Software Vault: The Sapphire Collection/Software Vault (Sapphire Collection) (Digital Impact).ISO/cdr16/wired1_1.zip/INSLAW

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The INSLAW Octopus --
Software Piracy, Conspiracy, Cover-Up, Stonewalling, Covert Action:
Just  another decade at the Department of Justice

By Richard L. Fricker


The House Judiciary Committee lists these crimes as among the possible
violations perpetrated by "high-level Justice officials and private
individuals":

=> Conspiracy to commit an offense
=> Fraud
=> Wire fraud
=> Obstruction of proceedings
   before  departments, agencies
   and committees
=> Tampering with a witness
=> Retaliation against a witness
=> Perjury
=> Interference with commerce
   by threats or violence
=> Racketeer Influenced and Corrupt
   Organizations (RICO) violations
=> Transportation of stolen goods,
   securities, moneys
=> Receiving stolen goods

-------------------------------------------------------------
Bill Hamilton, Inslaw & PROMIS


Who:
Bill Hamilton and his wife, Nancy Hamilton, start Inslaw to nurture
PROMIS (Prosecutors Management Information Systems).

Why #1:
The DOJ, aware that its case management system is in dire need of
automation, funds Inslaw and PROMIS. After creating a public-domain
version, Inslaw makes significant enhancements to PROMIS and, aware that
the US market for legal automation is worth $3 billion, goes private in
the early U80s.

Why #2:
Designed as case-management software for federal prosecutors, PROMIS has
the ability to combine disparate databases, and to track people by their
involvement with the legal system. Hamilton and others now claim that
the DOJ has modified PROMIS to monitor intelligence operations, agents
and targets, instead of legal cases.
-------------------------------------------------------------



By late November, 1992 the nation had turned its attention from the
election-weary capital to Little Rock, Ark., where a new generation of
leaders conferred about the future. But in a small Washington D.C.
office, Bill Hamilton, president and founder of Inslaw Inc., and Dean
Merrill, a former Inslaw vice president, were still very much concerned
about the past.

The two men studied six photographs laid out before them. "Have you ever
seen any of these men?" Merrill was asked. Immediately he singled out
the second photo. In a separate line up, HamiltonUs secretary singled
out the same photo.

Both said the man had visited Inslaw in February 1983 for a presentation
of PROMIS, InslawUs bread-and-butter legal software. Hamilton, who knew
the purpose of the line-up, identified the visitor as Dr. Ben Orr. At
the time of his visit, Orr claimed to be a public prosecutor from
Israel.

Orr was impressed with the power of PROMIS (Prosecutors Management
Information Systems), which had recently been updated by Inslaw to run
on powerful 32-bit VAX computers from Digital Equipment Corp. "He fell
in love with the VAX version," Hamilton recalled.

Dr. Orr never came back, and he never bought anything. No one knew why
at the time. But for Hamilton, who has fought the Department of Justice
(DOJ) for almost 10 years in an effort to salvage his business, once his
co-workers recognized the man in the second photo, it all made perfect
sense.

For the second photo was not of the mysterious Dr. Orr, it was of Rafael
Etian, chief of the Israeli defense forceUs anti-terrorism intelligence
unit. The Department of Justice sent him over for a look at the property
they were about to "misappropriate," and Etian liked what he saw.
Department of Justice documents record that one Dr. Ben Orr left the DOJ
on May 6, 1983, with a computer tape containing PROMIS tucked under his
arm.

What for the past decade has been known as the Inslaw affair began to
unravel in the final, shredder-happy days of the Bush administration.
According to Federal court documents, PROMIS was stolen from Inslaw by
the Department of Justice directly after EtianUs 1983 visit to Inslaw (a
later congressional investigation preferred to use the word
"misappropriated"). And according to sworn affidavits, PROMIS was then
given or sold at a profit to Israel and as many as 80 other countries by
Dr. Earl W. Brian, a man with close personal and business ties to then-
President Ronald Reagan and then-Presidential counsel Edwin Meese.

A House Judiciary Committee report released last September found
evidence raising "serious concerns" that high officials at the
Department of Justice executed a pre-meditated plan to destroy Inslaw
and co-opt the rights to its PROMIS software. The committeeUs call for
an independent counsel have fallen on deaf ears. One journalist, Danny
Casolaro, died as he attempted to tell the story (see sidebar), and
boxes of documents relating to the case have been destroyed, stolen, or
conveniently "lost" by the Department of Justice.

But so far, not a single person has been held accountable.

Wired has spent two years searching for the answers to the questions
Inslaw poses: Why would Justice steal PROMIS? Did it then cover up the
theft? Did it let associates of government officials sell PROMIS to
foreign governments, which then used the software to track political
dissidents instead of legal cases? (Israel has reportedly used PROMIS to
track troublesome Palestinians.)

The implications continue: that Meese profited from the sales of the
stolen property. That Brian, MeeseUs business associate, may have been
involved in the October Surprise (the oft-debunked but persistent theory
that the Reagan campaign conspired to insure that US hostages in Iran
were held until after Reagan won the 1980 election, see sidebar). That
some of the moneys derived from the illegal sales of PROMIS furthered
covert and illegal government programs in Nicaragua. That Oliver used
PROMIS as a population tracking instrument for his White House-based
domestic emergency management program.

Each new set of allegations leads to a new set of possibilities, which
makes the story still more difficult to comprehend. But one truth is
obvious: What the Inslaw case presents, in its broadest possible
implications, is a painfully clear snapshot of how the Justice
Department operated during the Reagan-Bush years.

This is the case that wonUt go away, the case that shows how justice and
public service gave way to profit and political expediency, how those
within the administrationUs circle of privilege were allowed to violate
private property and civil rights for their own profit.

