textfiles-politics/regexConsp/inslaw.xml

<xml><p>From: aq817@cleveland.Freenet.Edu (Steve Crocker)
Newsgroups: alt.conspiracy
Subject: Repost - Barrons Article on Inslaw
<info type="Message-ID"> 1992Aug22.093924.11815@usenet.ins.cwru.edu</info>
Date: 22 Aug 92 09:39:24 GMT</p>

<p>Date:   Thu, 10 Oct 1991 17:40:40 CDT
Reply-To:   dave 'who can do? ratmandu!' ratcliffe
  <special>dave@ratmandu.corp.sgi.com</special>
Sender: Activists Mailing List <special>ACTIV-L@UMCVMB.BITNET</special>
From:   dave 'who can do? ratmandu!' ratcliffe
  <special>dave@ratmandu.corp.sgi.com</special>
Subject:  the INSLAW Case:  part I of "BARRON'S" 1988 2-part piece</p>

<p>Subject: the INSLAW Case:  part I of "BARRON'S" 1988 2-part piece
Keywords: U.S. Deptartment of Justice != "with liberty and justice for all"
Lines: 510</p>

<p>  although these 2 articles are dated by more than 3 1/2 succeeding
  years-worth of newer revelations and mounting evidence of cynical
  corruption at the highest levels of the executive branch, as well
  as linkages into the judicial branch of the u.s. government, they
  still provide very useful and well-researched background material.</p>

<p>   In his decision, [federal bankruptcy judge George] Bason compares
   the Justice Department to someone who decides to test drive an
   automobile:  "So the customer drives off with the car and this is
   the last the dealer ever sees of him.  I think that is approximately
   what the Department of Justice has done in this case."</p>

<p>  First of a 2-part piece which began in the March 21, 1988 issue of
  "BARRON'S NATIONAL BUSINESS AND FINANCIAL WEEKLY"
 -----------------------------------------------------------------------------</p>

<p>    Beneath Contempt
   Did the Justice Dept. Deliberately Bankrupt INSLAW?
    By MAGGIE MAHAR</p>

