Over the life of the contract, INSLAW made several attempts to reach an agreement with the Department over its proprietary rights to the Enhanced PROMIS software. The Department, however, steadfastly refused to conduct any meaningful negotiations and exhibited little inclination to resolve the controversy. In the meantime, INSLAW was pushed to the brink of financial ruin because the Department withheld at least $1.6 million in critical contract payments on questionable grounds, and in February 1985 was forced to file for protection under chapter 11 of the Bankruptcy Code in order to stay economically viable. INSLAW at this time had installed PROMIS at the 20 largest U.S. attorneys' offices across the country as required by the contract.7 The Department had earlier canceled installation of PROMIS at the 74 smaller offices.

While refusing to engage in good faith negotiations with INSLAW, Mr. Brewer and Mr. Videnieks, with the approval of high level Justice Department officials, proceeded to take actions to misappropriate the Enhanced PROMIS software. These officials knew that INSLAW had installed Enhanced PROMIS at the 20 sites. Yet, without notice, and certainly without permission, the Department of Justice illegally copied INSLAW's Enhanced PROMIS software and installed it eventually at 25 additional U.S. attorneys' offices. The Department reportedly also brought another 31 U.S. attorneys, offices "on-line" to Enhanced PROMIS systems via telecommunications. INSLAW first learned of these unauthorized actions in September 1985, and notified the Department that it must remove the Enhanced PROMIS software or arrange for license agreements. When the Department refused, INSLAW subsequently filed a claim against Justice in the Federal Bankruptcy Court which eventually led to the Bankruptcy's Court's finding that the Department's actions "were done in bad faith, vexatiously, in wanton disregard of the law and the facts, and for oppressive reasons" to drive INSLAW out of business and to convert, by trickery, fraud and deceit, INSLAW's PROMIS software. When the case was appealed by the Department, Senior District Court Judge William Bryant concurred with the Bankruptcy Court and was very critical of the Department's handling of the case. In his ruling, at 49a, Judge Bryant stated:

The Government accuses the bankruptcy court of looking beyond the bankruptcy proceeding to find culpability by the Government. What is strikingly apparent from the testimony and depositions of key witnesses and many documents is that INSLAW performed its contract in a hostile environment that extended from the higher echelons of the Justice Department to the officials who had the day-to-day responsibility for supervising its work. [Emphasis added.]

Recently, the posture of some Department officials has been to attempt to exonerate the Department's handling of the INSLAW matter by citing the fact that the Court of Appeals has vacated the Bankruptcy and District Courts' judgment involving illegal misconduct of the Department including violations of the automatic stay provisions of the Bankruptcy Code. However, the D.C. Circuit's opinion was grounded primarily on jurisdictional questions and did not address the substantive merits of the findings of fact and conclusions of law of either the Bankruptcy Court or the ruling of the U.S. District Court.

Based on the facts presented in court and the committee's review of Department records, it does indeed appear that Justice officials, including Mr. Brewer and Mr. Videnieks, never intended to fully honor the proprietary rights of INSLAW or bargain in good faith with the company. The Bankruptcy Court found that:

Š [The Department] engaged in an outrageous, deceitful, fraudulent game of cat and mouse, demonstrating contempt for both the law and any principle of fair dealing. [Finding No. 266 at 138.]

As the Bankruptcy and District Courts found on the merits, it is very unlikely that Mr. Brewer and Mr. Videnieks acted alone to violate the proprietary rights of INSLAW in this matter. In explaining his own actions, Mr. Brewer, the project manager, has repeatedly stated that he was not acting out any personal vendetta against INSLAW and that high level Department officials including Lowell Jensen were aware of every decision he made with regard to the contract. Mr. Brewer stated, under oath that there was somebody in the Department at a higher level, looking over the shoulder of not just me but the people who worked for meŠ.''8 The PROMIS Oversight Committee, headed by Deputy Attorney General Lowell Jensen, kept a close watch over the administration of the contract and was involved in every major decision. Mr. Jensen, who worked with former Attorney General Edwin Meese in the Alameda County district attorneys' offices, stated under oath that he kept the Attorney General regularly informed of all aspects of the INSLAW contract. The PROMIS Oversight Committee readily agreed with Mr. Brewer's recommendation to cancel part of INSLAW's contract for default because of the controversy regarding the installation of PROMIS in word processing systems at the 74 smaller U.S. attorneys' offices. Mr. Brewer's proposal was ultimately rejected only because a Justice contracts attorney advised the oversight committee that the Department did not have the legal authority to do so. Curiously, the recommendation to find INSLAW in default occurred shortly after INSLAW and the Department signed a modification to the contract (Mod. 12), which was supposed to end the conflict over proprietary rights.