Sound like a conspiracy theoristUs dream? Absolutely. But the fact is,
itUs true.



The Background
**************
Imagine you are in charge of the legal arm of the most powerful
government on the face of the globe, but your internal information
systems are mired in the archaic technology of the 1960s. ThereUs a
Department of Justice database, a CIA database, an AttorneyUs General
database, an IRS database, and so on, but none of them can share
information. That makes tracking multiple offenders pretty darn
difficult, and building cases against them a long and bureaucratic task.

Along comes a computer program that can integrate all these databases,
and it turns out its development was originally funded by the government
under a Law Enforcement Assistance Administration grant in the 1970s.
That means the software is public domain ... free!

Edwin Meese was apparently quite taken with PROMIS. He told an April
1981 gathering of prosecutors that PROMIS was "one of the greatest
opportunities for [law enforcement] success in the future.UU In March
1982, Inslaw won a $9.6 million contract from the Justice Department to
install the public domain version of PROMIS in 20 US AttorneyUs offices
as a pilot program. If successful, the company would install PROMIS in
the remaining 74 federal prosecutorsU offices around the country. The
eventual market for complete automation of the Federal court system was
staggering: as much as $3 billion, according to Bill Hamilton. But
Hamilton would never see another federal contract.

Designed as a case-management system for prosecutors, PROMIS has the
ability to track people. "Every use of PROMIS in the court system is
tracking people," said Inslaw President Hamilton. "You can rotate the
file by case, defendant, arresting officer, judge, defense lawyer, and
itUs tracking all the names of all the people in all the cases."

What this means is that PROMIS can provide a complete rundown of all
federal cases in which a lawyer has been involved, or all the cases in
which a lawyer has represented defendant A, or all the cases in which a
lawyer has represented white-collar criminals, at which stage in each of
the cases the lawyer agreed to a plea bargain, and so on. Based on this
information, PROMIS can help a prosecutor determine when a plea will be
taken in a particular type of case.

But the real power of PROMIS, according to Hamilton, is that with a
staggering 570,000 lines of computer code, PROMIS can integrate
innumerable databases without requiring any reprogramming. In essence,
PROMIS can turn blind data into information. And anyone in government
will tell you that information, when wielded with finesse, begets power.
Converted to use by intelligence agencies, as has been alleged in
interviews by ex-CIA and Israeli Mossad agents, PROMIS can be a powerful
tracking device capable of monitoring intelligence operations, agents
and targets, instead of legal cases.

At the time of its inception, PROMIS was the most powerful program of
its type. But a similar program, DALITE, was developed under another
LEAA grant by D. Lowell Jensen, the Alameda County (Calif.) District
Attorney. In the mid-1970s, the two programs vied for a lucrative Los
Angeles County contract and Inslaw won out. (Early in his career, Ed
Meese worked under Jensen at the Alameda County District AttorneyUs
office. Jensen was later appointed to MeeseUs Justice Department during
the Reagan presidency.)

In the final days of the Carter administration, the LEAA was phased out.
Inslaw had made a name for itself and Hamilton wanted to stay in
business, so he converted Inslaw to a for-profit, private business. The
new Inslaw did not own the public domain version of PROMIS because it
had been developed with LEAA funds. But because it had funded a major
upgrade with its own money, Inslaw did claim ownership of the enhanced
PROMIS.

Through his lawyers, Hamilton sent the Department of Justice a letter
outlining his companyUs decision to go private with the enhanced PROMIS.
The letter specifically asked the DOJ to waive any proprietary rights it
might claim to the enhanced version. In a reply dated August 11, 1982, a
DOJ lawyer wrote: "To the extent that any other enhancements (beyond the
public domain PROMIS) were privately funded by Inslaw and not specified
to be delivered to the Department of Justice under any contract or other
agreement, Inslaw may assert whatever proprietary rights it may have."

Arnold Burns, then a deputy attorney general, clarified the DOJUs
position in a now-critical 1988 deposition: "Our lawyers were satisfied
that InslawUs lawyers could sustain the claim in court, that we had
waived those [proprietary] rights.UU

The enhancements Inslaw claimed were significant. In the 1970s the
public-domain PROMIS was adapted to run on Burroughs, Prime, Wang and
IBM machines, all of which used less-powerful 16-bit architectures. With
private funds, Inslaw converted that version of PROMIS to a 32-bit
architecture running on a DEC VAX minicomputer. It was this version that
Etian saw in 1983. It was this version that the DOJ stole later that
year through a pre-meditated plan, according to two court decisions.



The Dispute Grows
*****************
On a gorgeous spring morning in 1981, Lawrence McWhorter, director of
the Executive Office for US Attorneys, put his feet on his desk, lit an
Italian cigar, eyed his subordinate Frank Mallgrave and said through a
haze of blue smoke: "WeUre out to get Inslaw."

McWhorter had just asked Mallgrave to oversee the pilot installation of
PROMIS, a job Mallgrave refused, unaware at the time that he was being
asked to participate in InslawUs deliberate destruction.

"We were just in his office for what I call a B.S. type discussion,"
Mallgrave told Wired. "I remember it was a bright sunny morning....
(McWhorter) asked me if I would be interested in assuming the position
of Assistant Director for Data Processing...basically working with
Inslaw. I told him...I just had no interest in that job. And then,
almost as an afterthought, he said TWeUre out to get Inslaw.U I remember
it to this day."

After Mallgrave refused the job, McWhorter gave it to C. Madison "Brick"
Brewer. Brewer at one time worked for Inslaw, but was allowed to resign
when Hamilton found his performance inadequate, according to court
documents. Brewer was then hired into the Department of Justice
specifically to oversee the contract of his former employer. (The DOJUs
Office of Professional Responsibility ruled there was no conflict of
interest.) He would later tell a federal court that everything he did
regarding Inslaw was approved by Deputy Attorney General Lowell Jensen,
the same man who once supervised DALITE, the product which lost a major
contract to Inslaw in the 1970s.

