-Caveat Lector- For those who have forgotten: ---------- Forwarded message ---------- Date: Sat, 23 Nov 1996 03:30:36 +0000 From:[EMAIL PROTECTED] To: [EMAIL PROTECTED] Subject: ciadrugs] Inslaw Article 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 '80s. Why #2: Designed as case-management software for federal prosecutors, PROMIS has the ability to combine disparate databases, and to track people by their involvement with the legal system. Hamilton and others now claim that the DOJ has modified PROMIS to monitor intelligence operations, agents and targets, instead of legal cases. By late November, 1992 the nation had turned its attention from the election-weary capital to Little Rock, Ark., where a new generation of leaders conferred about the future. But in a small Washington D.C. office, Bill Hamilton, president and founder of Inslaw Inc., and Dean Merrill, a former Inslaw vice president, were still very much concerned about the past. The two men studied six photographs laid out before them. "Have you ever seen any of these men?" Merrill was asked. Immediately he singled out the second photo. In a separate line up, Hamilton's secretary singled out the same photo. Both said the man had visited Inslaw in February 1983 for a presentation of PROMIS, Inslaw's bread-and-butter legal software. Hamilton, who knew the purpose of the line-up, identified the visitor as Dr. Ben Orr. At the time of his visit, Orr claimed to be a public prosecutor from Israel. Orr was impressed with the power of PROMIS (Prosecutors Management Information Systems), which had recently been updated by Inslaw to run on powerful 32-bit VAX computers from Digital Equipment Corp. "He fell in love with the VAX version," Hamilton recalled. Dr. Orr never came back, and he never bought anything. No one knew why at the time. But for Hamilton, who has fought the Department of Justice (DOJ) for almost 10 years in an effort to salvage his business, once his co- workers recognized the man in the second photo, it all made perfect sense. For the second photo was not of the mysterious Dr. Orr, it was of Rafael Etian, chief of the Israeli defense force's anti-terrorism intelligence unit. The Department of Justice sent him over for a look at the property they were about to "misappropriate," and Etian liked what he saw. Department of Justice documents record that one Dr. Ben Orr left the DOJ on May 6, 1983, with a computer tape containing PROMIS tucked under his arm. What for the past decade has been known as the Inslaw affair began to unravel in the final, shredder-happy days of the Bush administration. According to Federal court documents, PROMIS was stolen from Inslaw by the Department of Justice directly after Etian's 1983 visit to Inslaw (a later congressional investigation preferred to use the word "misappropriated"). And according to sworn affidavits, PROMIS was then given or sold at a profit to Israel and as many as 80 other countries by Dr. Earl W. Brian, a man with close personal and business ties to then-President Ronald Reagan and then-Presidential counsel Edwin Meese. A House Judiciary Committee report released last September found evidence raising "serious concerns" that high officials at the Department of Justice executed a pre-meditated plan to destroy Inslaw and co-opt the rights to its PROMIS software. The committee's call for an independent counsel have fallen on deaf ears. One journalist, Danny Casolaro, died as he attempted to tell the story (see sidebar), and boxes of documents relating to the case have been destroyed, stolen, or conveniently "lost" by the Department of Justice. But so far, not a single person has been held accountable. WIRED has spent two years searching for the answers to the questions Inslaw poses: Why would Justice steal PROMIS? Did it then cover up the theft? Did it let associates of government officials sell PROMIS to foreign governments, which then used the software to track political dissidents instead of legal cases? (Israel has reportedly used PROMIS to track troublesome Palestinians.) The implications continue: that Meese profited from the sales of the stolen property. That Brian, Meese's business associate, may have been involved in the October Surprise (the oft-debunked but persistent theory that the Reagan campaign conspired to insure that US hostages in Iran were held until after Reagan won the 1980 election, see sidebar). That some of the moneys derived from the illegal sales of PROMIS furthered covert and illegal government programs in Nicaragua. That Oliver used PROMIS as a population tracking instrument for his White House-based domestic emergency management program. Each new set of allegations leads to a new set of possibilities, which makes the story still more difficult to comprehend. But one truth is obvious: What the Inslaw case presents, in its broadest possible implications, is a painfully clear snapshot of how the Justice