Mr. Jensen, who is currently a Federal District Court judge in San Francisco, served at the Justice Department successively as Assistant Attorney General in charge of the Criminal Division, Associate Attorney General and Deputy Attorney General between 1981 and 1986. The Bankruptcy court found that he "had a previously developed negative attitude about PROMIS and INSLAW" from the beginning (Findings No. 307-309) because he had been associated with the development of a rival case management system while he was a district attorney in California, and that this experience, at the very least, affected his judgment throughout his oversight of the contract. During a sworn statement, Judge Jensen denied being biased against INSLAW, but averred that he did not have complete recollection of the events surrounding his involvement in the contract. However, based on the committee's own investigation it is clear that Judge Jensen was not particularly interested or active in pursuing INSLAW's claims that Department officials were biased against the company and had taken action to harm the company. Perhaps most disturbing, he remembered very few details of the PROMIS Oversight Committee meetings even though he had served as its chairman and was certainly one of its most influential members. He stated that after a meeting with former Attorney General Elliot Richardson (representing INSLAW) regarding the alleged Brewer bias, he commissioned his deputy, Mr. Jay Stephens, to conduct an investigation of the bias charges. Based on this investigation, Judge Jensen said he concluded that there were no bias problems associated with the Department's handling of the INSLAW contract.

This assertion, however, contradicted Mr. Stephens, who testified during a sworn statement that he was never asked by Judge Jensen to conduct an investigation of the Brewer bias allegations raised by Mr. Richardson and others. Mr. Stephens, recollection of the events was sharp and complete in stark contrast to Judge Jensen's. As a result, many questions remain about the accuracy and completeness of Judge Jensen's recollections and statements. As for the PROMIS Oversight Committee, committee investigators were told that detailed minutes were not kept at any of the meetings, nor was there any record of specific discussions by its members affecting the INSLAW contract. The records that were available were inordinately sparse and often did not include any background of how and why decisions were made.

To date, former Attorney General Meese denies having knowledge of any bias against INSLAW by the Department or any of its officials. He stated, under oath, that he had little, if any, involvement with the INSLAW controversy and that he recalls no specific discussion with anyone, including Department officials about INSLAW's contract with Justice regarding the use or misuse of the PROMIS software. This statement is in direct conflict with Judge Jensen's testimony, that he briefed Mr. Meese regularly on this issue and that Mr. Meese was very interested in the details of the contract and negotiations.

One of the most damaging statements received by the committee is a sworn statement made by Deputy Attorney General Arnold Burns to Office of Professional Responsibility (OPR) investigators in 1988. In this statement, Mr. Burns stated that Department attorneys had already advised him (sometime in 1986) that INSLAW's claim of proprietary rights in the Enhanced PROMIS software was legitimate and that the Department had waived any rights in these enhancements. Mr. Burns was also told by Justice attorneys that the Department would probably lose the case in court on this issue. Accepting this statement, it is incredible that the Department, having made this determination, would continue to pursue its litigation of these matters. More than $1 million has been spent in litigation on this case by the Justice Department even though it knew in 1986 that it did not have a chance to win the case on merits. This clearly raises the specter that the Department actions taken against INSLAW in this matter represent an abuse of power of shameful proportions.

