The Inslaw Scandal

A service of the

Washington Weekly

Kenn Thomas, Jim Keith:

The Octopus : The Secret Government and Death of Danny Casolaro

A provocative analysis of the mysterious death of journalist Danny Casolaro discusses the link between the death and high-level government conspiracy involving the Iran-Contra affair, the October Surprise, BCCI, and other political scandals and cover-ups. (Feral House, Feb. 1997. Order it through

During the Clinton administration, allegations of politicization have been raised against the Justice Department. Concerns have been raised that the Justice Department, mainly through Associate Attorney General Webster Hubbell (now resigned and convicted for fraud), has been, and still is used as an instrument for political purposes. During previous administrations, the Justice Department was accused of being controlled by arrogant bureaucrats who considered themselves above the law.

Probably the most glaring example of the latter is the Inslaw scandal that started in 1982, but is still covered up to this date according to several key players as well as Congressional aides.

Inslaw Inc. is a computer software company based in Washington, DC, owned by William and Nancy Hamilton. Inslaw markets case management software to courts and related justice agencies, to the insurance industry, to large law firms, and to the law departments of corporations. Inslaw's principal asset is a highly sophisticated software program called PROMIS, a computer program which manages large amounts of information

A Justice Department Above the Law

In 1982, Inslaw won a contract with the Department of Justice to install PROMIS in U.S. attorney's offices. The person assigned by the Department to manage the contract, however, was one C. Madison Brewer, who had just been fired by Inslaw. Just one month after the contract was signed, Mr. Brewer recommended that it be terminated even though Inslaw was performing as agreed. The Department stole the software because it felt that it was above private property law.

The Justice Department withheld payment for the software, and Inslaw went into bankruptcy. Inslaw hired former Attorney General Elliot Richardson as their attorney. Richardson filed a civil suit claiming that Inslaw had been the victim of a conspiracy by the Justice Department.

In 1987, U.S. Bankruptcy Judge George Bason ruled in favor of Inslaw and awarded Hamilton $6.8 million, saying that Justice Department officials "took, converted and stole" PROMIS through "trickery, fraud and deceit." Judge Bason lived to regret his ruling when his reappointment was denied in a highly unusual move. Bason was replaced with one of the Justice Department lawyers who had argued the Inslaw case.

The Inslaw case had now reached the level of a full government conspiracy.

The Octopus

Investigative Reporter Danny Casolaro was investigating possible links between BCCI, Iran-Contra, and Inslaw. He called the covert operation, in which the CIA was involved, "The Octopus."

The Justice Department started sharing the illegally obtained PROMIS software with other agencies, including intelligence agencies where PROMIS was modified for intelligence purposes and sold to foreign intelligence operations in Israel, Jordan, and other places. Michael Risconsciuto of the Wakenhut security firm has testified that he was contracted to install a "trap door" in the software to allow the CIA to tap into PROMIS software worldwide. It appears that the original petty crimes of the Justice Department have led to the exposure of a sensitive national security operation.

As Casolaro continued his investigation he started to receive death threats. He told his brother, "if there was an accident and he died, not to believe it." On August 11, 1991, Casolaro was found dead in the bathtub of a hotel room in Martinsburg, Virginia, where he had a meeting with a U.S. Army Special Forces covert intelligence officer.

Following the death of Casolaro, Inslaw Attorney Elliot Richardson called for an investigation. "It's hard to come up with any reason for his death, other than he was deliberately murdered because he was so close to uncovering sinister elements of what he called "The Octopus," Richardson said.

A Full Government Conspiracy

After several appeals, Judge Bason's ruling was finally reversed on technical jurisdictional grounds in 1991. The Senate started investigating the Inslaw scandal and found even more troubling information: its investigation was hampered by an unwillingness by Justice Department officials to cooperate, and because key documents were reported missing or lost by the Department.

According to sworn testimony before the Committee, high level Justice Department officials conspired to steal the PROMIS software and secretly convert it to use by domestic and foreign intelligence services.

Ronald LeGrand, Chief Investigator for the for the Senate Judiciary Committee told Hamilton and Richardson that a trusted Justice Department source had confided that Inslaw "was a lot dirtier for the Department of Justice than Watergate had been, both in its breath and depth."

