative Report.

120

voted against the adoption of the

Hamilton Fish, Jr.

Carlos J. Moorhead.

Henry J. Hyde.

F. James Sensenbrenner, Jr.
Bill McCollum.

George W. Gekas.

Howard Coble.

Lamar S. Smith.

Craig T. James.

Tom Campbell.

Steven Schiff.

Jim Ramstad.

George Allen.

121

SEPARATE DISSENTING VIEWS OF HON. TOM CAMPBELL

I concur in the dissenting views but write separately to add em-
phasis to three points.

First, the Majority Report places a great deal of reliance on the
findings of the Bankruptcy Judge and refers to those findings as
haying been upheld by the Federal District Judge as well. The Ma-
jority Report accepts those findings as fact.

But our committee does not know if they are fact or not. The
Bankruptcy Judge lacked jurisdiction to enter the findings that he
did, as the Majority Report acknowledges. The Majority Report
claims as a result that the factual findings of the Bankruptcy
Judge were not cast in any doubt, since the reversal of his judg-
ment was on jurisdictional grounds — what the Majority Report
terms a legal technicality.

Legal technicalities are what you call holdings of law that dev-
astate your case. You call them unassailably learned conclusions of
law if they support your case.

The reason the U.S. Court of Appeals’ finding of no jurisdiction
devastates the Majority’s case is that this decision renders the
Bankruptcy Judge’s findings of no effect. The key point is this: if
the Bankruptcy Judge had jurisdiction, then the three judges of the
U.S. Court of Appeals on review would have had to consider wheth-
er to uphold those findings or not. But we’ll never know what they
would have done with those findings.

The Department of Justice makes a strong case the findings were
not substantiated by the evidence. It is wrong to say that the find-
ings were left untouched on appeal — the U.S. Court of Appeals sim-
ply never got to them because they didn’t have to. To hold that
they retain any significance at all would require reviewing courts,
having already found a lower court’s decision to be without jurisdic-
tion, to proceed nonetheless to review each and every finding bv
that court, lest someone subsequently says those findings were “left
untouched” on appeal. It is axiomatic in our legal system that
when a court is found to lack jurisdiction on appeal, all of its find-
ings of fact and conclusions of law are from that moment without
the slightest weight.

The Federal District Judge did uphold the findings of the Bank-
ruptcy Judge, prior to the Court of Appeals holding they both
lacked jurisdiction. The Majority Report tries to make this sound
as though two completely separate decisionmakers passed on the
facts and law presented. In reality, however, a federal district
judge will affirm the findings of a bankruptcy judge unless they are
clearly erroneous. So all that can be concluded is that one bank-
ruptcy judge found as the Majority Report states, and one federal
district judge could not call those findings clearly erroneous.

Hence, the tendency of the Majority should be resisted to inti-
mate that the “score” is somehow 2 to 0. If anything, it might be
1+ to 0, since the Federal District Judge’s finding of no clear error
does not constitute a separate analysis of the facts except on the
most generous of review standards.

But, once again, we have no idea how the three federal appeals
court judges would have ruled. They may well have found the
Bankruptcy Judge’s conclusions to be clearly erroneous. If they did,

122

the “score” would have been 1+ to 3, even adopting the somewhat
bizarre assumption that one federal judge’s opinion is entitled to
the same weight as any other’s, though some sit on a higher court.

But we don’t know, because the U.S. Court of Appeals judges
found the conclusions to have been without jurisdiction. In reality,
therefore, the only meaningful score is 0 to 3; since the unanimous
opinion of the three reviewing judges was that the findings of fact
below should have no legal effect.

Secondly, the Majority Report, and some Majority Members at
the Committee Markup, suggested that the involvement of Judge
Nicholas Bua made the case for an Independent Counsel stronger.
It is argued that the Attorney General has, by appointing Judge
Bua to conduct an outside investigation, admitted that the Depart-
ment of Justice is incapable of proceeding in this matter in a fair
way.

This is a dangerously erroneous position to maintain. Its logical
conclusion is that the Attorney General never appoint an outsider
to assist him, except through the mechanisms of the Independent
Counsel statute. This would be regrettable. The Attorney General
should remain free in those cases where an Independent Counsel
is not appropriate nevertheless to seek a report from an outside
source. To hold otherwise will discourage future Attorneys General
from seeking the judgment of outsiders. There is no knife-edge be-
tween Justice Department proceeding entirely internally and the
appointing of an Independent Counsel — middle courses are still
available, and in this case, may well be useful.

Third, and last, much was made at the Committee Markup of
statements made under oath by the Honorable Elliot Richardson,
who is counsel for one of the parties in this matter.

I cannot name a public figure for whom I have higher regard
than Mr. Richardson.

However, it remains that his views are not evidence. He was not
a party to any of the contract negotiations at issue in this case. His
conclusions are entitled only to the weight they deserve as argu-
ments offered by counsel for a very interested party.

Cogent argument by a very respected attorney representing one
side in a lawsuit is valuable to a court; it is not dispositive. That
we accord it more weight than that shows how different we are, in
fact, from a court.

The Inslaw matter is proceeding properly through the route of
administrative remedy, with subsequent judicial review awaiting.
This Committee errs in deciding factual matters in dispute on be-
half of one side, errs in effectively awarding that side damages, and
errs most fundamentally in taking a judicial and administrative
matter into the legislative branch.

Tom Campbell.

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