2. WAS THERE A HIGH LEVEL CONSPIRACY?

The second phase of the committee's investigation concentrated on the allegations that high level officials at the Department of Justice conspired to drive INSLAW into insolvency and steal the PROMIS software so it could be used by Dr. Earl Brian, a former associate and friend of then Attorney General Edwin Meese. Dr. Brian is a businessman and entrepreneur who owns or controls several] businesses including Hadron, Inc., which has contracts with the Justice Department, CIA, and other agencies. The Hamiltons and others have asserted that Dr. Brian conspired with high level Justice officials to sell PROMIS to law enforcement and intelligence agencies worldwide.

Former Attorney General Elliot Richardson, counsel to INSLAW, has alleged that the circumstances involving the theft of the PROMIS software system constitute a possible criminal conspiracy involving Mr. Meese, Judge Jensen, Dr. Brian, and several current and former officials at the Department of Justice. Mr. Richardson maintains that the individuals involved in the theft of the Enhanced PROMIS system have violated a plethora of Federal criminal statutes, including but not limited to:

(1) 18 U.S.C 654 (officer or employee of the United States converting the property of another);

(2) 18 U.S.C 1001 (false statements);

(3)18 U.S.C 1621 (perjury);

(4) 18 U.S.C 1503 (obstruction of justice);

(5) 18 U.S.C 1341 (mail fraud) and

(6) 18 U.S.C. 371 (conspiracy to commit criminal offenses). Mr. Richardson further contends that the violations of Federal law associated in the theft of Enhanced PROMIS, the subsequent coverup and the illegal distribution of PROMIS fulfill the requirements for prosecution under 18 U.S.C. 1961 et seq. (the Racketeer Influenced and Corrupt Organizations (RICO) statute).

As discussed earlier, the committee's investigation largely supports the findings of two Federal courts that the Department "took, converted, stole INSLAW'S Enhanced PROMIS by "trickery, fraud and deceit'', and that this misappropriation involved officials at the highest levels of the Department of Justice. The recent ruling by the D.C. Circuit Court of Appeals does nothing to vitiate those conclusions, the product of an extensive record compiled under oath by two Federal jurists. While the Department continues to attempt to explain away the INSLAW matter as a simple contract dispute, the committee's investigation has uncovered other information which plausibly could suggest a different conclusion if full access to documents and other witnesses were permitted. Several individuals have stated under oath that the Enhanced PROMIS software was stolen and distributed internationally in order to provide financial gain to Dr. Brian and to further intelligence and foreign policy objectives for the United States. While it should be acknowledged at the outset that some of the testimony comes from individuals whose past associations and enterprises are not commendable, corroborating evidence for a number of their claims made under oath has been found. It should be observed that these individuals provided testimony with the full knowledge that the Justice Department could-and would probably be strongly inclined to-prosecute them for perjury if they lied under oath. Moreover, we note that the Department is hardly in a position to negate summarily testimony offered by witnesses who have led less than an exemplary life in their choice of associations and activities. As indicated by the recent prosecution of Manuel Noriega, which involved the use of over 40 witnesses, the majority of whom were previously convicted drug traffickers, a witness, perceived credibility is not always indicative of the accuracy or usability in court of the information provided. Although the committee's investigation could not reach a definitive conclusion regarding a possible motive behind the misappropriation of the Enhanced PROMIS software, the disturbing questions raised, unexplained coincidences and peculiar events that have surfaced throughout the INSLAW case raises the need for further investigation.

One area which requires further investigation is the allegations made by Mr. Michael Riconosciuto. Mr. Riconosciuto, a shady character allegedly tied to U.S. intelligence agencies and recently convicted on drug charges, alleges that Dr. Brian and Mr. Peter Videnieks secretly delivered INSLAW's Enhanced PROMIS software to the Cabazon Indian Reservation, located in California, for "refitting" for use by intelligence agencies in the United States and abroad.9 When Dr. Brian was questioned about his alleged involvement in the INSLAW case, he denied under oath that he had ever met Mr. Riconosciuto and stated that he had never heard of the Cabazon Indian Reservation.

