Danny Casolaro, Michael Riconosciuto, Robert Booth Nichols, and others were mentioned rather prominently in the final House of Representatives Report #102-857 released to the public on September 10, 1992. The Investigative Report, put together by the Committee on the Judiciary headed by Congressman Jack Brooks of Texas, “The Inslaw Affair,” summarized a three year investigation into the theft of the PROMIS software from Bill and Nancy Hamilton, owners of Inslaw Corporation in Washington D.C. (The investigators who handled the three-year probe were listed on the Report as James E. Lewin, Chief Investigator, and John D. Cohen, Investigator.)
Two federal court judges and the House Judiciary Committee ultimately concluded that “the Department of Justice acted willfully and fraudulently” and “took, converted and stole” Inslaw’s enhanced PROMIS software by “trickery, fraud and deceit.”
The story of INSLAW is unparalleled in U.S. history, but it is far from over. The pendulum is swinging back and the world has not heard the last from the Hamiltons.
For that reason I have recorded notable facts from the “The Inslaw Affair” investigative report as well as Bill Hamilton’s personal account in this chapter for purposes of historical relevance.
The Hamilton’s nightmare began in the 1970’s when the Law Enforcement Assistance Administration (LEAA) an agency of the U.S. Department of Justice, funded Inslaw to develop a standardized management information system to assist local and state law enforcement offices across the country in recordkeeping and tracking of criminal cases. PROMIS (Prosecutor’s Management Information System) was subsequently developed to meet criminal prosecutor workloads of large local prosecution offices; and by 1980, two of the largest U.S. Attorney’s Offices were also using PROMIS software for both criminal and civil cases.
During the 1970s, Inslaw was a non-profit, tax-exempt corporation called the Institute for Law and Social Research and which was funded almost entirely through government grants and contracts. When President Carter liquidated LEAA, the Hamilton’s Inslaw created a successor profit-making corporation, INSLAW, Inc., bought the assets of the predecessor Institute, and, in 1981, developed significant, privately-financed improvements to PROMIS and began commercially marketing the enhanced version of the software.
In March 1982, the Justice Department awarded Inslaw Inc. a $10 million, 3-year contract to implement in the 22 largest U.S. Attorneys Offices an earlier version of PROMIS that the predecessor Institute had licensed in 1980 for two other large U.S. Attorneys Offices. However, the three-year contract became embroiled in controversy when the government demanded that INSLAW deliver under the contract a version of PROMIS that the new INSLAW, Inc. had developed in 1981 with private funds.
“The Inslaw Affair” report outlined the conflict on the question of whether Inslaw had ownership of its privately funded “enhanced PROMIS,” which was installed at numerous U.S. Attorney’s Offices after a 1983 modification to the contract. Justice officials initially recognized Inslaw’s proprietary rights to any privately-funded enhancements to the original version of PROMIS, and even provided a letter to INSLAW to that effect in August 1982 following five months of meetings between Justice and INSLAW’s lawyers. The bankruptcy court ruled, however, that by November 1982, ignoring its own August 1982 letter to INSLAW, Justice had launched a scheme fraudulently to induce INSLAW to deliver under the contract a later, privately-financed version of PROMIS.
Inslaw attempted to resolve the matter several times through negotiation but was met largely with indifference or hostility by Department officials. At the start of 1984, Justice cancelled part of INSLAW’s contract for its own convenience while withholding payments due INSLAW on the remaining part of the contract. By February 1985, Justice had withheld at least $1.6 million in payments, forcing INSLAW to file for Chapter 11 protection from its creditors. Both the bankruptcy and district courts ruled that Justice then sought “unlawfully and without justification” to convert INSLAW from Chapter 11 reorganization into Chapter 7 liquidation to incapacitate the Company from litigating. Department officials steadfastly claimed that the Inslaw controversy was merely a contract dispute that INSLAW had mischaracterized to the media.
As a result of media exposure, Inslaw’s owners, Bill and Nancy Hamilton, received information that eventually led them to believe that the Department’s actions were part of a high level conspiracy within Justice to steal the “enhanced” version of PROMIS.
