THE INSLAW AFFAIR: INVESTIGATIVE REPORT BY THE COMMITTEE ON THE JUDICIARY TOGETHER WITH DISSENTING AND SEPARATE VIEWS
THE INSLAW AFFAIR
SEPTEMBER 10, 1992. -- Committed to the Committee of the Whole House on the State of the Union and ordered to be printed
Mr. BROOKS, from the Committee on the Judiciary, submitted the following
INVESTIGATIVE REPORT together with DISSENTING AND SEPARATE DISSENTING VIEWS BASED ON A STUDY BY THE FULL COMMITTEE
On August 11, 1992, the Committee on the Judiciary approved and adopted a report entitled, '"The INSLAW Affair." The chairman was directed to transmit a copy to the Speaker of the House.
The Department of Justice has long recognized the need for a standardized management information system to assist law enforcement offices across the country in the recordkeeping and tracking of criminal cases. During the 1970s, the Law Enforcement Assistance Administration (LEAA) funded the development by INSLAW  of a computer software system called the Prosecutors Management Information System or PROMIS. This system was designed to meet the criminal prosecutor workloads of large urban jurisdictions; and by 1980, several large U.S. attorneys offices were using the PROMIS software. At this time, INSLAW (formerly called the Institute for Law and Social Research) was a nonprofit corporation funded almost entirely through Government grants and contracts. When President Carter terminated the LEAA, INSLAW converted the company to a for-profit corporation in 1981 to commercially market PROMIS. The new corporation made several significant improvements to the original PROMIS software and the resulting product came to be known as INSLAW's proprietary Enhanced PROMIS. The original PROMIS was funded entirely with Government funds and was in the public domain.
In March 1982, the Justice Department awarded INSLAW, Inc., a $10 million, 3-year contract to implement the public domain version of PROMIS at 94 U.S. attorneys offices across the country and U.S. Territories. While the PROMIS software could have gone a long way toward correcting the Department's longstanding need for a standardized case management system, the contract between INSLAW and Justice quickly became embroiled in bitterness and controversy which has lasted for almost a decade. The conflict centers on the question of whether INSLAW has ownership of its privately funded "Enhanced PROMIS." This software was eventually installed at numerous U.S. attorneys offices after a 1983 modification to the contract. While Justice officials at the time recognized INSLAW's proprietary rights to any privately funded enhancements to the original public domain version of PROMIS, the Department later claimed that it had unlimited rights to all software supplied under the contract. (See section of report entitled, "The Department Misappropriated INSLAW Software.")
INSLAW attempted to resolve the matter
several times but was largely met with indifference or hostility by
Department officials. Eventually, the Department canceled part of the
contract and, by February 1985, had withheld at least $1.6 million in
payments. As a result, the company was driven to the brink of insolvency
and was threatened with dissolution under chapter 7 of the bankruptcy
laws. Department officials have steadfastly claimed the INSLAW
controversy is merely a contract dispute which has been blown out of
proportion by the media. INSLAW's owners, William and Nancy Hamilton,
however, have persisted in their belief that the Department's actions
were part of a high level conspiracy within Justice to steal the
Enhanced PROMIS software.
Based on their knowledge and belief, the Hamiltons have alleged that high level officials in the Department of Justice conspired to steal the Enhanced PROMIS software system. As an element of this theft, these officials, who included former Attorney General Edwin Meese and Deputy Attorney General Lowell Jensen, forced INSLAW into bankruptcy by intentionally creating a sham contract dispute over the terms and conditions of the contract which led to the withholding of payments due INSLAW by the Department. The Hamiltons maintain that, after driving the company into bankruptcy, Justice officials attempted to force the conversion of INSLAW's bankruptcy status from Chapter 11: Reorganization to Chapter 7: Liquidation. They assert that such a change in bankruptcy status would have resulted in the forced sale of INSLAW's assets, including Enhanced PROMIS to a rival computer company called Hadron, Inc., which, at the time, was attempting to conduct a hostile buyout of INSLAW. Hadron, Inc., was controlled by the Biotech Capital Corporation, under the control of Dr. Earl Brian, who was president and chairman of the corporation. The Hamiltons assert that even though the attempt to change the status of INSLAW's bankruptcy was unsuccessful, the Enhanced PROMIS software system was eventually provided to Dr. Brian by individuals from the Department with the knowledge and concurrence of then Attorney General Meese who had previously worked with Dr. Brian in the cabinet of California Governor Ronald Reagan and later at the Reagan White House. According to the Hamiltons, the ultimate goal of the conspiracy was to position Hadron and the other companies owned or controlled by Dr. Brian to take advantage of the nearly 3 billion dollars worth of automated data processing upgrade contracts planned to be awarded by the Department of Justice during the 1980s.