C. ADDITIONAL QUESTIONS

Suspicions of a Department of Justice conspiracy to steal INSLAW's PROMIS were fueled when Danny Casolaro-an investigative writer inquiring into those issues-was found dead in a hotel room in Martinsburg, WV, where he was to meet a source that he claimed was critical to his investigation. Mr. Casolaro's body was found on August 10, 1991, with his wrists slashed numerous times. Following a brief preliminary investigation by local authorities, Mr. Casolaro's death was ruled a suicide. The investigation was reopened later as a result of numerous inquiries from Mr. Casolaro's brother and others regarding the suspicious circumstances surrounding his death.

The Martinsburg Police investigation subsequently concluded in January 1992, that Mr. Casolaro's death was a suicide. Subsequently, Chairman Brooks directed committee investigators to obtain sworn statements from the FBI agent and two former Federal Organized Crime Strike Force prosecutors in Los Angeles who had information bearing on the Casolaro case. Sworn statements were obtained from former Federal prosecutors Richard Stavin and Marvin Rudnick on March 13 and 14, 1992. After initial resistance from the Bureau, a sworn statement was taken from FBI Special Agent Thomas Gates on March 25 and 26, 1992.

Special Agent Gates stated that Mr. Casolaro claimed he had found a link between the INSLAW matter, the activities taking place at the Cabazon Indian Reservation, and a Federal investigation in which Special Agent Gates had been involved regarding organized crime influence in the entertainment industry.

Special Agent Gates stated that Mr. Casolaro had several conversations with Mr. Robert Booth Nichols in the weeks preceding his death. Mr. Nichols, according to documents submitted to a Federal court by the FBI, has ties with organized crime and the world of covert intelligence operations. When he learned of Mr. Casolaro's death, Special Agent Gates contacted the Martinsburg, WV, Police Department to inform them of the information he had concerning Mr. Nichols and Mr. Casolaro. The Martinsburg Police have not commented on whether or not they eventually pursued the leads provided by Special Agent Gates.

Based on the evidence collected by the committee, it appears that the path followed by Danny Casolaro in pursuing his investigation into the INSLAW matter brought him in contact with a number of dangerous individuals associated with organized crime and the world of covert intelligence operations. The suspicious circumstances surrounding his death have led some law enforcement professionals and others to believe that his death may not have been a suicide. As long as the possibility exists that Danny Casolaro died as a result of his investigation into the INSLAW matter, it is imperative that further investigation be conducted.

D. EVIDENCE OF POSSIBLE COVERUP AND OBSTRUCTION

One of the principal reasons the committee could not reach any definitive conclusion about INSLAW's allegations of a high criminal conspiracy at Justice was the lack of cooperation from the Department. Throughout the two INSLAW investigations, the Congress met with restrictions, delays and outright denials to requests for information and to unobstructed access to records and witnesses since 1988. The Department initially attempted to prevent the Senate Permanent Subcommittee on Investigations from conducting an investigation of the INSLAW affair. During this committee's investigation, Attorney General Thornburgh repeatedly reneged on agreements made with this committee to provide full and open access to information and witnesses. Although the day before a planned committee meeting to consider the issuance of a subpoena the Department promised full access to documents and witnesses, the committee was compelled to subpoena Attorney General Thornburgh to obtain documents needed to complete its investigation. Even then, the Department failed to provide all the documents subpoenaed, claiming that some of the documents held by the Department's chief attorney in charge of the INSLAW litigation had been misplaced or accidentally destroyed. The Department has not provided a complete accounting of the number of documents missing nor has it conducted an investigation to determine if the documents were stolen or illegally destroyed.

Questions regarding the Department's willingness and objectivity to investigate the charges of possible misconduct of Justice employees remain. That Justice officials may have too readily concluded that witnesses supporting the Department's position were credible while those who did not were ignored or retaliated against was, perhaps, most painfully demonstrated with the firing of Anthony Pasciuto, the former Deputy Director, Executive Office of the U.S. Trustees.