Brewer, who now refuses to comment on the Inslaw case, was aided

in his new DOJ job by Peter Videnieks. Videnieks was fresh from the
Customs Service, where he oversaw contracts between that agency and
Hadron, Inc., a company controlled by Meese and Reagan-crony Earl Brian.
Hadron, a closely held government systems consulting firm, was to figure
prominently in the forthcoming scandal.

According to congressional and court documents, Brewer and Videnieks
didnUt tarry in their efforts to destroy Inslaw. After InslawUs
installation of public domain PROMIS had begun, the DOJ claimed that
Inslaw, which was supporting the installation with its own computers
running the enhanced version of PROMIS, was on the brink of bankruptcy.
Although Inslaw was contracted to provide only the public domain PROMIS,
the DOJ demanded that Inslaw turn over the enhanced version of PROMIS in
case the company could not complete its contractual obligations. Inslaw
agreed to this contract modification, but on two conditions: that the
DOJ recognize InslawUs proprietary rights to enhanced PROMIS, and that
the DOJ not distribute enhanced PROMIS beyond the boundaries of the
contract (the 94 US AttorneyUs offices.)

The DOJ agreed to these conditions, but requested Inslaw prove it had
indeed created enhanced PROMIS with private funds. Inslaw said it would,
and the enhanced software was given to the DOJ.

Once the DOJ had control of PROMIS, it dogmatically refused to verify
that Inslaw had created the enhancements, essentially rendering the
contract modification useless. When Inslaw protested, the DOJ began to
withhold payments. Two years later, Inslaw was forced into bankruptcy.

As the contract problems with DOJ emerged, Hamilton received a phone
call from Dominic Laiti, chief executive of Hadron. Laiti wanted to buy
Inslaw. Hamilton refused to sell. According to HamiltonUs statements in
court documents, Laiti then warned him that Hadron had friends in the
government and if Inslaw didnUt sell willingly, it would be forced to
sell.

Those government connections included Peter Videnieks over at the
Justice Department, according to John Schoolmeester, VidenieksU former
Customs Service supervisor. Laiti and Videnieks both deny ever meeting
or having any contact, but Schoolmeester has told both Wired and the
House Judiciary Committee it was "impossible" for the pair not to know
each other because of the type of work and oversight involved in
HadronUs relationship with the Customs Service. Schoolmeester also said
that because of BrianUs relationship with then-President Reagan (see
sidebar), Hadron was considered an "inside" company.

The full-court press continued. In 1985 Allen & Co., a New York
investment banking concern with close business ties to Earl Brian,
helped finance a second company, SCT, which also attempted to purchase
Inslaw. That attempt also failed, but in the process a number of
InslawUs customers were warned by SCT that Inslaw would soon go bankrupt
and would not survive reorganization, Hamilton said in court documents.

Broke and with no friends in the government, on June 9, 1986, Inslaw
filed a $30 million lawsuit against the DOJ in bankruptcy court.
InslawUs attorney for the case (he was later fired from his firm under
extremely suspicious circumstances Q see sidebar) was Leigh Ratiner of
the Wash-ington firm Dickstein, Shapiro & Morin. Ratiner chose
bankruptcy court for the filing based on the premise that Justice, the
creditor, had control of PROMIS. He explained recently, "It was
forbidden by the Bankruptcy Act for the creditor to exercise control
over the debtor property. And that theory Q that the Justice Department
was exercising control Q was the basis that the bankruptcy court had
jurisdiction.

"As far as I know, this was the first time this theory had been used,"
Ratiner told Wired. "This was ground-breaking. It was, in fact, a
legitimate use of the code.UU

It worked, but to only a point. In 1987, Washington, D.C., bankruptcy
judge George Bason ruled in a scathing opinion that Justice had stolen
PROMIS through "trickery, fraud and deceit.UU He awarded Inslaw $6.8
million in damages and, in the process, found that Justice Department
officials made a concerted effort to bankrupt Inslaw and place the
companyUs enhanced PROMIS up for public auction (where it would then be
fodder for BrianUs Hadron). BasonUs findings of fact relied on testimony
>from Justice employees and internal memoranda, some of which outlined a
plan to "getUU PROMIS software.

Bason cited the testimony of a number of the governmentUs defense
witnesses as being "unbelievable" and openly questioned the credibility
of others. In his 216-page ruling, Bason cites numerous instances where
testimony from government witnesses is contradictory. (In a private
interview with Wired he noted that as a bankruptcy judge he was
precluded from bringing perjury charges against government employees,
but he had recommended to various congressional panels that an inquiry
was necessary.)

When the DOJ appealed, a federal district court affirmed Bason, ruling
that there was "convincing, perhaps compelling support for the findings
set forth by the bankruptcy court.UU But the D.C. Circuit Court of
Appeals reversed the case on a legal technicality, finding that the
bankruptcy court had no jurisdiction to hear the damages claim. A
petition to the Supreme Court in October 1991 was denied review.

The IRS got into the act as well. Inslaw was audited several times in
the course of their battles with the Department of Justice. In fact, the
day following the bankruptcy trial, S. Martin Teel, a lawyer for the
IRS, requested that Judge Bason liquidate Inslaw. Bason ruled against
Teel. As a coda to the lawsuit, Bason, a respected jurist, was not re-
appointed to the bench when his term expired. His replacement? S. Martin
Teel. (Bason has testified before Congress that the DOJ orchestrated his
replacement as punishment for his rulings in the Inslaw case.)