<p>   "A VERY strange thing happened at the Department of Justice . .
  ."
   What that very strange thing was was described in clear and
  exhaustive detail in Judge George Bason's blistering ruling before
  a packed Washington, D.C., courtroom last September.  In a quiet
  voice, Bason, a 56-year-old federal bankruptcy judge with a
  reputation for being meticulous in his judicial approach, told the
  astonishing story of INSLAW vs. the United States of America.
   In his ruling on the case, Bason explained how "through
  trickery, deceit and fraud," the U.S. Department of Justice "took,
  converted, stole" software belonging to INSLAW, a Washington-based
  computer software firm.  In 1982, INSLAW signed a $10 million
  contract to install its case-tracking software, PROMIS
  (Prosecutor's Management Information System) in the Justice
  Department's offices.  But instead of honoring the contract, Bason
  asserts, Justice officials proceeded to purposefully drive the
  small software company into bankruptcy, and then tried to push it
  into liquidation, engaging in an "outrageous, deceitful, fraudulent
  game of cat and mouse, demonstrating contempt for both the law and
  any principle of fair dealing."
   Ultimately, the series of "willful, wanton and deceitful acts"
  led to a cover up.  Bason called statements by top Justice
  Department officials "ludicrous . . . incredible . . . and totally
  unbelievable."
   Some of the evidence against the department came from one of its
  own.  During the course of the litigation, Anthony Pasciuto, deputy
  director of the department's Executive Office for United States
  Trustees, met secretly with INSLAW'S president, William Hamilton.
  At that breakfast meeting at the Mayflower hotel, Anthony Pasciuto
  told Hamilton and his wife, Nancy, how the Justice Department had
  pressured Trustee officers to liquidate their company.  Later, a
  superior confirmed Pasciuto's story.  But at the trial, a horrified
  Pasciuto listened while his superior changed his testimony.  Close
  to tears, he, too, recanted.
   Judge Bason believed Pasciuto's original testimony however.  On
  Feb. 2, 1988, he ordered Justice to pay INSLAW about $6.8 million
  in licensing fees and roughly another $1 million in legal fees.
  Bason wasn't sure whether he could assess a department of the U.S.
  government with punitive damages.  If so, damages could run as high
  as $25 million.  Bason struggled with that legal question and
  finally postponed the decision to a later date.
   Now, no one knows how Judge Bason would have ruled on the
  question of damages.  In November, Judge Bason rejected a
  Department of Justice motion to liquidate INSLAW.  A scant one
  month later, the Harvard Law School graduate and former law
  professor discovered that he was not being reappointed.  The
  decision to replace him followed from a recommendation made by a
  four-man merit selection panel appointed by the chief circuit
  judge, Patricia Wald, a former Justice Department employee.  The
  panel was headed up by District Judge Norma Johnson, another former
  Justice Department lawyer.
   Judge Bason stepped down in February.  He was replaced by S.
  Martin Teel Jr., 42, one of the Justice Department lawyers who had
  unsuccessfully argued the INSLAW case before Bason.  Even jaded,
  case-hardened Washington attorneys called the action "shocking" and
  "eerie."
   INSLAW'S case will be assigned to another judge for disposition
  of damages.  Meanwhile, the Justice Department is appealing Judge
  Bason's initial $8 million award to U.S. District Court.  And, last
  week, the Internal Revenue Service descended on the Hamiltons,
  demanding that the bankrupt company pay $600,000 in back taxes--
  immediately.
   "I restrained the IRS from going after the Hamiltons
  personally--just a few days before I left the bench," Bason
  recalls.  "But that restraining order lasts only 10 days.  I don't
  know what's happening now."
   "It seemed as if the controversy was winding down," observes
  INSLAW'S former attorney, Leigh Ratiner.  "It would follow a
  natural course in the press, and then fade from view."  Inslaw
  would become another shocking event that slinks off into obscurity:
  Someone occasionally might dimly remember and idly ask, "What ever
  did happen to Bill Hamilton and those INSLAW people?  A real shame
  . . . I heard the judge was back teaching law somewhere. . . ."
   But at the end of last week Anthony Pasciuto instructed his
  lawyer to write a letter to Deputy Attorney General Arnold Burns.
  Pasciuto has decided to tell the full story that he began telling
  at the Mayflower last spring.  And, in an interview with "Barron's"
  at the end of the week, Pasciuto explained how the Justice
  Department black-listed INSLAW.  It was a tale that involved two
  U.S. trustees, a federal judge who told two versions of the same
  story, and a Justice Department that routinely refused to pay
  certain suppliers:  "If you're on the bad list, you go in this
  drawer," another Justice Department employee explained to Pasciuto.
   Pasciuto knows what happened--but not why.  In the trial, INSLAW
  claimed that C. Madison "Brick" Brewer, the Justice Department
  employee responsible for administering the department's $10 million
  contract with INSLAW, held a grudge against the company:  INSLAW's
  Hamilton had fired Brewer in 1976.  But since the trial, Hamilton
  has become convinced that Brewer alone could not have been that
  powerful.  Bason's removal and Pasciuto's account suggest that what
  motivated the remarkable behavior of the Justice Department was
  something of greater moment than a middle-level employee's petty
  grievance.
   Indeed, three people have lost their jobs as a result of the
  INSLAW scandal--but not paradoxically, those responsible for the
  scandals.  The trio of victims includes Judge Bason and Pasciuto--
  who received notice that he would be fired after he testifed, and
  just two days after Judge Bason was informed that he would not be
  reappointed.  The third casualty of the Inslaw affair was Leigh
  Ratiner a former partner at Dickstein Shapiro and Morin, the firm
  that represented Edwin Meese during his confirmation hearings for
  Attorney General.
   Why Bason and Pasciuto got the axe can easily be inferred.
  Ratiner's forced departure is a little more complicated.  In
  January 1986, Elliot Richardson asked Ratiner to take on INSLAW'S
  defense.  Ratiner agreed, and named D. Lowell Jensen, then the
  Deputy Attorney General, and a long-time Meese friend, in a
  complaint.  Not long after, Meese discussed the case with another
  Dickstein, Shapiro partner, Leonard Garment, the attorney who,
  along with E. Robert Wallach, represented Meese in his confirmation
  hearings.  Meese acknowledged the conversation in a pretrial
  interrogation.  Shortly thereafter, his partners at Dickstein,
  Shapiro asked Ratiner to resign.
   The Senate's Permanent Subcommittee on Investigations is now
  looking into INSLAW--a sign that the lawmakers, too, think that the
  whole story of the "something strange" that happened in the Justice
  Department has yet to be told.  The Hamilton's attorneys aren't
  sure why a department of the U.S. government wanted to liquidate
  their company.  Anthony Pasciuto doesn't know.  Judge Bason is
  still trying to piece together who had it in for him and why.  But
  Bason, Hamilton and the attorneys involved in the case are
  beginning to define the pieces of the puzzle with some pointed
  questions.
   Why did the Justice Department hire Brick Brewer, a former
  INSLAW employee, to supervise a contract with his former employer?
  "The person is going to be biased in favor of the former employer-
  -or he is going to be biased against the former employer," Bason
  pointed out in his decision.
   The judge also noted that D. Lowell Jensen, the former deputy
  Attorney General named by Ratiner in his complaint, was questioned
  on this issue.  Jensen, now a federal judge in California,
  "recognized the general principle that it is a bad idea" to hire a
  former employee, disgruntled or otherwise, for such a task, Bason
  observes.  But, Bason wrote, he was amazed to find "no hint in
  Jensen's testimony that he recognized there was any possible
  applicability of that general principle to the case of Mr. Brewer
  and Inslaw."
   Hamilton discloses that Mr. Jensen himself was already familiar
  with INSLAW.  Hamilton ran into Jensen in the early 1970s, when
  Hamilton was developing PROMIS, the case-tracking system that he
  contracted to sell to the Justice Department.  At that time,
  Jensen, a long-time friend of Ed Meese, was district attorney in
  Alameda Country in northern California, developing his own
  computerized case-tracking system, DALITE.  Jensen competed with
  Hamilton's PROMIS head-on-head.  PROMIS won.
   Hamilton and others familiar with the case ask:  Could Jensen
  still be feeling competitive?  People who have "tracked" the INSLAW
  case point to the coincidences of timing:  INSLAW'S problems with
  the Justice Department erupted soon after Jensen was promoted to
  Associate Attorney General--the No. 3 person in the department--in
  1983.
   Hamilton reveals another curious coincidence:  About 90 days
  before the Justice Department contract began to fall apart, he
  received a phone call from Dominic Laiti, chairman of Hadron Inc.,
  a company in which Earl Brian, a long-time Meese colleague, holds
  an interest (see "Brain's Meese Connection" posting following this
  one, from Barron's Jan. 11, 1988 issue).  Brian's Infotechnology
  controls four of six seats on Hadron's board.  Laiti told Hamilton,
  according to Hamilton, that Hadron intended to become the dominant
  supplier of computer software and services to law enforcers and
  courts and related agencies, and that Hadron wanted to buy INSLAW.
  "We have ways of making you sell," Hamilton quotes Laiti as saying.
   Laiti insists:  "I have no memory of this.  It all sounds
  ridiculous to me."
   The bizarre web of coincidences and connections includes AT&amp;T.
  AT&amp;T had a contract with INSLAW and, during bankruptcy proceedings,
  declared itself a major creditor.  Then, Hamilton alleges, AT&amp;T's
  attorney began to behave less like someone representing a creditor
  interested in salvaging the company than like an attorney for the
  Justice Department bent on liquidating it.  More coincidences:
  AT&amp;T's outside counsel, Ken Rosen, was with an obscure New Jersey
  firm, but formerly had been a member of Deputy Attorney General
  Burns's New York law firm.  Rosen's co-counsel, Shea &amp; Gould, is
  not AT&amp;T's usual outside counsel, either, though it is the firm
  used by Earl Brian.
   Bason questions the failure of high Justice Department officials
  to take any action to investigate serious allegations of
  misconduct.  Both Hamilton and his attorney, Elliot Richardson,
  complained about Brewer's handling of the contract, and requested
  an investigation.
   "There's such a contrast between the total inaction on the part
  of Justice Department regarding Mr. Brewer--and the hammer and
  tongs approach they're using with Mr. Pasciuto," Bason observes.
   Last Thursday, Pasciuto's attorney, Gary Simpson, delivered his
  letter to Deputy Attorney General Burns--and met with the Senate
  committee.  At the end of the week, that committee met with Bason,
  as well.  Senator Nunn's committee may find some answers--and ask
  more questions--that will illuminate this bizarre story.
   For now, Pasciuto does know what happened to him and his tale
  provides a window on the strange thing that happened to INSLAW.
   In March of 1982, William Hamilton could probably envision his
  face on the cover of Fortune.  He had just won the $10 million,
  three-year contract with the Justice Department to install PROMIS
  in the department's 20 largest U.S. Attorney's offices, and to
  develop a separate program for its 74 smaller offices.  Hamilton,
  who had contracts with private firms as well, now had a deal with
  the nation's premier law firm:  the Department of Justice.
   PROMIS was unique, and those 94 U.S. Attorney's offices
  represented an entering wedge:  Hamilton could dream of capturing
  the federal judicial system's entire caseload.  In the fiscal year
  October 1, 1982, INSLAW's revenues went up about 35% to $7.8
  million, with more than half of those revenues coming from the
  Justice Department contract.
   But then, that funny thing happened.  The Justice Department
  began postponing payments.  In July 1983, Hamilton says, the
  department suspended nearly $250,000 in payments, alleging that the
  company was overcharging the government for time-sharing.  In
  February 1985, the government terminated the contract with smaller
  offices that had been generating revenues of $200,000-$300,000 a
  month.
   INSLAW's cash flow shriveled.  By Feb. 7, 1985, the government
  had withheld $1.77 million.  Inslaw twisted and turned, trying to
  negotiate with the Justice Department, desperate to find out what
  went wrong.  Finally, in financial shambles, INSLAW filed for
  bankruptcy in late February.  The Department of Justice kept the
  INSLAW software--and kept on using it.
   In his decision, Bason compares the Justice Department to
  someone who decides to test drive an automobile:  "So the customer
  drives off with the car and this is the last the dealer ever sees
  of him.  I think that is approximately what the Department of
  Justice has done in this case."
   In last week's letter to Deputy Attorney General Burns from
  Pasciuto's attorney, Gary Simpson, Pasciuto suggests a pattern of
  harrassment that helped drive INSLAW into Chapter 11.  According to
  Pasciuto, in June of 1984, Robert Hunneycutt, who worked in the
  Department of Justice's finance offices, told him about his
  practice of dividing contractors' bills into three piles.  "One
  pile he would pay right away;  the next pile when he got around to
  it;  and then he opened a drawer and pointed to some invoices in
  the drawer and said:  "These invoices may never get paid.'"
  Hunneycutt then identified such invoices as belonging to companies
  on the "bad list."