Inslaw alleged that former Attorney General Edwin Meese and Deputy Attorney General Lowell Jensen forced Inslaw into bankruptcy by intentionally creating a series of sham contract disputes which provided a pretext for Justice to put financial pressure on INSLAW by withholding increasingly larger amounts of money due INSLAW for its work under the three-year PROMIS Implementation Contract with U.S. Attorneys Offices.
The Hamiltons maintained that, after driving Inslaw into Chapter 11 in February 1985, Justice officials immediately attempted to force the conversion of Inslaw’s status to Chapter 7 (Liquidation). Such a change in bankruptcy status could have forced the sale of Inslaw’s assets, including “enhanced” PROMIS, to a rival computer software company such as Hadron, Inc. which had approached INSLAW in 1983 about buying the Company for the stated purpose of obtaining the PROMIS software so it could obtain federal contracts from its claimed friendship with then Presidential Counselor Edwin Meese. According to Hamilton, Hadron’s Chairman threatened him in 1983, when he declined any interest in INSLAW’s acquisition by Hadron, by saying ominously “we have ways of making you sell.”
Hadron, Inc. was controlled by the Biotech Capital Corporation, the holding company of Dr. Earl Brian, a Ronald Reagan crony. In his deposition to the House Judiciary Committee, Brian testified that Hadron had approximately 40 computer system contracts with U.S. intelligence agencies and the U.S. Department of Justice.
Attorney General Edwin Meese had previously worked with Dr. Brian in the cabinet of former California Governor Ronald Reagan and later at the Reagan White House, where Brian reported to Meese as the unpaid chairman of the White House Task Force on Health Care Cost Reduction during the first couple of years of the Reagan Administration. According to the Hamiltons, the Meese Justice Department launched Project EAGLE, the largest procurement in the Department’s history to provide uniform case management systems to every litigation office and investigative agency of the Justice Department, without explaining where the case management software was expected to come from. If Justice had succeeded in its unlawful 1985 scheme to force INSLAW into liquidation, PROMIS would have been sold at a liquidation auction, placing the buyer in an advantageous position for winning the huge Project EAGLE contract.
The Inslaw Affair report noted that information obtained by the Hamiltons through sworn affidavits of several individuals, including Ari Ben-Menashe, a former Israeli Mossad officer, and Michael Riconosciuto, who claimed to have ties to the intelligence community, indicated that one element of the Justice Department’s malfeasance against INSLAW was the modification of the ‘enhanced’ PROMIS software by individuals associated with the world of covert intelligence operations. The Hamiltons claimed that unauthorized, copyright-infringing modifications to PROMIS, including the insertion of a so-called “trap-door,” was part of a scheme by U.S. and Israeli intelligence to steal the intelligence secrets of foreign governments by selling them a trap-door version of PROMIS.
The Hamiltons also presented information indicating that PROMIS had been distributed to U.S. intelligence and law enforcement agencies such as the CIA, NSA, DIA, FBI, and DEA.
The House Judiciary Committee focused its investigative efforts on two principal questions: (1) Did high level Department of Justice officials convert, steal or otherwise misappropriate Inslaw’s PROMIS software and attempt to put the company out of business? And (2) did high level DOJ 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?
The Judiciary Committee concluded that there was strong evidence to indicate that the Justice Department “fraudulently took, converted and stole Inslaw’s ‘enhanced’ PROMIS by trickery, fraud and deceit, “ and that the actions taken against Inslaw by the Justice Department’s project manager had been undertaken at the direction of top officials of the Justice Department.
Two federal court decisions were mentioned in The Inslaw Affair report: Bankruptcy Court Judge George Bason found that Mr. C. Madison “Brick” Brewer’s [the government’s PROMIS project manager] recommendation that the Inslaw contract be cancelled at a meeting on April 14, 1982 of PROMIS Project Team members, when the three-year contract was only one month old, “constituted a smoking gun that clearly evidenced Brewer’s intense bias against Inslaw, [and] his single-minded intent to drive Inslaw out of business ---.”
By his own admission, Mr. Brewer had become upset when Inslaw claimed that it had made enhancements to the earlier version of PROMIS using private funds. In his view, the government was entitled to use every version of PROMIS without having to pay license fees to INSLAW.