But InslawUs troubles did not end with bankruptcy. Frustrated by
Attorney General Dick ThornburghUs stubborn refusal to investigate the
DOJ or appoint an independent prosecutor, Elliot Richardson, President
NixonUs former attorney general and a counsel to Inslaw for nearly 10
years (he retired this January), filed a case in U.S. District Court
demanding that Thornburgh investigate the Inslaw affair. In 1990, the
court ruled that a prosecutorUs decision not to investigate Q "no matter
how indefensible" Q cannot be corrected by any court. Another loss for
Inslaw.

Broke and still attempting to revive itself, Inslaw has not refiled its
suit, preferring to wait for a new administration and a new DOJ.

By this time, the spinning jennies of the conspiracy network had grasped
the Inslaw story and were all-too-eager to put their stitch in the
unraveling yarn. According to documents and affidavits filed during
court cases and congressional inquiries, the Hamiltons and their lawyers
began receiving phone calls, visits and memos from a string of shadowy
sources, many of them connected to international drug, spy and arms
networks. Their allegations: That Earl Brian helped orchestrate the
October Surprise for then-candidate Reagan, and that BrianUs eventual
payment for that orchestration was a cut of the PROMIS action. Brian and
the DOJ then resold or gave PROMIS to as many as 80 foreign and domestic
agencies. (Brian adamantly denies any connection to Inslaw or the
October Surprise.)

These sources, which include ex-Israeli spy Ari Ben Menashe and a
computer programmer of dubious reputation, Michael Riconosciuto, allege
that PROMIS had been further modified by the DOJ so that any agency
using it could be subject to undetected DOJ eavesdropping Q a sort of
software Trojan Horse. If these allegations are true, by the late 1980s
PROMIS could have become the digital ears of the US GovernmentUs spy
effort Q both internal and external. Certainly something the
administration wouldnUt want nosy congressional committees looking into.

The diaphanous web of more than 30 sources who offered information to
Inslaw were not "what a lawyer might consider ideal witnesses,"
Richardson admitted. But their stories yielded a surprising consistency.
"The picture that emerges from the individual statements is remarkably
detailed and consistent," he wrote in an Oct. 21, 1991 New York Times Op
Ed.


The Congressional Investigation
*******************************
The string of lawsuits and widening allegations caught the eye of House
Judiciary Committee Chairman Jack Brooks, D-Texas, who in 1989 launched
a three-year investigation into the Inslaw affair. In the resulting
report, the Committee suggested that among others, Edwin Meese, while
presidential counselor and later as attorney general, and D. Lowell
Jensen, a former assistant and deputy attorney general and now a US
district judge in San Francisco, conspired to steal PROMIS.

"High government officials were involved," the report states. "...
(S)everal individuals testified under oath that InslawUs PROMIS software
was stolen and distributed internationally in order to provide financial
gain and to further intelligence and foreign policy objectives.UU

"Actions against Inslaw were implemented through the Project Manager
(Brick Brewer) from the beginning of the contract and under the
direction of high-level Justice Department officials,UU the report says.
"The evidence...demonstrates that high-level Department officials
deliberately ignored Inslaw proprietary rights and misappropriated its
PROMIS software for use at locations not covered under contract with the
company.UU

The Committee report accuses former Attorney General Dick Thornburgh of
stonewalling congressional inquiries, turning a blind eye to the
possible destruction of evidence within the Justice Department, and
ignoring the DOJUs harassment of employees questioned by Congressional
investigators.

Rep. Brooks told Wired that the report should be the starting point for
a grand jury investigation. The owners of Inslaw, Brooks said, were
"ravaged by the Justice Department...treated like dogs.UU

BrooksU committee voted along party lines, 21-13, to adopt the
investigative report on Aug. 11, 1992. The report asked then-Attorney
General William Barr to "immediately settle InslawUs claims in a fair
and equitable mannerUU and "strongly recommends that the Department seek
the appointment of an Independent Counsel.UU

As he did with the burgeoning Iraqgate scandal and as his predecessor
did before him, Barr refused to appoint an independent counsel to the
Inslaw case, relying instead on a retired federal judge, in this case
Nicholas Bua, who reported to Barr alone. In other words, the DOJ was
responsible for investigating itself.

"The way in which the Department of Justice has treated this case, to
me, is inexplicable,UU Richardson told Wired. "I think the circumstances
most strongly suggest that there must be wider ramifications.UU



The Threads Unravel
*******************
Proof of those wider ramifications are just starting to leak out, as DOJ
and other agency employees begin to talk, although for the most part
they spoke to Wired only on condition of anonymity.

On Nov. 20, 1990, the Judiciary Committee wrote a letter asking CIA
director William Webster to help the committee "by determining whether
the CIA has the PROMIS software."

The official reply on December 11th: "We have checked with Agency
components that track data processing procurement or that would be
likely users of PROMIS, and we have been unable to find any indication
that the Agency ever obtained PROMIS software."

But a retired CIA official whose job it was to investigate the Inslaw
allegations internally told Wired that the DOJ gave PROMIS to the CIA.
"Well,UU the retired official told Wired, "the congressional committees
were after us to look into allegations that somehow the agency had been
culpable of what would have been, in essence, taking advantage of, like
stealing, the technology [PROMIS]. We looked into it and there was
enough to it, the agency had been involved."

How was the CIA involved? According to the same source, who requested
anonymity, the agency accepted stolen goods, not aware that a major
scandal was brewing. In other words, the DOJ robbed the bank, and the
CIA took a share of the plunder.