   "Mr. Pasciuto asked who was in that pile," the letter to Burns
  goes on, "and he said that INSLAW was an example and that `People
  in the U.S Attorney's offices don't like INSLAW they are in this
  pile. . . .'"
   When "Barron's" phoned Hunneycutt, he returned the call, and
  left this message:  "Mr.  Hunneycutt knows nothing."  In a
  subsequent conversation, he denied the conversation with Pasciuto.
   But Hamilton claims that the Justice Department was trying to
  starve INSLAW.  They didn't just push to bankrupt the software
  firm, he insists, they wanted to liquidate it, converting it from
  Chapter 11 to Chapter 7, as soon as possible.  Why?  Hamilton
  speculates that Justice may have wanted to push INSLAW into an
  auction where PROMIS could be purchased cheaply by someone that the
  department viewed more favorably.
   Indeed, the Justice Department did move for liquidation.  And on
  St. Patrick's Day 1987, Anthony Pasciuto met with the Hamiltons at
  the Mayflower and gave them a fuller picture of what was happening
  to them.  A mutual friend, Mark Cunniff, executive director of the
  National Association of Criminal Justice Planners, asked Pasciuto
  to go to that breakfast meeting at the Mayflower.
   "I said, `Don't you know what you're asking me to do?'"
  Pasciuto recalls.  "He said, `I know.'"
   "I knew him for 19 years," Pasciuto explains.  "I said, `Mark,
  I'm doing it for you--and for these poor people.'  I knew they had
  five kids," adds Pasciuto, a graying 44-year-old All-American "nice
  guy" with a strong Boston accent, and an open, slightly pockmarked
  face.  Pasciuto has been married for 21 years, in government
  service for 21 years, and still wears his class ring--U. of Mass.,
  1965.
   So, at the Mayflower, Tony Pasciuto remembers he tried to help
  Bill and Nancy Hamilton--and confirmed their most paranoid
  fantasies:  The Justice Department was out to get them.
   At the meeting with the Hamiltons Pasciuto told them that his
  boss, Thomas Stanton, director of the Justice Department's
  Executive Office for U.S. Trustees, was pressuring the federal
  trustee overseeing the INSLAW case.  William White was being
  pressed to liquidate INSLAW.  According to Pasciuto, in 1985 White
  told him that he was resisting the pressure.  As a result, White
  informed Pasciuto, Stanton denied White's Alexandria office
  administrative and budgetary support and, at the same time, tried
  to have an assistant from the U.S. Trustee's office in New York
  take over the case and convert it.
   The Hamiltons were told by Pasciuto that Cornelius Blackshear,
  the U.S. trustee in New York at the time of INSLAW's Chapter 11
  filing, knew all about Stanton's plan.  Pasciuto said that Judge
  Blackshear had repeated this tale of pressure in the presence of
  United States Court of Appeals Judge Lawrence Pierce in the judge's
  chambers in Foley Square in New York.  Pasciuto also told the
  Hamiltons that the Justice Department had blacklisted INSLAW on the
  department's computer system procurements.
   On March 25, 1985, INSLAW's lawyers deposed Blackshear, and he
  confirmed the story of pressure to liquidate INSLAW.  The very next
  day, March 26, Blackshear met with a Justice Department
  representative, and signed a sworn affidavit, recanting, and saying
  that he had confused INSLAW with another case--United Press
  International, which had also been involved in bankruptcy
  proceedings in Judge Bason's court.
   "I know the difference between UPI and INSLAW, I'm not that
  dumb," Pasciuto observes.  He spells it out with a finger:  "U--P--
  I."
   Cornelius Blackshear left his position as United States Trustee
  and became a United States bankruptcy judge the following fall.
   According to Pasciuto, Judge Blackshear discussed INSLAW in
  Judge Pierce's chambers.  But when questioned on the point, Judge
  Pierce told "Barron's":  "I have made it my business not to get
  into the particulars of whatever Tony [Anthony Pasciuto] got
  himself into the middle of.  Apparently, he thought his employer
  was doing something that was not kosher.  I told him I didn't want
  to know about it--if he needed to, he should hire an attorney."
   When "Barron's" offered to recount the details Pasciuto
  allegedly discussed in his presence, the judge grew agitated:
  "Don't tell me--I don't want to hear it.  I don't want to know
  about it."
   "I did ask him for help--six months before it all happened.  I
  didn't know what to do," Pasciuto recalls.  "Judge Pierce and I go
  back to the time when I was an assistant dean at the School of
  Criminal Justice in Albany--in 1972.  He was a visiting faculty
  member for one year.  We became good friends.  I considered him a
  father figure.
   In his ruling, Judge Bason noted that Blackshear had given "two
  different versions of the same event" and decided that other
  evidence supported the first version.  White also denied the story
  of political pressure in court and Judge Bason asserted in his June
  1987 ruling, "What I do believe is that Mr. White has a capacity to
  forget . . . a capacity which probably all humans share to some
  degree or another."
   Judge Bason went on to point out:  "Mr. White has just recently
  joined a large law firm that practices primarily in Virginia and
  primarily in bankruptcy matters.  Mr. White's future with the firm
  that he so recently joined could well be dependent on income-
  producing work that he does. . . .  It seems to this court that Mr.
  White is not in a position at this point in his career to
  jeopardize his relationship with the U.S. Trustee's office in
  Alexandria, and for him to testify in a way that would be strongly
  disliked and disfavored by the Executive Office for U.S. Trustees
  could well have an adverse impact on the relationship between the
  executive office and the Alexandria office and, in turn, a
  relationship between Mr. White and the Alexandria office."
   But in late spring of 1986, White was still a U.S. Trustee, and
  Pasciuto recalls one more incident involving INSLAW.  White called
  Pasciuto and asked for an extra filing cabinet for his INSLAW
  files.  "I said, `You've got plenty of them over there,'" Pasciuto
  recalls.  White responded, "I know, but I need another one because
  I need to put all the INSLAW files in one cabinet and lock it."
   White was discreet.  So, on June 1, 1987, when Anthony Pasciuto
  walked into that packed D.C. courtroom to take the stand in the
  INSLAW case, he knew that White would not support his story.  He
  also knew that Judge Blackshear had changed his original story.  As
  Pasciuto's lawyer puts it in the letter to Burns:  "Mr. Pasciuto
  was now the only person with recollection of conversations with
  U.S. Trustees in which Mr. Stanton was identified as having put
  pressure regarding the INSLAW case.  Other people's recollections
  were being erased by mechanisms best known to them."
   Pasciuto's boss, Stanton, apparently put his own pressure on
  Pasciuto.  Beginning in 1985, according to the letter to Burns,
  Pasciuto began reporting his concerns about substantial deficits in
  the U.S. Trustee's office to Stanton.  In 1986, Pasciuto spoke to
  the Department of Justice's finance staff and by late 1986, he says
  he had gone on record with the Office of Professional
  Responsibility about financial indiscretions by Stanton.  According
  to Pasciuto, Stanton in September 1986 called him a "traitor."
  Pasciuto began actively looking for other employment, including a
  job as Assistant U.S. Trustee in Albany, N.Y.  But no transfers
  were available for Anthony Pasciuto--until he was subpeonaed to
  testify in the INSLAW case.
   "Within an hour of receiving that subpeona to testify, Mr.
  Pasciuto was given a copy of an appointment paper for a job as the
  Assistant United States Trustee, Albany, New York, signed by Mr.
  Stanton," Simpson, Pasciuto's attorney, reports in last week's
  letter to Burns.  After the trial was over, however, Pasciuto was
  told that the procedure "was changed" and that the deputy Attorney
  General would have to sign off on the form.  That never happened.
   But Pasciuto, who believed the signed appointment papers, sold
  his house in Maryland for $200,000 and bought a house in Albany for
  $250,000.  On the day the movers came, he was told that the sale of
  the Maryland house had fallen through.  "We had to move, we had to
  carry two houses--and we couldn't even move into the Albany house
  yet because the owners wouldn't be moving out for a month," Tony
  Pasciuto recalls.  "So, we stayed with in-laws for a month."  That
  was May 22, 1987.  Nine days later Tony Pasciuto walked into court.
   When he entered the court room on June 1, 1987, Pasciuto was not
  represented by counsel.  According to Simpson, his attorney:  "The
  Justice Department attorney who was handling the INSLAW case, Mr.
  Dean Cooper, did not prepare him well for his trial testimony.  The
  paralegal who was taking notes during the witness preparation says
  that he has lost the notes of that meeting."
   When the questioning began, Pasciuto must have realized that the
  Justice Department attorney was not going to guide him gently
  through his story.  One of Cooper's first questions was "whether
  [Pasciuto] had been seeing a doctor about a stressful condition."
   In his letter to Burns, Simpson explains:  "Mr. Cooper
  apparently knew that Mr. Pasciuto had been seeing a psychiatrist in
  connection with personal problems that he had been experiencing and
  Mr. Pasciuto . . . now knew that the United States Department of
  Justice was prepared to stoop to the level of bringing his personal
  problems into the INSLAW case to get him to be careful about what
  he said."
   Apparently, the tactics worked.  Pasciuto recanted, saying that
  the statements he made to the Hamiltons at the Mayflower were made
  in an effort to hurt Stanton, who was blocking his promotion.
   Judge Bason remembers the scene:  "Mr. Pasciuto seemed to be
  basically a very honest person who had been caught up amongst a
  gang of very tough people--and he just didn't know what to do.  He
  was a career federal employee and he was petrified.  He probably
  had a vision of losing his job, his marriage, everything.  Probably
  he thought the only way he could save anything was to recant.  I
  had to adjourn at one point during his testimony--he was close to
  tears."
   But Pasciuto didn't save his career.  And now, in the letter to
  Burns, he has come forward to make a full disclosure.
   Last week's letter to Burns contains a compelling, painful
  vignette of a chance meeting between Pasciuto and Blackshear, about
  a month after the trial, on July 11, 1987.  If Hamilton felt
  floored by Pasciuto's testimony, so Pasciuto must have felt
  betrayed by Blackshear's change of heart.  The meeting was awkward.
   As Simpson tells the story in the letter to Arnold Burns, it was
  six in the evening, when Pasciuto and his wife were leaving the
  home of a mutual friend, Harry Jones, now U.S. Trustee for the
  Southern District of New York.  Judge Blackshear came up to Tony
  Pasciuto, put his arm around him, and said, "I am sorry, it will be
  all right."
   Pasciuto replied:  "No, it is not going to be all right, they
  are going to fire me."
   Blackshear responded, "They are not going to fire you.  Don't
  they know how much you know?"
   Pasciuto:  "Yes, but they don't care."
   Blackshear:  "But you told the truth."
   Pasciuto:  "Of what importance is the truth if everyone else is
  lying?"
   Blackshear:  "These people came up from Washington and the U.S.
  Attorney's office;  I got confused.  I thought that by changing my
  story I would hurt less people.  I didn't know you were subpoenaed
  until I saw your testimony, which was sent to me by Barbara
  O'Connor."
   Pasciuto:  "Do you remember what we talked with Judge Pierce
  about?"
   "I wanted to see if he was going to continue his crap," Pasciuto
  recalls.  "But he dodged--literally backing away from me--saying,
  again, `They sent someone from Washington and someone from the U.S.
  Attorney's office.  I felt the easiest thing to do was recant.  I
  felt less people would be hurt if I just bailed out.'"
   In Simpson's version, Judge Blackshear had received two
  telephone calls from William White the day he changed his story.
  White told him he had the wrong case.
   Pasciuto, exclaimed, sarcastically:  "What!  They asked you
  about converting *another* case [from Chapter 11 to Chapter 7]?"
   Blackshear, waving his hand:  "I don't want to get into it and
  who the hell cares?"
   Today, after listening to Simpson's version, Blackshear states:
  "I don't remember the specifics, word for word, but I do remember
  having that conversation.  And I don't have any problems with what
  Tony remembers."
   Recalling the scene, Pasciuto says:  "You know, even now--I'm
  not angry.  I can't help it.  I'm not.  Blackshear is basically a
  wonderful person.  It's sad--I'm sorry, I'm not angry.  It really
  is sad.  I feel devastated."
   Tony Pasciuto now has a house in Albany, and soon will have no
  job either in Washington or New York.  Over the past nine months,
  he has spent $12,000 commuting from Albany to the job he still
  clung to in D.C.  Legal fees are draining his savings--the bills
  total $25,000 so far.  "We're lucky that my wife and I were always
  frugal and have the money saved," he says proudly.
   But Tony Pasciuto is frightened.  "At work, ever since I got the
  letter saying they were firing me, I've felt like I was underhouse
  arrest," he relates.  "People come by my office to see if I'm
  there.  If I leave, I have to sign out.  Everyone is supposed to,
  but normally very few people sign out.  If I don't, they try to
  track me down.  If I go to the Men's Room, they come looking for me.
   "I'm just a GS 15," adds Pasciuto, referring to his level in
  government service.  "Stanton, my boss, can't fire me.  Stanton
  made the accusations, but the deputy Attorney General, Arnold
  Burns, will fire me.  How does it feel to know that the deputy
  Attorney General of the United States wants to destroy a GS 15?
  It's scary.  It scares me to death."</p>