Mr. Pasciuto had informed the Hamiltons that soon after INSLAW filed for chapter 11 bankruptcy in 1985, the Justice Department had planned to petition the court to force INSLAW into chapter 7 bankruptcy and liquidate its assets including the PROMIS software. His source for this information was Judge Cornelius Blackshear who, at the time, was the U.S. Trustee for the Southern District of New York. Judge Blackshear subsequently provided INSLAW's attorneys with a sworn statement confirming what Mr. Pasciuto had told the Hamiltons. However, following a conversation with a Justice Department attorney who was representing the Department in the INSLAW case,10 Judge Blackshear recanted his earlier sworn statement. Moreover, Judge Blackshear, under oath, could not or would not provide committee investigators with a plausible explanation of why he had recanted his earlier statements to INSLAW, Mr. Pasciuto and others regarding the Justice Department's efforts to force INSLAW out of business. He did confirm an earlier statement attributed to him that his recantation was a result of "his desire to hurt the least number of people." However, he would not elaborate on this enigmatic statement.

Similarly, Mr. Pasciuto, under strong pressure from senior Department officials, recanted his statement made to the Hamiltons regarding Judge Blackshear. It appears that Mr. Pasciuto may have been fired from his position with the Executive Office of U.S. Trustees because he had provided information to the Hamiltons and their attorneys which undercut the Department's litigating position before the Bankruptcy Court.11 This action was based on a recommendation made by the Office of Professional Responsibility (OPR). In a memorandum to Deputy Attorney General Burns, dated December 18, 1987, the OPR concluded that:

In our view, but for Mr. Pasciuto's highly irresponsible actions, the department would be in a much better litigation posture than it presently finds itself. Mr. Pasciuto has wholly failed to comport himself in accordance with the standard of conduct expected of an official of his position.

Mr. Pasciuto now states he regrets having allowed himself to be coerced by the Department into recanting and has stated under oath to committee investigators that he stands by his earlier statements made to the Hamiltons that Judge Blackshear had informed him that the Department wanted to force INSLAW out of business. Certainly, Mr. Pasciuto's treatment by the Department during his participation in the INSLAW litigation raises serious questions of how far the Department will go to protect its interests while defending itself in litigation. Not unexpectedly, Mr. Pasciuto's firing had a chilling effect on other potential Department witnesses who might have otherwise cooperated with the committee in this matter. Judge Blackshear, on the other hand, was not accused of wrongdoing by the Department even though he originally provided essentially the same information as had Mr. Pasciuto.

Despite this series of obvious reversals, the Department, after limited investigation, has apparently satisfied itself that the sworn statements of its witnesses, including Judge Blackshear, have somehow been reconciled on key issues such that no false statements have been made by any of these individuals. This position is flatly in opposition to the Bankruptcy Court's finding that several Department officials may have perjured themselves which was never seriously investigated by the Department. In addition, there are serious conflicts and inconsistencies in sworn statements provided to the committee that have not been resolved. Equally important, the possibility that witnesses, testimony were manipulated by the Department in order to present a "united front" to the Congress and the public on the INSLAW case needs to be fully and honestly explored. The potential for a conflict of interest in the Department's carrying out such an inquiry is high, if not prudently manifest, and independent scrutiny is required.

E. JUDGE BASON'S ALLEGATIONS AGAINST THE DEPARTMENT

Judge Bason testified, under oath, before the Economic and Commercial Law Subcommittee that the Department's actions against its critics may have extended into blocking his reappointment as a bankruptcy judge in 1988 because of his ruling in INSLAW's case. Judge Bason was replaced by Martin Teel, Jr., who, prior to his appointment, was a Justice Department attorney heavily involved in the Department's litigation of the INSLAW case.12 The committee was unable to substantiate Judge Bason's charges. If such undue influence did occur, it was subtle and lost in the highly private manner in which judge selection procedures are conducted. While sworn statements were not taken, the committee investigators interviewed several of the judges involved in the selection process. The judges who agreed to provide interviews all stated that they had little firsthand knowledge in which to evaluate the candidates, including the incumbent judge. As a result, the members of the Judicial Council had to rely on the findings of the Merit Selection Panel headed by Judge Norma Johnson.

