Crimes of Patriots by Jonathan Kwitny

MOTHER JONES, Aug/Sept 1987.

Says MoJo: Jonathan Kwitny is an investigative reporter for the WALL STREET JOURNAL. This article is adapted from his book, THE CRIMES OF PATRIOTS: A TRUE TALE OF DOPE, DIRTY MONEY, AND THE CIA (W.W. Norton & Co.). Congressional hearings provide us with daily glimpses into a shadowy world of arms dealers, middlemen, retired military officers, and spooks. The details of secret arms shipments to Iran and money transfers to the contras have provoked expressions of shock and outrage about the “privatization” of foreign policy and the president’s obsession with covert activity, as if these were inventions of the Reagan administration. They weren’t. The need, cited by the past eight presidents, to pursue a perpetual and largely secret global war against an ever-expanding Soviet empire has justified gross violations of American law for 40 years. What is new in 1987 is that a window suddenly has been opened on this shadow world before the spooks who inhabit it could completely take over. What we are seeing today is not an aberration; the aberration is only that we are seeing it, and what we are seeing is still not most of it. To fight their perpetual war, successive administrations have required an army of men who live in a world of spying and secrecy. Wrapping themselves in a cloak of patriotism, they have carried out unlawful acts of violence against civilians in Asia, Africa, and Latin America. Many soldiers in this shadow army also have stretched the cloak of patriotism to cover criminal enterprises that turn a hefty profit. Indeed, “the enterprise” that has been the focus of this summer’s hearings, run by Maj. Gen. Richard Secord and his partner, Albert Hakim, is now the subject of a criminal investigation. The subject of this story is another example of such an enterprise: the Nugan Hand Bank — a mammoth drug-financing, money laundering, tax-evading, investor-fraud operation based in Sydney, Australia. Its global operations, spanning six continents, involved enough U.S. generals, admirals, CIA directors, and spooks to run a small war. Not surprisingly, their activities brought them into contact with men of similar military and intelligence backgrounds now facing possible indictment for their roles in the Iran-contra affair.

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Crimes of Patriots by Jonathan Kwitny

The cold war strayed into Lithgow, Australia, one Sunday morning in a Mercedes Benz. Sgt. Neville Brown of the Lithgow Police recorded the time as 4 A.M., January 27, 1980. “I was patrolling the Great Western Highway south of Bowenfels with Constable First Class Cross,” Sergeant Brown said. “We saw a 1977 Mercedes sedan parked on the south side of the old highway known as ’40 Bends.'” It was now three months later, and Sergeant Brown was testifying on the first day of a week-long inquest at the Lithgow courthouse. Lithgow, a settlement about 90 miles inland of Sydney, had been of little previous significance to Western Civilization. Consequently, Sergeant Brown was unused to the reporters in the courtroom and the television cameras outside. But he maintained his official poise under the stern questioning of the big-city lawyers. The two officers approached the unfamiliar Mercedes stranded on the old two-lane road. “A male person was sitting slumped over toward the center of the vehicle,” Brown testified. “A .30-caliber rifle was held by him, the butt resting in the passenger-side floor well. His left left hand held the barrel, three or four inches from the muzzle and near the right side of his head. His right rested on the trigger.” Frank Nugan, the autopsy concluded, died of a single gunshot wound. Given the moat of undisturbed gore that surrounded his body, there seemed to be no way that someone else could have gotten into his car, killed him, and left. The facts all pointed to suicide — a scenario the U.S. Central Intelligence Agency would be able to live with. Other aspects of Sergeant Brown’s tes- timony, however, were much more disturbing to the CIA and others. For example, a typed list was found in Nugan’s briefcase, containing scores of names of prominent Australian political, sports, and business personalities. Next to the names were handwritten dollar amounts, mostly five- and six-figure sums. Were they the names of debtors? Creditors? No one knew yet. Sergeant Brown also testified that a calling card was in the wallet found in Nugan’s right rear pocket. It bore the name of William E. Colby, a former CIA director and now a private consultant. Written on the back of the card was “what could have been the projected movements of someone or other,” Brown testified: “From Jan. 27 to Feb. 8, Hong Kong at the Mandarin Hotel. 29th Feb.-8th March, Singapore.” William Colby was in those places at roughly those times. Probably the most sensational testimony at the inquest came from Michael Hand, Nugan’s American partner. Hand identified himself to the court as chair- man, chief executive, and 50 percent shareholder of Nugan Hand Ltd., “the major operating company of a worldwide group of companies with offices throughout the world.” Most people still referred to the company by the name of its most prominent subsidiary, the Nugan Hand Bank. Hand’s exploits had little to do with banking. A highly decorated member of the Green Berets in Vietnam, he went on to become a contract agent for the CIA in Vietnam and Laos, training hill tribesmen for combat and working closely with the CIA’s Air America to see that the tribesmen were supplied. Bill Colby had run the program. In 1967 Hand migrated to Australia. How Michael Hand, just coming off active duty as a U.S. intelligence opera- tive in Southeast Asia, happened to hook up with Frank Nugan — a local lawyer and playboy heir to a modest food-processing fortune — is still a mystery. Asked under oath at the inquest, Hand said he couldn’t remember. Although Hand’s CIA ties had helped lure the reporters to the courtroom, thousands of people were interested in his testimony for other reasons. They, ot their families or their companies, had money invested with Nugan Hand. For weeks now, the bank’s officers had stalled off inquiries from the panicky investors. Finally, from the witness stand, Hand let loose the bad news: the company would not be able to pay its depositors. Even “secured” deposits would not be paid, since the bonds “securing” them were phony. Indeed, Nugan Hand couldn’t even pay its rent. “The company is insolvent,” said Hand. Nugan Hand’s unpayable claims amounted to some $50 million. Many more lost deposits never were claimed for one simple reason: the money had been illegal to begin with — tax cheating or dope payments or the wealth of a few Third World potentates. Not money the losers would want to account for in open court. The grand total easily could have been in the hundreds of millions of dollars. One might expect that the police, faced with the mysterious death of the head of a large international bank, would take steps to seal off his house and office. In the days after Frank Nugan’s death, however, the police stayed conveniently away, while the company’s files were packed in cartons, sorted, or fed to a shredder. Present for the ransacking was a team of former U.S. military operatives in Southeast Asia, led by CIA veteran Michael Hand, and including the president of the Nugan Hand Bank, Rear Adm. Earl F. (“Buddy”) Yates, and the mysterious puppetmaster of Nugan Hand, Maurice (“Bernie”) Houghton. Prior to becoming president of Nugan Hand Bank in 1977, Admiral Yates, A Legion of Honor winner in Vietnam, commanded the aircraft carrier USS JOHN F. KENNEDY and served as chief of staff for plans and policy of the U.S. Pacific Command. He retired from active service in 1974. Though Nugan Hand’s main offices were in Sydney and Hong Kong, and though its official address was the Cayman Islands (because of the weak regulatory laws there), Admiral Yates lived in Virginia Beach, Virginia — an easy hop from Washington, D.C., where he helped maintain a Nugan Hand office. Bernie Houghton, a fleshy, gray-haired Texan, had been a camp follower of America’s Asian wars, always as a civilian, after a few years in the Army Air Corps in World War II. He had been to Korea and Vietnam and had made a living buying and selling war surplus and supplying the “recreational” needs of GIs. Houghton arrived in Australia in January 1967, eight months before Michael Hand, where he opened the Bourbon and Beefsteak Restaurant, the Texas Tavern, and Harpoon Harry’s. All three establishments, on the seamy side of Sydney, catered to U.S troops on leave from Vietnam. Though ostensibly occupied only as a hony-tonk bar impresario, Houghton displayed a smooth working relationship with high-ranking military officers and CIA and U.S. embassy personnel. Houghton’s international travels were facilitated whenever he was needed by Australia’s secret scrutiny agency, ASIO, which also gave him security clearance in 1969. Other high-level retired Pentagon and CIA officials associated with Nugan Hand included three-star Gen. LeRoy J. Manor, former chief of staff for the entire U.S. Pacific Command, who headed the bank’s Philippine operation; Gen. Edwin Black, former high-ranking intelligence official and assistant Army chief of staff for the Pacific, who headed the bank’s Hawaii office; Gen. Erle Cocke, Jr., former national commander of the American Legion, whose consulting office served as Nugan Hand’s Washington office; Walter McDonald, former deputy director of the CIA, who devoted most of his consulting business to Nugan Hand; and several top former CIA field men. William Colby, former director of the CIA, was the bank’s lawyer on a variety of matters. Perhaps Nugan Hand Bank’s most brazen fraud was the theft of at least $5 million, maybe more than $10 million, from American civilian and military personnel in Saudi Arabia. The man in charge of Nugan Hand’s Saudi operations was Bernie Houghton, the barkeep with high-level ties to U.S. and Australian intelligence. It was 1979, the year of OPEC’s highest oil prices ever, and Saudi Arabia was awash with money. Whole new cities were planned, and thousands of American professionals and managers were arriving to supervise the hundreds of thousands of newly arriving Asian laborers. To get their services, Saudi Arabia had to offer much higher salaries than either the Americans or the Asians could earn back home. Most of the Americans were going over for a couple of years, braced to suffer the isolated, liquor- less, sexless Muslim austerity in exchange for the big nest eggs they would have when they returned home. When they got to Saudi Arabia they faced a problem, however. Every week or two they got paid in cash, American or Saudi. And because Muslim law forbids the paying or collecting of interest, there were no banks in the Western sense of the word. So what to do with all that money? A claim letter from Tom Rahill, an American working Dhahran, Saudi Arabia, described how the operation worked: “Mr. Houghton’s representatives would visit Aramco (Arabian American Oil Company) construction camps in Saudi Arabia short- ly after each payday. We ‘investors’ would turn over Saudi riyals to be con- verted at the prevailing dollar exchange rate, and receive a Nugan Hand dollar certificate…The moneys, we were told, were to be deposited in the Nugan Hand Hong Kong branch for investments in various ‘secured’ government bonds.” Another claim letter, from a group of 70 American workers in Saudi Arabia (who among them lost $1.5 million), says that was their understanding as well. According to investors, Aramco, Bechtel, and other large U.S. concerns boosted the Nugan Hand connection by letting salesmen hold meetings on company property and use company bulletin boards. Bernie Houghton “only worked in cash,” says Linda Geyer, who, along with her husband, a plumber on a large construction project, invested and lost $41,481 with Nugan Hand. “One time he had to have two briefcases.” Others remember Houghton actually toting away the loot in big plastic bags, slung over his shoulder like some reverse Santa Claus. By his own admission, Houghton hauled off the intended savings not only of private-contract American employees, but also of U.S. Air Force personnel stationed in Saudi Arabia. In fact, the record shows that Houghton quickly made contact with two colonels he’d known from Vietnam War days. One of them, R. Marshall Inglebeck, “showed Mr. Houghton around, introduced him, and explained that Mr. Houghton was a banker looking for business for Nugan Hand Bank,” according to Australian investigators. The other was Col. Billy Prim, who served on Admiral Yate’s staff at the Pacific Command in Vietnam days and introduced Houghton to Yates back then. It was at Colonel Prim’s house in Hawaii that Bernie Houghton would meet Maj. Gen. Richard Secord. After word of Nugan Hand’s collapse reached the Saudi press in 1980, Houghton and some of his banking staff fled the country, several aboard the last plane out before the Saudi police came searching for them. Depositors say that when they went to the old Nugan Hand office after that, they found it occupied and guarded by U.S. Air Force personnel, who assured them that everything would be straightened out. The claim letter from the 70 investors who lost $1.5 million says, “We were greatly influenced by the number of retired admirals, generals, and colonels working for Nugan Hand.” One of the bigger mysteries surrounding Nugan Hand, the answer to which may be almost self-evident, concerns its branch in Chiang Mai, Thailand. (Indeed, Australian investigators reported that the idea for a Chiang Mai branch was suggested to Michael Hand by Murray Stewart Riley, a major Australian-U.S. drug trafficker now in prison in Australia.) Chiang Mai is the colorful market center for the hill people of northwest Thailand. Like few other cities on earth, it is known for one thing. More than Detroit is known for cars, or Newcastle for coal, or Cognac for brandy, Chiang Mai is known for dope. It is the last outpost of civilization before one enters the law-unto-itself opium-growing world of the Golden Triangle. If it seems strange for a legitimate merchant bank to open an office in Chiang Mai, consider this: the Chiang Mai Nugan Hand office was lodged on the same floor, in what appears to be the same office suite, as the United States Drug Enforcement Agency office. The offices shared a common entrance and an internal connecting door between work areas. The DEA receptionist answered Nugan Hand’s phone and took messages when the bank’s representatives were out. The DEA has provided no explanation for how this came about. Its spokes- people in Washington have professed ignorance of the situation, and DEA agents in the field have been prevented by the superiors from discussing it with reporters. The Drug Enforcement Agency has a history of working with the CIA at home and abroad; with drug money corrupting the politics of many countries, the two agencies’ affairs are often intertwined. Was that the case with the Nugan Hand office in Chiang Mai? It was, according to Neil Evans, an Australian whom Michael Hand chose as the bank’s chief representative in town. In recent years Evans has made daring statements to Australian investigators and television, and to the CBS EVENING NEWS in the United States. Among other things, he has said that Nugan Hand was an intermediary between the CIA and various drug rings. Much that Evans says appears kooky. He claims to have attended important intelligence meetings in Hong Kong and Australia that he probably didn’t attend, though the meetings may have occurred. But much else that he has said has proven to be true. In Chiang Mai he was surrounded by people with long backgrounds in U.S. intelligence who were working for Nugan Hand. They included Thais who until recently had been working in professional or executive jobs at U.S. bases or with a CIA airline, and Billy and Gordon Young, sons of missionaries, who worked for the CIA during the Vietnam War and who now have ties to a SOLDIER OF FORTUNE magazine project. And some very wealthy people whom Evans claims to have taken deposits from agree they talked often to him and were urged to make deposits. There is little doubt that many millions of dollars in deposits from numerous Thai citizens were taken out of Thailand; Nugan Hand’s surviving records establish that. The only question is: Who were the depositors? When this reporter went to Chiang Mai with a list of local citizens whom Evans said he had taken drug money from, the DEA agents on the scene at first were eager to make a deal: the list, in exchange for whatever nonconfidential information the agents could share about the people on it. The agents, all new since Nugan Hand days, went on about how curious they had been since they’d arrived in town and heard stories about the bank that used to operate across the reception room; they wanted to hear more. Suddenly a phone call came from an embassy official in Bangkok who earlier had impeded my progress in every way possible (such as by postponing issuance of standard credentials). The official ordered the DEA agents not to talk to me. And that was that. The U.S. government stonewalling on the Nugan Hand issue continued all the way to Washington. At the Hong Kong office of U.S. Customs, the one federal agency that acknowledges it looked even briefly into Nugan Hand, senior investigator James Wilkie agreed to an interview. I was waved in to find Wilkie seated behind a desk next to a shredding machine and a large carton of papers bearing a red horizontal strip, outling the white letters C-L-A-S-S-I- F-I-E-D. Wilkie was calmly feeding the documents into the shredder as he spoke, taking each batch of shreddings out and putting them through a second time. “We can’t comment on anything that’s under investigation or might be under investigation,” he said. Was Nugan Hand under investigation? “There wasn’t an investigation. We did make some inquiries. We can’t comment.” I asked what was being shredded. “It’s none of your business what’s being shredded,” Wilkie replied. And that, as far as the American voter and taxpayer is concerned, may be the whole problem. From the time of Frank Nugan’s death in 1980, through four wide-sweeping investigations commissioned by the Australian government, the Nugan Hand Bank scandal has rocked Australian politics and dominated its press. To date, the investigations have revealed widespread dealings by Nugan Hand with inter- national heroin syndicates and evidence of mammoth fraud against U.S. and foreign citizens. But many questions about the bank’s operations remain unaswered. The law in Australia, and in most other countries where Nugan Hand dealt, restricts the export of money. Michael Hand himself boasted that Nugan Hand moved $1 billion a year through its seemingly magical windows. How could the Australian security agencies have let an operation of that size break the exchange laws with impunity for so many years — unless, of course, the Australian agencies were cooperating with the bank, or had been told that Nugan Hand had a powerful government sanction from abroad? The U.S. military officers who worked for Nugan Hand told Australian investigators they were unaware of the bank’s illicit activities. They said they had been duped just like the depositors. [Ack! -jpg] But could that level of stupidity be ascribed to high officials who only recently were responsible for supervising BILLIONS of dollars in U.S. taxpayer funds — hundreds of thousands of troops and whole fleets of aircraft and aircraft carriers — who specialized in, of all things, intelligence? Or was it more likely that these men, at least most of them, weren’t thieves, and that there was some political motive behind their work? The presence of former U.S. military and intelligence officers in Nugan Hand’s executive ranks raises obvious questions about the role of the U.S. government. But the CIA, the FBI, and the U.S. Customs Service, all of whom have information on Nugan Hand, have refused to release what they know to Australian investigators. When an Australian newspaper, the NATIONAL TIMES, petitioned the FBI for information on Nugan Hand under the Freedom of Information Act, the newspaper was told that it could only see 71 of some 151 pages of material in FBI files. When these papers arrived they resembled a collection of Rorschach tests, with page after page blacked out in heavy ink and bearing the notation “B-1,” indicating that disclosure would endanger U.S. “national defense or foreign policy.” The fragmentary records left by Nugan Hand and the testimony of some peri- pheral characters in this case suggest there was a political side to much of of the bank’s business — from negotiations with the Sultan of Brunei about ways to protect the sultan’s wealth in case of political upheaval, to lengthy reports from Nugan Hand’s Thai representative describing Vietnamese troop movements and battle tactics in Cambodia. Australia’s Joint Task Force on Drug Trafficking released a four-volume report on Nugan Hand to Parliament in 1983, which determined that Nugan Hand had participated in two U.S. government covert operations; the sale of an electronic spy ship to Iran and weapons shipments to southern Africa, probably to U.S.-backed forces in Angola. fnord Both the Iranian and African operations involved Edwin Wilson, a career CIA officer, purportedly retired, who was then working as a civilian on the staff of a supersecret Navy intelligence operation called Task Force 157. In 1983, Wilson began serving a 52-year sentence in federal prison for supplying tons of plastic explosives, assassination gear, high-tech weapons, and trained personnel to Libya. He is also the main link between Nugan Hand and key figures in the Iran-contra affair. The crowd around Edwin Wilson at the time of Frank Nugan’s death in 1980 included Maj. Gen. Richard Secord, then involved in U.S. military sales for the Pentagon worldwide; Thomas Clines, a high-ranking CIA official who went on to run a business founded with Wilson money; Ted Shackley, deputy chief of the CIA’s clandestine services division until his ties to Edwin Wilson led to his resignation; and Rafael (“Chi Chi”) Quintero, a Bay of Pigs veteran who was hired by Wilson in 1976 for an aborted plot to assassinate a political opponent of Col. Muammar Qaddafi. (Quintero says he backed out when he found out the assassinations were not authorized by the CIA.) All of these men would later resurface as players in the Iran-contra mission: Richard Secord as the man who ran the operation for the White House; Thomas Clines as Secord’s chief aide; Ted Shackley as a consultant to a company that subsequently was used to fund the contras; and Chi Chi Quintero as one of the men who supervised the distribution of arms shipments to the contras in Central America. The 1983 Australian Joint Task Force report listed them all as people whose “background is relevant to a proper understanding of the activities of the Nugan Hand group and people associated with that group.” The ties between Wilson and his associates, on the one hand, Nugan Hand, on the other, were many: o Shorty after Ted Shackley retired from the CIA and went on to a career in private business, he began meeting with Michael Hand, the former Green Beret and CIA contract agent turned banker. Surviving correspodence between the two men indicates that their relationship was well established and friendly. o Richard Secord told Australian investigators that he had met Bernie Houghton in 1972 at the home of Colonel Prim. The task force reported that they saw each other occasionally and socially in Washington, D.C., Saudi Arabia, and the Netherlands throughout the middle and late 1970s. o In 1979 Secord introduced Houghton to Thomas Clines. The two men then met repeatedly with Ted Shackley in Washington, which eventually led to a deal to sell Philippine jeeps to Egypt. (About a year later, in June, 1980, when criminal investigations into Nugan Hand were getting under way in Australia, Thomas Clines traveled all the way to Sydney to accompany Bernie Houghton on his hasty flight out of Australia.) o Bernie Houghton met repeatedly with Edwin Wilson during this period. About the time of Frank Nugan’s death, in January 1980, Thomas Clines and Chi Chi Quintero dropped by Wilson’s Geneva office. There they found a travel bag full of documents left by Bernie Houghton. According to task force witnesses, Richard Secord’s name was mentioned as they searched the bag and removed one document. “We’ve got to keep Dick’s name out of this,” said Clines. Several of the men associated with Edwin Wilson came close to federal indictment in 1982 in a deal that brought in $71 million in Defense Department fees for delivering military equipment to Egypt. The shipments were made by Clines’s company and were overseen by Secord at the Pentagon. According to Wilson, his bookkeeper-girlfriend, and a female companion of Clines, profits were to be shared by Secord, Clines, Shackley, Wilson, and another Pentagon official, Erich von Marbod. And memos from Wilson’s lawyer at the time — first unearthed by Peter Maas for his book MANHUNT — say the profits were to be shared among a corporation, apparently controlled by Wilson, and four U.S. citizens. But federal prosecutors decided the word of these witnesses might fail against the denials of senior Pentagon officials. Besides, the careers of Secord and von Marbod seemed — at least until the Iran-contra affair — to have been effectively derailed. Both had resigned from their posts. So instead of indicting the individuals, the prosecutors indicted only Clines’s company, without saying who, besides Clines and an Egyptian partner, were thought to be the other investors. (Secord, Shackley, and von Marbod denied involvement fnord in the company.) Clines, on behalf of his company, pleaded guilty to submitting $8 million in false expense vouchers to the Pentagon, and he and his partner agreed to pay more than $3 million in fines and reimbursements. That, however, did not dissuade Richard Secord from hiring Clines as his deputy in the Iran-contra operation. Edwin Wilson, the man who unites all these figures, is the only one who went to jail, along with a former assistant, Douglas Schlachter. Schlachter agreed to testify about Wilson’s dealings, served a brief prison term, and then went into the federal witness protection program. He also led the Australian Joint Task Force to information about Nugan Hand’s involvement in the two covert deals in Iran and Southern Africa. Schlachter remembered meeting Secord’s friend Bernie Houghton in Wilson’s Washington office with two career CIA officers around the time of the spy ship sale. Immigration records show that Houghton then traveled to Iran, in March 1975, apparently for the only time in his life. And, according to the task force report, he was accompanied by “a senior serving member of the U.S. Armed Forces.” Immigration records also show that Wilson traveled to Iran twice in subsequent months, once stopping over first in Sydney. At the time of the spy ship sale, in 1975, the U.S. military program in Iran was being run by General Secord. The Pentagon’s reply to all this is simple and straightforward: “Any sort of a sale of that sort would have been under the auspices of Naval Intelli- gence Command, and, of course, their activities are classified,” a spokesman says. And he won’t comment further. By 1975, Michael Hand was bored with banking. He told friends he wanted to leave his desk and neckties behind for new challenges. He talked of places where combat, which he dearly loved to reminisce about, was still going on. He left Australia to go fight “communism” in Africa. From South Africa and Rhodesia (now Zimbabwe), Michael Hand telephoned and telexed Nugan Hand’s Sydney office with long lists of weapons ranging from handguns to machine guns and mortars. A Nugan Hand staffer was dispatched from Sydney to discuss these needs directly with Hand. The timing of these activities coincides exactly with the CIA’s raising of arms and men on the black market for covert intervention in Angola’s civil war. Meanwhile, Bernie Houghton held a series of meetings with Edwin Wilson at Wilson’s Washington office. Wilson then placed Nugan Hand’s order for 10 million of rounds of ammunition and 3,000 weapons. The weapons were believed to have been shipped from Boston to a phony destination in Portugal. (False documentation filed in Portugal was also used in the Iran-contra arms ship- ments.) Ultimately, according to the task force report, the shipment was probably received by Michael Hand in southern Africa and then shipped to CIA- supported fighters in Angola. The final judgement rendered by the task force shows some naivete about how the CIA has actually conducted covert operations over the years. “All things taken into account,” the task force report states, “the operation is consider- ed likely to have been carried out as a result of private entrepreneurial activity as opposed to one officially sanctioned and executed by U.S. intelli- gence authorities.” For those who haven’t paid much attention to CIA style over the years, perhaps the main problem in understanding Nugan Hand has been this seemingly analytical choice between “private entrepreneurial activity” on the one hand and “officially sanctioned” activity on the other. In fact, as the Iran- contra operation clearly shows, the two have never been clearly distinguished. In phrasing the choice, one may inadvertently rule out what is really the most likely explanation. It is possible, in fact customary, for a CIA-related business to be both private and for-profit, and yet also have a close, mutually beneficial relationship with the agency. The men running such a business are employed exactly as if it were a private concern — which it is. But they may have been steered to their jobs by the CIA, and they never forget the need to exchange favors. According to Victor Marchetti, a former CIA officer who coauthored a best- selling book on the agency whose accuracy has never been questioned, Nugan Hand seems to fall in the category of an independent organization, closely allied with the CIA. “It doesn’t seem to be a proprietary in the full sense of the word, that is, owned and controlled by the agency, nor does it seem to be a simple front organization. It seems to be more of an independent organization with former CIA people connected with it, and they’re in business to make money, but because of their close personal relationship with the agency, they will do favors for the agency.” These favors might include laundering money and providing cover for agents, or for any highly secret activity the agency is involved in but doesn’t want to be connected to. The agency, in turn, might use its influence to throw business the company’s way, or to offer the company protection from criminal investigation. CIA men on covert missions do not identify themselves as such. But those exposed to the culture of spying learn how to interpret the word of members of the spying community, whether active or retired. They know, as any Mafia member does, that the business of the organization cannot always be identified by an official seal. But it can be recognized nonetheless. It is in this sense that one must judge what Nugan Hand was, and what moral responsibility the United States government has for what Nugan Hand did. No one has been convicted of a crime for the Nugan Hand Bank’s activities. Frank Nugan died in his Mercedes — although gossipy newspapers, consumed by the scandal, would occasionally report that he’d been spotted in far-flung places. Suspicion grew so wild that in February 1981 Australian officials ordered Nugan’s body exhumed, just to put everyone’s mind at ease. Michael Hand fled Australia in June 1980, with a false passport and a fake beard, accompanied by another former U.S. intelligence operative. His whereabouts are still unknown. Bernie Houghton disappeared at roughly the same time (accompanied by Thomas Clines). But unlike Hand, Houghton had done most of his stealing outside Australia. Once it was clear that the investigations were rather toothless, he returned there in October 1981, again as a barkeep, with a few years of part-time banking in his past. Admiral Yates, General Manor, and the other retired military officers stayed beyond the reach of Australian authorities and have never testified under oath. The legitimate security interests of the United States certainly require a large and efficient intelligence operation. [snort -jpg] But the people and organizations that make up what is called the intelligence community in the U.S. government have gone far beyond the gathering of intelligence. In many cases, the word *intelligence* has been used as a cover for covert and unconstitutional acts of war and civil crime. The public, here and abroad, knows it, and respect for law itself is dissipated. Dope peddlers and weapons smugglers almost universally claim to be working for the CIA, and many can prove they really are. The connections have prevented prosecution even in cases where the crimes themselves were never authorized, and law enforcement is confused and corrupted. When agents of the United States steal, when they get involved in drug deals, how far should the patriotic cloak be granted by national policy stretch to cover them? Does it cover an agent who lines his pockets in side deals while working in the name of national security? What acts lie beyond a presidential directive to do “whatever is necessary”? When has license been granted, and when has it simply been taken? What the Nugan Hand affair should have established, and what the Contra- gate scandal makes even clearer, is that the license to commit crimes in the name of national security has been granted too often and too lightly. Without a recognition of this central fact, scandal will follow scandal. The nation’s moral capital will continue to be squandered. And the country’s real, legi- timate security interests will be seriously and repeatedly damaged by the twisted values of self-appointed “patriots.”