<p>Subject: the INSLAW Case:  part II of "BARRON'S" 1988 2-part piece
Keywords: U.S. Deptartment of Justice != "with liberty and justice for all"
Lines: 877</p>

<p> That the U.S. Justice Department could engage in a vendetta that would
 end the career of a federal judge, bankrupt a company, force a partner
 out of his law firm, cause another federal judge to recant under oath
 and reach down and wreck the career of a 21-year government-service
 employee--that's the stuff of a spy novel, set, one would hope, in
 another country.  But resignations en masse from a Department of
 Justice inhabited by "moles" suggest alarming facts, not diverting
 fiction.</p>

<p> Conclusion of a 2-part piece which appeared in the April 4, 1988 issue of
   "BARRON'S NATIONAL BUSINESS AND FINANCIAL WEEKLY"</p>

<p>  This part was the cover story with the following title emblazzoned
  above the seal of the United States Department of Justice:</p>

<p>    Rogue Justice:  Who and What
    Were Behind The Vendetta Against INSLAW?</p>

<p>------------------------------------------------------------------------------</p>

<p>    Rogue Justice
  What Really Sparked the Vendetta Against INSLAW
   By MAGGIE MAHAR</p>

<p>   TWO weeks ago, "Barron's" told the story of INSLAW, a small software
   company that landed a $10 million contract with the Justice
   Department in 1982.  Bill Hamilton, INSLAW'S 42-year-old founder was
   jubilant when Justice bought the Prosecutor's Management Information
   System (PROMIS), which he had spent his life--and his life's
   savings--building.  But then things took a mysterious and nasty
   turn.  Justice began withholding payments.  Contract disputes
   multiplied.  Threats accelerated.  Bill Hamilton couldn't understand
   what was happening or why.  But he knew INSLAW's cash flow was
   shriveling.  By 1985, INSLAW was in financial shambles, and Bill
   Hamilton ended up in federal bankruptcy court.  And there, last
   fall, a federal bankruptcy judge handed down an astonishing ruling.
  Judge George Bason found that the Justice Department had
   purposefully propelled INSLAW into bankruptcy in an effort to steal
   its PROMIS software through "trickery, deceit and fraud."  On Feb.
   2, 1988, Bason ordered the Department of Justice to pay INSLAW about
   $6.8 million in licensing fees and roughly $1 million in legal
   costs.  He postponed a decision on punitive damages--which could run
   as high as $25 million.
  Trial testimony revealed an unexplained series of "coincidences"
   surrounding the INSLAW case, including the fact that Justice
   appointed C. Madison "Brick" Brewer to oversee the INSLAW contract.
   Brick Brewer had worked for Hamilton--until Hamilton fired him in
   May 1976.  After listening to Brewer's testimony, Judge Bason wrote
   that he could not understand why Justice picked a man "consumed by
   hatred" to administer the contract with a former employer.  He also
   couldn't fathom why top department officials ignored complaints from
   INSLAW attorneys when Brewer began withholding payments.  "A very
   strange thing happened at the Department of Justice . . .," observed
   Judge Bason, leaving open the question as to just why, at the
   highest levels, the U.S. Department of Justice condoned a vendetta
   against a small, private U.S. company.
  It was November of 1987 when Judge Bason rejected a Justice
   Department motion to liquidate INSLAW.  Not quite one month later,
   Judge Bason learned that he would not be reappointed to the bench.
   In the past four years, only four of 136 federal bankruptcy judges
   seeking reappointment have been turned down.  Bason was replaced by
   S. Martin Teel, one of the Justice Department attorneys who
   unsuccessfully argued the INSLAW case before him.
  Bason observes that the Justice Department will now have a "third
   bite of the apple" on the question of punitive damages.  Judge Teel
   has recused himself from the case, and the Justice Department is
   appealing.  So INSLAW vs. the United States of America hangs in
   limbo.
  The INSLAW case also left a Justice Department whistle-blower
   waiting for the verdict on his 21-year career.  When "Barron's"
   began reporting the INSLAW story two weeks ago, we interviewed Tony
   Pasciuto.  Pasciuto revealed how a Justice Department colleague
   responsible for paying contractors' bills said he divided them into
   three piles:  "One pile he would pay right away, the next pile when
   he got around to it, and then he opened a drawer and pointed to some
   invoices in the drawer and said, `These invoices may never get paid.
   If you're on the bad list you go in this drawer.'"  INSLAW was on
   the bad list.
  Pasciuto also repeated what he had been told by Cornelius
   Blackshear, a federal judge and former U.S. Trustee based in New
   York.  Blackshear had confided that his Justice Department superior
   in Washington was pressuring him to send someone down to D.C. to
   help liquidate INSLAW.  Apparently, Washington wanted to make sure
   that the job was done.
  When INSLAW's lawyers deposed Blackshear, he confirmed the story.
   During INSLAW's suit, Judge Blackshear recanted.  Meanwhile, about
   one hour after Pasciuto was subpoenaed to testify, his superiors in
   the Justice Department offered him a long-awaited transfer to
   Albany, N.Y.
  Feeling scared and "out there all alone," Tony Pasciuto bought a
   house in Albany and changed his story.  Close to tears, he recanted
   on the stand.  Judge Bason recalls the scene:  "Mr. Pasciuto seemed
   to be basically a very honest person who had been caught up amongst
   a gang of very tough people--and he just didn't know what to do."
  According to Pasciuto, after he testified, Judge Blackshear met
   him at a party and said, "I'm sorry. . . .  These people came up
   from Washington and the U.S. Attorney's office.  I got confused.  I
   thought that by changing my story I would hurt less people."  When
   "Barron's" read Pasciuto's version of the conversation to Judge
   Blackshear, a weary-sounding Blackshear confirmed it:  "I don't
   remember the specifics word for word.  But I do remember the
   conversation.  And I don't have any problems with what Tony
   remembers."
  Meanwhile, after Tony Pasciuto recanted in court, the Justice
   Department told him, "Sorry, the procedure was changed.  No transfer
   to Albany."  Then, B. Boykin Rose, one of the Justice Department
   officials who resigned last week, wrote a letter to Deputy Attorney
   General Arnold Burns--another member of the Justice group who bailed
   out--recommending that Pasciuto be fired.
  When "Barron's" last talked to Pasciuto, he was commuting from
   the new house in Albany to a job in Washington, where he said, "I
   feel like I'm under house arrest."  And he was awaiting the end of
   his 21-year career in government service.
  "My boss, Thomas Stanton, can't fire me," Pasciuto explained.
   "The Deputy Attorney General, Arnold Burns, will fire me.  How does
   it feel to know that the Deputy Attorney General of the United
   States wants to destroy a GS15?  It's scary.  It scares me to
   death."  Last week, Burns led the dissidents out of the department.
  Tony Pasciuto's tale is chilling.  And it raises two equally
   disquieting questions:  Why did the U.S. Department of Justice want
   to liquidate Bill Hamilton's software company?  And, how high did
   the coverup of the scheme to destroy INSLAW go?</p>

