textfiles/law/summary.txt

                     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  enforcement  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      INSLAW1
  of  a  computer  software system called  the  Prosecutor's
Management  Information System or PROMIS.  This  system  was
designed to meet the criminal prosecutor workloads of  large
urban  jurisdictions;  and  by  1980,  several  large   U.S.
attorneys  offices were using the PROMIS software.  At  this
time,                    INSLAW                    (formerly
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 commercially  market  PROMIS.
The new corporation made several significant improvements to
the  original PROMIS software and the resulting product came
to  be  known  as INSLAW's proprietary Enhanced 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  version  of  PROMIS at 94  U.S.  attorneys'  offices
across  the  country and U.S. Territories. While the  PROMIS
software  could  have gone a long way toward correcting  the
Department's  longstanding  need  for  a  standardized  case
management  system, the contract between INSLAW and  Justice
quickly became embroiled in bitterness and controversy which
has  lasted for almost a decade. The conflict centers on the
question  of  whether INSLAW has ownership of its  privately
funded   "Enhanced  PROMIS." This  software  was  eventually
installed at numerous U.S. attorneys' offices after  a  1983
modification to the contract. While Justice officials at the
time recognized INSLAW's proprietary rights to any privately
funded enhancements to the original public domain version of
PROMIS,  the Department 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
Department'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 Edwin  Meese  and  Deputy
Attorney   General   Lowell  Jensen,  forced   INSLAW   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
bankruptcy,  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 bankruptcy status would have resulted  in
the  forced  sale  of  INSLAW'S 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 INSLAW's  bankruptcy  was
unsuccessful,  the  Enhanced  PROMIS  software  system   was
eventually  provided  to Dr. Brian by individuals  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 advantage of the nearly  3  billion
dollars,   worth   of  automated  data  processing   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 element  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
intelligence   operations.   The   Hamiltons    claim    the
modification of Enhanced PROMIS was an essential element  of
the   enterprise,  because  the  software  was  subsequently
distributed   by   Dr.   Brian  to   intelligence   agencies
internationally with a "back door" software routine, so that
U.S.  intelligence agencies could covertly  break  into  the
system when needed. The Hamiltons also presented information
indicating  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   focused   on   two   principal
questions: (1) Did high level Department officials  convert,
steal  or  otherwise misappropriate INSLAW's PROMIS software
and attempt to put the company out of business; and, (2) did
high   level  Department  of  Justice  officials,  including
Attorney  General  Edwin  Meese  and  then  Deputy  Attorney
General   Lowell  Jensen,  and  others  conspire  to   sell,
transfer, or in any way distribute INSLAW's Enhanced  PROMIS
to other Federal agencies and foreign governments?
  
 1. DID THE DEPARTMENT CONVERT, STEAL OR MISAPPROPRIATE THE
                      PROMIS SOFTWARE?
  
With  regard  to  the first question, there  appears  to  be
strong evidence, as indicated by the findings in two Federal
court proceedings as well as by the committee investigation,
that   the  Department  of  Justice  "acted  willfully   and
fraudulently"2           and           "took,           con-
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 Department officials.
  Just  1  month  after  the contract  was  signed,  Mr.  C.
Madison  "Brick" Brewer, the PROMIS project manager,  raised
the possibility of canceling the INSLAW contract. During  an
April  14,  1982,  meeting of the PROMIS Project  Team,  Mr.
Brewer,  and others discussed terminating the contract  with
INSLAW for convenience of the Government. Mr. Brewer did not
recall  the  details of the meeting but said  that  if  this
recommendation  was made, it was made "in jest."5  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,
"<22>constituted a smoking gun that clearly evidences  Brewer's
intense  bias  against INSLAW, his single-minded  intent  to
drive  INSLAW out of business<73>."6 By his own admission,  Mr.
Brewer  became upset when INSLAW claimed that  it  had  made
enhancements  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),  supported  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  payments
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,  however,  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  because  the  Department
withheld at least $1.6 million in critical contract 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 offices.
  While  refusing to engage in good faith negotiations  with
INSLAW,  Mr. Brewer and Mr. Videnieks, with the approval  of
high  level Justice Department officials, proceeded to  take
actions  to  misappropriate  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-
ment  of  Justice illegally copied INSLAW's Enhanced  PROMIS
software  and installed it eventually at 25 additional  U.S.
attorneys'  offices. The Department reportedly also  brought
another  31  U.S. attorneys, offices "on-line"  to  Enhanced
PROMIS  systems via telecommunications. INSLAW first learned
of   these  unauthorized  actions  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  filed  a   claim
against  Justice  in  the  Federal  Bankruptcy  Court  which
eventually led to the Bankruptcy's Court's finding that  the
Department's  actions "<22>were done in bad faith, vexatiously,
in  wanton  disregard  of the law and  the  facts,  and  for
oppressive reasons <20> to drive INSLAW out of business and  to
convert,  by  trickery,  fraud and deceit,  INSLAW's  PROMIS
software.  When  the  case was appealed by  the  Department,
Senior  District Court Judge William Bryant  concurred  with
the   Bankruptcy  Court  and  was  very  critical   of   the
Department's  handling of the case. In his ruling,  at  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 testimony and depositions of key
     witnesses  and  many  documents  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. [Emphasis added.]
  