Department operated during the Reagan-Bush years. This is the case that won't go away, the case that shows how justice and public service gave way to profit and political expediency, how those within the administration's circle of privilege were allowed to violate private property and civil rights for their own profit. Sound like a conspiracy theorist's dream? Absolutely. But the fact is, it's true. The Background Imagine you are in charge of the legal arm of the most powerful government on the face of the globe, but your internal information systems are mired in the archaic technology of the 1960s. There's a Department of Justice database, a CIA database, an Attorney's General database, an IRS database, and so on, but none of them can share information. That makes tracking multiple offenders pretty darn difficult, and building cases against them a long and bureaucratic task. Along comes a computer program that can integrate all these databases, and it turns out its development was originally funded by the government under a Law Enforcement Assistance Administration grant in the 1970s. That means the software is public domain ... free! Edwin Meese was apparently quite taken with PROMIS. He told an April 1981 gathering of prosecutors that PROMIS was "one of the greatest opportunities for [law enforcement] success in the future." In March 1982, Inslaw won a $9.6 million contract from the Justice Department to install the public domain version of PROMIS in 20 US Attorney's offices as a pilot program. If successful, the company would install PROMIS in the remaining 74 federal prosecutors' offices around the country. The eventual market for complete automation of the Federal court system was staggering: as much as $3 billion, according to Bill Hamilton. But Hamilton would never see another federal contract. Designed as a case-management system for prosecutors, PROMIS has the ability to track people. "Every use of PROMIS in the court system is tracking people," said Inslaw President Hamilton. "You can rotate the file by case, defendant, arresting officer, judge, defense lawyer, and it's tracking all the names of all the people in all the cases." What this means is that PROMIS can provide a complete rundown of all federal cases in which a lawyer has been involved, or all the cases in which a lawyer has represented defendant A, or all the cases in which a lawyer has represented white-collar criminals, at which stage in each of the cases the lawyer agreed to a plea bargain, and so on. Based on this information, PROMIS can help a prosecutor determine when a plea will be taken in a particular type of case. But the real power of PROMIS, according to Hamilton, is that with a staggering 570,000 lines of computer code, PROMIS can integrate innumerable databases without requiring any reprogramming. In essence, PROMIS can turn blind data into information. And anyone in government will tell you that information, when wielded with finesse, begets power. Converted to use by intelligence agencies, as has been alleged in interviews by ex-CIA and Israeli Mossad agents, PROMIS can be a powerful tracking device capable of monitoring intelligence operations, agents and targets, instead of legal cases. At the time of its inception, PROMIS was the most powerful program of its type. But a similar program, DALITE, was developed under another LEAA grant by D. Lowell Jensen, the Alameda County (Calif.) District Attorney. In the mid-1970s, the two programs vied for a lucrative Los Angeles County contract and Inslaw won out. (Early in his career, Ed Meese worked under Jensen at the Alameda County District Attorney's office. Jensen was later appointed to Meese's Justice Department during the Reagan presidency.) In the final days of the Carter administration, the LEAA was phased out. Inslaw had made a name for itself and Hamilton wanted to stay in business, so he converted Inslaw to a for-profit, private business. The new Inslaw did not own the public domain version of PROMIS because it had been developed with LEAA funds. But because it had funded a major upgrade with its own money, Inslaw did claim ownership of the enhanced PROMIS. Through his lawyers, Hamilton sent the Department of Justice a letter outlining his company's decision to go private with the enhanced PROMIS. The letter specifically asked the DOJ to waive any proprietary rights it might claim to the enhanced version. In a reply dated August 11, 1982, a DOJ lawyer wrote: "To the extent that any other enhancements (beyond the public domain PROMIS) were privately funded by Inslaw and not specified to be delivered to the Department of Justice under any contract or other agreement, Inslaw may assert whatever proprietary rights it may have." Arnold Burns, then a deputy attorney general, clarified the DOJ's position in a now-critical 1988 deposition: "Our lawyers were satisfied that Inslaw's lawyers could sustain the claim in