The Judiciary Committee added that it was clear from the record that Mr. Brewer and Mr. Peter Videnieks (the government’s PROMIS contracting officer), supported by high level Justice officials, continued to confront Inslaw at every turn.
Senior U.S. District Court William Bryant, Jr. subsequently stated in the second ruling: “There was unending contention about payments under this contract and the rights of the respective parties – 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.”
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. Meanwhile Inslaw had installed PROMIS at the 20 largest U.S. Attorney’s offices across the nation as required by the contract.
Mr. Brewer and Mr. Videnieks knew that Inslaw had installed “enhanced” PROMIS in 20 of the largest U.S. Attorneys Offices, yet without notice, and certainly without permission, the Department of Justice illegally copied the privately-financed version of PROMIS and installed it in 25 more U.S. Attorneys Offices.
The bankruptcy court ruled that “[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).
It is worth noting that Deputy Attorney General Lowell Jensen, who headed the Department’s PROMIS Oversight Committee, and who kept a close watch over the administration of the contract as well as being involved in every major decision, had also once worked with Attorney General Edwin Meese in the Alameda County District Attorney’s Office. Jensen later became a U.S. District Court Judge in San Francisco, after serving at the Justice Department between 1981 and 1986 successively as Assistant Attorney General in charge of the Criminal Division, Associate Attorney General, and Deputy Attorney General.
Mike Abbell, the attorney whom Danny Casolaro had been investigating during the last week of his life, had served as Director of the Office of International Affairs of the Criminal Division of the Justice Department until 1984 when he left to become counsel at the law firm of Kaplan, Russin and Becchi – so Jensen and Abbell had served in the Criminal Division of the DOJ at the same time between 1981 and 1982.
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Bill Hamilton, President of INSLAW, Inc., had become “the Keeper of the Flame” in this never-ending saga: Through interviews and e-mail communications, I was able to glean his personal behind-the-scenes account of what had transpired. This is a summary of what Hamilton provided, as follows:
In May 1988, just a few months after the federal bankruptcy court in Washington, D.C. issued fully-litigated findings that the Justice Department had stolen the PROMIS legal case management software from INSLAW, Inc. in the early 1980s “through trickery, fraud and deceit,” and then attempted to drive INSLAW out of business so the Company would be unable to litigate, Ronald LeGrand, the Chief Investigator for the Senate Judiciary Committee, telephoned Hamilton, to pass on information from someone he described as a trusted senior Justice Department career official who had been in the Criminal Division of the Justice Department since the time of the Watergate scandal under President Nixon.
Hamilton had recently explained to LeGrand his belief that the Reagan Administration had stolen PROMIS with the intention of using the stolen software as the basis for the award of a massive Justice Department computerization contract to a friend of the Reagan Administration. LeGrand told Hamilton that his source had asked him to tell Mr. and Mrs. Hamilton the following: “What you think happened, did happen. You are not crazy. But you do not know squat about how dirty the INSLAW case really is. If you ever learn even half of it, you will be sickened. INSLAW is a lot dirtier for the Department of Justice, in its breadth and depth, than Watergate. The Justice Department has been compromised at every level on the INSLAW case.”
The source also sent word to INSLAW that the Criminal Division had served as the nerve center for the scheme to drive INSLAW out of business by engineering sham contract disputes. INSLAW had no idea in 1988, when the Chief Investigator of the Senate Judiciary Committee passed on the information, what the government had done with the PROMIS software that this senior career prosecutor viewed as sickening.
Senior U.S. District Judge William Bryant, Jr. affirmed the bankruptcy court’s findings a year later, in November 1989, in a separate opinion of almost 50 pages, following a de novo trial. Notwithstanding these two strongly worded federal court decisions, the Justice Department failed to settle with INSLAW, and its Office of Professional Responsibility promptly cleared of any wrongdoing every Justice Department official criticized by the bankruptcy court. Moreover, the Justice Department exhibited no interest in investigating indications that the malfeasance against INSLAW might be even more widely-ramified.