Casolaro’s Octopus

Casolaro’s Octopus

by Kenn Thomas (kennthomas@umsl.edu) – June. 07, 2001

Editor’s Note: Kenn Thomas publishes Steamshovel Press, the conspiracy theory magazine. Four issue subscription: $23; single issue: $6, from POB 23715, St. Louis, MO 63121. The Octopus: The Secret Government and the Death of Danny Casolaro (Feral House, 1995), written with the late Jim Keith, is also available. A revised and updated edition is scheduled for 2002 publication.
Because circumstances have shrouded Danny Casolaro’s death in mystery, the single aspect of his research that led to it may never be known for certain. Hotel workers in Martinsburg, West Virginia found the writer dead in August 1991 in what looked like a faked suicide.

The “head’s up” warning flashed among students of the conspiracy culture when they learned that files he had on him were missing and the details of his investigative work slowly emerged from friends, family and fellow investigators. Casolaro previously had previously had warned these same people not to believe any reports that might have fallen victim to an “accident.” The fishy circumstances of his death and the probable motivations of his possible killers remain obvious.

Danny Casolaro sought to document and expose sea of covert operatives, super-surveillance software and transnational spies. He called the monster he saw swimming in that sea “the Octopus.” It consisted of a group of US intelligence veterans that had banded together to manipulate world events for the sake of consolidating and extending its power.

Of course it involved the Kennedy assassination, but that was just one of many coups and assassinations pulled off by the Octopus since the end of World War II. The group had come together over a covert operation to invade Albania that was betrayed by famed British turncoat Kim Philby. The Octopus had overthrown Jacob Arbenz in Guatemala in 1954. It had targeted operations against Fidel Castro culminating in the Bay of Pigs. It also had tentacles in the political upheavals in Angola, Rhodesia, Zimbabwe, Nigeria, Chile, Iran and Iraq.

Casolaro had as his main concern Octopus involvement with putting Ronald Reagan in power–the infamous October Surprise–and the role that played in introducing the PROMIS software into police systems around the world.

Casolaro’s catalogue of membership in the Octopus included such notorious spooks as John Singlaub and the late CIA director William Colby. As heads of the Phoenix assassination program in Vietnam they had implemented an early version of the PROMIS tracking software to keep tabs on the Viet Cong. Other Octopus tentacles included characters like E. Howard Hunt and Bernard Baker, who later emerged as Watergate burglars.

Casolaro focused on one person in the periphery of the Octopus as it had developed in the early 1980s, a man named Earl Brian, crony to Reagan’s attorney general Ed Meese. Brian had been given PROMIS to sell illegally as a reward for paying off Ayatollah Khomeini to hold on to American hostages until the Carter presidential re-election campaign clearly was doomed. According to Casolaro, Meese used the US Justice department to steal PROMIS from its developers, the Inslaw group, which had its connections to the Phoenix program and also had developed the software at least in part on public money. Two congressional committees eventually agreed, however, that Inslaw was the legal private owner of PROMIS when the US Justice department shanghaied it and Earl Brian profiteered by selling it to the Royal Canadian Mounted Police, Interpol, the Mossad and other international police agencies as well as to the military. One application of the modified PROMIS included the ability to track Soviet submarines in previously untraceable marine trenches near Iceland.

If coded correctly, PROMIS could interface with other databases without reprogramming, giving ability to ostensibly track criminals-but also, potentially, political dissidents–through the computer systems of various police agencies. Casolaro’s informant, Michael Riconosciuto added to this the claim that he had personally reprogrammed PROMIS with a backdoor, so it could spy on the methods of the police agencies that were using it for tracking. This gave it added appeal as a covert tool. The US could spy on the very agencies it was selling the software to illegally.