court, that we had waived those [proprietary] rights." The enhancements Inslaw claimed were significant. In the 1970s the public- domain PROMIS was adapted to run on Burroughs, Prime, Wang and IBM machines, all of which used less-powerful 16-bit architectures. With private funds, Inslaw converted that version of PROMIS to a 32-bit architecture running on a DEC VAX minicomputer. It was this version that Etian saw in 1983. It was this version that the DOJ stole later that year through a pre-meditated plan, according to two court decisions. The Dispute Grows On a gorgeous spring morning in 1981, Lawrence McWhorter, director of the Executive Office for US Attorneys, put his feet on his desk, lit an Italian cigar, eyed his subordinate Frank Mallgrave and said through a haze of blue smoke: "We're out to get Inslaw." McWhorter had just asked Mallgrave to oversee the pilot installation of PROMIS, a job Mallgrave refused, unaware at the time that he was being asked to participate in Inslaw's deliberate destruction. "We were just in his office for what I call a B.S. type discussion," Mallgrave told WIRED. "I remember it was a bright sunny morning.... (McWhorter) asked me if I would be interested in assuming the position of Assistant Director for Data Processing...basically working with Inslaw. I told him...I just had no interest in that job. And then, almost as an afterthought, he said 'We're out to get Inslaw.' I remember it to this day." After Mallgrave refused the job, McWhorter gave it to C. Madison "Brick" Brewer. Brewer at one time worked for Inslaw, but was allowed to resign when Hamilton found his performance inadequate, according to court documents. Brewer was then hired into the Department of Justice specifically to oversee the contract of his former employer. (The DOJ's Office of Professional Responsibility ruled there was no conflict of interest.) He would later tell a federal court that everything he did regarding Inslaw was approved by Deputy Attorney General Lowell Jensen, the same man who once supervised DALITE, the product which lost a major contract to Inslaw in the 1970s. Brewer, who now refuses to comment on the Inslaw case, was aided in his new DOJ job by Peter Videnieks. Videnieks was fresh from the Customs Service, where he oversaw contracts between that agency and Hadron, Inc., a company controlled by Meese and Reagan-crony Earl Brian. Hadron, a closely held government systems consulting firm, was to figure prominently in the forthcoming scandal. According to congressional and court documents, Brewer and Videnieks didn't tarry in their efforts to destroy Inslaw. After Inslaw's installation of public domain PROMIS had begun, the DOJ claimed that Inslaw, which was supporting the installation with its own computers running the enhanced version of PROMIS, was on the brink of bankruptcy. Although Inslaw was contracted to provide only the public domain PROMIS, the DOJ demanded that Inslaw turn over the enhanced version of PROMIS in case the company could not complete its contractual obligations. Inslaw agreed to this contract modification, but on two conditions: that the DOJ recognize Inslaw's proprietary rights to enhanced PROMIS, and that the DOJ not distribute enhanced PROMIS beyond the boundaries of the contract (the 94 US Attorney's offices.) The DOJ agreed to these conditions, but requested Inslaw prove it had indeed created enhanced PROMIS with private funds. Inslaw said it would, and the enhanced software was given to the DOJ. Once the DOJ had control of PROMIS, it dogmatically refused to verify that Inslaw had created the enhancements, essentially rendering the contract modification useless. When Inslaw protested, the DOJ began to withhold payments. Two years later, Inslaw was forced into bankruptcy. As the contract problems with DOJ emerged, Hamilton received a phone call from Dominic Laiti, chief executive of Hadron. Laiti wanted to buy Inslaw. Hamilton refused to sell. According to Hamilton's statements in court documents, Laiti then warned him that Hadron had friends in the government and if Inslaw didn't sell willingly, it would be forced to sell. Those government connections included Peter Videnieks over at the Justice Department, according to John Schoolmeester, Videnieks' former Customs Service supervisor. Laiti and Videnieks both deny ever meeting or having any contact, but Schoolmeester has told both WIRED and the House Judiciary Committee it was "impossible" for the pair not to know each other because of the type of work and oversight involved in Hadron's relationship with the Customs Service. Schoolmeester also said that because of Brian's relationship with then-President Reagan (see sidebar), Hadron was considered an "inside" company. The full-court press continued. In 1985 Allen & Co., a New York investment banking concern with close business ties to Earl Brian, helped finance a second company, SCT, which also attempted to