The Bua Rebuttal (250kb)

After several Congressional investigations concluded wrongdoing by the Justice Department and called for the appointment of a special prosecutor, Attorney General William Barr in 1992 appointed lawyer Nicholas Bua to investigate the Inslaw scandal. Bua impaneled a grand jury, but dismissed it midway through the investigation, allegedly because it was giving credence to the allegations and constituted a "runaway" grand jury.

In June 1993 the Bua report was released. It cleared Justice officials of any wrong doing in the case.

Inslaw Attorney Elliot Richardson issued a statement saying, "What I have seen of [the report] is remarkable both for its credulity in accepting at face value denials of complicity in wrongdoing against Inslaw and for its failure to pursue leads making those denials implausible."

On July 12, 1993 Inslaw submitted a 90-page rebuttal of the Bua report to Associate Attorney General Webster Hubbell. The rebuttal offered evidence that the Bua report was false. What Inslaw probably did not know at time, however, was that Webster Hubbell's and White House Deputy Counsel Vince Foster apparently were linked to both Iran-Contra and Inslaw through two Arkansas companies called Park-on-Meter and Systematics.

On July 20, 1993 Vince Foster was found dead in Fort Marcy Park. Three days later, attorney Paul Wilcher, allegedly investigating "The Octopus" was found dead.

Mar 27 1995 Whitewater Update
Starr Probing Links to Inslaw Murder
May 29 1995 Vince Foster's Frequent Travels
Aug 14 1995 Whitewater Update
Foster's ties to the National Security Acency
Aug 21 1995 Interview with Jim Norman, Author of "Fostergate"
Mr. Norman sheds light on what is really behind the death of Vince Foster
Aug 28 1995 Newsweek Mounts Counteroffensive Against Fostergate
Sep 11 1995 Newsweek's Attack on Internet Conspiracy Theorists
Sep 18 1995 Newsweek Described as Official Disinformation Organ
Sep 18 1995 Official Foster Investigation Intensifies
Sep 18 1995 Foster was Indeed Subject of Counterintelligence Investigation
Sep 18 1995 White House Responds to Foster Conspiracy Theories
Sep 25 1995 Is Foster Key to "The Octopus?"
Sep 25 1995 Letters to the Editor
Jim Norman Responds to Claims by Sarah McClendon
Open Letter to the Editor
Well worth the Money
Sep 25 1995 Foster's Ties to Israelis Questioned

Congress Finally Acts on Inslaw

After Inslaw owner Bill Hamilton distributed a report on the Inslaw scandal to each member of the House Judiciary Committee, Congressmen Jack Brooks (D-TX) and Charlie Rose (D-NC) tried to enact a bill that would force an investigation of the Justice Department and the death of Danny Casolaro, and pay reparations to the owners of Inslaw. Among the allegations in the bill:
The following criminal statutes may have been violated by certain high level Justice officials and private individuals:
`18 U.S.C. Sec. 371--Conspiracy to commit an offense.
`18 U.S.C. Sec. 654--Officer or employee of the United States converting the property of another.
`18 U.S.C. Sec. 1341--Fraud.
`18 U.S.C. Sec. 1343--Wire fraud.
`18 U.S.C. Sec. 1505--Obstruction of proceedings before departments, agencies and committees.
`18 U.S.C. Sec. 1512--Tampering with a witness.
`18 U.S.C. Sec. 1513--Retaliation against a witness.
`18 U.S.C. Sec. 1621--Perjury.
`18 U.S.C. Sec. 1951--Interference with commerce by threats or violence (RICO).
`18 U.S.C. Sec. 1961 et seq: Racketeer Influenced and Corrupt Organizations.
`18 U.S.C. Sec. 2314--Transportation of stolen goods, securities, moneys.
`18 U.S.C. Sec. 2315--Receiving stolen goods.
The bill, H.R. 4862 was introduced in the House on July 29, 1994, but died without any action by the Democratic leadership in the waning days of the 103rd Congress.

Under the new Republican leadership, Senator Orrin Hatch introduced a similar bill, S. 740. On May 3, 1995, the Senate voted to commit the bill, which would pay reparations to the owners of Inslaw, to the chief judge of the United States Court of Federal Claims for a report thereon.

Last updated September 24, 1996.
[Sources: Karen-Lee Bixman, U.S. House Resolution 4862, Rep. Charlie Rose]
If you are not already a Washington Weekly subscriber, you can find more information here.