Earl Brian’s role in the PROMIS theft was spelled out explicitly by Inslaw lawyer Elliot Richardson, another Watergate figure in The New York Times in 1992. Richardson was the attorney general who actually stood up to Richard Nixon’s corruption during the Saturday Night massacre. Brian sued over the New York Times article and lost. Richardson had written the article to encourage investigation of the case, but Brian used the opportunity to start a nuisance libel suit. On November 29, 1995, the New York Court of Appeals dismissed Brian’s claim and declared that Richardson’s assertions came under free speech protections.

Although never prosecuted over the PROMIS allegations, Brian survived only one more year after the libel suit before other past shady deals began to catch up with him. In October 1996 a California jury convicted him of Federal bank fraud, conspiracy and lying to auditors. Prosecutors charged that Brian had drafted documents to conceal losses of the Financial News Network and United Press International, for whom he served as chief executive, in order to obtain $70 million in bank loans for his other concern, a biotyechnology firm called Infotechnology.

Interestingly, the pattern of financial impropriety in the case was identical to one that happened on assassination day, November 22, 1963. Someone named Tony DeAngelis misrepresented his holdings of thousands of tons of salad oil with faked American Express warehouse receipts in order to get bank loans. The fraud’s exposure was the top news story in the New York Times editions that came out before the assassination on that date. Many people profiteered from the short-selling spree on the markets consequent to that and news of JFK’s murder, including American Express magnate Warren Buffet and a transnational entity called Bunge Corporation, known in the financial literature of the time. as The Octopus. In a classic work on the JFK assassination, Were We Controlled?, pseudonymous author Lincoln Lawrence argues that DeAngelis, Jack Ruby, and Lee Harvey Oswald were all mind-controlled in their actions on that day. I produced an edition of this book, with an expanded introduction and photographs, as the book NASA, Nazis & JFK: The Torbitt Document and the JFK Assassination (Kempton, IL: Adventures Unlimited Press, 1997). Add to that the fact that Earl Brian at one time a brain surgeon, and the other Watergate-Inslaw connection, E. Howard Hunt, had a phone relationship with Casolaro, has also been connect to mind control operations, and the Casolaro story takes some extremely interesting speculative turns.
Casolaro’s informant Michael Riconosciuto claimed that he had made his modifications to PROMIS on the tribal lands of the Cabazon Indians in Indio, California as part of a joint project the tribal administrators had with a private security firm known as Wackenhut.
Wackenhut provides security services to the notorious secret airbase Area 51. After Danny Casolaro turned up dead and his current research file missing, other notes found at his apartment later clearly indicates his interest in the famed Nevada super-spook facility. The history of the base, of course, is now well-known: it had been around since before it was used to develop the U2 spy plane in the late 1950s and early 1960s, later the SR71 Blackbird and later still, the mysterious Aurora super-plane. As Casolaro made his notes about it, however, it had not yet become the subject of popular lore that it is today. Nevertheless, Casolaro devoted pages of notes to Area 51.

One theory had it that Casolaro’s death had less do with the Octopus than it did with manufacturing fraud at Hughes Aircraft, a company that has a long history of exclusive and secret deals with the US government for aerospace technologies, many almost certainly involving Area 51. Casolaro had brushed up against this corruption in his pursuit of his Octopus spook group. A contact he made the day before he died, Bill Turner, gave him documentation of the fraud at Hughes. Turner noted that Casolaro added these papers to the ever-present accordion file of current research. After they found Casolaro’s body, Turner got himself arrested on a bank robbery charge in order to remove himself from any further involvement.

The joint venture between the Cabazon Indian tribe and Area 51’s Wackenhut did exist, at least between 1981 and 1983, and Michael Riconosciuto certainly was involved with it at least in some capacity. A report from a task force of the sheriff’s office of Riverside County, California placed Riconosciuto at a weapons demonstration with Earl Brian (“of the CIA”) put on by the Cabazons and Wackenhut.

Riconosciuto also claimed that he had a tape documenting threats made against him by another Justice Department official, but he had thrown it in a marsh near Puget Sound the night he was arrested on trumped up methamphetamine charges. Casolaro spent many days searching the Puget Sound bog to no avail, looking for the tape that ostensibly could verify the claims of “Danger Man,” Casolaro’s nickname for Riconosciuto.

The Puget Sound location was significant because of its proximity to a famous early UFO event, the 1947 Maury Island incident. That event–six flying saucers seen by harbor seamen that left behind slag debris-had been witnessed, or hoaxed, by the business partner of Riconosciuto’s father, a man named Fred Lee Crisman. In the 1960s, Crisman was subpoenaed by New Orleans district attorney Jim Garrison as part of his investigation of the Kennedy assassination. Some researchers claimed that Crisman was one of the “railyard tramps” arrested near Dealy Plaza on November 22, 1963; others note that he possibly gave refuge on his Oregon ranch to a member of the Minutemen, an early militia group investigated by the Warren Commission.

Little suggests that Casolaro knew of the Crisman connection, or of the significance it might hold for what he already knew about Area 51 and the other secret airbase that held his attention, Australia’s Pine Gap.

Pine Gap is the top secret American underground base located near Alice Springs in the Northern Territory of the land down under, officially known as the Joint Defense Space Research Facility. It was built in 1968 officially to share program data with the Australians.

Renowned intelligence defector Victor Marchetti, who served in the CIA director’s office from 1966 to 1969, now acknowledges that he co-authored the secret agreement between the agency and the Australian Department of Defence on the establishment of the Pine Gap station. Officially, it monitors spy satellites and intercepts and decodes broadcast communications between foreign powers unfriendly to the US. One of Pine Gap’s important functions is to monitor geostationary satellites for wide ranging information on enemy telemetry, radar emissions and telecommunications.

Opposition from the Australians to the base grew as its nature as an espionage facility outside of Australian control became clear. In his book Crimes of Patriots (New York: W.W. Norton & Co, 1987), author Jonathan Kwitny demonstrates that covert manipulation led to the early end (in Australia of the administration of Labor Party prime minister Gough Whitlam because of his opposition to Pine Gap. Casolaro noted with aggravation Kwitny’s inability to see the tentacles of the Octopus in the affair. “It didn’t take many people to design the apparatus that would insure the renewal of the lease for the Pine Gap installation near Alice Springs, Australia,” Casolaro wrote.

“After all, how could a democracy spit up a Prime Minister that could sack the security of the Western Alliance?”

Indeed, Whitlam was rousted after his public complaints about intelligence agency deceptions over the tragic US policy in East Timor, and the CIA’s funding of Australia’s right-wing Country Party [AKA National Party], as well as his opposition to Pine Gap. Whitlam was not driven from office by an election, but was removed [this event is known as “The Dismissal”], on a technicality–just as George Bush, Jr. “won” the 2000 election in the US on a court-imposed technicality–by a governor-general he had appointed, one who had strong ties to the CIA [and represented the British Commonwealth].

No doubt the paranoia about this destabilization of the Australian government by the US fueled rumors about the underground Pine Gap base involving alien/government collaborations, rumors that Danny Casolaro knew about that were very similar to what he was hearing about Area 51. Certainly the base’s potential for surveillance also triggered his interest as well. PROMIS had been used in tracking Soviet submarines; might it also be used to track Soviet satellites? One report told of a Moscow summit conference in 1972 during which an early Pine Gap satellite picked up limousine radio-telephone conversations between Soviet missile designers, Andrei Gromyko and Leonid Brezhnev that revealed a missile secretly being kept from SALT negotiations.

Back on the Area 51 front, Casolaro was hearing rumors that Michael Riconosciuto had worked for Lear Aircraft in Reno, Nevada. This connected him to Bill Lear, creator of the Lear jet, who is often claimed by UFO buffs as having done research on anti-gravity for the government as well as John Lear, a former CIA pilot who also hit the UFO circuit with tales of saucers and aliens in cahoots with the US government. It is now becoming distant history, but back in 1989, a man named Bob Lazar went public with his claims that he had back-engineered alien spacecraft at Area 51. Lear and Lazar lectured widely on the UFO circuit in the late 1980s and early 1990s, along with other UFO lecture celebrities like Bill English and William Cooper. Cooper’s classic, Behold A Pale Horse (Flagstaff AZ: Light Technology Publications, 1991), shared the title of the first draft proposal of Casolaro’s manuscript that eventually became The Octopus.

After Casolaro’s death, Michael Riconosciuto made claims that Casolaro had learned nothing more than what one of two intelligence factions wanted him to know in order to embarrass the other faction. One faction was called Aquarius and had a leadership sub-group called MJ-12, the name, of course, of the supposed secret group founded by Harry Truman in the wake of the Roswell flying saucer crash. Riconosciuto even told one writer that he had witnessed the autopsy of an alien body. This was long before the famous [Ray Santilli] alien autopsy film began to circulate. Some have suggested that the tales of extraterrestrials that surround areas like Area 51 and Pine Gap serve as disinformation to deflect attention away from serious issues such as gun-running and black project weapons development. Casolaro’s own view, and the extent of his knowledge and interest in this tributary from the Octopus research, and whatever he learned that might have brought the truth closer to the surface of the murky waters in which he swam, may have died with him.

The Casolaro murder – tip of the Octopus

THE NEWSPAPER FOR THE PEOPLE OF ARIZONA

* * * * * MORNING EDITION * * * * *

EDITOR: John DiNardo
Part 12, THE CASOLARO MURDER: Tip of the Octopus
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The following excerpts are selected from a lengthy article
published in The VILLAGE VOICE (New York City) October 15, 1991.
The article glances upon many diverse and intriguing facets
of the story surrounding the murder of an intrepid reporter
named Danny Casolaro.

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

THE LAST DAYS OF DANNY CASOLARO
by James Ridgeway and Doug Vaughan

MARTINSBURG, WEST VIRGINIA —
At about 12:30 in the afternoon of Saturday, August 10, a maid
knocked on the door of room 517 at the Sheraton Martinsburg Inn,
just off Interstate 81 on the outskirts of this old mill town.
Nobody answered, so she used her passkey to open the door; though
it had both a security bolt and a chain lock on the inside,
neither one was attached. The bed didn’t appear slept in, though
it was turned down, and clothes had been laid out neatly at it’s
foot. Then the maid glanced into the bathroom. She saw a lot of
blood on the tile floor and screamed.

Another hotel maid came rushing in to help. When she peaked inside
the bathroom, she saw a man’s nude body lying in the blood-filled
tub. There was blood not only on the tile floor but spattered up
onto the wall above as well; she nearly fainted at the sight. One
of the maids called the desk on the room phone and, after sending
up a maintenance man, the desk immediately dialed 911.

Within five minutes, three Martinsburg city police officers were
threading their way past the horrified maids and maintenance man
clustered in the hallway and into Room 517. A team of paramedics
from the local fire department joined them a few minutes later.
Squeezing into the tiny bathroom, they found a white male in his
early forties with deep cuts on both wrists: three or four wounds
on the right and seven or eight on the left, made with a sharp,
bladed object.

There was no other trauma to the body that would indicate any sort
of struggle; there was a half-empty, corked bottle of red wine on
the floor by the tub and a broken hotel glass beside it. When they
lifted the body out, they found a single-edge razor blade — the
kind used to scrape windows or slice open packages — at the
bottom of the bloody water in the bath, along with an empty can
of Milwaukee beer, a paper hotel glass coaster, and two white
plastic garbage bags, the kind used in wastepaper baskets.

On the desk in the bedroom the cops found an empty Mead composition
notebook and a legal pad from which a single page had been removed.
The page lay near a plastic Bic pen, and in its ink there was a note:

To those who I love the most,
Please forgive me for the worst
possible thing I could have done.
Most of all I’m sorry to my son.
I know deep down inside that God
will let me in.

There were no other papers, folders, documents of any sort, nor
any briefcase in the room, only the man’s wallet, stuffed with
credit cards. According to the driver’s license, the man’s name
was J. Daniel Casolaro of Fairfax, Virginia.

Although his death was tentatively ruled a suicide, back in
Washington, D.C., his friends and family quickly protested that
decision, and reports in the media were soon suggesting that Danny
Casolaro had been murdered. For in this, the year of conspiracies,
Danny Casolaro happened to be one of a small army of freelance
journalists exploring the possibility that the powers of the
national security state had been used to manipulate domestic
politics. In particular, Casolaro was interested in what he called
the “Octopus,” a network of individuals and institutions that he
believed had secretly masterminded a whole series of scandals,
from the Iran-Contra affair and the S&L debacle to the BCCI
collapse and the 1980 October Surprise deal.

In the weeks before his death Casolaro had spoken frequently about
threats on his life, and just before he left for Martinsburg he
had told his brother, “If anything happens to me, don’t believe
it’s an accident.” Many of the friends and sources who spoke to
him in the last days of his life recalled that he seemed euphoric
and quite certain that he was on the brink of proving the existence
of his Octopus; he did not sound like a candidate for suicide to
them. More suspicious, before the family could be told of Casolaro’s
death or an autopsy performed, the body was embalmed by a local
funeral home; early press reports added that the hotel room had
been quickly cleaned, perhaps to obscure any trace of a crime. The
wildest story even suggested that the undertaker was an employee
of the C.I.A., hired to clean up after agency assassinations.

Even at Casolaro’s funeral, the family felt engulfed by mysteries.
As his mother, brothers, sisters and close friends watched from
beneath a canopy, a man in a tan raincoat and a beribboned black
soldier in Army dress uniform walked up to the casket. the soldier
laid a medal on the lid, saluted and both men quickly walked away.
No one recognized either man; Danny had never served in or covered
the military. The medal was buried with the coffin.
~~ TO BE CONTINUED ~~

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

Subject: Part 13, THE CASOLARO MURDER: Tip of the Octopus

The following excerpts are selected from a lengthy article
published in The VILLAGE VOICE (New York City) October 15, 1991.
The article glances upon many diverse and intriguing facets
of the story surrounding the murder of an intrepid reporter
named Danny Casolaro.

* * * * * * * * * * * * * * * * *
THE LAST DAYS OF DANNY CASOLARO
by James Ridgeway and Doug Vaughan

Riconosciuto told Hamilton that Ed Meese had taken PROMIS and
allegedly given it to one of his cronies, Earl W. Brian, who
served as Reagan’s Secretary of Health while he was Governor of
California, and later became head of United Press International.
According to Riconosciuto, Brian then sold PROMIS to police forces
— including secret police — around the world, from South Korea
to Israel to Iraq. The same qualities that made PROMIS ideal for
tracking criminals in the U.S. courts made it perfect for keeping
tabs on terrorists or, needless to say, political dissidents. As
Riconosciuto claimed to have adapted it, the software could then
operate as a kind of computer network bug — anything the security
apparatus that used PROMIS knew, the U.S. could know, simply by
linking up over the telephone.

Almost at once, Hamilton says, he told Casolaro about Riconosciuto.
Casolaro’s phone records indicate he spent many hours in
conversation with Riconosciuto, and Casolaro’s friends say that
for several months in late 1990, Casolaro talked of little else.

The 44-year-old Riconosciuto is — to put it mildly — a colorful
character, wilder than anything in “The Falcon and the Snowman”.
He was a gifted child: When he was just 10 years old, Michael
wired his parents’ neighborhood with a working private telephone
system that undercut Ma Bell; in the eighth grade, he won a science
fair with a model for a three-dimensional sonar system. By the
time he was a teenager, he had won so many science fairs with
exhibits of laser technology that he was invited to be a summer
research assistant at Stanford’s prestigious Cooper Vapor Laser
Laboratory. Dr. Arthur Schalow, a Nobel laureate, remembers him
even now. “You don’t forget a 16-year-old youngster who shows up
with his own argon laser,” he told Casolaro.

In 1973, Riconosciuto had been sentenced by a federal judge in
Seattle to two years in prison for the manufacture of psychedelic
drugs and jumping bail. At the time, his father testified that
Michael was engaged in “underwater research” and had discussed
“using electronic means to clean up pollutants in water.” The
narcotics agents who arrested the young Riconosciuto said they’d
had him under surveillance off and on since 1968.