  Recently,  the  posture of some Department  officials  has
been  to  attempt to exonerate the Department's handling  of
the  INSLAW  matter  by citing the fact that  the  Court  of
Appeals  has  vacated  the Bankruptcy and  District  Courts'
judgment  involving  illegal misconduct  of  the  Department
including violations of the automatic stay provisions of the
Bankruptcy  Code.  However, the D.C. Circuit's  opinion  was
grounded primarily on jurisdictional questions and  did  not
address  the substantive merits of the findings of fact  and
conclusions  of law of either the Bankruptcy  Court  or  the
ruling of the U.S. District Court.
  Based  on the facts presented in court and the committee's
review  of  Department records, it does indeed  appear  that
Justice  officials, including Mr. Brewer and Mr.  Videnieks,
never  intended  to  fully honor the proprietary  rights  of
INSLAW  or  bargain  in  good faith with  the  company.  The
Bankruptcy Court found that:
  
      <20>  [The  Department] engaged  in  an  outrageous,
     deceitful,  fraudulent  game  of  cat  and  mouse,
     demonstrating contempt for both the  law  and  any
     principle  of fair dealing. [Finding  No.  266  at
     138.]
  
  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 proprietary rights  of
INSLAW  in  this matter. In explaining his own actions,  Mr.
Brewer,  the project manager, has repeatedly stated that  he
was  not acting out any personal vendetta against INSLAW and
that high level Department officials including Lowell Jensen
were  aware  of  every decision he made with regard  to  the
contract.  Mr.  Brewer stated, under oath that  "<22>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<EFBFBD>.''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. Jensen, who worked with former Attorney
General   Edwin   Meese  in  the  Alameda  County   district
attorneys'  offices,  stated under oath  that  he  kept  the
Attorney  General regularly informed of all aspects  of  the
INSLAW  contract.  The  PROMIS Oversight  Committee  readily
agreed  with Mr. Brewer's recommendation to cancel  part  of
INSLAW'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 ultimately rejected  only  because  a
Justice  contracts attorney advised the oversight  committee
that  the Department did not have the legal authority to  do
so.  Curiously, the recommendation to find INSLAW in default
occurred  shortly after INSLAW and the Department  signed  a
modification  to the contract (Mod. 12), which was  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,  Associate Attorney General  and  Deputy
Attorney General between 1981 and 1986. The Bankruptcy court
found  that he "had a previously developed negative attitude
about  PROMIS  and INSLAW" from the beginning (Findings  No.
307-309) because he had been associated with the development
of  a  rival case management system while he was a  district
attorney  in  California, and that this experience,  at  the
very  least, affected his judgment throughout his  oversight
of  the  contract.  During a sworn statement,  Judge  Jensen
denied being biased against INSLAW, but averred that he  did
not have complete recollection of the events surrounding his
involvement   in  the  contract.  However,  based   on   the
committee's own investigation it is clear that Judge  Jensen
was  not  particularly  interested  or  active  in  pursuing
INSLAW's  claims  that  Department  officials  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
handling of the INSLAW contract.
  This  assertion, however, contradicted Mr.  Stephens,  who
testified  during a sworn statement that he was never  asked
by  Judge  Jensen 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 Jensen's. As  a  result,  many
questions     remain     about     the     accuracy      and
completeness of Judge Jensen's recollections and statements.
As   for   the   PROMIS   Oversight   Committee,   committee
investigators were told that detailed minutes were not  kept
at any of the meetings, nor was there any record of specific
discussions  by  its members affecting the INSLAW  contract.
The records that were available were inordinately sparse and
often  did  not  include  any  background  of  how  and  why
decisions were made.
  To  date,  former  Attorney General  Meese  denies  having
knowledge  of  any bias against INSLAW by the Department  or
any  of  its officials. He stated, under oath, that  he  had
little, if any, involvement with the INSLAW controversy  and
that   he   recalls  no  specific  discussion  with  anyone,
including Department officials about INSLAW's contract  with
Justice  regarding the use or misuse of the PROMIS software.
This  statement  is in direct conflict with  Judge  Jensen's
testimony, that he briefed Mr. Meese regularly on this issue
and that Mr. Meese was very interested in the details of the
contract and negotiations.
  One  of  the  most  damaging statements  received  by  the
committee  is  a  sworn statement made  by  Deputy  Attorney
General    Arnold   Burns   to   Office   of    Professional
Responsibility  (OPR)  investigators  in   1988.   In   this
statement,  Mr. Burns stated that Department  attorneys  had
already  advised him (sometime in 1986) that INSLAW's  claim
of  proprietary rights in the Enhanced PROMIS  software  was
legitimate and that the Department had waived any rights  in
these  enhancements.  Mr. Burns 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   the   Department,   having   made   this
determination,  would continue to pursue its  litigation  of
these  matters.  More  than $1 million  has  been  spent  in
litigation  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
Department  actions  taken against  INSLAW  in  this  matter
represent an abuse of power of shameful proportions.
                              