But the CIA was not the only place where illegal versions of PROMIS
cropped up. Canadian documents (held by the House Judiciary Committee
and obtained by Wired) place PROMIS in the hands of various Canadian
government agencies. These documents include two letters to Inslaw from
Canadian agencies requesting detailed user manuals Q even though Inslaw
has never sold PROMIS to Canada. Canadian officials now claim the
letters were in error.

And, of course, the software was transferred to Rafael EtianUs anti-
terrorism unit in Israel. The DOJ claims it was the LEAA version, but
former Israeli spy Ben Menashe and others claim it was the 32-bit
version. According to Ben Menashe, other government departments within
Israel also saw PROMIS, and this time the pitchman was Dr. Earl Brian.
In a 1991 affidavit related to the bankruptcy proceedings, Ben Menashe
claimed: "I attended a meeting at my DepartmentUs headquarters in Tel
Aviv in 1987 during which Dr. Earl W. Brian of the United States made a
presentation intended to facilitate the use of the PROMIS computer
software."

"Dr. Brian stated during his presentation that all U.S. Intelligence
Agencies, including the Defense Intelligence Agency, the Central
Intelligence Agency, and the National Security Agency and the U.S.
Department of Justice were then using the PROMIS computer software," Ben
Menashe continued. While the credibility of his statements has been
questioned, the Israeli government has admitted that Ben Menashe had
access to extremely sensitive information during his tenure at the
Mossad.

Asked why Israeli intelligence would have been so interested in Inslaw
and PROMIS, Ben Menashe said, "PROMIS was a very big thing for us guys,
a very, very big thing ... it was probably the most important issue of
the U80s because it just changed the whole intelligence outlook. The
whole form of intelligence collection changed. This whole thing changed
it.UU PROMIS, Ben Menashe said, was perfect for tracking Palestinians
and other political dissidents.

(Ben MenasheUs superior during this period was Rafael Etian, or Dr. Ben
Orr, as he was known during his 1983 visit to Inslaw.)

Apparently, Israel was not the only country interested in using PROMIS
for internal security purposes. Lt. Col. Oliver North also may have been
using the program. According to several intelligence community sources,
PROMIS was in use at a 6,100-square-foot command center built on the
sixth floor of the Justice Department. According to both a contractor
who helped design the center and information disclosed during the Iran-
Contra hearings, Oliver North had a similar, but smaller, White House
operations room that was connected by computer link to the DOJUs command
center.

Using the computers in his command center, North tracked dissidents and
potential troublemakers within the United States as part of a domestic
emergency preparedness program, commissioned under ReaganUs Federal
Emergency Management Agency (FEMA), according to sources and published
reports. Using PROMIS, sources point out, North could have drawn up
lists of anyone ever arrested for a political protest, for example, or
anyone who had ever refused to pay their taxes. Compared to PROMIS,
Richard NixonUs enemies list or Sen. Joe McCarthyUs blacklist look
downright crude. This operation was so sensitive that when Rep. Jack
Brooks asked North about it during the Iran-Contra hearings, the hearing
was immediately suspended pending an executive (secret) conference. When
the hearings were reconvened, the issue of NorthUs FEMA dealings was
dropped.



A Thorough Cleaning at the White House?
***************************************
If the case against the Department of Justice is so solid, why hasnUt
anything been done? The answer is timing. The next move belongs to
retired Federal Judge Bua, since he was given oversight by Attorney
General Barr in lieu of an independent counsel. And everyone, including
Judge Bua, whose non-binding report was pending at WiredUs early
December deadline, seems to be waiting for the new administration. Both
the Clinton/Gore transition team and House majority leader Richard
Gephardt had no comment on the Inslaw case pending ClintonUs
inauguration.

But a source close to BuaUs investigation said the retired judge may
present the DOJ with a bombshell. While not required to suggest a
settlement, the source believes Bua will reportedly recommend that
Inslaw be given between $25 million and $50 million for its mistreatment
by the DOJ. (In last-minute negotiations, Inslaw attorney Elliot
Richardson held brief meetings with DOJ officials in mid-December.
Richardson pressed for a settlement ranging from $25 million to $500
million, but the DOJ balked, according to newspaper reports.)

But the question remains: Can the DOJ paper over the willful destruction
of a company, the plundering of its software, the illegal resale of that
software to further foreign policy objectives, and the overt obstruction
of justice with $25 million?

BuaUs final recommendation, expected sometime before ClintonUs
inauguration, is that the Inslaw Affair "requires further
investigation," the source said. That conclusion mirrors the House
Judiciary CommitteeUs report. Privately, many Democrats, including
Gephardt, have expressed a strong desire to get to the bottom of the
Inslaw case. Rep. Brooks will be pushing for yet another investigation
of the scandal, this time independent of the Justice Department,
according to Congressional sources. Once BuaUs report is out, the next
and possibly final move will be up to a new president, a new Congress,
and, possibly, a renewed sense of justice. n n n



***************************************************

INSLAW SIDEBARS    INSLAW SIDEBARS    INSLAW SIDEBARS

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*************************************
Earl W. Brian - The Consumate Insider
*************************************
Dr. Earl W. Brian has made quite a career of riding Reagan and MeeseUs
coattails. After a stint in Vietnam, where he worked as a combat
physician in the unit that supplied air support for Operation Phoenix,
Brian returned to California with a chest full of ribbons and a waiting
job P as Secretary of Health P with then-Governor ReaganUs
administration. (Operation Phoenix, a well-documented CIA political
assassination program, used computers to track "enemies" in Vietnam.)

In 1974, Brian resigned his cabinet post with Governor Reagan to run for
the Senate against Alan Cranston. After his defeat, Brian moved into the
world of business and soon ran into trouble. His flagship company,
Xionics, was cited by the Security and Exchange Commission for issuing
press releases designed to boost stock prices with exaggerated or
bloated information. The SEC also accused Xionics of illegally paying
"commissions" to brokers, according to SEC documents.