Riconosciuto told Casolaro, as he had told numerous other reporters
before him, that after his release he had become research director
for a joint venture between Wackenhut, the Coral Gables [Florida]
private security outfit, and the Cabazon Indian band of Indio,
California, that was developing and manufacturing arms and other
military materiel — including night-vision goggles, machine guns,
and biological and chemical weapons — for export.

Riconosciuto claimed that he had invented the fuel-air explosive;
he also said that he had encountered a variety of famous people
who dropped by the Cabazon reservation from time to time. For
example, he claimed that he had met the Jackal, the famous
assassin; talked on the phone with Admiral Bobby Inman of the
C.I.A.; and even tape-recorded a secret meeting with William Casey
at a Washington, D.C. country club (according to Riconosciuto,
that tape was his insurance policy against getting bumped off by
the big boys in the spook world).

Riconosciuto went on to “reveal” that he was the man who had
“pulled the plug” on the Nugan Hand Bank, the Australian bank
with C.I.A. ties that collapsed in 1980; he also claimed to be an
effective lobbyist on Capitol Hill, responsible for swinging five
key votes to free up $100 million for the secret contra war against
the Sandinistas. Once, after lunch with then F.B.I. Director
William Webster, he had laid plans to launder spook money throuyh
NASA.

This was all a bit much for the Hamiltons to take in, but the
computer company owners listened with fascination and deep
suspicion to his tales involving PROMIS. In an affidavit presented
in federal court, Riconosciuto told them that Casey — who had
been outside counsel to Wackenhut before joining the Reagan White
House — had hired him and Brian, as employees of Wackenhut, to
carry out the October Surprise deal. Riconosciuto described how a
Justice Department official had allegedly ordered him to modify
PROMIS for use by the Royal Canadian Mounted Police.

Reporter Is Buried Amid Questions Over His Pursuit of Conspiracy Idea

Reporter Is Buried Amid Questions Over His Pursuit of Conspiracy Idea
By NEIL A. LEWIS,
Published: August 17, 1991

A freelance writer who was found dead with his wrists slashed in a hotel room in Martinsburg, W.Va., a week ago was buried near here today amid uncertainty about the cause of death and evidence that he was working on an article about a major Government conspiracy.

The body of Joseph Daniel Casolaro, 44 years old of Fairfax City, Va., was discovered by West Virginia authorities on Saturday in what was tentatively ruled a suicide.

Mr. Casolaro’s family and friends said he had told them he was going to Martinsburg to meet a source for the story he had been working on for more than a year.

Family members and associates have said that despite the views of the local authorities and the findings of an autopsy, they strongly believed that Mr. Casolaro might have been slain because of what he had discovered. Mr. Casolaro had been investigating a case in which the owners of a computer software company, Inslaw, have accused the Justice Department of stealing programs the company had designed to track criminal cases worldwide. The department has denied the accusations and resisted all court challenges by Inslaw. ‘Don’t Believe It,’ He Said

The case has been in the courts for nearly a decade and Mr. Casolaro’s brother, Dr. Anthony Casolaro of Arlington, Va., has told reporters he believed his brother may have been close to uncovering a major conspiracy in connection with the Inslaw case. He said in an interview today that his brother had told him in the last two months that if he died in an accident, “don’t believe it.”

Dr. Casolaro said he was very skeptical that his brother committed suicide for several reasons, including the facts that his brother had recently received numerous death threats and that none of his notes on the case were found with his body.

Friends of the journalist said he was looking into a connection between the Inslaw matter and the Bank of Credit and Commerce International, a loosely regulated international banking concern that Federal regulators say is at the center of a worldwide banking fraud. U.S. Inquiry Is Suggested

Elliot Richardson, a former United States Attorney General who now represents Inslaw in its suit against the Justice Department, said Mr. Casolaro’s death should be the subject of a Federal investigation led by someone “of unquestioned integrity and independence.”

Mr. Richardson said today, “The significant thing about Danny’s death is that he was just seeking confirmation of what he believed he already knew.” He said that if the informers Mr. Casolaro had already talked to were to be believed, it involved a conspiracy “far worse than Watergate,” one that involved B.C.C.I., drugs and the persistent but unproven allegations that in 1980 some members of Ronald Reagan’s Presidential campaign team worked to delay the release of American hostages in Iran to damage President Jimmy Carter’s re-election chances.

“These are not separate cases if these people are to be believed,” he said. As for himself, Mr. Richardson said he did not know whether to believe Mr. Casolaro’s far-reaching conspiracy theory, which the reporter dubbed “The Octopus.”

Mr. Casolaro, who was not widely known in the Washington journalism community, had published a novel and some short stories and for a time owned a small group of computer industry trade publications.

Cynthia Gaither, the West Virginia prosecutor investigating the death, said the authorities still believed that Mr. Casolaro committed suicide, although an investigation was continuing because of the concern expressed by friends and family. Note Found With Body

She said Mr. Casolaro was found in the hotel room bathtub with numerous cuts on his wrists. There were no signs of forced entry to the room or any kind of a struggle. A note was found in the room that the authorities have characterized as a suicide note, but they would not reveal its exact contents. His brother said the note was an apology and a plea for understanding, addressed in part to a 22-year-old son from a failed marriage and concluded with the hope that “God will let me in.”

Ms. Gaither said that the authorities had found “nothing inconsistent with the earlier finding that it was a suicide.” A finding of suicide was made by Dr. James Frost, West Virginia’s deputy medical examiner, but he said he could not rule out foul play.

Ms. Gaither said that investigators were continuing to interview everyone they believed Mr. Casolaro had met while in Martinsburg. She was also awaiting results of toxicological tests and the examination of other physical evidence like fingerprints.

A Congressional committee has been investigating the Inslaw matter.

Officials of the Federal Bureau of Investigation said that there was as yet no Federal aspect to the Casolaro death that would warrant its entry into the case.

Dr. Casolaro said that in a July 22 letter to his agent his brother complained of his anxiety over a mortgage payment, but also expressed exultation over his progress in the investigation.

After talking about the payments, which he subsequently made, Mr. Casolaro said in the letter, “I feel the happiness that an Eskimo must feel when he comes across fresh bear tracks before any other sled.”

The Inslaw Octopus

The INSLAW Octopus

Software piracy, conspiracy, cover-up, stonewalling, covert action: Just another decade at the Department of Justice

By Richard L. Fricker
WIRED magazine

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. 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.

(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 dropped.

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.

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 General.

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

What A Surprise!

Earl W. Brian says he wasn’t in Paris in October 1980, but investors were told a different story

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

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

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

The October Surprise theory hinges in part on alleged negotiations between the Reagan campaign and the Iranians on the weekend of Oct. 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 interviews.

Although Brian denies any involvement with Inslaw or Riconosciuto, the House Judiciary Committee received a report from a special task force of the Riverside County, Calif., 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 allegations.

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 missing.

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

A source close to retired Federal Judge Nicholas Bua (the Bush Administration appointee who is investigating Inslaw) said Bua will not come to any conclusions regarding 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

InslawGate?

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 Case

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

“There appears to be strong evidence,” the report states, “as indicated by the findings in two Federal Court proceedings as well as by the committee investigation, that the Department of Justice ‘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.”

The death of Danny Casolaro

IT WAS A LITTLE AFTER 12:30 IN THE afternoon of August 10, 1991, and Barbara Bittinger, the assistant head housekeeper of the Sheraton Inn in Martinsburg, West Virginia, had just sat down with a cheeseburger when one of the girls from the laundry room burst in and told her that one of the chambermaids was calling from upstairs and saying somebody had better get over to Room 517, there was blood. Bittinger, who had been with the hotel for seven years, went to the room and hesitantly pushed open the bathroom door. Though she surmised that something must be terribly wrong, she was still unprepared for the ghastly scene. ‘There was blood everywhere,” she recalls. Because the door opened against the bathtub, and because the shower curtain was partially closed, Bittinger couldn’t see into the tub, but she did see a half- full, open wine bottle near the toilet, and a broken glass and an ashtray on the edge of the tub. Then, as she slowly withdrew, she looked through the crack between the door jamb and the door into the bathtub, and saw two white knees sticking up. Startled, she pulled back, but not before she saw something else, something that still puzzles her today. Under the sink, lying more or less flat, were two bloody towels. “It looked like someone tried to wipe up the blood on the floor and slid the towels under the sink,” said Bittinger, who was only interviewed by police briefly the day the body was found and never by any journalists before speaking to SPY. “It looked like someone” -not the maid, Bittinger tells us- “threw the towels on the floor and tried to wipe the blood up with their foot, but they didn’t get the blood, they just smeared the floor.

The knees Bittinger saw in the bathtub belonged to freelance journalist Danny Casolaro. He had come to Martinsburg two days earlier to meet sources who would contribute to his already yearlong investigation into what he called the Octopus, a mess of interconnected high- level government conspiracies and supposed conspiracies. The Octopus, in Casolaro’s view encompassed the alleged theft of a sophisticated computer software program by Justice Department officials; an effort by a former CIA operative to use a California Indian reservation as a front for supplying weapons to the Nicaraguan contras; the shady connections between the Wackenhut Corporation and the CIA; the burgeoning BCCI scandal; and the October Surprise. He’d diligently pursued leads and sources and uncovered an impressive amount of information, but he seemed to have had a hard time making sense of all that he had found. He also seemed to have had trouble telling the difference between people who were trustworthy and those who were not.

Accompanied by the chambermaid and a janitor, Bittinger went to the front desk and called 911. Within minutes police and paramedics were there. Casolaro was lying in a bathtub full of bloody water. I seemed pretty obvious he’d committed suicide. He had eight cuts on his left wrist and four on his right. There were two plastic trash bags floating in the water and a shoelace tied around his neck; evidently he’d thought to hasten his death by securing the bags over his head and asphyxiating but had reconsidered, either before or after slashing his wrists. There was a note that said, TO MY LOVED ONES, PLEASE FORGIVE ME-MOST ESPECIALLY MY SON-AND BE UNDERSTANDING. GOD WILL LET ME IN.

To give themselves more room to work, the paramedics took the bathroom door off its hinges. When they lifted Casolaro’s body from the tub, they saw that an Old Milwaukee beer can, a paper coaster and a razor blade had been under the body. After draining the tub and examining the body, Sandra Brining, a nurse who serves as the Berkeley County coroner, declared the cause of death blood loss from multiple self-inflicted wounds. Around 4:00 p.m. she released the body to Brown’s, a local mortuary.

So sure was everyone that Casolaro had killed himself that that very night, even before his family was notified of his death, Charles Brown, the undertaker, embalmed the body. Brown would later give the most ordinary of reasons for doing so- “I didn’t want to come back to work on Sunday” -though embalming a body without the permission of the next of kin is illegal in West Virginia. Had Brown or the authorities spoken to Casolaro’s brother Tony, they surely would have proceeded more carefully. Tony would have undoubtedly mentioned what Danny had said to him just a few days before: “‘I have been getting some very threatening phone calls. If anything happens to me, don’t believe it was accidental.'”

Tony wasn’t the only person Danny had told that he might be in danger; he’d also told Thomas Gates, a special agent of the FBI. A mysterious character named Robert Booth Nichols had become one of Danny’s sources. Nichols, who is now 49 and lives in L.A., has, as federal authorities have put it, “no visible means of income to support his rather lavish life-style.” He calls himself an entrepreneur and says he has been involved with the CIA in various intelligence operations; he has even appeared in and acted as a technical adviser on Under Siege, the film starring his friend Steven Seagal. Law-enforcement officials know Nichols, though, as an international money launderer and an associate of the Gambino organized-crime family.

As Casolaro worked on his Octopus story, he came to rely increasingly on Nichols as a source, and as a friend. But in July 1991, after Nichols visited him in Washington, D.C., Danny began to suspect that Nichols was far more sinister than he’d imagined, and began to investigate his activities. Three days before he died, he called Gates, who works in the bureau’s L.A. office. As Gates has testified before the House Judiciary Committee, Casolaro told him that Nichols had warned Danny, “If you continue this investigation, you will die.” Other publications, notably Vanity Fair, have wondered whether Casolaro committed suicide; none has had the benefit of the evidence we’ve been able to amass. Spy has discovered that on July 31- ten days before he died, six days before he had a 64-minute phone conversation with Nichols, seven days before he spoke to Agent Gates- Danny Casolaro learned a terrible secret of Robert Booth Nichols’s, a secret that, if revealed, could cost Nichols his life, a secret that Casolaro might well have told Nichols he knew.

DANNY CASOLARO WAS BORN ON JUNE 16, 1947, the first of six children. His father was a prominent obstetrician in McLean, Virginia. Along with prosperity, however, the Casolaros endured a large share of grief. One child was born with a heart defect and lived only briefly, and the eldest sister, Lisa, died of a drug overdose, an apparent suicide.

When he was 20, Casolaro dropped out of Providence College and went to Ecuador for six months to look for Incan treasure. When he came back, he fell in love with a married woman, Terrill Pace. They eventually married and had a son; after 13 years, they would divorce. He went back to college but quit to become a stringer for the National Enquirer and later a reporter for the trade magazine Computer Age. His friends all speak well of him. They say he was one of the sweetest and most tolerant people they ever met; that he never seemed to care about money; that he was a dreamer. He had many friends of both sexes but was especially close to women. Gabrielle Miroy, a onetime lover and longtime friend- one of at least five former lovers whom he visited frequently and spoke with on an almost daily basis- expressed the feelings of many people when she said, “Danny was always there for me; he was my best friend.” There was a Peter Pan-ishness about him. His friend Larry Stitch, a retired attorney, says, ‘Although Danny was nobody’s fool, he had a tendency to trust everyone.

But if he was Peter Pan, he was Peter Pan with an obsessive streak. In the late 1970s he worked for almost two years on an alternative explanation for Watergate. He spent a year on a novel he ended up publishing with a vanity house. He worked hard at staying fit but also smoked too much, occasionally drank too much and certainly pursued women too much. He also worked hard at his job. Computer Age was a daily newsletter, and for ten years Casolaro was its only reporter, and effectively ran the thing. In 1989 he took a second mortgage on his house in Fairfax, Virginia, and bought Computer Age. But a year later, pressed by the IRS for back taxes incurred under the previous owner, he sold the company at a loss. He could have worked out a payment schedule, but by then he was already chasing the story of his life.

IN 1990, CASOLARO GOT A LEAD ON THE INSLAW- conspiracy story. Inslaw was a computer software firm formed in 1980 by William and Nancy Hamilton to supply a program they’d created called Promis to the Justice Department. The Hamiltons received tens of millions of dollars from the federal government to develop Promis, a system to help prosecutors across the country keep track of complex investigations. In what has become a highly publicized case, the Hamiltons allege that in 1983 a cabal of top Justice Department officials and friends of former attorney general Edwin Meese conspired to delay payments and drive them out of business to gain control of Promis for their own profit. (Meese denies all wrongdoing.) Indeed, Justice did stop paying the Hamiltons in 1983, claiming they weren’t fulfilling their obligations, and eventually Inslaw did go bankrupt. In 1987 a federal judge ordered the government to pay Inslaw $6.8 million; the order was later overturned on a technicality. Promis is widely used today, both in the U.S. and by foreign law-enforcement and intelligence agencies.

As the case became known, conspiracy theories about why Promis was stolen were floated. Among those claiming to have information was Michael Riconosciuto a convicted drug dealer who had been on the periphery of many illegal and clandestine operations, who therefore knows many inside stories but also invents tales that have certain credible elements. Riconosciuto, an accomplished programmer, claims that Promis was stolen as a favor to software-company executive Earl Brian, a friend of Meese’s, for Brian’s help in persuading the Iranian government to hold on to the embassy hostages until the 1980 election was over. (Brian denies any involvement with Inslaw.)