            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 Justice conspired to drive  INSLAW  into
insolvency and steal the PROMIS software so it could be used
by  Dr.  Earl Brian, a former associate and friend  of  then
Attorney General Edwin Meese. Dr. Brian is a businessman and
entrepreneur  who  owns  or  controls  several]   businesses
including Hadron, Inc., which has contracts with the Justice
Department,  CIA,  and  other agencies.  The  Hamiltons  and
others  have  asserted that Dr. Brian  conspired  with  high
level  Justice  officials to sell PROMIS to law  enforcement
and intelligence agencies worldwide.
  Former  Attorney  General Elliot  Richardson,  counsel  to
INSLAW,  has  alleged that the circumstances  involving  the
theft  of  the PROMIS software system constitute a  possible
criminal conspiracy involving Mr. Meese, Judge Jensen,   Dr.
Brian,  and  several  current and former  officials  at  the
Department  of  Justice. Mr. Richardson maintains  that  the
individuals  involved in the theft of  the  Enhanced  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 another); (2) 18 U.S.C 1001 (false statements);
(3)18  U.S.C  1621 (perjury); (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
subsequent  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) statute).
  As   discussed   earlier,  the  committee's  investigation
largely supports 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
conclusions,  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 documents 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 objectives 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, corroborating evidence  for  a  number  of
their  claims made under oath has been found. It  should  be
observed that these individuals provided testimony with  the
full  knowledge that the Justice Department 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
testimony  offered by witnesses who have led  less  than  an
exemplary   life   in  their  choice  of  associations   and
activities. As indicated by the recent 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.  Although 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 surfaced throughout the INSLAW
case raises the need for further investigation.
  One  area  which  requires further  investigation  is  the
allegations   made   by   Mr.  Michael   Riconosciuto.   Mr.
Riconosciuto,  a  shady  character allegedly  tied  to  U.S.
intelligence  agencies  and  recently  convicted   on   drug
charges,  alleges  that Dr. Brian and  Mr.  Peter  Videnieks
secretly delivered INSLAW's Enhanced PROMIS software to  the
Cabazon  Indian  Reservation,  located  in  California,  for
"refitting" for use by intelligence agencies in  the  United
States                                                   and
abroad.9  When  Dr. Brian was questioned about  his  alleged
involvement in the INSLAW 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
  
