The INSLAW Octopus


Mar/April, 1993

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


Bill Hamilton, Inslaw & PROMIS


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.

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The INSLAW Octopus (continued)


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


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.

<< Page 1 Page 3 >>



The INSLAW Octopus (continued)


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


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.

<< Page 2 Page 4 >>

he INSLAW Octopus (continued)


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"


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


"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.)

<< Page 3 Page 5 >>

The INSLAW Octopus (continued)


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


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."

<< Page 4 Page 6 >>

The INSLAW Octopus (continued)


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


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


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


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


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. Canadian officials now claim the

letters were in error.

And, of course, the software was transferred to Rafael Etian's

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 Department's 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 '80s because it just changed the

whole intelligence outlook. The whole form of intelligence

collection changed. This whole thing changed it." PROMIS, Ben

Menashe said, was perfect for tracking Palestinians and other

political dissidents.

<< Page 5 Page 7 >>



The INSLAW Octopus (continued)


(Ben Menashe's 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 DOJ's 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 Reagan's 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 Nixon's enemies list or Sen. Joe McCarthy's

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 North's FEMA dealings was


A Thorough Cleaning at the White House?

If the case against the Department of Justice is so solid, why

hasn't 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 WIRED's 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 Clinton's inauguration.

But a source close to Bua's 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?

Bua's final recommendation, expected sometime before Clinton's

inauguration, is that the Inslaw Affair "requires further

investigation," the source said. That conclusion mirrors the

House Judiciary Committee's 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 Bua's 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.

<< Page 6 Page 8 >>

The INSLAW Octopus (continued)


SIDEBARS to the Inslaw Article

Earl W. Brian - The Consumate Insider

Dr. Earl W. Brian has made quite a career

of riding Reagan and Meese's 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 - as Secretary

of Health - with then-Governor Reagan's

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 - surprise - stolen computer

tapes. The tapes, which contained records of 70,000 state

welfare files, were eventually returned - 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 Meese's two children, according to information

made public during Meese's confirmation hearings for Attorney


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. That's quite a

political plum.

One possibility is Ed and Ursula Meese's financial connections to

Brian. Another is a payoff for Brian's 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 Network's

financial dealings were under investigation by a Los Angeles

Grand Jury, according to sources who have testified before it. -


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. 17-21, 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 Reagan's 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."

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 Brian's 1980 trip, Pasztor

said, "These are political questions and I don't 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. - RLF

Earl W. Brian: Closet Spook?

Michael Riconosciuto, a computer programmer and chemist who

surfs the spooky fringe of the guns-'n'-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


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., Sheriff's

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 North's 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," and Michael Riconosciuto. - 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 Attorney's office.

Jensen was later appointed as Deputy Attorney General into

Meese's 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 Israel's PROMIS to Crush the Infitada?

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 '80s because

it just changed the whole intelligence outlook. The whole form of

intelligence collection changed. This whole thing changed it."

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 DOJ's command center.

Who Fired Inslaw's Lawyer?

As the Inslaw-DOJ battle was joined in bankruptcy court,

Inslaw's 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 Menashe's


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

written in Hebrew, requesting funds for "a lawyer." 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 Ratiner's settlement

payment. "The money was transferred, $600,000, to Hadron," he

said. As to why Hadron was used, Ben Menashe claims:

"Because [Brian] was involved quite deeply." 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 Menashe's

figures were correct, Ratiner said, "I can't comment because it

would be the same as revealing them." WIRED located a deep

background source who confirmed that the amount was "correct

almost to the penny."

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," he said. "Why is it that everyone who comes in

contact with the Inslaw case becomes a victim?" - 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. Casolaro's 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.

Casolaro's 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


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 Casolaro's fate. "I

don't 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 Casolaro's 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." - RLF


Elliot Richardson, President Nixon's 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 President's complicity were not as strong as

those that now point to a broad conspiracy implicating lesser

Government officials in the theft of Inslaw's 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 Inslaw's 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 committee's 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


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 'acted willfully and fraudulently,' and 'took, converted

and stole,' Inslaw's Enhanced PROMIS by 'trickery fraud and

deceit.' "

"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."

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