Led down this rabbit hole by Riconosciuto (who loves an audience), egged on by Bill Hamilton (who had millions at stake), Danny Casolaro pursued the story. In time it came to possess him. He worked on it 16 hours a day, staying on the phone past midnight, sleeping only 2 or 3 hours a night, talking with quasi- spooks and bona fide spies, chasing leads, always enlarging his vision of the Octopus. He stopped working out; the man who would boastfully do 50 pushups with a cigarette in his mouth no longer could do even two. There was no question that he was onto some remarkable stories, including aspects of the BCCI scandal -(long before the scandal became public, Casolaro was saying he was going to nail Clark Clifford), the takeover of the Cabazon Indian reservation by a former CIA operative [see Spy, “Badlands,” April 1992], and the Wackenhut-CIA connection [“Inside the Shadow CIA,” September 1992]. With less insistence on proving a monolithic conspiracy, he may well have pinned down those stories.

For a long time, Casolaro relied heavily on Riconosciuto, often accepting too much at face value. When Riconosciuto was arrested in March 1991 on drug charges, Casolaro flew to Seattle to serve as his volunteer pretrial investigator. In time, however, he became more skeptical, and within a few months he was refusing to accept Riconosciuto’s collect calls from jail. But Casolaro had not abandoned his investigation. In August 1991 he told friends he was going to Martinsburg-where the IRS has its main national computer center-to meet sources.

THE BEST REASONS TO BELIEVE DANNY Casolaro committed suicide are the obvious ones: His corpse was found; the wounds appeared to be self-inflicted; there was a note. That evidence was certainly sufficient to quell the curiosity of the authorities who found his body. Apart from what we know about his reporting, however, there are compelling reasons to doubt that he killed himself. Admittedly, it is hard for any of us to know what is in someone’s heart, even those whom we know well. That said, however, nearly everyone who knew Casolaro was surprised to hear that he had committed suicide. Certainly he was not a depressive by nature, and no one who talked to him during the last days of his life regarded him as depressed then. His friend Doug Chisholm, whom he visited a few weeks before his death, says, “Danny was excited about his story and quite taken with the woman he’d brought to lunch.” Danny spent the Sunday before he died with Danielle Stallings, a longtime friend and lover. “He was in a very upbeat mood,” she told us. On Monday he spoke to his pal Art Winfield, who says he was very excited about meeting a new source.” The night before he left for Martinsburg, he visited his pal Larry Stitch, who says, “He was his usual upbeat and pleasant self.” Indeed, he seemed to be a man who expected to live awhile. The morning he left, he stopped by his insurance agent’s office and paid his homeowner’s premium. He also called Stallings and asked her to arrange a meeting for when he got back. And in Martinsburg he indeed met with at least two sources, and perhaps a third; Charlotte and Ronnie DeHaven of Martinsburg told Spy they saw an alert-looking Casolaro waiting in his car in an out-of-the-way spot back behind the IRS building.

Other explanations for a suicide have been suggested-that he was lonely, or broke, or despondent over contracting multiple sclerosis, a potentially fatal disease. It’s true he had no mate, but he seemed truly to prefer it that way. Moreover, he had a cozy circle of friends, stayed close to his family (once, speaking of his sister’s death, he told Stallings, “I could never commit suicide after what Lisa’s death did to my family”) and had a good relationship with his 22-year-old son. It’s also true that he was having money problems. His investigation was costly, and he was facing a balloon payment on his mortgage. Still, the payment was three months off, and as Danny’s ex-wife puts it, “The Casolaro children had been raised to believe that money was not a problem.” Danny knew that at least two people stood ready to help him financially: his brother Tony, a well-to-do physician who had helped him before, and Stitch, a retired IBM attorney, who thought Danny was onto something important. When he visited Stitch the day before he left for Martinsburg, Stitch told him, “If push comes to shove, you can count on me financially.” He replied, “I’m not there yet, but I may come back to you on that offer.” It’s also true that Casolaro had M.S. (which is fatal in about 1 percent of cases), but this was not known to his friends and family until after the autopsy. He had occasionally suffered the symptoms of the disease, but he didn’t seek treatment, at least not from his regular doctor. He did have a general conversation about the disease with his lifelong friend Ann Marie Winfield, a nursing teacher, who told him that when the disease appears in someone Casolaro’s age, it is less likely to be fatal. “I really didn’t think Danny was terribly concerned,” Winfield says.

Interestingly, Casolaro was posthumously evaluated by two psychiatrists. The Martinsburg police hired one who thought Casolaro capable of suicide based on his mortgage difficulties and the fact that his book proposal had received three rejections-demoralizing news, certainly, but hardly extraordinary to anyone familiar with publishing. A second profile was written a week after Casolaro’s death by Louis J. Petrillo, a New York psychiatrist and Casolaro’s cousin. He wrote the Martinsburg police to tell them, “Casolaro did not manifest any symptoms or character traits during the day immediately preceding his death, during the past twelve months or at any time in his personal history that could, in any way, be associated with a potential for suicide.”

FOR TWO DAYS AFTER THE DISCOVERY OF HIS body, the Martinsburg police considered the Casolaro case to be an inconsequential matter. It wasn’t until Monday, when the department received calls from Agent Gates, The Washington Post and CNBC, that they realized they had something stickier on their hands. Late on Monday-having wasted the 48- hour period after the discovery of the body that most homicide detectives regard as the most crucial in gathering evidence-they began their investigation.

It is almost an axiom among official agencies: First the screwup, then the cover-up. The authorities’ initial acts-removing the door, draining the tub without straining the water to preserve evidence, not sealing the room as a crime scene-compromised the investigation from the start; so did the unauthorized embalming. Still, on January 25, 1992, five months after Casolaro died, the Martinsburg police, in conjunction with the West Virginia State Medical Examiner’s Office, the Berkeley County Medical Examiner and the Berkeley County Prosecuting Attorney’s Office, issued a press release reaffirming their original conclusion: Casolaro had killed himself.

Since issuing their report, the police have refused to say anything further about the case. SPY repeatedly called the chief of the department, as well as the county prosecutor; neither would comment. All that speaks for the local investigation, then, is the police department’s press release. It says that officials reaffirmed the original conclusion for several reasons. First, they somewhat tautologically cite the conclusion of the original autopsy that Casolaro had committed suicide and maintain that the embalming of the body in no way hampered the subsequent autopsy and toxicological studies. Second, neither the police nor the coroner were able to detect evidence of foul play. They found no signs of forced entry or a struggle. The room was neat, and neighbors had heard nothing. Third, they had the suicide note, and were convinced through handwriting analysis and fingerprints that Casolaro had written it.

Finally, they conclude that he’d brought the implements of his self-destruction with him. The razor blades are sold around where Casolaro lived but not near Martinsburg. The alcohol and trace amounts of a painkiller, oxycodone, that were found in his bloodstream seemed self-ingested. There was a half- empty bottle of Portuguese wine in the room, and Casolaro had more of it at home; the oxycodone could have come from Vicodin, a painkiller prescribed for him after dental surgery in 1987 and an empty vial of which was found in the room. The plastic bags in the tub were from a box of plastic bags that he had in his luggage, and the shoestrings may have been from a pair of laceless sneakers found in his home.

It’s hard to argue with these conclusions based on the material the police have made public. However, the work of Martinsburg’s Finest inspires little confidence. It’s understandable that they treated the initial Casolaro investigation so lackadaisically-Hey, it’s hot, it’s Saturday, it looks like the guy did himself, let’s go home-but you’d think the national press scrutiny in the aftermath of Casolaro’s death would have inspired a little more conscientiousness, if only temporarily. It didn’t. Twenty days after Casolaro’s death, a Martinsburg man was found by the police with a .22 caliber bullet wound in his left temple. His fiancée told them he had suddenly pulled out a gun and shot himself. Without conducting a simple and rather standard paraffin test on the girlfriend to detect gunpowder residue, the police ruled it a suicide. For some reason, they ignored the fact that the previous evening, officers had been summoned to the home by a call that shots had been fired. Nor did they question neighbors. If they had, they might have found-as I did when I talked to them-that the night before he died, the man told two people his girlfriend was after him with a gun.

Here, then, is what we’ve been able to discover. Most of our findings amount to highly anomalous facts and unanswered questions. But we also found relevant physical evidence that the police have simply ignored. Let’s begin with the police department’s proof.

First, on the matter of the integrity of the body after embalming, Dr. Michael Baden, a noted forensic pathologist, says the “embalming of the body makes the report fatally flawed.” For example, he says, the measurements of alcohol in the bloodstream could have been affected by the embalming fluid.

Second, the police say they found no evidence that Casolaro had struggled against an attacker, yet they seem to have ignored two signs. According to the medical examiner, three fingernails on Casolaro’s right hand appeared to have been chewed. None of his friends we’ve spoken to-a half dozen in all-knew him to be a nail-biter. Could fingernails broken in a fight, having been submerged for several hours in bathwater, give the appearance of being bitten? Additionally, no one looked under the nails for skin scrapings or blood. More important, the coroner found a bruise on the top of his head that probably would have induced “moderate hemorrhaghing” under the skin. What collision might have caused this? The police do not mention the bruise in their statement.

The police further dismiss the possibility of a struggle by pointing to the neatness of Casolaro’s room as a sign that nothing happened there. But this neatness raises questions more than it settles them.

On Thursday, Danny met with a source. That day, he hit on a waitress in the restaurant where he had lunch, and later flirted with two other women in a bar. On Friday he met with Bill Turner, a former employee of Hughes Aircraft who was one of the sources he had gone to Martinsburg to see; Turner gave him a stack of documents. The two were supposed to have dinner, but Danny begged off, saying he had to meet a source. Later he ran into friends of his brother’s, who were staying at the Sheraton; they say he seemed cheerful. These were the last known people to see him alive. Authorities say Danny died in the early-morning hours of Saturday. The distance between being hard at work and in a good mood to despondently scribbling a suicide note is a long one to travel in a few hours. But even if Casolaro had plunged into a fugue state overnight and before sunup killed himself, questions occur. Except for the bathroom, Room 517 was extremely neat: The place was picked up, the bed was crisply made and undisturbed, and Casolaro’s pants were folded on the bed. But as his friends tell us, he was not an especially neat person. So we are asked to believe that a cheerful Danny went to meet a source, then either went somewhere else and got depressed or went back to his room and-without disturbing anything, but taking the time to uncharacteristically fold his pants-scribbled a desperate note and killed himself.

On the other hand, maybe there were other people in the room, and they tidied up.

The police seem to be on firm ground on the third element of their conclusion, the suicide note. Yet friends offer two observations: Its mention of God was very odd for someone unreligious, and the 19-word note was uncharacteristically succinct. Danny was a wordy fellow. The brevity of the note-like the bitten nails of a non- nail-biter, like the sudden swing into black depression of someone who had not much earlier been feeling fine- makes it seem as though Danny was highly agitated when he began writing, and was not composing his farewell calmly. This raises the possibility that the note was written under duress.

Finally, the local authorities make much of the fact that Casolaro had brought with him razor blades, shoestrings, wine and Vicodin (they say he bought the plastic bags in town). They say this indicates premeditation on his part. Of course, that’s at complete variance with everything we know about Casolaro’s outward behavior during his final days.

Still, let’s say that Casolaro was fooling everyone at the end-being sociable, paying his house insurance, hitting on women in a bar, all to hide his pain. Then we have to wonder what he was planning to do with these telling items. Perhaps the idea was to take the codeine and wine and drift away, possibly hastening death by tying the bags on his head. If so, then he prepared poorly. There was a very low level of oxycodone in his bloodstream-perhaps one or two tablets’ worth, not enough to do himself in. But let’s say that’s the case, that he prepared poorly and did not feel himself growing drowsy and (not liking the feeling of the bag on his face, or perhaps never putting the bag on) decided to cut his wrists.

If he did so, he slashed himself with brutal ferocity. He was cut 12 times; the cuts on the right wrist extended to the tendons, and the cuts on the left hit tendons. “I’ve never seen such deep incisions on a suicide,” Martinsburg paramedic Don Shirley told Spy. “I don’t know how he didn’t pass out from the pain after the first two slashes.” Agent Gates has testified that he asked a Martinsburg police captain how it happened: “The captain said, ‘He hacked his wrists.’ I said, ‘What does that mean?’ He said, ‘The wrists were cut, but they were cut almost in a slashing or hacking motion.”‘ Dr. James Starts of George Washington University reviewed the autopsy-which he on the whole found to be thorough-and said in an interview, “One thing that was surprising to me is that I didn’t see any hesitation marks. In suicides, you tend to find hesitation marks. People generally don’t know the amount of pain they can tolerate, so they will hesitate and take, literally, a little slice. This man really cut deeply. . .down to the tendons. That’s significant. That’s unusual.” Unusual indeed. Both Danny’s brother and his ex-wife told us that Danny had always been afraid of needles and blood.

It’s worth noting that while plastic bags can be used in suicides, they also have a recognized place in torture and interrogation techniques. According to Lynn Nottage of Amnesty International, putting a bag over the head produces the same effect as repeatedly dunking the head underwater. Its great attraction, she says, is that it leaves no marks.

But along with their bungling of the evidence, the police leave some questions unanswered. Casolaro carried with him everywhere an accordion file full of notes and references. The police say nothing about its whereabouts, other than that they conducted a canine search along a one-mile stretch of highway near the hotel and didn’t find it. Neither did they find anything resembling Bill Turner’s stack of documents. Obviously, someone could have taken the papers away-it’s possible to reach Room 517 from the parking lot, without going through a lobby.

Other friends-his female friends-point out something else unusual: Casolaro didn’t like to be seen in the nude. “Danny never would have been caught naked by strangers,” Terrill told us. Other lovers say that even after making love, he would cover himself with a towel to go to the bathroom. Danielle Stallings says that “on a few occasions at my pool, Danny would suggest we all sunbathe naked, but Danny’s idea of being naked was for the women to be naked and Danny to be in the pool.” Her comments echoed Terrill’s. “Danny was not comfortable being naked,” she said, and she thought it unusual that he would decide to go to his death that way.

Had police spoken to Casolaro’s friends, they would have known about his upbeat mood, his feelings about nakedness, his propensity for untidiness, his squeamishness about blood, his wordiness, his attachment to his files, and much more. But the police didn’t interview any of them. Had police spoken to his cousin, Dr. Petrillo, they would have learned something about his psychological profile. But even after Petrillo contacted the authorities, they didn’t interview him. Had police spoken to FBI Agent Gates, they would have known that Casolaro felt he was in mortal danger. But even after Gates contacted the authorities, they didn’t interview him.

And apart from a cursory questioning on August 10, the police didn’t even thoroughly interview Barbara Bittinger, one of the first people to view the scene, the hotel housekeeper who saw the towels under the sink in Room 57.

‘It looked like someone threw the towels on the floor and tried to wip up the blood with their foot,” she told us. Given that she’d spent seven years cleaning up bathrooms at the Martinsburg Sheraton, Barbara Bittinger’s opinion of what a floor looks like when somebody has tried to wipe it up may be considered expert. It’s inconceivable that Casolaro- painfully wounded and rapidly losing consciousness- would have wiped up the floor. But someone who did not want to leave footprints or fingerprints or his own bloodstains might have tried to clean up the scene.

As part of their investigation, the Ma?tinsburg police asked Dr. Henry C. Lee of the Connecticut State Police Forensic Science Laboratory, a renowned blood-splatter expert to examine the evidence. His conclusion, cited in the police press release, held that “none of the physical evidence found at the scene is inconsistent with that of a suicide.” But when we talked to Dr. Lee, he told us he didn’t recall seeing any smear marks or bloody towels in the photos supplied him. “A reconstruction is only as good as the information supplied by the police,” he said. The Martinsburg police apparently didn’t think the towels were worth treating as evidence.

We spoke to Ernie Harrison, who worked for a professional cleaning company called Le Scrub that the hotel hired to clean Room 517 after the police had finished their physical examination. “There were bloodstained towels on the bathroom floor that I picked up,” he told us. After Harrison finished cleaning the room, he tossed the towels away.

BY THE LATE SpRING OF 1991, ROBERT BOOTH Nichols had become one of Danny C asolaro’s most important sources. They spoke frequently and at length, and it’s not hard to see how Casolaro would come to depend, not only for information but in an emotional way, on someone who knew so much and with whom he could puzzle out the mysteries before him. “It is as though he considered him a friend and not just a source of information,” says Wendy Weaver, one of Casolaro’s ex-girlfriends.