purchase Inslaw. That attempt also failed, but in the process a number of Inslaw's customers were warned by SCT that Inslaw would soon go bankrupt and would not survive reorganization, Hamilton said in court documents. Broke and with no friends in the government, on June 9, 1986, Inslaw filed a $30 million lawsuit against the DOJ in bankruptcy court. Inslaw's attorney for the case (he was later fired from his firm under extremely suspicious circumstances -- see sidebar) was Leigh Ratiner of the Wash- ington firm Dickstein, Shapiro & Morin. Ratiner chose bankruptcy court for the filing based on the premise that Justice, the creditor, had control of PROMIS. He explained recently, "It was forbidden by the BankruptcyAct for the creditor to exercise control over the debtor property. And that theory -- that the Justice Department was exercising control -- was the basis that the bankruptcy court had jurisdiction. "As far as I know, this was the first time this theory had been used," Ratiner told WIRED. "This was ground-breaking. It was, in fact, a legitimate use of the code." It worked, but to only a point. In 1987, Washington, D.C., bankruptcy judge George Bason ruled in a scathing opinion that Justice had stolen PROMIS through "trickery, fraud and deceit." He awarded Inslaw $6.8 million in damages and, in the process, found that Justice Department officials made a concerted effort to bankrupt Inslaw and place the company's enhanced PROMIS up for public auction (where it would then be fodder for Brian's Hadron). Bason's findings of fact relied on testimony from Justice employees and internal memoranda, some of which outlined a plan to "get" PROMIS software. Bason cited the testimony of a number of the government's defense witnesses as being "unbelievable" and openly questioned the credibility of others. In his 216-page ruling, Bason cites numerous instances where testimony from government witnesses is contradictory. (In a private interview with WIRED he noted that as a bankruptcy judge he was precluded from bringing perjury charges against government employees, but he had recommended to various congressional panels that an inquiry was necessary.) When the DOJ appealed, a federal district court affirmed Bason, ruling that there was "convincing, perhaps compelling support for the findings set forth by the bankruptcy court." But the D.C. Circuit Court of Appeals reversed the case on a legal technicality, finding that the bankruptcy court had no jurisdiction to hear the damages claim. A petition to the Supreme Court in October 1991 was denied review. The IRS got into the act as well. Inslaw was audited several times in the course of their battles with the Department of Justice. In fact, the day following the bankruptcy trial, S. Martin Teel, a lawyer for the IRS, requested that Judge Bason liquidate Inslaw. Bason ruled against Teel. As a coda to the lawsuit, Bason, a respected jurist, was not re-appointed to the bench when his term expired. His replacement? S. Martin Teel. (Bason has testified before Congress that the DOJ orchestrated his replacement as punishment for his rulings in the Inslaw case.) But Inslaw's troubles did not end with bankruptcy. Frustrated by Attorney General Dick Thornburgh's stubborn refusal to investigate the DOJ or appoint an independent prosecutor, Elliot Richardson, President Nixon's former attorney general and a counsel to Inslaw for nearly 10 years (he retired this January), filed a case in U.S. District Court demanding that Thornburgh investigate the Inslaw affair. In 1990, the court ruled that a prosecutor's decision not to investigate -- "no matter how indefensible" -- cannot be corrected by any court. Another loss for Inslaw. Broke and still attempting to revive itself, Inslaw has not refiled its suit, preferring to wait for a new administration and a new DOJ. By this time, the spinning jennies of the conspiracy network had grasped the Inslaw story and were all-too-eager to put their stitch in the unraveling yarn. According to documents and affidavits filed during court cases and congressional inquiries, the Hamiltons and their lawyers began receiving phone calls, visits and memos from a string of shadowy sources, many of them connected to international drug, spy and arms networks. Their allegations: That Earl Brian helped orchestrate the October Surprise for then-candidate Reagan, and that Brian's eventual payment for that orchestration was a cut of the PROMIS action. Brian and the DOJ then resold or gave PROMIS to as many as 80 foreign and domestic agencies. (Brian adamantly denies any connection to Inslaw or the October Surprise.) These sources, which include ex-Israeli spy Ari Ben Menashe and a computer programmer of dubious reputation, Michael Riconosciuto, allege that PROMIS had been further modified by the DOJ so that any agency using it could be subject to undetected DOJ eavesdropping -- a sort of software Trojan