The Merit Selection Panel's findings were provided to the Judicial Council by Judge Johnson whose oral presentation was instrumental in the final selection. Judge Johnson had previously worked at the Department of Justice with Stuart Schiffer, who led the Department's attempt to have the District Court remove Judge Bason from the INSLAW case. Mr. Schiffer is also the official who argued vociferously against the appointment of an independent counsel on the INSLAW case in a memorandum to Deputy Attorney General Arthur Burns. Judge Johnson also served in the D.C. Superior Court with Judge Tim Murphy from 1970 through 1980. Judge Murphy subsequently worked directly for Mr. Brewer on the PROMIS contract. The committee, however, has not at this date found any evidence that Judge Johnson had specific discussions with Mr. Schiffer or anyone else at the Department of Justice about Judge Bason, the INSLAW case or the bankruptcy judicial selection process.

The committee's investigation revealed that the selection process was largely informal, undocumented and highly subjective. For example, several members of the Judicial Council indicated that one of the primary factors influencing the non-reappointment of Judge Bason, was the poor administrative condition of his court. These same members admitted that they had no firsthand knowledge of the administrative condition and based this opinion on the reports of the Merit Selection Panel and Judge Johnson. This was corroborated by the discovery of a confidential memorandum written by a member of the Merit Selection Panel which was highly critical of Judge Bason and the administrative condition of the Bankruptcy Court. While this memorandum had been seen by several judges during the selection process, committee investigators were unable to determine who authored it. The committee's investigation did not reveal any evidence to support the criticisms raised in the memorandum. Martin Bloom, Clerk of the Bankruptcy Court, indicated in his sworn statement to committee investigators that under Judge Bason, the administrative condition of the court vastly improved. These sentiments were echoed by Chief Judge Aubrey Robinson who consistently complimented Judge Bason on his efforts to improve the administrative condition of the Bankruptcy Court in his remarks to the Annual Judicial Conference.

F. CONCLUSION

The history of the Department's behavior in the INSLAW case dramatically illustrates its (1) reflexive hostility and "circle the wagons" approach toward outside investigations; (2) inability or unwillingness to look objectively at charges of wrongdoing by high level Justice officials, particularly when the agency itself is a defendant in litigation; and, (3) belligerence toward Justice employees with views that run counter to those of the agency's upper management. The fact that the Department failed to recognize a need for an independent investigation of the INSLAW matter for more than 7 years is remarkable. Failure to do so has effectively shielded officials who may have committed wrongdoing from investigation and prosecution.

As already documented and confirmed by two Federal judges, the Department's actions in the INSLAW case have greatly harmed the company and its owners. These actions, as they pertain to the dispute with INSLAW over the misappropriation of the PROMIS software, were taken with the full knowledge and support of high level Justice officials. The harm to the company was further perpetuated by succeeding high level officials, such as former Attorney General Richard Thornburgh, who not only failed to objectively investigate the serious charges raised by the Hamiltons and their attorney, former Attorney General Elliot Richardson, but also delayed and rebuffed effective and expeditious outside investigation of the matter by Congress.

The Department of Justice is this nation's most visible guarantor of the notion that wrongdoing will be sought out and punished irrespective of the identity of the actors involved. Moreover, its mandate is to protect all private citizens from illegal activities that undermine the public trust. The Department's handling of the INSLAW case has seriously undermined its credibility and reputation in playing such a role. Congress and the executive must take immediate and forceful steps to restore public confidence and faith in our system of justice, which cannot be undermined by the very agent entrusted with enforcement of our laws and protections afforded every citizen. In view of the history surrounding the INSLAW affair and the serious implications of evidence presented by the Hamiltons, two court proceedings in the judicial branch and the committee's own investigation, there is a clear need for further investigation. The committee believes that the only way in which INSLAW's allegations can be adequately and fully investigated is by the appointment of an independent counsel. The committee is aware that on November 13, 1991, Attorney General Barr appointed Nicholas Bua, a retired Federal judge from Chicago, as his special counsel to investigate and advise him on the INSLAW controversy. The committee eagerly awaits Judge Bua's findings; however, as long as the investigation of wrongdoing by former and current high level Justice officials remains under the ultimate control of the Department itself, there will always be serious doubt about the objectivity and thoroughness of the inquiry.