After writing letters to Attorney General Richard Thornburgh twice about the need to investigate such indications but without receiving any reply, INSLAW’s Counsel, and former U.S. Attorney General, Elliot Richardson, filed a lawsuit against Thornburgh in federal district court in Washington, D.C. for failing and refusing to carry out his clear duty to enforce the federal criminal laws in the INSLAW case. The court ruled, however, that it did not have the legal authority to intrude into the exercise of prosecutorial discretion, no matter how questionable the attorney general’s exercise of his discretion might appear to be.
It was not until early 1991 that INSLAW obtained the first evidence, in the form of affidavits, about a much broader PROMIS. Several individuals, each of whom claimed under oath to have worked for U.S. or Israeli intelligence, testified that the Justice Department had been covertly disseminating PROMIS since the early 1980s for various intelligence-tracking applications.
INSLAW Counsel Richardson asked retired four-star Admiral Daniel Murphy, who had served as Richardson’s Military Advisor when Richardson was Secretary of Defense under Nixon, and who later held two of the top U.S. intelligence posts (Deputy Director of the CIA under Ford and Undersecretary of Defense for Intelligence under Carter), to review the plausibility of the claims about the covert dissemination of PROMIS for intelligence-tracking applications, and also to give his opinion on whether the claimed intelligence uses could explain Attorney General Thornburgh’s otherwise inexplicable failure to enforce the federal criminal laws.
After reading the affidavits and the INSLAW lawsuit against Thornburgh, Murphy told Richardson and Hamilton that he was sorry to say that there was nothing implausible about any of the claims, including the claim by Michael Riconosciuto that he had modified PROMIS for U.S. intelligence on an Indian reservation in southern California; that the available evidence made it look like an NSA operation; and that if it were an NSA operation, it would explain Thornburgh’s behavior because Thornburgh would not have needed to receive a call from the White House to know that his job was to stonewall “until the cows come home”.
Elliot Richardson passed away at the end of 1999. In 2001, Hamilton contacted Admiral Murphy again and gave him an approximately 50-page INSLAW summary of evidence revealing that the Justice Department began misappropriating PROMIS in 1982 for three separate intelligence projects: (1) NSA’s deployment of PROMIS to banks to enable NSA to track wire transfers of money and letters of credit; (2) Israeli intelligence’s sale of a trap-door version of PROMIS to foreign governments so Israel and the United States could covertly intercept their intelligence secrets; and (3) the CIA’s deployment of PROMIS throughout the U.S. Government as the standard database software for the gathering and disseminating of U.S. intelligence information.
Murphy told Hamilton that the INSLAW summary eliminated any doubt about what had happened and that the INSLAW case needed to be settled. He warned Hamilton, however, that government officials would “regard it as their patriotic duty to look INSLAW’s lawyer in the eyes and lie”, making it essential that INSLAW find another outstanding lawyer like Elliot Richardson to represent the Company in seeking compensation.
Shortly before introducing Mr. and Mrs. Hamilton to C. Boyden Gray one week after the September 11, 2001 terrorist attacks, and asking Gray “to become the John Adams of the INSLAW case” and represent INSLAW simply because it was the right thing to do, Murphy said something to Hamilton that Hamilton now suspects may have been an allusion to the use of the NSA bank surveillance version of PROMIS to launder drug profits.
In September 2001, Murphy, who had served as Chief of Staff to Vice President Bush during the first term of the Reagan Administration when the PROMIS misappropriations began, told Hamilton that it was his “hunch” that there was still another use of PROMIS that INSLAW had not yet discovered, that it “involves something so seriously wrong that money alone cannot cure the problem,” and that the government might never compensate INSLAW unless the Company discovers that additional use of PROMIS.
Unfortunately, Admiral Murphy passed away suddenly several days later on September 21, 2001, and Hamilton was never able to obtain clarification from Murphy where his hunch had originated from relative to “still another use of PROMIS that INSLAW had not yet discovered.”
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As a postscript, Bill Hamilton later mentioned to me that, in retrospect, he had come to believe that the “other” use of PROMIS involved laundering money from drug profits. He said he believed that “the main role of the Cabazon/Wackenhut Joint Venture was connected to government-sanctioned drug trafficking and money laundering by organized crime groups like the Gambino Family and groups like the Contras, and that Michael Riconoscuito’s job was to help these groups access NSA’s bank surveillance version of PROMIS to launder the proceeds from the drug sales.”