At the close of the Reagan governorship, Brian was involved in a public
scandal having to do with P surprise P stolen computer tapes. The tapes,
which contained records of 70,000 state welfare files, were eventually
returned P Brian claimed he had a right to them under a contract signed
in the last hours of the administration. (Brian said he just wanted to
develop a better way of doing welfare business.)

In 1980, Brian formed Biotech Capital Corp., a venture capital firm
designed to invest in biological and medical companies. Ultimately,
Brian has invested in and owned several companies, including FNN
(Financial News Network) and UPI, both of which ended up in dire
financial straits.

Ursula Meese, who like her husband knew Brian from the Reagan cabinet,
was an early investor in Biotech, using $15,000 (borrowed from Edwin
Thomas, a Meese aide in the White House and another Reaganite from
California) to purchase 2,000 shares on behalf of the MeeseUs two
children, according to information made public during MeeseUs
confirmation hearings for Attorney General.

It is those Reagan-Meese connections that continue to drag Brian into
the Inslaw affair. For why would Brian, of all people, be the recipient
of stolen PROMIS? PROMIS, after all, was a major part in government
automation contracts estimated at $3 billion, according to Inslaw
President Bill Hamilton. ThatUs quite a political plum.

One possibility is Ed and Ursula MeeseUs financial connections to Brian.
Another is a payoff for BrianUs role in the October Surprise  Even if he
manages to evade the Inslaw allegations, Brian may still be in hot
water. As of this writing, Financial News NetworkUs financial dealings
were under investigation by a Los Angeles Grand Jury, according to
sources who have testified before it. Q RLF



****************
What A Surprise!
****************
Earl W. Brian says he wasn't in Paris in October 1980, but investors
were told a different story.

As Inslaw President Bill Hamilton moved his company from non-profit
status to the private sector in 1980, Ronald Reagan was running for
President, negotiations for the release of the American hostages in Iran
had apparently hit a snag, and Dr. Earl W. Brian was touring Canada
touting stock in his newly acquired Clinical Sciences Inc.

History records that the hostages were released as Ronald Reagan took
the Presidential oath of office, and that shortly thereafter, Inslaw
received a $9.6 million contract from the Department of Justice. At the
same time, Earl Brian was appointed to a White House post to advise on
health-care issues. Brian reported directly to Ed Meese. He also
arranged White House tours to woo investors in his government
contracting company, Hadron Inc., according to a Canadian investment
banker who took a tour.

But these seemingly random historical connections between Inslaw,
Hadron, the Reagan White House and Earl Brian take on a new meaning when
considered in light of the "October Surprise," the persistent allegation
that the Reagan campaign negotiated with Iranian officials to guarantee
that US hostages would not be released before Reagan won election in
1980.

The October Surprise theory hinges in part on alleged negotiations
between the Reagan campaign and the Iranians on the weekend of Oct. 17P
21, 1980, in Paris, among other places.

The deal, according to former Iranian President Abol Hassan Bani-Sadr,
ex-Israeli spy Ari Ben Menashe, and a former CIA contract agent
interviewed by Wired, included the payment of $40 million to the
Iranians.

According to several sources, Earl Brian, one of ReaganUs close
advisors, made it quite clear that he was planning to be in Paris that
very weekend. Ben Menashe, who says he was one of six Israelis, 12
Americans and 16 Iranians present at the Paris talks, said, "I saw Brian
in Paris.UU

Brian was interviewed by Senate investigators on July 28, 1992, and
denied under oath any connection with the alleged negotiations.

He told the investigators he did not have a valid passport during the
October 1980 dates.

But according to court documents and interviews, Brian told Canadian
investors in his newly acquired Clinical Sciences, Inc., that he would
be in Paris that weekend. Brian acquired controlling interest in
Clinical Sciences in the summer of 1980. Clinical Sciences was then
trading at around $2 a share. Brian worked with Janos P. Pasztor, a vice
president and special situations analyst with the Canadian investment
bank of Nesbitt, Thomson, Bongard Inc., to create a market of Canadian
investors for the stock.

Pasztor later testified in court documents that Brian said he would be
in Paris the weekend of October 17 to do a deal with the Pasteur
Institute (a medical research firm).

Two other brokers, Harry Scully, a broker based in Halifax, Nova Scotia,
and John Belton, a senior account executive with Nesbitt-Thomson from
1968 to 1982 who is suing Nesbitt-Thomson and Pasztor for securities
fraud, also claim that they were told that Brian was in Paris that
weekend.

But if Brian went to Paris to see the Pasteur Institute, he seems to
have missed his appointment. An investigation by the Royal Canadian
Mounted Police into Clinical Sci-ences stock transactions revealed that
the Pasteur Institute had never conducted business with, or even heard
of Brian.

When asked by Wired to elaborate on BrianUs 1980 trip, Pasztor said,
"These are political questions and I donUt want to become involved." He
refused further comment.Brian contends that the dates of his trip were
in error and that he went to Paris in April 1981, not October 1980. But
the passport he turned over to Senate investigators did not contain a
French entry or exit stamp for April 1981.

Through his lawyers, Brian refused to be interviewed for this story.

QRLF



****************************
Earl W. Brian: Closet Spook?
****************************
Michael Riconosciuto, a computer programmer and chemist who surfs the
spooky fringe of the guns-UnU-money crowd, is currently serving a
federal prison sentence for drug crimes. From his jail cell he has given
several interviews claiming knowledge of Inslaw and the October Surprise
(he also claims his jail term is the DOJ's way of punishing him for his
knowledge). Much of what he claims cannot be verified, other statements
have failed to be veri-fied conclusively.