Information obtained by the Hamiltons
through sworn affidavits of several individuals, including Ari Ben-Menashe,
a former Israeli Mossad officer, and Michael Riconosciuto, an individual
who claims to have ties to the intelligence community, indicated that an
element of this ongoing criminal enterprise by Mr. Meese, Dr. Brian and
others included the modification of the Enhanced PROMIS software by
individuals associated with the world of covert intelligence operations.
The Hamiltons claim the modification of Enhanced PROMIS was an essential
element of the enterprise, because the software was subsequently
distributed by Dr. Brian to intelligence agencies internationally with a
"back door" software routine, so that U.S. intelligence agencies could
covertly break into the system when needed. The Hamiltons also presented
information indicating that PROMIS had been distributed to several
Federal agencies, including the FBI, CIA, and DEA.
Due to the complexity and breadth of the INSLAW allegations against the Department of Justice, the committees investigation focused on two principal questions: (1) Did high level Department officials convert, steal or otherwise misappropriate INSLAW's PROMIS software and attempt to put the company out of business; and, (2) did high level Department of Justice officials, including Attorney General Edwin Meese and then Deputy Attorney General Lowell Jensen, and others conspire to sell, transfer, or in any way distribute INSLAW's Enhanced PROMIS to other Federal agencies and foreign governments?
1. DID THE DEPARTMENT CONVERT, STEAL OR MISAPPROPRIATE THE PROMIS
Just 1 month after the contract was signed, Mr. C. Madison "Brick" Brewer, the PROMIS project manager, raised the possibility of canceling the INSLAW contract. During an April 14, 1982, meeting of the PROMIS Project Team, Mr. Brewer, and others discussed terminating the contract with INSLAW for convenience of the Government. Mr. Brewer did not recall the details of the meeting but said that if this recommendation was made, it was made "in jest."  Based on notes taken at this meeting by Justice officials, Bankruptcy Court Judge George Bason found that Mr. Brewers recommendation to terminate the INSLAW contract, ". . . constituted a smoking gun that clearly evidences Brewers intense bias against INSLAW, his single-minded intent to drive INSLAW out of business . . .."  By his own admission, Mr. Brewer became upset when INSLAW claimed that it had made enhancements to the public domain version of PROMIS using private funds. In his view, under the contract all versions of PROMIS were the Governments property. It is clear from the record that Mr. Brewer and Mr. Videnieks (the PROMIS contracting officer), supported by high level Justice officials continued to confront INSLAW at every turn. As Senior District Court Judge Bryant stated in his ruling on the case: "There was unending contention about payments under this contract and the rights of the respective parties."
Over the life of the contract, INSLAW made several attempts to reach an agreement with the Department over its proprietary rights to the Enhanced PROMIS software. The Department, however, steadfastly refused to conduct any meaningful negotiations and exhibited little inclination to resolve the controversy. In the meantime, INSLAW was pushed to the brink of financial ruin because the Department withheld at least $1.6 million in critical contract payments on questionable grounds, and in February 1985 was forced to file for protection under chapter 11 of the Bankruptcy Code in order to stay economically viable. INSLAW at this time had installed PROMIS at the 20 largest U.S. attorneys offices across the country as required by the contract.  The Department had earlier canceled installation of PROMIS at the 74 smaller offices.