<p>   WHEN six Department of Justice officials resigned last week,
   department spokesmen insisted that they were NOT leaving because
   they feared Attorney General Edwin Meese was about to be indicted.
   Nor had they beaten their wives--should anyone ask.  But, according
   to "Barron's" sources inside Justice, their exodus represents the
   climax to a much larger, subterranean game of musical chairs that
   has been going on in the Department of Justice for the past 18
   months.
  "I know of at least 50 or 60 career government employees who have
   been reassigned or forced out," says one department insider.
   Another charges the department with using FBI background checks in
   order to manufacture reasons for forcing employees to leave.
   "They're trying to find--or force--openings for political appointees
   that they want to bury as what we call 'moles' in the department,"
   explains a longtime Justice Department hand.  "They bury the moles
   so that the next administration can't find them."
  The moles, he goes on, are political appointees who are moved
   into GS (government service) jobs normally held by career government
   employees.  "It could take the next administration two years to
   figure out who are the career employees and who are the political
   appointees dropped into their slots," he says.  "In the meantime,
   the moles will be in place--and they'll have the historical
   knowledge of how the organization works--everyone else will be
   gone."
  But even while the moles are burrowing in, the rumor among them
   is that sunlight is about to flood the shadowy reaches of the
   department.  For last week's resignations suggest that Special
   Prosecutor James C. McKay is coming closer to addressing the
   question:  "Was there justice at Justice during the past four
   years?"
  The INSLAW affair suggests a disquieting answer, for the
   virtually unpublicized case serves as a window on how Justice did
   business during the Meese years.  In his blistering ruling, Judge
   Bason charged that the department committed a series of "willful,
   wanton and deceitful acts . . . demonstrating contempt for both the
   law and any principle of fair dealing."
  Originally, Bill Hamilton, INSLAW's founder, thought that only
   one mid-level Justice Department official was willfully and
   deceitfully out to get him:  C. Madison "Brick" Brewer, the former
   employee whom he had fired.  When Hamilton and his wife, Nancy, put
   their six children in the family station wagon and drove to a
   federal court on June 9, 1986, to file a suit against the United
   States government, they firmly believed that Brewer was their
   nemesis.  But as the trial progressed, their certainty gave way to
   doubts.  Why did Justice put Brewer in that critical and, under the
   circumstances, highly improper position--and allow him to remain?
   Why did the Justice Department refuse to settle?  Why were the
   government's lawyers, seemingly not satisfied with bankrupting
   INSLAW, pressing so hard to liquidate the company?  When the trial
   was finally over at the end of 1987, Bill and Nancy Hamilton had won
   their case, but they still wanted to know why their company was near
   ruin.  So they followed the counsel of Elliot Richardson, one of
   their attorneys:  They sat down at their dining room table, made a
   list of all the anomalies in the baffling case, and tried to puzzle
   out the mystery.
  "These were all things we were aware of, yet until you organize
   them and put them side by side, you don't see them," Hamilton
   observes.
  "But seeing the strange incidents and coincidences all together,
   suddenly it popped out at me.  There was a coverup--and it wasn't
   just to protect Brick Brewer.  For instance, someone had persuaded
   Judge Blackshear to recant under oath within 48 hours of his
   original deposition.  Who would have that power?  You don't do that
   to a federal judge to protect Brick Brewer--it's too risky.  That's
   when I became convinced then that there was criminal liability at
   the highest levels of the department.  Then, I started to look at
   the pieces.  And, every time I picked up a rock and turned it over,
   it seemed to fit."
  Now, looking back five years, Bill Hamilton believes he
   understands the reasons for the oppressive behavior of the Justice
   Department.  And he thinks he had an early warning about the
   department's methods.  But he didn't take the warning phone call
   seriously.
  As Bill Hamilton tells it, it was April of 1983, and he was
   sitting in his office--right across the street from the "Washington
   Post"--when he received the call from Dominic Laiti, chairman of
   Hadron Inc.
  "Laiti identified himself, and said that Hadron intended to
   become the leading vendor providing software for law enforcement
   nationwide," Hamilton recalls.  "He said they had purchased Simcon,
   a manufacturer of police-department software--and Acumedics, a
   company that provides computer-based litigation support services for
   courts.  `Now,' Laiti told me, `we want to buy INSLAW.'"
  "I told him he had just described our ambition," Hamilton
   relates.  "We intended to become the major vendor of these software
   services ourselves--and we were not interested in being acquired."
  But Laiti kept pushing, and, according to Hamilton, boasted, as
   he remembers, "We have very good political contacts in the current
   administration--we can get this kind of business."
  The words would reverberate in Hamilton's memory later, but, at
   the time, he didn't heed the implicit threat.  He just repeated,
   "We're not interested in selling," whereupon, he says, Laiti
   retorted, "We have ways of making you sell."
  The story sounds fantastic.  Laiti calls it "ludicrous."  Is
   Hamilton making it up?  "I would think the whole tale was fantasy--
   if I hadn't been involved in investigating the Iran-Contra affair,"
   confides a Senate staffer now involved in an investigation of the
   Justice Department's software contracts.  And Judge Bason states
   that Hamilton was a levelheaded witness with a scrupulously honest
   memory:
  "I was particularly impressed in the last phase of the trial,"
   Bason recalls.  "Hamilton could very easily have testified
   positively in a way that would have been favorable to his case--to
   an extent of about $1 million.  Instead, he testified, `This is my
   best recollection--but I am not sure.'  The contrast between that
   and the government witness who was so obviously disingenuous!"
  The call from Hadron was strange, so Hamilton remembered it, but
   in 1983 he shrugged it off.  "I politely, but firmly, cut off the
   conversation.  I'd never had a conversation like that with someone
   in the software industry.  I thought Hadron must be new to
   software--maybe they were used to an industry where this kind of
   talk was more prevalent."
  But now, Hamilton surmises that his troubles may have begun with
   that phone call.  Within 90 days of Laiti's threat, he says, the
   Department of Justice mounted its attack.  And, Hamilton alleges,
   the attack ultimately became a vendetta, a vendetta that could have
   been inspired by the convergence of three interests:
  Hadron, the brazenly aggressive competitor controlled, from
   behind the scenes, by a Meese crony from his salad days in
   California:  Dr. Earl Brian.
  Brick Brewer, the embittered former employee who, as project
   manager, was in a strategic position to do INSLAW harm.
  D. Lowell Jensen, then the deputy Attorney General, and a ghost
   from INSLAW's own California past.  Jensen had developed a software
   product to compete with INSLAW and lost--back in the 1970s when
   Jensen was a D.A. in Alameda County.  But Jensen did have the good
   fortune to meet Ed Meese in the D.A.'s office.  So years later,
   Jensen became top-ranking member of the "Alameda County Mafia,"
   which found a home in the Ed Meese Justice Department.
  When Bill Hamilton sat down, in good faith, to negotiate a deal
   with the Justice Department, the people on the other side of the
   table were not dispassionate government officials.  They were
   instead a hostile crew, inspired apparently by old scores and
   private interest.  Whether carefully organized or spontaneously
   launched, the attack was successful--for a while, anyway.  When the
   principals and the department were suddenly in danger of exposure,
   Hamilton charges, the cover-up spread out to embrace the Justice
   Department bureaucracy, the IRS, and Jensen's successor--former
   Deputy Attorney General Arnold Burns--one of the six who quit last
   week.
  "They circled their wagons," Judge Bason wrote.  The defense
   became an offense, and an attorney, a Justice Department whistle-
   blower, and the judge himself all lost their jobs.  Today, only two
   of the three have found work.
  Hamilton is luckier. IBM has become INSLAW's savior--rescuing the
   company from the auction block, and vindicating the worth of its
   product.  Meanwhile, some Senate staffers looking into the INSLAW
   case believe that it raises questions about Project Eagle, a much
   larger scheme to computerize the Justice Department, the $200
   million contract is scheduled to be awarded before the end of the
   year.
  The deeply troubling questions about INSLAW remain.  If anything,
   they are magnified by last week's departures from Justice:  "Why?"
   and, "How High?"
  "Start," Bill Hamilton says, "with Hadron."  For Hadron is
   indeed, as Laiti allegedly boasted, "well-connected in the
   Administration."  It is controlled by Dr. Earl Brian, the longtime
   friend of Ed Meese who owns Financial News Network ("Barron's," Feb.
   29[, 1988]).  In fact, business dealings between the Meese family
   and Brian's company imperiled Meese's 1984 nomination.  And Hadron,
   Hamilton charges, is one of the keys to the mystery of why INSLAW
   became the victim of rogue justice.
  Hadron boasts a history replete with acquisitions, lots of
   government business--and brushes with the SEC.
  The outfit emerged in 1979 from the ashes of Xonics, a notorious
   high-tech fiasco founded and headed by a colorful wheeler-dealer
   named Bernard Katz.  "Barron's" described Xonics in 1976 as a
   company with a knack for "recognizing income as fast as possible
   and deferring expense as long as it decently could."
  In 1977, the SEC brought a lawsuit against Xonics, accusing top
   management, including Katz, of fraud and manipulating the stock's
   price, in part by using Xonics stock to acquire other firms.
   Besieged by two shareholder suits, Xonics agreed to a permanent
   injunction in April of that year.  The company did not admit to any
   wrong-doing.
  But the nimble survived.  In 1979, Dominic Laiti gathered a group
   of former Xonics executives, and bought Hadron.  By 1983, the
   company was lauded in the press as "an investment banker's dream."
  For the child had, it appeared, inherited the parent's
   acquisitive streak, snapping up nine companies in just three years.
   The offspring did run into a few SEC snags of its own, however.  In
   1981, the SEC ruled that the limited partnerships Hadron had set up
   to fund its R&amp;D efforts were in truth a form of loan financing
   rather than a source of revenue.  By 1982, Hadron had lost $4.5
   million and another shareholder suit was pending.
  But by 1983, Dominic Laiti's group appeared to be on a roll,
   acquiring their way into an exciting new industry:  lasers.  Laiti
   was quoted as saying, "There's the potential for very, very rapid
   growth."
  Unfortunately, the roll turned out to be a very, very rapid
   roller-coaster.  By February of 1984, Hadron was announcing sale of
   its "money-losing laser-equipment division."  In the third quarter a
   year earlier, Hadron had earned a penny-a-share profit, but by early
   1984, it was sinking $1.2 million into the red.  Hadron's ups and
   downs continued:  a loss of $231,000 for the 1986 fiscal year, a
   profit of $852,000 a year later--despite a 13% decline in revenues.
  Since 1979, the price of Hadron's stock has followed the same
   pattern, swinging wildly from its high of 6 1/8 in December of 1980
   to a low of 3/4 in March of 1985.  In the past couple of years, the
   stock has been trading in a narrower range between 3/4 and 1 11/16,
   and an investor complains that as far as he knows, the company
   hasn't had a shareholders' meeting since 1983.  "I'm not so much
   perturbed that they don't meet--I wouldn't care if they never met,
   if the the stock were up around $5 or $6," this sizable holder
   laments.
  Still, Hadron has kept bouncing back--with a little help from
   Uncle Sam:  namely, contracts with the Pentagon, a fat settlement
   with the Agency for International Development and, most recently, a
   gigantic contract with, yes, the U.S. Department of Justice.
  Hadron's government connection can be traced to Earl Brian, who
   was president of Xonics, Hadron's parent, until October of 1977.
   Brian slipped away from the company discreetly, just six months
   after Xonics rolled over and agreed to the SEC injunction.  Brian
   was never charged with any wrongdoing;  four Xonics officers were
   required to sign the consent decree, and he was not one of them.
  Ostensibly, Dominic Laiti led the investor group that then
   rescued Hadron from the ruins of Xonics, but somehow Brian managed
   to keep his hand on the levers.  Today, Laiti--the man who allegedly
   phoned Bill Hamilton--is Hadron's chairman, but Brian's business-
   development company controls four of the six seats on Hadron's
   board.
  In March of 1981, Brian resigned from Hadron's board in order, he
   said at the time, "to divest himself of Hadron to facilitate future
   transactions" between his business-development company,
   Infotechnology, and Hadron "under the Investment Company Act of
   1940."  But by January 1984, Brian was back on Hadron's board, and,
   according to the 1987 annual report, he's still there, though Hadron
   is continuing to do deals with Infotech.  In October 1987, Hadron
   sold Atlantic Contract Services to Infotech at book value for a
   combination of cash and Infotech common stock in a deal valued at
   roughly $300,000.
  "Brian does an awful lot of buying and selling," the disgruntled
   Hadron shareholder observes.  "He's making money at it, but I'm not
   sure his shareholders are making money.  I know that, as a
   shareholder of Hadron, I'm not making any money."
  Still, in the spring of 1987 Hadron moved into the black in large
   part because it received $1.6 million from the Agency for
   International Development.  The AID settlement came after the U.S.
   government cancelled a Hadron subsidiary's business with Syria.
  But the AID money wasn't the only lucky boon from Uncle Sam.  The
   government has long been a Hadron client:  In the 1987 fiscal year,
   approximately 34% of the company's revenues came from the Department
   of Defense.  And most recently, a Hadron subsidiary, Acumedics,
   locked up a $40 million contract with the Department of Justice.
  Hadron never did acquire INSLAW.  But there's more than one way
   to skin a Justice Department software contract.  Last October,
   Hadron's Acumedics division signed the $40 million deal to provide
   automated litigation-support services for Justice's Land and Natural
   Resources division.
  When the Acumedics contract was awarded, competitors groused that
   the bidding process was unfair.  Justice officials respond that all
   bids went through a stringent review process.
  "There was absolutely no pressure on me.  It was one of the
   cleanest procurements I've been involved in," recalls Steve Denny,
   the contracts officer on the case.
  Justice Department officials also pointed out that the $40
   million deal was essentially a continuation of a 1983 contract.
   Acumedics began doing business with the Justice Department in 1970
   as an 8(a) minority business.  In 1983, Acumedics was acquired by
   Hadron--and lost its 8(a) status.  But even without the favored
   status, Hadron somehow managed to hold onto the business, and win a
   four-year competitive bid contract.  Shortly after the acquisition,
   Earl Brian reappeared on the Hadron board, and, recalls a former
   Hadron executive, told the board, "If we needed any help in
   marketing at Acumedics, he had been a member of Reagan's Cabinet, he
   knew people--and would be willing to make phone calls."  The Hadron
   alumnus adds:  "He was just being nice."  According to Federal
   Computer Week, a trade publication:  "A competitor for the 1983
   contract, who declined to be named, said his company no longer bids
   on Justice Department contracts.  He explained that, after losing
   the 1983 contract to Acumedics, `We took a look at their bid
   compared to ours, and it was about $1.5 million over ours.'"
  Now, the size of Acumedics's newest deal with the government has
   raised old questions about the man behind the Hadron subsidiary, Dr.
   Earl Brian, and his connection to Ed Meese.  A venture capitalist,
   and former neurosurgeon, Dr. Brian practiced medicine in Vietnam,
   then returned to the States, where he became health and welfare
   secretary in then-Gov. Reagan's California cabinet.  There, he
   served with Ed Meese, Reagan's chief of staff until 1979.  Today,
   Brian owns and oversees Infotechnology (which controls Hadron), the
   Financial News Network, and, most recently, he headed up an
   investment group that bought the right to run United Press
   International.
  The Brian connection became an embarrassment during Ed Meese's
   confirmation hearings when Meese acknowledged that his wife, Ursula,
   borrowed $15,000 from a Meese adviser, Edwin Thomas, in order to buy
   stock in Brian's company.  Coincidentally, just six months later,
   Brian lent $100,000 to Thomas, who by then needed money himself--and
   had become a member of the White House staff.  Neither Meese nor
   Thomas listed the loans on their financial disclosure statements.
   Meese paid no interest, and Thomas only partial interest.  Following
   a six-month investigation, independent counsel concluded that there
   was no basis for criminal charges against Meese, and while
   "inferences might be drawn from Mr. Thomas's contact with Dr. Brian
   . . . whether Mr. Thomas or Dr. Brian committed a violation of law
   was not within our jurisdiction.  Even if we were to make an
   assumption that Mr. Thomas might have been acting on insider
   information, we have been given no evidence by the SEC."
  Bill Hamilton learned of the connection between Hadron, Brian and
   Meese only after the INSLAW trial ended.  But then remembering what
   Hadron's Chairman Dominic Laiti said about being politically
   connected--not to mention "ways of making you sell"--Hamilton