  Suspicions of a Department of Justice conspiracy to  steal
INSLAW's   PROMIS   were  fueled  when   Danny   Casolaro-an
investigative  writer inquiring into those issues-was  found
dead  in  a hotel room in 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 numerous times. Following  a
brief  preliminary investigation by local  authorities,  Mr.
Casolaro's death was ruled a suicide. The investigation  was
reopened  later as a result of numerous inquiries  from  Mr.
Casolaro's  brother  and  others  regarding  the  suspicious
circumstances surrounding his death.
  The    Martinsburg   Police   investigation   subsequently
concluded in January 1992, that Mr. Casolaro's death  was  a
suicide.  Subsequently, Chairman Brooks  directed  committee
investigators to obtain sworn statements from the FBI  agent
and   two  former  Federal  Organized  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 Rudnick
on  March 13 and 14, 1992. After initial resistance from 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 investigation in which Special Agent Gates had  been
involved   regarding  organized  crime  influence   in   the
entertainment industry.
  Special  Agent Gates stated that Mr. Casolaro had  several
conversations  with Mr. Robert Booth Nichols  in  the  weeks
preceding  his  death. Mr. Nichols, according  to  documents
submitted  to  a  Federal 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.
  Based  on  the  evidence collected by  the  committee,  it
appears that the path followed by 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 circumstances  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
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 INSLAW's allegations
of  a  high criminal conspiracy at Justice was the  lack  of
cooperation from the Department. 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   Senate
Permanent Subcommittee on Investigations from conducting  an
investigation of the INSLAW affair. During this  committee's
investigation,   Attorney  General   Thornburgh   repeatedly
reneged  on  agreements made with this committee to  provide
full  and open access to information and witnesses. Although
the  day before a planned 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  investigation.  Even  then,   the
Department  failed to provide all the documents  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  employees  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
INSLAW  filed for chapter 11 bankruptcy in 1985, the Justice
Department had planned to petition the court to force INSLAW
into chapter 7 bankruptcy and liquidate its assets including
the  PROMIS  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 INSLAW's attorneys  with  a
sworn  statement confirming what Mr. Pasciuto had  told  the
Hamiltons. However, following a conversation with a  Justice
Department  attorney who was representing 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
his  earlier statements to INSLAW, Mr. Pasciuto  and  others
regarding  the Justice Department's efforts to force  INSLAW
out  of  business.  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 statement.
  Similarly,  Mr.  Pasciuto,  under  strong  pressure   from
senior Department 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. Trustees because he  had  provided
information  to  the  Hamiltons and  their  attorneys  which
undercut  the  Department's litigating position  before  the
Bankruptcy Court.11 This action was based on a recommendation
made by the Office of Professional Responsibility (OPR).  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 litigation 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 statements 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  defending
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 matter. 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 sworn statements of its witnesses, including Judge
Blackshear, have somehow been reconciled on key issues  such
that  no  false statements have been made by  any  of  these
individuals.  This position is flatly in opposition  to  the
Bankruptcy Court's finding that several Department officials
may  have  perjured  themselves which  was  never  seriously
investigated  by  the  Department. In  addition,  there  are
serious  conflicts and inconsistencies in  sworn  statements
provided  to  the  committee that have  not  been  resolved.
Equally important, 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's
carrying  out  such  an inquiry is high,  if  not  prudently
manifest, and independent scrutiny is required.
  
     E. JUDGE BASON'S ALLEGATIONS AGAINST THE DEPARTMENT
  
  Judge  Bason  testified, under oath, before  the  Economic
and   Commercial  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. Judge Bason was  replaced  by
Martin  Teel,  Jr.,  who, prior to his  appointment,  was  a
Justice   Department  attorney  heavily  involved   in   the
Department's litigation of the INSLAW case.12 The  committee
was  unable to substantiate Judge Bason's charges.  If  such
undue  influence did occur, it was subtle and  lost  in  the
highly  private  manner in which judge selection  procedures
are  conducted. While sworn statements were not  taken,  the
committee  investigators interviewed several of  the  judges
involved in the selection process. The judges who agreed  to
provide interviews all stated that they had little firsthand
knowledge in which to evaluate the candidates, including the
incumbent  judge. As a result, the members of  the  Judicial
Council  had to rely on the findings of the Merit  Selection
Panel headed by Judge Norma Johnson.
  The  Merit Selection Panel's findings were provided to the
Judicial  Council  by Judge Johnson whose oral  presentation
was  instrumental in the final selection. Judge Johnson  had
previously  worked at the Department of Justice with  Stuart
Schiffer,  who  led  the Department's attempt  to  have  the
District Court remove Judge Bason from the INSLAW case.  Mr.
Schiffer  is  also  the  official  who  argued  vociferously
against  the  appointment of an independent counsel  on  the
INSLAW  case  in  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
Murphy  subsequently worked directly for Mr. Brewer  on  the
PROMIS  contract. The committee, however, has  not  at  this
date  found  any  evidence that Judge Johnson  had  specific
discussions  with  Mr.  Schiffer  or  anyone  else  at   the
Department of Justice about Judge Bason, the INSLAW case  or
the bankruptcy judicial selection process.
  The  committee's investigation revealed that the selection
process  was  largely  informal,  undocumented  and   highly
subjective.  For  example, several members of  the  Judicial
Council   indicated   that  one  of  the   primary   factors
influencing  the non-reappointment of Judge Bason,  was  the
poor  administrative  condition of  his  court.  These  same
members admitted that they had no firsthand knowledge of the
administrative  condition  and based  this  opinion  on  the
reports of the Merit Selection Panel and Judge Johnson. This
was   corroborated  by  the  discovery  of  a   confidential
memorandum written by a member of the Merit Selection  Panel
which         was         highly         critical         of
Judge   Bason  and  the  administrative  condition  of   the
Bankruptcy  Court. While this memorandum had  been  seen  by
several  judges  during  the  selection  process,  committee
investigators were unable to determine who authored it.  The
committee's  investigation did not reveal  any  evidence  to
support  the  criticisms  raised in the  memorandum.  Martin
Bloom, Clerk of the Bankruptcy Court, indicated in his sworn
statement to committee investigators that under Judge Bason,
the  administrative condition of the court vastly  improved.
These  sentiments were echoed by Chief Judge Aubrey Robinson
who consistently complimented Judge Bason on his efforts  to
improve the administrative condition of the Bankruptcy Court
in his remarks to the Annual Judicial Conference.
  