While refusing to engage in good faith negotiations with INSLAW, Mr. Brewer and Mr. Videnieks, with the approval of high level Justice Department officials, proceeded to take actions to misappropriate the Enhanced PROMIS software. These officials knew that INSLAW had installed Enhanced PROMIS at the 20 sites. Yet, without notice, and certainly without permission, the Department of Justice illegally copied INSLAW's Enhanced PROMIS software and installed it eventually at 25 additional U.S. attorneys offices. The Department reportedly also brought another 31 U.S. attorneys offices "on-line" to Enhanced PROMIS systems via telecommunications. INSLAW first learned of these unauthorized actions in September 1985, and notified the Department that it must remove the Enhanced PROMIS software or arrange for license agreements. When the Department refused, INSLAW subsequently filed a claim against Justice in the Federal Bankruptcy Court which eventually led to the Bankruptcys Courts finding that the Department's actions ". . . were done in bad faith, vexatiously, in wanton disregard of the law and the facts, and for oppressive reasons . . . to drive INSLAW out of business and to convert, by trickery, fraud and deceit, INSLAW's PROMIS software." When the case was appealed by the Department, Senior District Court Judge William Bryant concurred with the Bankruptcy Court and was very critical of the Department's handling of the case. In his ruling, at 49a, Judge Bryant stated:
The Government accuses the bankruptcy court of looking beyond the bankruptcy proceeding to find culpability by the Government. What is strikingly apparent from the testimony and depositions of key witnesses and many documents is that INSLAW performed its contract in a hostile environment that extended from the higher echelons of the Justice Department to the officials who had the day-to-day responsibility for supervising its work. (Emphasis added.)
Recently, the posture of some Department officials has been to attempt to exonerate the Department's handling of the INSLAW matter by citing the fact that the Court of Appeals has vacated the Bankruptcy and District Courts judgment involving illegal misconduct of the Department including violations of the automatic stay provisions of the Bankruptcy Code. However, the D.C. Circuits opinion was grounded primarily on jurisdictional questions and did not address the substantive merits of the findings of fact and conclusions of law of either the Bankruptcy Court or the ruling of the U.S. District Court.
Based on the facts presented in court and the committees review of Department records, it does indeed appear that Justice officials, including Mr. Brewer and Mr. Videnieks, never intended to fully honor the proprietary rights of INSLAW or bargain in good faith with the company. The Bankruptcy Court found that:
. . . (The Department) engaged in an outrageous, deceitful, fraudulent game of cat and mouse, demonstrating contempt for both the law and any principle of fair dealing. (Finding No. 266 at 138.)
As the Bankruptcy and District Courts found on the merits, it is very unlikely that Mr. Brewer and Mr. Videnieks acted alone to violate the proprietary rights of INSLAW in this matter. In explaining his own actions, Mr. Brewer, the project manager, has repeatedly stated that he was not acting out any personal vendetta against INSLAW and that high level Department officials including Lowell Jensen were aware of every decision he made with regard to the contract. Mr. Brewer stated, under oath that ". . . there was somebody in the Department at a higher level, looking over the shoulder of not just me but the people who worked for me . . . ."  The PROMIS Oversight Committee, headed by Deputy Attorney General Lowell Jensen, kept a close watch over the administration of the contract and was involved in every major decision. Mr. Jensen, who worked with former Attorney General Edwin Meese in the Alameda County district attorneys offices, stated under oath that he kept the Attorney General regularly informed of all aspects of the INSLAW contract. The PROMIS Oversight Committee readily agreed with Mr. Brewers recommendation to cancel part of INSLAW's contract for default because of the controversy regarding the installation of PROMIS in word processing systems at the 74 smaller U.S. attorneys offices. Mr. Brewers proposal was ultimately rejected only because a Justice contracts attorney advised the oversight committee that the Department did not have the legal authority to do so. Curiously, the recommendation to find INSLAW in default occurred shortly after INSLAW and the Department signed a modification to the contract (Mod. 12), which was supposed to end the conflict over proprietary rights.
Mr. Jensen, who is currently a Federal District Court judge in San Francisco, served at the Justice Department successively as Assistant Attorney General in charge of the Criminal Division, Associate Attorney General and Deputy Attorney General between 1981 and 1986. The Bankruptcy Court found that he "had a previously developed negative attitude about PROMIS and INSLAW" from the beginning (Findings No. 307-309) because he had been associated with the development of a rival case management system while he was a district attorney in California, and that this experience, at the very least, affected his judgment throughout his oversight of the contract. During a sworn statement, Judge Jensen denied being biased against INSLAW, but averred that he did not have complete recollection of the events surrounding his involvement in the contract. However, based on the committees own investigation it is clear that Judge Jensen was not particularly interested or active in pursuing INSLAW's claims that Department officials were biased against the company and had taken action to harm the company. Perhaps most disturbing, he remembered very few details of the PROMIS Oversight Committee meetings even though he had served as its chairman and was certainly one of its most influential members. He stated that after a meeting with former Attorney General Elliot Richardson (representing INSLAW) regarding the alleged Brewer bias, he commissioned his deputy, Mr. Jay Stephens, to conduct an investigation of the bias charges. Based on this investigation, Judge Jensen said he concluded that there were no bias problems associated with the Department's handling of the INSLAW contract.