But prior to his arrest in 1991, Riconosciuto provided the Hamiltons
with an affidavit that once again brought Brian into the Inslaw picture.
"I engaged in some software development and modification work in 1983
and 1984 on proprietary PROMIS computer software product," he stated.
"The copy of PROMIS on which I worked came from the US Department of
Justice. Earl W. Brian made it available to me through Wackenhut (a
security company with close FBI and CIA connections) after acquiring it
>from Peter Videnieks, who was then a Department of Justice contracting
official with the responsibility for PROMIS software.

I performed the modifications to PROMIS in Indio, Calif.; Silver
Springs, Md.; and Miami, Fla."

The modifications included a telecommunications "trap door" that would
let the US Government eavesdrop on any other organization using the
pirated software, Riconosciuto said.

Videnieks and Brian both told House investigators that they did not know
Riconosciuto. After Riconosciuto was interviewed by House investigators,
Videnieks refused to give Congress further interviews.

Although Brian denies any involvement with Inslaw or Riconosciuto, the
House Judiciary Committee received a report from a special task force of
the Riverside County, Calif., SheriffUs Office and District Attorney,
stating that on the evening of Sept. 10, 1981, arms dealers, buyers and
various intelligence operatives gathered at the Cabazon Indian
Reservation near Indio, Calif., for a demonstration of night warfare
weapons. The demonstration was orchestrated jointly by Wackenhut and the
Cabazon Indian tribe. (Many published reports allege that the
Wackenhut/Cabazon joint venture served as a weapons fencing operation
for Oliver NorthUs Iran-Contra dealings.)

According to Indio city police officers hired to provide security, those
attending included Earl W. Brian, who was identified as "being with the
CIA,UU and Michael Riconosciuto.

Q RLF



******************************************************
US Deputy Attorney General Jensen Lost Once To Inslaw.
Could It Be He Wanted to Even The Score?
******************************************************
At the time of its inception, PROMIS was the most powerful program of
its type. But a similar program, DALITE, was developed under another
LEAA grant by D. Lowell Jensen, the Alameda County, Calif., District
Attorney.

In the mid-1970s, the two programs vied for a lucrative Los Angeles
County contract and Inslaw won out.

Early in his career, Attorney General-to-be Edwin Meese worked under
Jensen at the Alameda County District AttorneyUs office. Jensen was
later appointed as Deputy Attorney General into MeeseUs Justice
Department.

C. Madison "Brick" Brewer, accused by the House Judiciary Committee of
deliberately misappropriating PROMIS, testified in federal court that
everything he did regarding Inslaw was approved by D. Lowell Jensen, the
same man who once supervised DALITE.



******************************************
WAS ISRAELUS PROMIS TO CRUSH THE INTIFADA?
******************************************
Asked why Israeli intelligence would have been so interested in Inslaw
and PROMIS, ex-Israeli spy Ari Ben Menashe said: "PROMIS was a very big
thing for us guys, a very, very big thing ... it was probably the most
important issue of the T80s because it just changed the whole
intelligence outlook. The whole form of intelligence collection changed.
This whole thing changed it.UU Why? PROMIS, Ben Menashe said, was
perfect for tracking the Palestinian population and other political
dissidents.



****************************
DID OLIVER NORTH USE PROMIS?
****************************
Apparently, Israel was not the only country interested in using PROMIS
for internal security purposes. Lt. Col. Oliver North also may have been
using the program. According to several intelligence community sources,
PROMIS was in use at a 6,100-square-foot command center built on the
sixth floor of the Justice Department. According to both a contractor
who helped design the center and information disclosed during the Iran-
Contra hearings, Oliver North had a similar, but smaller, White House
operations room that was connected by computer link to the DOJUs command
center.



**************************
Who Fired InslawUs Lawyer?
**************************
As the Inslaw-DOJ battle was joined in bankruptcy court, InslawUs chief
attorney, Leigh Ratiner, was fired from Dickstein, Shapiro & Morin, the
firm where he had been a partner for 10 years. His firing came after
another Dickstein partner, Leonard Garment, met with Arnold Burns, then-
deputy attorney general of the DOJ.

Garment was counsel to President Richard Nixon and assistant to
President Gerald Ford. He testified before a Senate inquiry that he and
Meese discussed the Inslaw case in October 1986, and afterward he met
with Burns. Two days later Ratiner was fired.

The terms of the financial settlement between Ratiner and his firm were
kept confidential, but Wired has been told by ex-Israeli spy Ari Ben
Menashe that Israeli intelligence paid to have Ratiner fired, and that
the money was transferred through Hadron Inc., the same company that
Earl Brian used to distribute illegal copies of PROMIS. Through informed
sources, Wired has independently confirmed portions of Ben MenasheUs
allegations.

Ben Menashe has told Wired that he saw a memo in Israel, written

in Hebrew, requesting funds for "a lawyer.UU He claims to have seen the
memo at the office of a joint Mossad (Israeli CIA), Internal Defense
Forces and Military committee specializing in Israeli-Iran relations.
Israel admits that Ben Menashe handled communications at this level and
therefore would have had access to such transmissions.

Ben Menashe said the money was used as RatinerUs settlement payment.
"The money was transferred, $600,000, to Hadron,UU he said. As

to why Hadron was used, Ben Menashe claims: "Because [Brian] was
involved quite deeply.UU He said Ratiner was unaware of the source of

the settlement funds.

Ratiner, contacted after the Ben Menashe interview, said he had never
disclosed the amount of the separation settlement to anyone.