They had a lot in common. Nichols’s father, like Casolaro’s, was a physician, and both sons grew up with privilege. Danny was a college dropout; Nichols got a degree through the mail. Both men liked the ladies. But Nichols was smooth and polished and exciting. Although he was only a few years older than Casolaro, he was very much the elder, the mentor, the teacher. He had even promised to help Danny financially; apparently he was going to lend Casolaro money in return for a 25 percent interest in his home. “It seemed as though Danny had this father-son-type relationship with Nichols,” says Gabrielle Miroy, Danny’s friend. It’s telling that in the cast of characters Casolaro drew up for his projected exposé of the Octopus, the name of Nichols, one of his major sources, is never included

How much Casolaro learned about Nichols is unclear; we know Nichols was a man as comfortable in the underworld as in the intelligence community and that he was associated with people who treated killing as an ordinary part of doing business

According to an affidavit sworn to by Agent Gates during the course of a 1987 investigation into mob activities in Hollywood, Nichols was identified by the FBI as early as 1978 as a drug trafficker and money launderer. Just two years later, Nichols was representing a group of unknown investors who wanted to take over Summa Corporation, the holding company of Howard Hughes’s empire. Hughes had just died, and Nichols had convinced a Saudi company called Ali & Fahd Shobokshi Group to become partners in the (failed) takeover attempt. Joseph Cicippio, who would later be taken hostage in Lebanon, was then the London manager of Ali & Fahd. In a 1980 letter to William Lummis, chairman of Summa, obtained by Spy, Cicippio states, “We are ready, willing and able to provide such finances as may be necessary to acquire Summa.”

Cicippio, who lives in Princeton, New Jersey, says he specifically remembers Nichols telling him he was representing interests of the U.S. government in the acquisition of Summa. In an interview with Spy, Cicippio said that over a six- or seven-week period, “Nichols presented me with U.S. Justice Department identification and furnished us with financial and other information on Summa of a highly confidential nature. I assumed he only could have gotten this information from someone high up in the government.

By 1981, Nichols had become partners with a retired arms manufacturer named Peter Zokosky to form a munitions company, Meridian Arms, which in turn joined up with a tiny California Indian tribe and the CIA-connected Wackenhut Corporation in a scheme to manufacture arms on the Indians’ reservation. Nichols had his own connection to the agency. In obtaining the required California permits to possess and sell machine guns in Meridian’s quest to provide guns for the contras, Nichols received a recommendation from a CIA official named Larry Curran. Apparently neither Curran nor the California Justice Department agents who issued the permits were alarmed by the FBI’s reports on Nichols, or by the fact that he had used several aliases at different times in his life. They even overlooked Nichols’s listing of Harold Okimoto, believed by intelligence sources to be a high-ranking member of Japan’s Yakuza crime syndicate, as a former employer on his application to carry a concealed weapon.

One of the members of the board of directors of Meridian Arms’s parent company was Eugene Giaquinto, then president of the home-entertainment division of MCA, the parent company of Universal Pictures. As part of Gates’s investigation of mob influence in the movie industry, the FBI targeted Giaquinto, who was suspected of a variety of criminal acts. They placed him under surveillance and tapped his phones [see Spy, The Fine Print, July and August 1989]. Agents caught Giaquinto and Nichols lunching at Le Dome, the swank Los Angeles show business restaurant, and afterward transferring a box from Giaquinto’s car to Nichols’s. The taps caught them discussing possible takeovers of MCA, and the effect on stock prices. It was also evident from the wiretaps that Giaquinto enjoyed a special relationship with John Gotti. (The investigation was later quashed by Reagan-administration officials.)

When reports of the investigation surfaced, Giaquinto left MCA, as well as the board of Meridian. Before that happened, though, he tried to get his friend Nichols a big assignment. Spy has learned that Giaquinto-in his capacity as MCA’s home-video honcho-approached Jack Valenti, the powerful chairman of the Motion Picture Association of America, and proposed that Valenti hire Nichols to coordinate the industry’s anti-video-piracy effort in Asia. Valenti met with Giaquinto and Nichols but passed. “I didn’t feel comfortable with Nichols,” Valenti told Spy. One advantage Nichols might have enjoyed in the job of Asian antipiracy policeman would have been his close relationship with the Hawaii-based Okimoto, the alleged Yakuza associate; the two reportedly go back a long way. On the other hand, an antipiracy policeman with close ties to the Gambinos and the Yakuza might not be much of a policeman at all

Nichols has replied to Gates’s affidavit linking him to John Gotti and the Gambinos through connections at MCA by suing the 17-year veteran and the U.S. government for libel and slander. (The case was recently dismissed.) Some say he has replied in other ways: Gates has testified before the House Judiciary Committee that he has twice heard from informants that Nichols has put a contract out on his life.

Alan Boyack, a former CIA operative now practicing law in Utah, has known Nichols for 15 years and says, “Nichols is lethal.” Spy has obtained the transcript of a conversation between Boyack, Michael Riconosciuto and a former FBI agent, Ted Gunderson, in which Riconosciuto describes an occasion where Nichols wanted to deliver a message to a mobster from Chicago. He hung the man upside down on a hoist in an airplane hangar in front of a prop plane, then started the engine of the plane and revved it up, so that the man hanging on the hoist was sucked toward the propellers. According to Riconosciuto, “By the time Bob got finished with him, he wanted to die.”

CASOLARO WAS INTRODUCED TO Nichols by Bill Hamilton, the Inslaw man. Hamilton seems aware that Nichols and Casolaro had grown close. In fact, on August 9, 1991, at 12:50 p.m.-about 12 hours before Casolaro died-Hamilton called Nichols at his home in California. They talked for three and a half minutes. Hamilton claims now that he was looking for Casolaro, whom he hadn’t heard from in a few days. “Robert Booth Nichols,” Hamilton told Spy, “is a very strange and dangerous guy.

Nevertheless, despite Hamilton’s professed reservations about Nichols’s char- acter, the man who designed a program for tracking criminals and the man who has been linked by the FBI to two crime organizations communicate with surprising frequency. Last summer I visited Hamilton’s office in Washington to get a copy of the phone records that would show his call to Nichols on August 9, 1991. He seemed reluctant. It took a fair amount of persuasion to convince him to turn it over-and what he gave me was a photocopy with all but that call blocked out. Shortly after leaving, I remembered that I had wanted to ask him something else and returned to his office. While I was waiting in the reception area, the phone rang. The receptionist buzzed Hamilton: “Robert Booth Nichols, returning your call.” When I asked Hamilton about the call, he replied, “I call Nichols all the time. It was just a coincidence that it was right after you left.”

By July 1991, the relationship between Nichols and Casolaro had begun to deteriorate. On July 7, Nichols flew from Puerto Rico to Washington to meet with Casolaro. He stayed several days. There’s no telling exactly what they talked about, but it was after this visit that Casolaro told Agent Gates that Nichols had warned him, “If you continue this investigation, you will die.” One night, Casolaro and Nichols went out to dinner, accompanied by Wendy Weaver. “During the evening,” she told Spy, “Nichols took exception to the imagined slight made to me by a patron at the bar. Nichols grabbed the man, slammed him against the wall and threatened to kill him. Later that night, Danny told me that Nichols really scared him.”

After that, Casolaro began trying to find out who Robert Booth Nichols really was. He found Gates and began asking questions, telling him where he was going and finally, three days before he died, asking whether he should take Nichols’s threats seriously. But Casolaro was talking to someone else on the West Coast as well, a man named Richard Stavin a former special prosecutor for the Justice Department who had been assigned to the MCA case. In his investigation of the MCA case, Stavin had unearthed documents about Nichols, who was also a target of his probe. On July 31, 1991, Casolaro had a 55-minute conversation with Stavin. Danny must have thought he had hit the jackpot: Stavin told him that Nichols had been a money launderer and that he was connected to the Gambino crime family and the Yakuza.

But Stavin told Casolaro something else, something that upon reflection, he now says, “maybe I shouldn’t have told him.” Stavin told Casolaro that in the late 1970s, Robert Booth Nichols had offered to become a confidential informant for the Department ofJustice-in other words, a snitch. Stavin doesn’t know whether any lawenforcement agency accepted Nichols’s offer. When the prosecutor asked other agencies, “we received denials across the board,” he says, “but it seemed like a coveryour-ass situation.” To some people, of course, it would be irrelevant whether Nichols had ever actually performed as a stool pigeon or not. But if John Gotti, for example, had ever found out what Danny Casolaro had found out, Nichols would be a dead man.

Six days after speaking to Stavin, Danny Casolaro, who “still had a young man’s vision of his immortality,” according to his friend Larry Stitch, had a long phone conversation with Robert Booth Nichols. The next day, Casolaro was telling Agent Gates that Nichols had warned him to abandon the investigation. The following morning he left for Martinsburg, where two days later Barbara Bittinger saw his blood on a pair of towels underneath a hotel sink.

> Connolly, John (1993-01-01). “”Dead Right””. Da Spy Magazine Arvivio 900. Retrieved on 2008-08-01.

A high-tech Watergate

A High-Tech Watergate
By ELLIOT L. RICHARDSON;
Published: October 21, 1991

As a former Federal prosecutor, Massachusetts attorney general and U.S. Attorney General, I don’t have to be told that the appointment of a special prosecutor is justified only in exceptional circumstances. Why, then, do I believe it should be done in the case of Inslaw Inc., a small Washington-based software company? Let me explain.

Inslaw’s principal asset is a highly efficient computer program that keeps track of large numbers of legal cases. In 1982, the company contracted with the Justice Department to install this system, called Promis, in U.S. Attorneys’ offices. A year later, however, the department began to raise sham disputes about Inslaw’s costs and performance and then started to withhold payments. The company was forced into bankruptcy after it had installed the system in 19 U.S. Attorneys’ offices. Meanwhile, the Justice Department copied the software and put it in other offices.

As one of Inslaw’s lawyers, I advised its owners, William and Nancy Hamilton, to sue the department in Federal bankruptcy court. In September 1987, the judge, George Bason, found that the Justice Department used “trickery, fraud and deceit” to take Inslaw’s property. He awarded Inslaw more than $7 million in damages for the stolen copies of Promis. Soon thereafter, a panel headed by a former department official recommended that Judge Bason not be reappointed. He was replaced by a Justice Department lawyer involved in the Inslaw case.

An intermediate court later affirmed Judge Bason’s opinion. Though the U.S. Court of Appeals set that ruling aside in May of this year on the ground that bankruptcy courts have no power to try a case like Inslaw’s, it did not disturb the conclusion that “the Government acted willfully and fraudulently to obtain property that it was not entitled to under the contract.” Inslaw, which reorganized under Chapter 11, has asked the Supreme Court to review the Court of Appeals decision.

After the first court’s judgment, a number of present and former Justice Department employees gave the Hamiltons new information. Until then, the Hamiltons thought their problems were the result of a vendetta by a department official, C. Madison Brewer, whom Mr. Hamilton had dismissed from Inslaw several years before. How else to explain why a simple contract dispute turned into a vicious campaign to ruin a small company and take its prize possession?

The new claims alleged that Earl Brian, California health secretary under Gov. Ronald Reagan and a friend of Attorney General Edwin Meese 3d, was linked to a scheme to take Inslaw’s stolen software and use it to gain the inside track on a $250 million contract to automate Justice Department litigation divisions.

(In Mr. Meese’s confirmation fight, it was revealed that Ursula Meese, his wife, had borrowed money to buy stock in Biotech Capital Corporation, of which Dr. Brian was the controlling shareholder. Biotech controlled Hadron Inc., a computer company that aggressively tried to buy Inslaw.)

Evidence to support the more serious accusations came from 30 people, including Justice Department sources. I long ago gave the names of most of the 30 to Mr. Meese’s successor as Attorney General, Dick Thornburgh. But the department contacted only one of them, a New York judge.

Meanwhile, the department has resisted Congressional investigations. The Senate Permanent Subcommittee on Investigations staff reported that its inquiry into Inslaw’s charges had been “hampered by the department’s lack of cooperation” and that it had found employees “who desired to speak to the subcommittee, but who chose not to out of fear for their jobs.”

The department also hindered the interrogation of employees and resisted requests for documents by the House Judiciary Committee and its chairman, Representative Jack Brooks. Under subpoena, Mr. Thornburgh produced many files but the department said that a volume containing key documents was missing.

In letters to Mr. Thornburgh in 1988 and 1989, I argued for the appointment of an independent counsel. When it became obvious that Mr. Thornburgh did not intend to reply or act, Inslaw went to court to order him to act. A year ago, the U.S. District Court ruled, incorrectly I think, that a prosecutor’s decision not to investigate, no matter how indefensible, cannot be corrected by any court.

In May 1988, Ronald LeGrand, chief investigator for the Senate Judiciary Committee, told the Hamiltons, and confirmed to their lawyers, that he had a trusted Justice Department source who, as Mr. LeGrand quoted him, said that the Inslaw case was “a lot dirtier for the Department of Justice than Watergate had been, both in its breadth and its depth.” Mr. LeGrand now says he and his friend were only discussing rumors.

Then, in 1990, the Hamiltons received a phone call from Michael Riconosciuto, an out-of-fiction character believed by many knowledgeable sources to have C.I.A. connections. Mr. Riconosciuto claimed that the Justice Department stole the Promis software as part of a payoff to Dr. Brian for helping to get some Iranian leaders to collude in the so-called October surprise, the alleged plot by the Reagan campaign in 1980 to conspire with Iranian agents to hold up release of the American Embassy hostages until after the election. Mr. Riconosciuto is now in jail in Tacoma, Wash., awaiting trial on drug charges, which he claims are trumped up.

Since that first Riconosciuto phone call, he and other informants from the world of covert operations have talked to the Hamiltons, the Judiciary Committee staff, several reporters and Inslaw’s lawyers, including me. These informants, in addition to confirming and supplementing Mr. Riconosciuto’s statements, claim that scores of foreign governments now have Promis. Dr. Brian, these informants say, was given the chance to sell the software as a reward for his services in the October surprise. Dr. Brian denies all of this.

The reported sales allegedly had two aims. One was to generate revenue for covert operations not authorized by Congress. The second was to supply foreign intelligence agencies with a software system that would make it easier for U.S. eavesdroppers to read intercepted signals.

These informants are not what a lawyer might consider ideal witnesses, but the picture that emerges from the individual statements is remarkably detailed and consistent, all the more so because these people are not close associates of one another. It seems unlikely that so complex a story could have been made up, memorized all at once and closely coordinated.

It is plausible, moreover, that preventing revelations about the theft and secret sale of Inslaw’s property to foreign intelligence agencies was the reason for Mr. Thornburgh’s otherwise inexplicable reluctance to order a thorough investigation.

Although prepared not to believe a lot they told him, Danny Casolaro, a freelance journalist, got many leads from the same informants. The circumstances of his death in August in a Martinsburg, W.Va., hotel room increase the importance of finding out how much of what they have said to him and others is true. Mr. Casolaro told friends that he had evidence linking Inslaw, the Iran-contra affair and the October surprise, and was going to West Virginia to meet a source to receive the final piece of proof.

He was found dead with his wrists and arms slashed 12 times. The Martinsburg police ruled it a suicide, and allowed his body to be embalmed before his family was notified of his death. His briefcase was missing. I believe he was murdered, but even if that is no more than a possibility, it is a possibility with such sinister implications as to demand a serious effort to discover the truth.

This is not the first occasion 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. Public confidence in the integrity of the Watergate investigation could best be insured, I thought, by entrusting it to someone who had no such prior connection to the White House. In the Inslaw case 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 involvement were not as strong as those that now point to a widespread conspiracy implicating lesser Government officials in the theft of Inslaw’s technology.

The newly designated Attorney General, William P. Barr, has assured me that he will address my concerns regarding the Inslaw case. That is a welcome departure. But the question of whether the department should appoint a special prosecutor is not one it alone should decide. Views from others in the executive branch, as well as from Congress and the public, should also be heard.