This assertion, however, contradicted Mr. Stephens, who testified during a sworn statement that he was never asked by Judge Jensen to conduct an investigation of the Brewer bias allegations raised by Mr. Richardson and others. Mr. Stephens recollection of the events was sharp and complete in stark contrast to Judge Jensens. As a result, many questions remain about the accuracy and completeness of Judge Jensens recollections and statements. As for the PROMIS Oversight Committee, committee investigators were told that detailed minutes were not kept at any of the meetings, nor was there any record of specific discussions by its members affecting the INSLAW contract. The records that were available were inordinately sparse and often did not include any background of how and why decisions were made.
To date, former Attorney General Meese denies having knowledge of any bias against INSLAW by the Department or any of its officials. He stated, under oath, that he had little, if any, involvement with the INSLAW controversy and that he recalls no specific discussion with anyone, including Department officials about INSLAW's contract with Justice regarding the use or misuse of the PROMIS software. This statement is in direct conflict with Judge Jensens testimony, that he briefed Mr. Meese regularly on this issue and that Mr. Meese was very interested in the details of the contract and negotiations.
One of the most damaging statements received by the committee is a sworn statement made by Deputy Attorney General Arnold Burns to Office of Professional Responsibility (OPR) investigators in 1988. In this statement, Mr. Burns stated that Department attorneys had already advised him (sometime in 1986) that INSLAW's claim of proprietary rights in the Enhanced PROMIS software was legitimate and that the Department had waived any rights in these enhancements. Mr. Burns was also told by Justice attorneys that the Department would probably lose the case in court on this issue. Accepting this statement, it is incredible that the Department, having made this determination, would continue to pursue its litigation of these matters. More than $1 million has been spent in litigation on this case by the Justice Department even though it knew in 1986 that it did not have a chance to win the case on merits. This clearly raises the specter that the Department actions taken against INSLAW in this matter represent an abuse of power of shameful proportions.
2. WAS THERE A HIGH LEVEL CONSPIRACY?
Former Attorney General Elliot Richardson, counsel to INSLAW, has alleged that the circumstances involving the theft of the PROMIS software system constitute a possible criminal conspiracy involving Mr. Meese, Judge Jensen, Dr. Brian, and several current and former officials at the Department of Justice. Mr. Richardson maintains that the individuals involved in the theft of the Enhanced PROMIS system have violated a plethora of Federal criminal statutes, including but not limited to: (1) 18 U.S.C 654 (officer or employee of the United States converting the property of another); (2) 18 U.S.C 1001 (false statements); (3) 18 U.S.C 1621 (perjury); (4) 18 U.S.C 1503 (obstruction of justice); (5) 18 U.S.C 1341 (mail fraud) and (6) 18 U.S.C. 371 (conspiracy to commit criminal offenses). Mr. Richardson further contends that the violations of Federal law associated in the theft of Enhanced PROMIS, the subsequent coverup and the illegal distribution of PROMIS fulfill the requirements for prosecution under 18 U.S.C. 1961 et seq. (the Racketeer Influenced and Corrupt Organizations (RICO) statute).
As discussed earlier, the committees investigation largely supports the findings of two Federal courts that the Department "took, converted, stole" INSLAW's Enhanced PROMIS by "trickery, fraud and deceit," and that this misappropriation involved officials at the highest levels of the Department of Justice. The recent ruling by the D.C. Circuit Court of Appeals does nothing to vitiate those conclusions, the product of an extensive record compiled under oath by two Federal jurists. While the Department continues to attempt to explain away the INSLAW matter as a simple contract dispute, the committees investigation has uncovered other information which plausibly could suggest a different conclusion if full access to documents and other witnesses were permitted. Several individuals have stated under oath that the Enhanced PROMIS software was stolen and distributed internationally in order to provide financial gain to Dr. Brian and to further intelligence and foreign policy objectives for the United States. While it should be acknowledged at the outset that some of the testimony comes from individuals whose past associations and enterprises are not commendable, corroborating evidence for a number of their claims made under oath has been found. It should be observed that these individuals provided testimony with the full knowledge that the Justice Department could and would probably be strongly inclined to prosecute them for perjury if they lied under oath. Moreover, we note that the Department is hardly in a position to negate summarily testimony offered by witnesses who have led less than an exemplary life in their choice of associations and activities. As indicated by the recent prosecution of Manuel Noriega, which involved the use of over 40 witnesses, the majority of whom were previously convicted drug traffickers, a witness perceived credibility is not always indicative of the accuracy or usability in court of the information provided. Although the committees investigation could not reach a definitive conclusion regarding a possible motive behind the misappropriation of the Enhanced PROMIS software, the disturbing questions raised, unexplained coincidences and peculiar events that have surfaced throughout the INSLAW case raises the need for further investigation.