He is limited contractually by his former firm from discussing any
specifics of the firing. Asked if Ben MenasheUs figures were correct,
Ratiner said, "I canUt comment because it would be the same as revealing
them.UU Wired located a deep background source who confirmed that the
amount was "correct almost to the penny.UU

Ratiner said he was shocked at the allegations of money laundering.
"Dickstein, Shapiro is the 10th largest firm in Washington and I had no
reason to think it was other than reputable,UU he said. "Why is it that
everyone who comes in contact with the Inslaw case becomes a victim?UU Q
RLF



**************************************
A Dead Journalist Raises Some Eyebrows
**************************************
Among the many strong conclusions of the "House Judiciary Committee
Report on the Inslaw Affair" was this rather startling and brief
recommendation: "Investigate Mr. CasolaroUs death."

Freelance reporter Danny Casolaro spent the last few years of his life
investigating a pattern which he called "The Octopus." According to
Casolaro, Inslaw was only part of a greater story

of how intelligence agencies, the Department of Justice and even the mob
had subverted the government and its various functions for their own
profit.

Casolaro had hoped to write a book based on his reporting. His theories,
which some seasoned investigative journalists have described as naive,
led him into a Bermuda Triangle of spooks, guns, drugs and organized
crime. On August 10th, 1991, he was found dead in a Martinsburg, W. Va.,
hotel room. Both wrists were deeply slashed.

CasolaroUs death has only deepened the mystery surrounding Inslaw. Among
the more unusual aspects of his death: He had gone to Martinsburg to
meet an informant whose name he never revealed. He had called home the
afternoon before his death to say he would be late for a family
gathering. Martinsburg police allowed his body to be embalmed before
family members were notified and warned hotel employees not to speak to
reporters. The hotel room was immediately scrubbed by a cleaning
service. Casolaro had told several friends and his brother that if
anything ever happened to him, not to believe it was an accident. And
his notes, which witnesses saw him carry into the hotel, were missing.

His death was ruled a suicide by Martinsburg and West Virginia
authorities several months later. Friends, relatives and some
investigators still cry foul.

A source close to retired Federal Judge Nicholas Bua (the Bush
Administration appointee who is investigating Inslaw) said Bua will not
come to any conclusions regarding CasolaroUs fate. "I donUt know if he
committed suicide or if it was murder," the source said. "But the
evidence is consistent with both theories. There are things that bother
me but ... certainly no one can be indicted on the evidence that is
available."

What does that mean? Either an independent investigation drums up more
evidence, or the case may never be solved.

The House Judiciary Committee may have written what could be called the
final word on Danny CasolaroUs inexplicable death: "As long as the
possibility exists that Danny Casolaro died as a result of his
investigation into the Inslaw matter, it is imperative that further
investigation be conducted." Q RLF



***********
InslawGate?
***********
Elliot Richardson, President NixonUs former attorney general (he was
fired when he refused to fire Archibald Cox during the Watergate
scandal) has been a counsel to Inslaw for nearly 10 years (he retired
this January).

In a Oct. 21, 1991 New York Times Op Ed, Richardson wrote: "This is not
the first time I have had to think about the need for an independent
investigator. I had been a member of the Nixon Administration from the
beginning when I was nominated as Attorney General in 1973. Confidence
in the integrity of the Watergate investigation could best be insured, I
thought, by entrusting it to someone who had no prior connection to the
White House. With Inslaw, the charges against the Justice Department
make the same course even more imperative.

"When the Watergate special prosecutor began his inquiry, indications of
the PresidentUs complicity were not as strong as those that now point to
a broad conspiracy implicating lesser Government officials in the theft
of InslawUs technology."



***********************
A Well-Covered Coverup?
***********************
The House Committee Report contained some no-holds-barred language on
the issue of stonewalling:

"One of the principle reasons the committee could not reach any
definitive conclusion about InslawUs allegations of a high criminal
conspiracy at Justice was the lack of cooperation from the Department,"
the report states. "Throughout the two Inslaw investigations, the
Congress met with restrictions, delays and outright denials to requests
for information and to unobstructed access to records and witnesses.

"During this committeeUs investigation, Attorney General Thornburgh
repeatedly reneged on agreements made with this committee to provide
full and open access to information and witnesses ... the Department
failed to provide all the documents subpoenaed, claiming that some of
the documents ... had been misplaced or accidentally destroyed."



***********************************************************
Rep. Jack Brooks and the House Committee On the Inslaw Case
***********************************************************
The string of lawsuits and widening allegations caught the eye of House
Judiciary Committee Chairman Jack Brooks, D-Texas, who in 1989 launched
a three-year investigation into the Inslaw affair. In the resulting
report, the Committee suggested that among others, Edwin Meese, while
presidential counselor and later as attorney general, and D. Lowell
Jensen, a former assistant and deputy attorney general and now a U.S.
district judge in San Francisco, conspired to steal PROMIS.

"There appears to be strong evidence," the report states, "as

indicated by the findings in two Federal Court proceedings as well as by
the committee investigation, that the Department of Justice Tacted
willfully and fraudulently,U and Ttook, converted and stole,U InslawUs
Enhanced PROMIS by Ttrickery fraud and deceit.U "

"While refusing to engage in good faith negotiations with Inslaw," the
report continues, "Mr. Brewer and Mr. Videnieks, with the approval of
high-level Justice Department officials, proceeded to take actions to
misappropriate the Enhanced PROMIS software."

Furthermore, the report states, "several individuals have stated under
oath that the Enhanced PROMIS software was stolen and distributed
internationally in order to provide financial gain to Dr. Brian and to
further intelligence and foreign policy objectives for the United
States."

Rep. Brooks told Wired that the report should be the starting point for
a grand jury investigation. The owners of Inslaw, Brooks said, were
"ravaged by the Justice Department ... treated like dogs.UU




copyright ) 1993 Wired Magazine