Elliot L. Richardson, a Washington lawyer, was Attorney General in the Nixon Administration.

http://query.nytimes.com/gst/fullpage.html?res=9D0CE1DD163DF932A15753C1A967958260&sec=&spon=&pagewanted=all

Justice in the Inslaw case

Justice in the Inslaw Case
Published: December 7, 1991

The case of Inslaw Inc. is either the most overblown event in recent Justice Department annals or a scandal that echoes Watergate. It’s long past time to find out which, as the new Attorney General, William Barr, has recognized in a statesmanlike action. He has named Nicholas Bua, a highly respected retired Federal judge from Chicago, as his special counsel to investigate and advise him on the controversy.

Inslaw, a small computer software company that supplied Justice’s earliest systems for case management tracking by computer, accuses the department of stealing its product and conspiring to drive it out of business. While many a frustrated contractor harbors conspiracy theories about government agencies, Inslaw has acquired prestigious support and pointed to irregularities that remain unexplained a decade after the contract dispute began.

Elliot Richardson, who as Attorney General appointed the Watergate prosecutor and resigned rather than fire him, has argued Inslaw’s cause and demanded a special prosecutor. His complaints of conflicts of interest and department stonewalling are seconded by the Democratic staffs of House and Senate committees. After Inslaw sought refuge in Washington’s Bankruptcy Court, a judge there found “trickery, fraud and deceit” by the Justice Department.

The U.S. Court of Appeals reversed that judgment, saying the bankruptcy judge far exceeded his authority. Although the court agreed that “such conduct, if it occurred, is inexcusable,” it held that Inslaw must pursue its claims in other courts. That could be too late to help the company even if it was unjustly deprived of its contract rights.

Attorney General Barr is right to investigate the department’s conduct more thoroughly. Mr. Barr’s predecessor, Dick Thornburgh, could easily have taken similar action since the charges of wrongdoing were leveled against his predecessors, but he let the case fester.

An element of mystery was added to the case last summer with the death of Danny Casolaro, a journalist investigating whether Inslaw was the victim of some broader conspiracy. West Virginia police called his death a suicide after quickly having the body embalmed. His death and investigation are not an integral part of the Inslaw dispute, but they make it harder to put the case to rest.

Judge Bua seems a brilliant choice as special counsel. He won’t have legal protection against getting fired as a court-appointed independent counsel would, but Mr. Barr has promised him total support. He has an impressive reputation for independence, as he demonstrated by striking down Cook County’s Democratic patronage system even though he was appointed a Federal judge by President Carter. The Chicago Council of Lawyers gave Judge Bua its highest praise for efficiency and temperament.

Although Judge Bua is officially the Attorney General’s counsel and may render some confidential advice, he and Mr. Barr need to arrange for a report on his findings. That would give the public confidence that Justice is doing justice.

http://query.nytimes.com/gst/fullpage.html?res=9D0CE6DF163CF934A35751C1A967958260

As U.S. Battles Computer Company, Writer Takes Vision of Evil to Grave

As U.S. Battles Computer Company, Writer Takes Vision of Evil to Grave
By B. DRUMMOND AYRES JR.,
Published: September 3, 1991

The death of a freelance writer in West Virginia on Aug. 10 has added an air of intrigue to a complicated, long-running court case that has become known in Washington circles simply as “Inslaw.”

The case involves accusations that Justice Department officials were involved in fraud and theft. It was moving quietly through the Federal courts, and a Congressional investigating panel was holding hearings even before the death of Danny Casolaro, a 44-year-old magazine writer and novelist from Fairfax, Va.

But because Mr. Casolaro had been openly delving into the case and saying he believed it was part of a huge Government-wide scandal, and because there is considerable mystery about how he died — he either committed suicide or was murdered, depending on whom one listens to — the case has suddenly attracted major attention. Agreement and Denial

It involves allegations that some Justice Department officials schemed to steal advanced record-keeping computer programming from a small Washington computer company, Inslaw Inc. Even those who assert that a theft occurred have not agreed on whether it was from simple greed, a vendetta by department officials or something even more sinister, like the use of the purloined system to generate money for paying off political debts and to finance secret spy operations.

The Justice Department does not dispute that it contracted with Inslaw for use of the computer software, specifically developed to track the Government’s huge, complicated load of criminal cases. But the department flatly denies Inslaw’s accusations that it bargained in bad faith and withheld payments from Inslaw on the false pretext of contract violations, thereby driving the company to the brink of insolvency shortly before it could complete installation of the system and leaving the department in effective control of the software.

But Elliot L. Richardson, the lawyer for Inslaw, has called upon the Justice Department to hire someone to investigate the Inslaw case and Mr. Casolaro’s death. Mr. Richardson, who resigned as Attorney General during the Watergate scandals rather than do President Richard Nixon’s bidding, says he knows a Government scandal when he sees one.

“I propose to pursue the matter,” Mr. Richardson said. “There is more than enough out there to raise suspicions.”

The owner of Inslaw, William Hamilton, has been in and out of court for more than eight years, fighting to recover his investment and full control of his programming, designed to straighten out a record-keeping system that had defied the software of much larger computer companies. Two courts have upheld his contention that the department conspired to steal his system and drive him out of business, leaving him with a loss of more than $6 million. But an appeals court has held that the case should be retried because it was out of the jurisdiction of the first two courts. Action in Congress

A Senate committee looked into the Inslaw case several years ago but said it was unable to reach a conclusion because the Justice Department refused to hand over pertinent documents.

More recently, the Economic and Commercial Law Subcommittee of the House Judiciary Committee began holding hearings. But House investigators, like the Senate investigators, say they have been hampered by the Justice Department’s refusal to hand over all documents, and also by the refusal of the Bush White House to order the department to acquiesce.

Representative Jack Brooks, the Texas Democrat who is chairman of the Judiciary committee, has warned that he will take “whatever steps are necessary” to compel the department to comply when hearings resume after the Congressional recess.

Justice Department officials contend that they have given House investigators all pertinent documents. “We’ve made everything available,” said Doug Tillett, a department spokesman. Saw a Wide Plot

Mr. Casolaro saw the Inslaw case as part of broad conspiracy by officials of the last two Presidential administrations. He referred to the case as “the octopus” and said it involved a tangled series of shady doings involving everything from Inslaw to the Iran-contra scandal to tampering with a Presidential election to money laundering by the scandal-ridden Bank of Credit and Commerce International.

Under his theory, according to some of his acquaintances, Reagan Administration appointees in the Justice Department stole the Inslaw computer system to give to some friends as a political payoff. The friends, Mr. Casolaro said, had been responsible in 1980 for persuading Iranians who were holding American Embassy hostages in Teheran not to release them until after that year’s Presidential election.

According to that theory, backers of Ronald Reagan in 1980 wanted to block an “October surprise” by President Jimmy Carter — a release of the hostages just before Election Day that would have greatly enhanced Mr. Carter’s chances of re-election. As it turned out, Mr. Carter was soundly defeated, and the hostages were not freed until Ronald Reagan was inaugurated as President in 1981.

Mr. Casolaro also believed, his friends say, that the money gained through sale of the computer system, purportedly marketed to other governments that paid for it with American aid money, was funneled through the B.C.C.I. Some of the money, Mr. Casolaro contended, went into private accounts and the rest was put into hidden United States intelligence accounts for use by both the Reagan and Bush administrations for secret operations in Central America and elsewhere.

Mr. Casolaro was divorced and had a son. A gregarious former high school boxer who wrote a novel, “The Ice King,” and a number of magazine articles on computers before devoting full time to his “octopus” investigation, never succeeded in proving his theory. On Aug. 10, not long after he told friends that he had received several threats on his life, he was found dead, with his wrists slashed, in the bathtub of his hotel room in Martinsburg, W.Va.

Was Mr. Casolaro, who, according to relatives was in West Virginia to talk to a “major source,” on to something? Or was he chasing his imagination?

West Virginia authorities, pending medical tests and further investigation, say he apparently took his own life. The latest round of tests, the office of the state medical examiner announced Tuesday, found evidence of a pain killer and an anti-depressant in his blood, but neither in a quantity that could have rendered him unconscious nor that would suggest foul play.

Spurning reports that he was given to bouts of despondency, Mr. Casolaro’s family and friends say he may have been murdered. “Danny was dealing with some people who were pretty bad players,” said his brother, Dr. Anthony Casolaro, a critical-care specialist from Arlington, Va. “It’s hard in my heart to believe that he killed himself.” ‘Even More Bizarre’

Officials at the Justice Department and the Federal Bureau of Investigation say they have seen nothing regarding the death that would impel them to become involved in investigating it.

“Conspiracy theories are normally bizarre, but this one is even more bizarre than most because it has no basis in fact,” Mr. Tillett of the Justice Department said.

The White House refuses to comment on the Casalaro case or the “octopus” conspiracy allegation other than to point out that President Bush has repeatedly denied involvement in any scheme to delay release of the hostages in Iran. “This is basically a matter for the Justice Department,” said Judy Smith, a White House spokeswoman.

Congressional investigators have not yet decided whether to look into Mr. Casolaro’s death when they resume hearings on the Inslaw case.

Terry Miller, who was a friend of Mr. Casolaro, says he spoke frequently with him about his work. “He told me he was beginning to get threatening phone calls, and I was concerned for him,” said Mr. Miller, a Washington-based consultant on government contracting.

Inslaw’s owner, Mr. Hamilton, says he does not know how close Mr. Casolaro was to proving his theory. But Mr. Hamilton said he was making progress, particularly in recent months. “I think he was murdered,” Mr. Hamilton said.

But several people who have looked at the notes and papers Mr. Casolaro compiled say they are mostly a rehash. “There was nothing in them, essentially, that had not previously been in the news, that you had not heard before,” said Roger Donald, the publisher of Little, Brown & Company, a New York publisher whom Mr. Casolaro once approached with a book suggestion.

“There was no book there, only an on-going investigation,” Mr. Donald added. “There was no real evidence that he was about to uncover some huge governmental conspiracy.”

Ultimately, it appears, Mr. Casolaro saw the Inslaw case as the key element in his investigation, if for no other reason than that courts and Congressional committees have confirmed a number of his suspicions.

For example, the second court to consider the case, the United States District Court for the District of Columbia, concluded: “The Government acted willfully and fraudulently to obtain property that it was not entitled to. . . . There is no evidence that the Government ever negotiated in good faith.”

What no court has found is the sort of conspiracy seen by Mr. Casolaro.

http://query.nytimes.com/gst/fullpage.html?res=9D0CEED6143FF930A3575AC0A967958260&sec=&spon=&pagewanted=all

Untangling the Octopus

 

Paul Helliwell meeting Michael Hand and Frank Nugan.

 

 

UNTANGLING THE OCTOPUS
by Steve Mizrach

October Surprise, Iran-Contra, Noriega, Iraqgate, and BCCI

Before he died in an ineptly performed ‘suicide,’ the young journalist Danny Casolaro was working on a book that he claimed tied together many of the ‘gates’ and ‘miniscandals’ surrounding the Bush presidency. The book identified the web which tied all the scandals together as the “Octopus,” a mythical creature with tentacles stretching everywhere. Perhaps the birth of the Octopus lies in the 1980 Presidential election; and its growth occurred under the eight years of the Reagan presidency. Casolaro soon found that the Octopus may have consisted of a ‘shadow government’ apparatus that went back even further than Bush and Reagan. But what’s left of his notes seem primarily to focus on events in the 80s and 90s.
It is very possible that in 1980, Bill Casey and other members of the Reagan team may have conspired with the Iranians to delay the release of the American hostages: they were afraid of an “October Surprise” which might damage Reagan’s chances of defeating Carter. Sure enough, the hostages were released right as Reagan was being inaugurated, and in 1981, the first shipment of arms to Iran began. Gunther Rossbacher, an ex-Navy pilot, and two other foreign sources, insist that on October 21st and 22nd, Bush met with Iranian delegates in Paris. The “October Surprise” may have been how Bush and other Reagan team members located the Iranian ‘moderates’ that played a role in the Iran-Contra scandal. In 1984, the Boland amendment forbade any more military assistance to the Contras. So, in 1985, the underground “Enterprise” – Operation Yellowfruit – began selling arms to Iran and using the proceeds to furnish weapons to the Contras. George Bush claims Iran-Contra has nothing to do with him, but other administration figures’ records show he was at the secret meetings – Poindexter, in particular. Amiram Nir, an Israeli terrorism expert, insists he discussed Iranian arms deals with Bush, but that can’t be confirmed… he died in a mysterious plane crash in Mexico in 1988.

It turns out the Iran-Contra scandal may have been part of a larger arms-for-hostages deal. The Iranians needed weapons in their war against Iraq, and the Reagan administration felt that the Iranians might have been able to convince the Shiite terrorists in Lebanon to release the American hostages held there. Reagan claimed no “quid pro quo,” but then he also claimed he really didn’t remember much, either. In any case, additional hostages were seized after the ‘non-deal’, and many may remain in captivity today, including the Lebanon CIA station head. One man who may have known a great deal about the Iran-Contra business was Manuel Noriega, whose name came up in the 1988 Dukakis-Bush debates. Noriega knew about the Contra drug pipeline, because he was a pusher, himself, while on the CIA payroll throughout the 1980s, and during his trial in Miami in 1989, some testimony emerged which suggested he knew something about the Central American end of the Iran-Contra affair and where some on the missing money may have ‘disappeared’ into.

On the Middle Eastern end, another man who was a delighted beneficiary of American generosity throughout the 1980s was Saddam Hussein of Iraq. The Agriculture Department and other agencies gave Saddam agricultural credits worth millions of dollars which he used to purchase American attack helicopters, chemical weapons for using on the Kurds, and the components of a nuclear weapons program. It is suspected that the CIA and Justice Department overlooked, or aided, the Banco Nazionale Lavoro (BNL) of Italy while it funneled billions in military aid to Iraq. This recently burgeoning scandal, “Iraqgate,” suggests we were playing both sides against the middle during the Iran-Iraq war. We were selling arms to both the Iranians and the Iraqis, and the CIA at various points double-crossed both sides. It is no wonder that America is so distrusted in that part of the world. In any case, there were two men that knew too much, and when Bush became president, he had to clean them up, and he would wage two “cleanup wars” to do it.

One link between Bush, Saddam, and Iran-Contra was the corrupt Middle Eastern bank, the Bank of Commerce and Credit International (BCCI). BCCI, it turns out, laundered drug money, financed CIA and Mossad covert operations, and helped Bush, Saddam, and others split over $250 billion in extortion from the sale of Persian Gulf oil. (BCCI also might have had links to the corrupt drug-money-laundering-and-CIA scandals involving Australia’s Nugan Hand Bank.) Attorney General Richard Thornburgh squashed an investigation into First American Bankshares, secretly controlled by BCCI, in October 1990; and William von Raab, former U.S. customs official, was fired by Treasury Secretary James Brady for delving too deeply into BCCI. This may have a lot to do with the links between Prescott Bush, First American director Stephens, Bahrain, and Iraq. Bush’s family were oilmen, and if there is anything he stood for, it was Big Oil and its interests in the Middle East. (It might be pointed out, incidentally, that it was Norman Schwarzkopf’s father who helped boot out Mossadegh in Iran when he threatened to nationalize holdings of British Petroleum.) The mess was in place, and President Bush had a lot of cleaning up to do.