One area which requires further investigation is the allegations made by Mr. Michael Riconosciuto. Mr. Riconosciuto, a shady character allegedly tied to U.S. intelligence agencies and recently convicted on drug charges, alleges that Dr. Brian and Mr. Peter Videnieks secretly delivered INSLAW's Enhanced PROMIS software to the Cabazon Indian Reservation, located in California, for "refitting" for use by intelligence agencies in the United States and abroad.  When Dr. Brian was questioned about his alleged involvement in the INSLAW case, he denied under oath that he had ever met Mr. Riconosciuto and stated that he had never heard of the Cabazon Indian Reservation.
C. ADDITIONAL QUESTIONS
The Martinsburg Police investigation subsequently concluded in January 1992, that Mr. Casolaros death was a suicide. Subsequently, Chairman Brooks directed committee investigators to obtain sworn statements from the FBI agent and two former Federal Organized Crime Strike Force prosecutors in Los Angeles who had information bearing on the Casolaro case. Sworn statements were obtained from former Federal prosecutors Richard Stavin and Marvin Rudnick on March 13 and 14, 1992. After initial resistance from the Bureau, a sworn statement was taken from FBI Special Agent Thomas Gates on March 25 and 26, 1992.
Special Agent Gates stated that Mr. Casolaro claimed he had found a link between the INSLAW matter, the activities taking place at the Cabazon Indian Reservation, and a Federal investigation in which Special Agent Gates had been involved regarding organized crime influence in the entertainment industry.
Special Agent Gates stated that Mr. Casolaro had several conversations with Mr. Robert Booth Nichols in the weeks preceding his death. Mr. Nichols, according to documents submitted to a Federal court by the FBI, has ties with organized crime and the world of covert intelligence operations. When he learned of Mr. Casolaros death, Special Agent Gates contacted the Martinsburg, WV, Police Department to inform them of the information he had concerning Mr. Nichols and Mr. Casolaro. The Martinsburg Police have not commented on whether or not they eventually pursued the leads provided by Special Agent Gates.
Based on the evidence collected by the committee, it appears that the path followed by Danny Casolaro in pursuing his investigation into the INSLAW matter brought him in contact with a number of dangerous individuals associated with organized crime and the world of covert intelligence operations. The suspicious circumstances surrounding his death have led some law enforcement professionals and others to believe that his death may not have been a suicide. As long as the possibility exists that Danny Casolaro died as a result of his investigation into the INSLAW matter, it is imperative that further investigation be conducted.
D. EVIDENCE OF POSSIBLE COVERUP AND OBSTRUCTION
Questions regarding the Department's willingness and objectivity to investigate the charges of possible misconduct of Justice employees remain. That Justice officials may have too readily concluded that witnesses supporting the Department's position were credible while those who did not were ignored or retaliated against was, perhaps, most painfully demonstrated with the firing of Anthony Pasciuto, the former Deputy Director, Executive Office of the U.S. Trustees.
Mr. Pasciuto had informed the Hamiltons that soon after INSLAW filed for chapter 11 bankruptcy in 1985, the Justice Department had planned to petition the court to force INSLAW into chapter 7 bankruptcy and liquidate its assets including the PROMIS software. His source for this information was Judge Cornelius Blackshear who, at the time, was the U.S. Trustee for the Southern District of New York. Judge Blackshear subsequently provided INSLAW's attorneys with a sworn statement confirming what Mr. Pasciuto had told the Hamiltons. However, following a conversation with a Justice Department attorney who was representing the Department in the INSLAW case,  Judge Blackshear recanted his earlier sworn statement. Moreover, Judge Blackshear, under oath, could not or would not provide committee investigators with a plausible explanation of why he had recanted his earlier statements to INSLAW, Mr. Pasciuto and others regarding the Justice Department's efforts to force INSLAW out of business. He did confirm an earlier statement attributed to him that his recantation was a result of "his desire to hurt the least number of people." However, he would not elaborate on this enigmatic statement.