   thought he glimpsed an ominous pattern.
  Hamilton believes the Justice Department mounted its attack 90
   days after the Hadron phone call, "with the apparent objective of
   forcing INSLAW either to agree to be acquired, or into bankruptcy."
   Earl Brian, Hamilton is convinced, would have been happy to pick up
   INSLAW cheaply--at a liquidation sale.
  Moreover, Hamilton has reason to believe that the No. 2 man in
   Justice, D. Lowell Jensen, wasn't at all disposed to save INSLAW
   from the auction block.  For, years earlier, Jensen had competed
   with INSLAW's product, PROMIS, head-on.  While holding public office
   in Alameda County, Calif., Jensen was promoting a rival software,
   DALITE, that he hoped would be used statewide.  Jensen lost.
  Jensen served as Alameda County district attorney in the early
   1970s and during that time he tried to persuade other DA offices to
   adopt DALITE, the case-tracking software system that he helped
   develop.  To that end, Hamilton alleges, Jensen urged the California
   District Attorneys Association to incorporate.  By incorporating,
   the association would be in a position to apply for grants,
   receiving and administering funds needed to finance DALITE training
   statewide.  But, Hamilton recalls, the very month that the
   association finally incorporated, the Los Angeles District
   Attorney's office, the state's largest, chose INSLAW's PROMIS
   software--dashing Jensen's hopes for DALITE.
  Larry Donoghue, now deputy district attorney for the County of
   Los Angeles, remembers the keen rivalry.  He was in charge of
   selecting software for the L.A. office at the time, and he recalls
   visiting Alameda County while making on-site inspections:  "Jensen
   called me into his office and I went away feeling what I regarded to
   be unusual and significant pressure to select the DALITE system.
   But PROMIS was a more suitable system for a large office.  After I
   made the recommendation to L.A., I remember my conversation with
   Joseph Busch, who was district attorney there at the time.  I said,
   `Joe what's your reason for hesitating?'  He said, `Larry, there is
   resistance to my selecting PROMIS.'  The resistance couldn't have
   come from within the L.A. office," Donoghue adds, "no one there knew
   anything about software.  By a process of elimination, it must have
   come from Alameda County."
  When "Barron's" attempted to reach Jensen for a reply, his office
   stated that, because the INSLAW case is still pending, he could not
   comment.  But during the trial, Jensen conceded that he had been a
   critic of INSLAW's software.  Yet, he insisted, DALITE was not a
   commercial product available for sale to the public, and he had no
   financial interest in it.
  Jensen didn't own DALITE any more than Bill Hamilton owned PROMIS
   when he first invented it.  Like DALITE, INSLAW's PROMIS began as a
   government product.  Bill Hamilton developed it while working as a
   consultant for the U.S. District Attorney's office in D.C. in 1970,
   and improved it while working for a not-for-profit company funded by
   the Justice Department.  PROMIS became commercial software only after
   Hamilton left this last job in 1981, formed INSLAW, and raised
   private funds to refine PROMIS.  The software then became a
   proprietary, and highly profitable, product.  Presumably Jensen
   might have had the same luck with DALITE--if PROMIS had not won the
   California race.
  Instead, Jensen remained at his post in Alameda County for 12
   years.  And from 1959 until 1967, Ed Meese served with Jensen, as an
   Alameda deputy district attorney.
  When Ronald Reagan became President, Ed Meese recommended that
   his former colleague, Jensen, be appointed assistant Attorney
   General in charge of the Criminal Division.  In 1983, when Rudolph
   Giuliani resigned as associate Attorney General--the No. 3 spot in
   the department--Jensen ascended to that post.
  So in early 1984, when Edwin Meese became Attorney General, his
   old Alameda County compatriot was already in place.  And Jensen was
   not alone.  A network, nicknamed the Alameda County Mafia, already
   was ensconced in Justice.  No fewer than six former Alameda County
   law-enforcement officials held positions ranging from deputy
   assistant attorney in the tax division, to commissioner of
   naturalization and immigration.  The former Oakland deputy police
   chief had snagged a spot as director of the National Institute of
   Justice.
  Under Meese, Jensen rose to No. 2, and developed a reputation as
   a buffer between Ed Meese and his critics.  The 58-year-old Democrat
   was described as "soft-spoken" "apolitical" and a "gentleman of the
   old standard" in a 1986 "New York Times" tribute, which added,
   "Colleagues say that Mr. Jensen, better than anyone else at the
   Justice Department, knows how to duck."
  The Justice Department's diplomat had to duck when congressional
   investigators looking into the Iran-Contra affair reportedly found a
   Justice Department memo dated March 20, 1986, saying that Deputy
   Assistant Attorney General D. Lowell Jensen was giving a "heads-up"
   to the National Security Council, warning that Miami federal
   prosecutors were on Ollie North's trail.
  Bill Hamilton believes Jensen displayed the same talent for
   diplomatic bobbing and weaving throughout the INSLAW affair.  When
   Hamilton pieced together the anomalies, he realized Jensen's rise to
   power occurred in the fateful spring of 1983, when he received the
   call from Hadron, and all of his troubles began.
  "Jensen was promoted to associate Attorney General in May or June
   of '83--and that's when all the contract disputes came up," Hamilton
   points out.  Jensen exhibited a strong interest in the software
   contract and even served as chairman of the PROMIS oversight
   committee.
  In December of 1983, INSLAW's counsel, Elliott Richardson, and
   Hamilton met with the assistant Attorney General for administration,
   Kevin Rooney.  They expressed their concern that Brick Brewer, the
   project manager on the INSLAW contract, was biased against the
   company because Bill Hamilton had fired Brewer some years earlier.
   Rooney testified in a deposition that, a week later, he told
   Jensen's oversight committee that Richardson's proposal seemed
   reasonable.  It appeared that the dispute could be resolved.  But
   Rooney left the committee meeting early.  After he was gone,
   Hamilton says, "Mr. Jensen and the other members of the committee
   surprisingly approved a plan to terminate the word-processing part
   of the INSLAW contract with the department's Executive Office for
   U.S. Attorneys."
  In March of 1983, Hamilton alleges, Bill Tyson. formerly director
   of that Executive Office, told Hamilton that a Presidential
   appointee at Justice was biased against INSLAW.  In March 1987,
   Tyson sent a handwritten letter to Jensen, reassuring him that he
   had denied this allegation under oath--and that he had not named
   Jensen as the appointee in question.  He also sent a note to Deputy
   Attorney General Arnold Burns.
  In a deposition, Tyson was asked:
  "Did either Mr. Jensen or Mr. Burns ask you to write the letter?"
  "No sir."
  "Did you not realize that by writing a letter to Mr. Jensen of
   this type informing him of your intended testimony that he would
   then be able to develop his testimony to be consistent with yours?"
  "That was not my intention."
  "But as an attorney, you realize that is a possibility, more than
   a possibility?"
  "Well, that was not my intention. . . ."
  In his ruling last September, Judge Bason characterized portions
   of Tyson's testimony as "so ludicrous that there is no way I can
   believe anything that the man has to say."
  A month before writing the notes, Tyson was removed from his
   position in the Executive Office for U.S. Attorneys, and he and his
   secretary were exiled to Justice's Immigration and Naturalization
   Service--though in positions commensurate with their grade levels.
  By protesting too much, Tyson could seem to further implicate
   Jensen.  But, the answer to "How High?" leads even higher.  Ed Meese
   himself may have been involved in a push to force Leigh Ratiner,
   INSLAW's litigating attorney, off the case.
  Ratiner had been a partner at Dickstein, Shapiro, &amp; Morin for 10
   years when Elliot Richardson recruited him to take on INSLAW.
   Dickstein, Shapiro was the law firm of Chuck Colson, of Watergate
   notoriety.  Colson brought in its principal client, the Teamsters
   Union.  More recently, Dickstein, Shapiro became known in the loop
   as Leonard Garment's firm.  Garment, a former colleague says, has
   been described as "the only attorney in Washington who will put a
   senator on hold to take a call from a reporter."  Garment was former
   White House counsel to Richard Nixon, and represented Meese during
   his confirmation hearings.
  Meese and Garment put their heads together again after Ratiner
   filed a complaint in the INSLAW case that named Meese's longtime
   friend and deputy Attorney General, Jensen.
  Ratiner, an aggressive attorney with a reputation as very bright,
   ego-driven, and a loner within the Dickstein, Shapiro firm, relished
   being viewed as a maverick.  So he was displaying his usual
   independence when he filed the complaint that named Jensen early in
   October 1986.  On Oct. 12, the "L.A. Times" ran a story airing the
   INSLAW case and the former rivalry between Hamilton and Jensen.  On
   Oct. 23, Ratiner was asked to leave the law firm.  Between Oct. 12
   and Oct. 23, Ed Meese talked to Garment about the case.
  In a pre-trial interrogatory, Ed Meese conceded that he had a
   "general recollection of a conversation with Leonard Garment in
   which Mr. Garment mentioned that he had discussed INSLAW with Arnold
   Burns."  Arnold Burns, the deputy Attorney General who resigned last
   week, replaced Jensen when Jensen left Washington to take a federal
   judgeship in San Francisco in the spring of 1986.
  When "Barron's" asked Leonard Garment about the conversation, he
   emulated D. Lowell Jensen.  He ducked.  "I know there was a
   suggestion by Meese--or one of his staff--saying he met and spoke to
   me about INSLAW.  Oh, he said it in pre-trial interrogatories?  Then
   . . . it was a question of his recollection."
  Garment was more emphatic regarding Ratiner's removal. "No one in
   the Justice Department or the whole U.S. government or the whole USA
   suggested to me that anything should be done with Ratiner.  Nor do I
   remember mentioning INSLAW to Meese," he continues. "Look--I met
   with Meese around the date he mentioned, and I discussed with him a
   matter of foreign policy.  I was on my way to Israel. . . .  Memory
   is so tricky, but I don't have the slightest recollection. . . ."
   Finally, Garment collected his recollections and summed up his
   position.  "As Sam Goldwyn said, `Include me out.'"
  Ratiner's exit settlement with Dickstein, Shapiro bars him from
   discussing how and why he left.  But Hamilton believes that Burns
   and Meese expressed dismay at the fact that he had turned the
   spotlight on Jensen.  After Ratiner gave up the case, the firm
   continued to represent INSLAW, but Hamilton feels their support
   waned.  In January of 1987, Dickstein, Shapiro urged him to settle
   with Justice for $1 million--of which about half would go to pay
   Dickstein, Shapiro's fees.  A few days later, Hamilton switched
   attorneys.  In September, Judge Bason awarded INSLAW $6.8 million-
   -plus attorneys' fees.
  During the trial, Tony Pasciuto's boss, Thomas Stanton testified
   to another reason why Meese might have been interested in the INSLAW
   case:  INSLAW could besmirch the U.S. Trustee program.  The U.S.
   Trustee's Office had been recently set up to administer bankruptcies
   nationwide, and it was Meese's baby.  Meese made the decision to
   take the Trustee program national--even though his predecessor,
   William French Smith, had planned to ditch the pilot Trustee
   program.
  Two of Pasciuto's former colleagues in the Justice Department
   allege that the move to keep the U.S. Trustee program was flagrantly
   political.  "It was a way of getting cronies into office.  There
   would be 50 or 60 positions to be filled," one asserts.  Stanton,
   the director of the Trustee program, seemed well-protected within
   Justice.  This former Pasciuto colleague adds:  "It was always
   puzzling to me how he got away with what he got away with.  He'd do
   things that were blatantly wrong and no one would question him--it's
   kind of scary."  Another former employee confirms, "Irrespective of
   the law, or anything, if Stanton wanted something, he had the ear of
   the right people at the highest level--straight from Burns to Meese.
   If he could not get what he needed, he went to Burns."
  Outside Justice, bankruptcy attorneys like Patrick Kavanagh, a
   solo practitioner in Bakersfield, Calif., worry that the Trustee
   program "concentrates so much power in one government department. .
   . .  It's supposed to act as a watchdog over lawyers and trustees,
   but the problem is it's more.  It has a considerable amount of power
   to control the administration of cases."
  When a case moves from bankruptcy to liquidation, the U.S.
   Trustee's Office names the trustee, who converts the assets,
   oversees an auction, and retains appraisers who will put a price tag
   on the leavings.
  The U.S. Trustee's program also links Justice and the IRS.  "The
   thing that's a little frightening about it is that the U.S. Trustee
   department sees itself as part of the tax-collecting function of
   government," observes Charles Docter, the bankruptcy attorney
   representing INSLAW.  "The Justice Department represents the IRS,
   and the IRS is often the biggest creditor in a liquidation.
  In the INSLAW case, tax collectors seem unusually determined to
   see their debt paid immediately.  "The IRS showed up in Bill
   Hamilton's office the day after the trial ended in August.
   Ultimately, they would demand that he personally pay the $600,000
   that INSLAW owes," says Docter.  "Usually the IRS calls us before
   coming to see one of our clients," he notes.  "We talk to them on
   the phone and get it straight."  Hamilton doesn't have the $600,000
   in his personal savings account.
  But Docter responded to the pressure by writing a letter in which
   INSLAW promised to pay the withholding portion of the taxes within
   30 days.  "Normally, the IRS would wait that long." he says.
   "Instead, on the 28th day, they went out and filed to convert INSLAW
   from Chapter 11 to Chapter 7."  Once again, they were trying to
   liquidate INSLAW.
  Lately, Docter reports, an aggressive IRS has been pursuing
   withholding taxes by going after the individual who owns a company,
   "but normally they don't go for the jugular immediately and file for
   a motion to liquidate."
  Still on the bench, Judge Bason managed to stop the IRS push to
   liquidate INSLAW.
  When the tax collectors filed to convert INSLAW to Chapter 7,
   Docter recalls having a memorable conversation with an attorney from
   the Justice Department's tax division.  Docter chided the attorney
   from Justice, saying:  "Look, the judge has already found that you
   tried to steal the software through `trickery and deceit.'  Isn't it
   about time you stopped this heavy-handed stuff?  Doesn't anyone in
   the department have enough guts to say, `We have to start handling
   this like lawyers?'  The whole thing is just completely sullying the
   Justice Department."
  Docter states that the attorney from Justice replied:  "I don't
   set policy around here.  The Attorney General does."
  And, Bill Hamilton remembers, Ed Meese approved the Justice
   Department bonuses awarded after the trial was over, in December of
   1987.  Three of the six who received bonuses were involved in the
   INSLAW case:
  Stewart Schiffer, who directly supervised the INSLAW litigation,
   received $20,000.
  Michael Shaheen, head of the "Office of Professional
   Responsibility," $20,000.  Shaheen wrote a letter to Arnold Burns on
   Dec. 18 recommending that whistle-blower Pasciuto be fired for
   exercising "atrocious judgment" in telling the Hamiltons what he
   knew.
  Lawrence McWhorter, Brick Brewer's boss, $10,000.  McWhorter,
   Judge Bason noted, said, "`I don't recall' or `I don't know'
   something like 147 times in his deposition."  The court found
   McWhorter's testimony to be "totally unbelievable."
  Arnold Burns, deputy Attorney General until just last week,
   headed up the panel that received recommendations for Justice
   bonuses.
  With no help from Uncle Sam, Bill Hamilton earned his own bonus.
   IBM has plans to enter a $2.5 million deal with INSLAW that will
   bail the firm out of bankruptcy.  "About $1 million will be used for
   software development to integrate INSLAW's products with IBM's own
   database software," Hamilton says, "and $1.5 million will be used to
   finance INSLAW's reorganization."  Details are still being
   negotiated.
  "IBM's law firm has drawn up a contract.  We expect to have it
   signed in two or three weeks," Hamilton adds.
  In a 1981 speech, Edwin Meese had lauded INSLAW's work on PROMIS
   as "one of the greatest opportunities for success in the future."
   It seems he was right:  The IBM deal provides the clearest evidence
   of all of the product's continuing value.
  Still, the IRS persists in demanding immediate payment--even
   though the pending IBM contract, not to mention the $8 million owed
   by Justice, suggest that INSLAW will be able to pay its tax bill.
  Charlie Docter, INSLAW's attorney, comments on the IRS posture:
   "The whole thing smacks of a police state.  This case scares the
   hell out of me. '
  "Scary" is the word most often used by victims of the INSLAW
   affair.  They are angry, but they also can't quite believe it
   happened.
  That the U.S. Justice Department could engage in a vendetta that
   would end the career of a federal judge, bankrupt a company, force a
   partner out of his law firm, cause another federal judge to recant
   under oath and reach down and wreck the career of a 21-year
   government-service employee--that's the stuff of a spy novel, set,
   one would hope, in another country.  But resignations en masse from
   a Department of Justice inhabited by "moles" suggest alarming facts,
   not diverting fiction.
  Bill Hamilton's story is not based on imagination.  It's based on
   experience, and there's considerable circumstantial evidence that he
   could have been the victim of a California cabal encompassing
   onetime members of the Reagan gubernatorial cabinet, and alumni of
   the Alameda County Mafia.  Ed Meese belonged to both groups.</p>