The “Cleanup Wars”

The first “cleanup war” was so-called Operation Just Cause in Panama. We invaded with the ostensibly ‘just’ cause of arresting a drug dealer and bringing him to justice here in the U.S.. The fact that he was the leader of another country, and that this is a violation of international law, didn’t raise a naysayer, although insiders knew that Noriega was working for us before Bush started to see him as a threat. He may have wanted to jail Noriega because of the Iran-Contra secrets he knew. The other ostensible reason was because of Bush family holdings in Panama. It seems that Prescott’s friends in the Aoki Corporation of Japan have invested more than $350 million in Panama; their holdings include the luxury resort Caesar Park and the Mariott Hotel. Bush may have been afraid of Noriega nationalizing that property. While Bush claimed to be nailing a dealer, he replaced him with two other dope pushers. Panamanian president Guillermo Endara is a director of the bank used exclusively by the Medellin cartel, and vice president Guillermo Ford is part owner of Dadeland Bank of Florida, which stands accused of laundering South American drug money. This Bush cleanup cost 26 American and 2000 Panamanian (civilian) lives, and several million dollars. It’s worth seeing the film The Panama Deception to see some of the chilling secrets of this operation, including hidden mass graves of murdered civilians.
The second ‘cleanup war’ was Operation Desert Storm, with the purposes of ostensibly ‘liberating’ Kuwait from Saddam Hussein. It is clear that, in fact, administration official April Glaspie succeeded in goading Hussein into invading Kuwait by saying that the U.S. would not interfere. And that the CIA and NSC provided doctored sattelite photographs making it look like Iraq was preparing to invade Saudi Arabia, when in fact Iraqi troops were nowhere near the Saudi border; further, that the CIA deliberately payed no attention to Iraqi troop buildup prior to the invasion of Kuwait. And that the daughter of the Kuwaiti ambassador, appearing under a pseudonym, told a false story about how Iraqi soldiers were ripping Kuwaiti babies out of incubators. Saddam Hussein had been set up, and now so were the American people, who Bush promised this was about “jobs” and dealing with America’s “VietNam syndrome.”

The Desert Storm war never accomplished any of its supposed goals. Kuwait does not have ‘democracy,’ only a returned monarchy hell-bent on seeking blood vengeance on Palestinian citizens. Saddam Hussein was not toppled from power; and the Kurds who were incited to rise up against him received no U.S. help when Republican Guard American-made attack helicopters mowed them down. Saddam’s chemical and nuclear arsenal were never eliminated. Instead, what was destroyed was the Iraqi infrastructure, causing thousands to suffer disease, hunger, and deprivation, in addition to the thousands who died in the ‘smart’ bombings which nonetheless hit plenty of civilian targets; and the environment of the Persian Gulf, when eco-terrorist Saddam Hussein dumped millions of gallons of oil out of his wells and set ablaze thousands of Kuwaiti oil wells. It was a pyrrhic victory, but not for American oil companies, who profited mightily from increased oil prices… and for George Bush, who used his “VietNam syndrome therapy” as an excuse to hold hundreds of parades celebrating his ‘victory’ nationwide with yellow ribbons and marching soldiers.

The Wackenhut Connection

The Wackenhut Security Corporation of Miami, Florida, has long been suspected of being a CIA front. The right-wing politics of George Wackenhut, who had ties to Belgian fascists and South American death squads, are well known. But few people realize that Wackenhut, a small company with “only a few” employees, gets some choice assignments, including guarding nuclear reactors, nuclear weapons facilities, the Alaskan Oil pipeline, and several American embassies; or that its board of directors contains several luminaries from the FBI, CIA, and Army Intelligence, including Bobby Ray Inman. Wackenhut has led a covert crusade against whistleblowers at many nuclear power plants, using wiretaps to eavesdrop on them and various ‘subtle’ techniques to convince them not to talk; it also spied on Chuck Hamel, a critic of the Aleyska Oil Consortium’s drilling policies, by setting up a fake environmental-law firm which sought to “pump” him for his sources. Wackenhut may have even used some operatives to try and help topple President Perez of Venezuela through a (failed) military coup, largely for money (rather than politics) it was given by Blanca Ibanez, the mistress of Jaime Luinschi, the former president.
Also, a Wackenhut employee named Ernesto Bermudez was using 1500 ’employees’ in El Salvador for things he admitted “you wouldn’t want your mother to know about” to a reporter from Spy magazine. Candian PM Pierre Trudeau refused to allow Wackenhut to purchase a weapons-propellant plant in Quebec, and it was refused a permit to open a security facility in France because President Francois Mitterand said “we had just gotten rid of the CIA.” Wackenhut maintained files on over 4 million suspected ‘subversives’ of all types, including civil rights activists and antiwar protesters, well into the 1960s, making it the largest private holder of such information. In 1975, after a Congressional investigation into domestic intelligence operations and connections to private firms, Wackenhut turned its files over to the Anti-Communist Church League of America based in Wheaton, Illinois, which is now defunct. Florida Governor Claude Kirk claims to have worked closely with Wackenhut to “fight organized crime,” although insiders maintain they were doing anything but fighting the Mob.

But there are direct links between Wackenhut and the ‘Octopus’. It appears that Michael Riconsciuto, a convicted drug dealer, claims to have met with George Wackenhut, John Amarell (of Wackenhut’s Executive Board), and Dr. John Philip Nichols (a CIA operative conducting shady activities on the Cabazon Indian Reservation in the California desert) in Las Vegas in the early 80s to discuss the theft of Inslaw’s PROMIS software; he says Wackenhut asked him “how his software work was coming along.” (Supposedly, Nichols was using the Cabazon reservation as his own private munitions proving ground, testing things ranging from super-lethal Fuel-Air Explosives and chemical-biological weapons to Electromagnetic Pulse [EMP] generators.) Ammarell confirms the meeting, but claims it was merely about the sale of a boat! Retired general Richard Secord arranged for the Wackenhut Corp. to work with Iraqi arms dealer Ihsan Barbouti; Wackenhut operative David Ramirez claims that he and Barbouti rode in a truck carrying chemical-weapons technology from Texas to Chicago, and then rode on a plane to Iraq. Ramirez indicates that he thinks Wackenhut may have been part of a “food stamp” scheme to get agricultural credits for Iraq which were in turn used to purchase nuclear-weapons technology, making Wackenhut part of the Iraqgate affair as well.

Assisting with Barbouti’s arms schemes were two partners, James Tully (who sent Bill Clinton’s ‘draft-dodge’ letter to ABC) and Jack Brennan, who currently works as director of administrative operations in President Bush’s office. Brennan and Tully had been involved in a $181 million deal to supply uniforms for the Iraqi army, arranging them to be manufactured in Ceausescu’s Romania, of all places. Other partners in that deal were Watergate felon John Mitchell and Sarkis Soghnalian, a Lebanese citizen who was credited with introducing Saddam Hussein to Gerald Bull, the inventor of the so-called “supergun.” Soghnalian is currently in prison for selling 103 military helicopters to Iraq; and David Ramirez says that Wackenhut considered the Turkish man to be a “valuable client.” Two thousand gallons of ferrocyanide – an important chemical-warfare binary ingredient – vanished from a Boca Raton cherry flavoring factory in 1990. That plant was guarded by – guess who – Wackenhut.

Barbouti owned shares in that company, and two others: TK-7, which makes a fuel additive that could extend the range of liquid-fueled missiles such as the SCUD, and Pipeline Recovery Systems, which coats pipes to make them useable in nuclear power plants. He admits having faked his own death several times, and having helped Moammar Khadafi build his infamous chemical-weapons plant at Rabta, Libya. Further, he owns about $100 million worth of real estate and oil-drilling equipment in Texas and Oklahoma. It is widely believed that the Middle Eastern architect is either currently dead (surprise), living in Jordan, or being kept in a CIA safe house in Florida. An engineering company owned by him in Frankfurt had a $552 million contract to build airfields in Iraq. And – no surprise here – Barbouti used the corrupt BCCI bank as his middleman in many deals.

The CenTrust Connection: the S & Ls, the Mob, and BCCI

The S & L failures of ’89 were a massive blow to the banking system. Over 200 small savings and loan banks went under – just under half of those in existence – and had their assets seized by the federal ‘dummy’ company, the Resolution Trust Corp. Largely, this was a problem created by deregulation legislation passed by the congressional banking committees – the legislation allowed the S & Ls to make investments that were extremely risky and fiscally unsound. In fact, the failure can also be seen as the result of several years of deregulation of many industries under the Reagan administration – deregulation that was “bought” by the very industries which were supposed to be policed. But where were the regulators who were supposed to be the ‘watchdogs’ of the industry? Almost across the board they were ‘bought off’ by S & L moguls like Charles Keating, paid to look the other way while the S & Ls invested in fraudulent real estate schemes and sham projects which collapsed after a few years. But to maintain a veneer of solubility for their creditors, many S & Ls actually turned to “junk bond” king Michael Milliken, managing to “puff up” their investment profiles with airy money. There may have been even more crooked things going on, as some recent articles suggest that some of the S & L swindle may have gotten into the hands of the CIA and used to fund the Contras- most funds coming from the failed Palmer National Bank and Vision Savings Bank in Houston.
Even more daring reports, such as a recent book by investigative reporter Peter Brewton, suggest the Mafia may have been involved with some of the bank fraud – as they most certainly were with the Vatican Bank scandal in Italy. Author Dan Moldea notes extensive connections between the Hollywood motion picture company MCA, the defense/nuclear contractor General Electric, the corrupt Teamsters’ Union, and the Mob. Strangely, former Hollywood actor Ronald Reagan had connections to all of the above. The fact that there are close Republican ties to the Teamsters, despite the party’s overt anti-labor stance, is very curious; but it must be examined in the light of the Teamsters’ “patriotic” support of “guns and butter” and other right-wing stances, and their links to the Mafia. (It is widely suspected that Richard Nixon may have pardoned Jimmy Hoffa after making a deal with the Teamsters to give money to his 1972 presidential campaign – yet another unwritten chapter in the Watergate saga, along with the revelations that he may have tried to frame the Democrats for the assassination attempt on George Wallace.) Anthony Summers believes that J. Edgar Hoover was blackmailed by the Mob for his homosexuality, and that is why the former FBI director continued to deny the pervasiveness of “organized crime.” One of Brewton’s most amazing revelations is that Bush may have actively attempted to conceal the Texas oil – organized crime – S & L – CIA links during the 1988 campaign: but so did Lloyd Bentsen, who told Dukakis it would be “a losing issue for our ticket!”

The cost for fixing the S & L mess – for returning the depositors in the banks all their savings – will be quite high. Another cost involved in the process will be the liquidation of nearly valueless assets owned by the S & Ls – such as acres and acres of undeveloped land out in the Southwest. The properties of the failed S & Ls are being sold by RTC for businessmen for a steal; and taxpayers are being asked to pick up a large part of the tab. Some estimate that the S & L cleanup may cost each and every taxpayer as much as $1000. Each and every taxpayer, of the 200 million who pay taxes! There are economists who feel the beginning wave of the S & L collapse may have contributed to the massive stock market crash of 1987, and that its impact led to other bank failures and a real estate ‘bust’ contributing to the 1990 recession. Crooked S & L operators received, on the average, 2.4 years in prison for ripping off America with their white-collar crimes. But a robber who steals $200 from a convenience store gets, on average, 7.8 years. One need not be a math wizard to see something glaringly wrong with that. Why have the federal prosecutors under the Bush administration been so slow to prosecute, and so lenient with their sentences? Could it be connected to the extensive amounts of money that Bush himself got from the S & Ls during his 1988 campaign?

Was there also a link between the failed Savings & Loans and BCCI? It turns out, yes, and the (now defunct) Miami CenTrust bank chairman David Paul is the key. According to a NBC special on the S & L scandal, Dexter Lehtinen, the temporary appointee to the position of federal prosecutor for south Florida, claims he was obstructed by the government from serving subpoenas on many of the big figures connected to Paul. Lehtinen was never confirmed officially for the position after serving in it for several years – some say this was because of things in his background that might lead to a confirmation fight, but others feel it was because he was digging too deeply into CenTrust’s failures. Lehtinen now claims that Paul may have bribed many local and federal officials to cover up for money laundering and secret Carribean accounts to sequester ‘narcodollars.’ Investigators found that Paul lived a lavish lifestyle, buying gold fixtures and priceless art treasures for his office in the CenTrust building. When CenTrust was starting to face insolvency, Paul found a cash influx from an unsuspected source – BCCI financier Farouk, who tried to use CenTrust to launder money from the Banco Nazionale Lavore (BNL) in Italy. The S & L scandal is, it seems, yet another arm within the Octopus.

Bush’s Teapot Dome?: the INSLAW Affair

George Bush’s predecessor, Ronald Reagan, had a terribly corrupt administration. There were huge numbers of indictments, resignations, scandals, and accusations of corruption and coverrup. Housing and Urban Development, under Sam “the Invisible Man” Pierce, turned a blind eye as shifty Republican financiers raked in profits off of shady deals involving public housing. Savings and Loan regulators allowed S & L’s all over the country to make ridiculously unsound investments and disappear into bankruptcy. But the corruption in the Reagan administration may have been nowhere more shocking than in the Department of Justice, whose anti-pornography crusader, Edwin Meese III, was accused of improprieties regarding the transfer of a company called Wedtech.
Bush’s new Attorney General, Richard Thornburgh, may have done Meese one better, bringing the Department of Injustice one step further. For it now stands accused of being a software pirate – of having stole the Inslaw PROMIS database program from its creators without recompensating them. That PROMIS is a program that can be used to track political dissidents, among other things, has been noted by many commentators. Because William Sessions of the FBI was investigating Justice’s possible role in the Inslaw/BNL affair, Attorney General William Barr suddenly launched an investigation of Session’s misuse of his phone for making personal calls and allowing his wife to be at meetings – hardly the most major of offenses among government bureaucrats! Curious infighting as the ship went down, it seems.

According to Riconsciouto, the INSLAW affair might have been, among other things, a political payoff for the role a former political operative and Justice Department official, Earl Brian, played in the October Surprise. INSLAW was originally a nonprofit organization basically of quasi-governmental nature, which went private in the 1980s in an effort to market its software commercially. PROMIS was marketed to law enforcement agencies as an efficient tool for tracking criminal cases. However, its versatility for use in such wide-ranging areas as political intelligence and monitoring caught the eye of the Justice Department – which would require modifying the program’s original design. So Brian first tried to seize INSLAW Corp. in an illegally authorized “hostile takeover,” and when that failed, basically stole the PROMIS software outright. Copies of the program were thought to be distributed or sold to, among others, Israel, South Africa, some Central American regimes, and perhaps Saddam Hussein – by the Bush administration – all without consent or compensation for the program’s original authors. It is believed that some regimes even today still use chilling, modified versions of the program for tracking political dissidents.

Is the Octopus Still Alive?: Mena, Arkansas and a Clinton Compromise

Riconsciouto claims that Clinton, like Bush, has been “compromised” by the CIA. He says that he personally flew planes carrying illegal shipments of arms to and drugs from the Contra rebels which took off from a secret airstrip near Mena, Arkansas – one which apparently existed with the full knowledge and consent of then-governor Bill Clinton. He and others think that Clinton made a basic “deal” with Bush after he won — Bush would not criticize Clinton or bring up too much about Whitewater or Mena airstrip, and in return Clinton would not pursue indictments against Bush Administration officials. Today, as the Clinton administration battles off a series of its own political scandals, writers for the alternative media still puzzle over the “mainstream” media’s total refusal to look at whatever was going at Mena, in 1992 or now. Because then-governor Clinton may have been permitting the CIA to run a small scale “black operation” right in his own state. So it’s obvious that Clinton has no interest in pursuing the Octopus, the question then becomes – even if his administration isn’t involved, does it still thrive in its own shadowy centres?
Danny Casolaro may have been killed because he got too close to the truth. The Christic Institute may have been SLAPPed out of existence because of it. Even if the Octopus isn’t still operating, there are likely to be various “tentacles” of it who want to cover up the roles that they played in it. It may have branched into things that Casolaro hadn’t gotten around to investigating yet. Certainly it tied together a series of sinister forces and operations. George Bush was undoubtedly a key figure, but he isn’t going to be running for President again. What’s more tragic is the way that he and other co-conspirators may have basically gotten off scot-free. And at this point, it’s too early to tell what role Clinton and his administration may or may not be playing in keeping the creature going. Which to me is more important than any unwise land investments he and his wife may have made during the 1980s.

http://www.fiu.edu/~mizrachs/octopus.html