                        F. CONCLUSION
  
  The  history  of the Department's behavior in  the  INSLAW
case  dramatically  illustrates its (1) reflexive  hostility
and    "circle   the   wagons"   approach   toward   outside
investigations;  (2)  inability  or  unwillingness  to  look
objectively  at charges of wrongdoing by high level  Justice
officials,  particularly  when  the  agency  itself   is   a
defendant  in  litigation;  and,  (3)  belligerence   toward
Justice  employees with views that run counter to  those  of
the  agency's upper management. The fact that the Department
failed  to recognize a need for an independent investigation
of  the  INSLAW matter for more than 7 years is  remarkable.
Failure to do so has effectively shielded officials who  may
have    committed   wrongdoing   from   investigation    and
prosecution.
  As   already  documented  and  confirmed  by  two  Federal
judges,  the  Department's actions in the INSLAW  case  have
greatly harmed the company and its owners. These actions, as
they   pertain   to  the  dispute  with  INSLAW   over   the
misappropriation of the PROMIS software, were taken with the
full  knowledge and support of high level Justice officials.
The   harm  to  the  company  was  further  perpetuated   by
succeeding  high  level officials, such as  former  Attorney
General   Richard  Thornburgh,  who  not  only   failed   to
objectively  investigate the serious charges raised  by  the
Hamiltons and their attorney, former Attorney General Elliot
Richardson,  but  also  delayed and rebuffed  effective  and
expeditious outside investigation of the matter by Congress.
  The  Department of Justice is this nation's  most  visible
guarantor  of the notion that wrongdoing will be sought  out
and  punished  irrespective of the identity  of  the  actors
involved.  Moreover, its mandate is to protect  all  private
citizens  from illegal activities that undermine the  public
trust.  The  Department's handling of the  INSLAW  case  has
seriously  undermined  its  credibility  and  reputation  in
playing  such a role. Congress and the executive  must  take
immediate  and  forceful steps to restore public  confidence
and  faith  in  our  system  of  justice,  which  cannot  be
undermined  by the very agent entrusted with enforcement  of
our laws and protections afforded every citizen. In view  of
the  history  surrounding the INSLAW affair and the  serious
implications  of  evidence presented by the  Hamiltons,  two
court proceedings in the judicial branch and the committee's
own  investigation,  there  is  a  clear  need  for  further
investigation. The committee believes that the only  way  in
which  INSLAW's  allegations can  be  adequately  and  fully
investigated                                              is
by   the   appointment  of  an  independent   counsel.   The
committee  is  aware  that on November  13,  1991,  Attorney
General Barr appointed Nicholas Bua, a retired Federal judge
from  Chicago,  as  his special counsel to  investigate  and
advise  him on the INSLAW controversy. The committee eagerly
awaits  Judge  Bua's  findings;  however,  as  long  as  the
investigation of wrongdoing by former and current high level
Justice officials remains under the ultimate control of  the
Department itself, there will always be serious doubt  about
the objectivity and thoroughness of the inquiry.