<p>   Why did INSLAW rate the attention of such a powerful group?  INSLAW
   was, one Senate staffer suggests, the leading edge of Justice's $200
   million "Project Eagle," a plan to computerize the department's tax
   division, criminal division and the 94 U.S. Attorney's offices.
   INSLAW predates the four-year-old Project Eagle, and might well
   offer an easy entry to any company that wants to participate in that
   program.  The Justice Department has taken pains to say that INSLAW
   is not involved in Project Eagle.  But Senate staffers looking into
   both INSLAW and Project Eagle aren't so sure.
  Project Eagle seems part of the same pattern of musical chairs:
   John J. Lane, a respected deputy assistant Attorney General for
   information technology, left last summer, and according to
   Government Computer News, Justice has lost its four IRM (information
   resources management) officials with the longest service in the past
   year.  When Lane left, Justice reorganized its computer operations
   and created a new position, naming Stephen R. Colgate, who had been
   director of the Treasury Department's Office of Finance, to head
   Project Eagle.
  Asked about his priorities, Colgate was quoted in the trade
   publication as saying that, for the leadership of the department,
   "Eagle is the No. 1 priority.  Eagle is the technology legacy that
   this Administration wants to leave behind."
  A member of Sen. Christopher Dodd's staff who has been looking
   into the INSLAW case for more than a year takes a more cynical view:
  "If you wanted to wire [fix] something, this would be the
   project," he confides.  "It's been anticipated for a long time.
   And, it's a lot of money.  So, if you wanted to wire something . . .
   this would be the one."
  These days, however, it's unlikely anyone at Justice wants wire
   anything.  Today, there's a new agenda:  Everyone is either
   burrowing in, or getting out.  And, before leaving, there's an
   urgent desire to tidy up.
  Justice had announced its intention to fire Tony Pasciuto two
   months ago.  But in the end, just a week before Deputy AG Arnold
   Burns resigned, he agreed to meet with Pasciuto's attorney, Gary
   Simpson, to hear Pasciuto's side of the case.
  Five or six officials from Justice were in the room;  another
   three or four--including one who had recommended firing Pasciuto--
   waited nervously in the hallway outside.
  "I was on a roll," confesses Simpson, who is normally matter-of-
   fact.  "It was something else.  I was accusing them of all sorts of
   things, and no one stopped me."
  Justice ultimately proposed a painless solution:  Pasciuto should
   walk away, go work somewhere else, and they'd acknowledge he had
   been a good employee.
  During the meeting, Simpson did most of the talking.  "Burns was
   really taking it on the chin," he recalls.  "He jerked back a couple
   of times, but he didn't say anything.  More than once, he nodded
   assent.  When I stated that Blackshear had recanted, he nodded
   again.  And," Simpson concludes, "Burns didn't look like he was
   hearing any of it for the first time."</p>