Horse. If these allegations are true, by the late 1980s PROMIS could have become the digital ears of the US Government's spy effort -- both internal and external. Certainly something the administration wouldn't want nosy congressional committees looking into. The diaphanous web of more than 30 sources who offered information to Inslaw were not "what a lawyer might consider ideal witnesses," Richardson admitted. But their stories yielded a surprising consistency. "The picture that emerges from the individual statements is remarkably detailed and consistent," he wrote in an Oct. 21, 1991 New York Times Op Ed. The Congressional Investigation The string of lawsuits and widening allegations caught the eye of House Judiciary Committee Chairman Jack Brooks, D-Texas, who in 1989 launched a three-year investigation into the Inslaw affair. In the resulting report, the Committee suggested that among others, Edwin Meese, while presidential counselor and later as attorney general, and D. Lowell Jensen, a former assistant and deputy attorney general and now a US district judge in San Francisco, conspired to steal PROMIS. "High government officials were involved," the report states. "... (S)everal individuals testified under oath that Inslaw's PROMIS software was stolen and distributed internationally in order to provide financial gain and to further intelligence and foreign policy objectives." "Actions against Inslaw were implemented through the Project Manager (Brick Brewer) from the beginning of the contract and under the direction of high- level Justice Department officials," the report says. "The evidence...demonstrates that high-level Department officials deliberately ignored Inslaw proprietary rights and misappropriated its PROMIS software for use at locations not covered under contract with the company." The Committee report accuses former Attorney General Dick Thornburgh of stonewalling congressional inquiries, turning a blind eye to the possible destruction of evidence within the Justice Department, and ignoring the DOJ's harassment of employees questioned by Congressional investigators. Rep. Brooks told WIRED that the report should be the starting point for a grand jury investigation. The owners of Inslaw, Brooks said, were "ravaged by the Justice Department...treated like dogs." Brooks' committee voted along party lines, 21-13, to adopt the investigative report on Aug. 11, 1992. The report asked then-Attorney General William Barr to "immediately settle Inslaw's claims in a fair and equitable manner" and "strongly recommends that the Department seek the appointment of an Independent Counsel." As he did with the burgeoning Iraqgate scandal and as his predecessor did before him, Barr refused to appoint an independent counsel to the Inslaw case, relying instead on a retired federal judge, in this case Nicholas Bua, who reported to Barr alone. In other words, the DOJ was responsible for investigating itself. "The way in which the Department of Justice has treated this case, to me, is inexplicable," Richardson told WIRED. "I think the circumstances most strongly suggest that there must be wider ramifications." The Threads Unravel Proof of those wider ramifications are just starting to leak out, as DOJ and other agency employees begin to talk, although for the most part they spoke to WIRED only on condition of anonymity. On Nov. 20, 1990, the Judiciary Committee wrote a letter asking CIA director William Webster to help the committee "by determining whether the CIA has the PROMIS software." The official reply on December 11th: "We have checked with Agency components that track data processing procurement or that would be likely users of PROMIS, and we have been unable to find any indication that the Agency ever obtained PROMIS software." But a retired CIA official whose job it was to investigate the Inslaw allegations internally told WIRED that the DOJ gave PROMIS to the CIA. "Well," the retired official told WIRED, "the congressional committees were after us to look into allegations that somehow the agency had been culpable of what would have been, in essence, taking advantage of, like stealing, the technology [PROMIS]. We looked into it and there was enough to it, the agency had been involved." How was the CIA involved? According to the same source, who requested anonymity, the agency accepted stolen goods, not aware that a major scandal was brewing. In other words, the DOJ robbed the bank, and the CIA took a share of the plunder. But the CIA was not the only place where illegal versions of PROMIS cropped up. Canadian documents (held by the House Judiciary Committee and obtained by WIRED) place PROMIS in the hands of various Canadian government agencies. These documents include two letters to Inslaw from Canadian agencies requesting detailed user manuals -- even though Inslaw has never sold PROMIS to Canada. 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