<p>   Where Are They Now?</p>

<p>  LEIGH RATINER has left the practice of law.  The man who once
   negotiated the Law of the Sea treaty for the U.S. government now
   runs his own business, LSR Enterprises, a maker of filing systems
   for lawyers.
  JUDGE BASON, who was denied reappointment as a federal bankruptcy
   judge, is still unemployed, and looking for work.  Judge Bason has
   no regrets, though he concedes he does not relish controversy.
   Indeed Judge Bason tried to have himself taken off the INSLAW case
   when it first came up.  "I talked to the chief justice of the
   District Court and said, `This has the potential of becoming a very
   hot potato.'  I wasn't sure I wanted to get involved in it."  George
   Bason is not, by temperament, a fighter.
  "My wife tells me I'm very stubborn," the 56-year-old former law
   professor confesses.  "It takes me a long time to make up my mind
   about things and I tend to reserve judgment until I know as much as
   I can.  But when I make up my mind, I'm very firm.  To a very
   aggressive person I may give the impression of being a pushover, and
   when I prove not to be one, such people can be very angry."
  TONY PASCIUTO is luckier.  He has been offered a good job at a
   large financial firm based in New York.  If he takes it, he'll be
   making a lateral move from Justice into the private sector.
   Meanwhile, his attorney, Gary Simpson, awaits final word on
   Pasciuto's honorable discharge from the department.  The papers are
   scheduled to be signed today.</p>

<p> ------------------------------------------------------------------------------</p>

<p>  if you've made it to the end of these 2 articles, you understand that there
  are a lot of questions Ms. Mahar leaves open-ended since, during the spring
  of 1988 when she wrote this, many aspects of this situation were still
  grinding on and had not achieved the clarity now more evident.  obviously,
  3 and a half years later, and a great deal more known about this story,
  there is much that Ms. Mahar was only able to intimate for lack of more
  concrete evidence that has since become available.  if any of you are
  interested in following up on any of the points raised in these 2 articles,
  i'd like to suggest at least a couple of obvious starting points.  Maggie
  Mahar writes that</p>

<p>   Bason questions the failure of high Justice Department officials
  to take any action to investigate serious allegations of misconduct.</p>

<p>  and alludes to the Senate Permanent Subcommittee on Investigations, chaired
  at that time by Sam Nunn:</p>

<p>   The Senate's Permanent Subcommittee on Investigations is now
  looking into INSLAW--a sign that the lawmakers, too, think that the
  whole story of the "something strange" that happened in the Justice
  Department has yet to be told. . . .  At the end of the week, that
  committee met with Bason, as well.  Senator Nunn's committee may
  find some answers--and ask more questions--that will illuminate
  this bizarre story.</p>

<p>  why not call up Senator Nunn's office and ask "what happened?"  "what did
  you find out?  what did you conclude?  is there a report you can send me?"
  also Senator Dodd's office should be called:</p>

<p>   A member of Sen. Christopher Dodd's staff . . . has been looking
  into the INSLAW case for more than a year . . .</p>

<p>  to see if the member she alludes to is still there or ever wrote up a
  report of their examinations.</p>

<p>--
     daveus rattus</p>

<p>   yer friendly neighborhood ratman</p>

<p>    KOYAANISQATSI

 ko.yan.nis.qatsi (from the Hopi Language)  n.  1. crazy life.  2. life
 in turmoil.  3. life out of balance.  4. life disintegrating.
   5. a state of life that calls for another way of living.
<special>end reposted material</special>
-Steve Crocker
</p></xml>