Similarly, Mr. Pasciuto, under strong pressure from senior Department officials, recanted his statement made to the Hamiltons regarding Judge Blackshear. It appears that Mr. Pasciuto may have been fired from his position with the Executive Office of U.S. Trustees because he had provided information to the Hamiltons and their attorneys which undercut the Department's litigating position before the Bankruptcy Court.  This action was based on a recommendation made by the Office of Professional Responsibility (OPR). In a memorandum to Deputy Attorney General Burns, dated December 18, 1987, the OPR concluded that:
In our view, but for Mr. Pasciutos highly irresponsible actions, the department would be in a much better litigation posture than it presently finds itself. Mr. Pasciuto has wholly failed to comport himself in accordance with the standard of conduct expected of an official of his position.
Mr. Pasciuto now states he regrets having allowed himself to be coerced by the Department into recanting and has stated under oath to committee investigators that he stands by his earlier statements made to the Hamiltons that Judge Blackshear had informed him that the Department wanted to force INSLAW out of business. Certainly, Mr. Pasciutos treatment by the Department during his participation in the INSLAW litigation raises serious questions of how far the Department will go to protect its interests while defending itself in litigation. Not unexpectedly, Mr. Pasciutos firing had a chilling effect on other potential Department witnesses who might have otherwise cooperated with the committee in this matter. Judge Blackshear, on the other hand, was not accused of wrongdoing by the Department even though he originally provided essentially the same information as had Mr. Pasciuto.
Despite this series of obvious reversals, the Department, after limited investigation, has apparently satisfied itself that the sworn statements of its witnesses, including Judge Blackshear, have somehow been reconciled on key issues such that no false statements have been made by any of these individuals. This position is flatly in opposition to the Bankruptcy Courts finding that several Department officials may have perjured themselves which was never seriously investigated by the Department. In addition, there are serious conflicts and inconsistencies in sworn statements provided to the committee that have not been resolved. Equally important, the possibility that witnesses testimony were manipulated by the Department in order to present a "united front" to the Congress and the public on the INSLAW case needs to be fully and honestly explored. The potential for a conflict of interest in the Department's carrying out such an inquiry is high, if not prudently manifest, and independent scrutiny is required.
Judge Bason testified, under oath, before the Economic and Commercial Law Subcommittee that the Department's actions against its critics may have extended into blocking his reappointment as a bankruptcy judge in 1988 because of his ruling in INSLAW's case. Judge Bason was replaced by Martin Teel, Jr., who, prior to his appointment, was a Justice Department attorney heavily involved in the Department's litigation of the INSLAW case.  The committee was unable to substantiate Judge Bason's charges. If such undue influence did occur, it was subtle and lost in the highly private manner in which judge selection procedures are conducted. While sworn statements were not taken, the committee investigators interviewed several of the judges involved in the selection process. The judges who agreed to provide interviews all stated that they had little firsthand knowledge in which to evaluate the candidates, including the incumbent judge. As a result, the members of the Judicial Council had to rely on the findings of the Merit Selection Panel headed by Judge Norma Johnson.
The Merit Selection Panels findings were provided to the Judicial Council by Judge Johnson whose oral presentation was instrumental in the final selection. Judge Johnson had previously worked at the Department of Justice with Stuart Schiffer, who led the Department's attempt to have the District Court remove Judge Bason from the INSLAW case. Mr. Schiffer is also the official who argued vociferously against the appointment of an independent counsel on the INSLAW case in a memorandum to Deputy Attorney General Arthur Burns. Judge Johnson also served in the D.C. Superior Court with Judge Tim Murphy from 1970 through 1980. Judge Murphy subsequently worked directly for Mr. Brewer on the PROMIS contract. The committee, however, has not at this date found any evidence that Judge Johnson had specific discussions with Mr. Schiffer or anyone else at the Department of Justice about Judge Bason, the INSLAW case or the bankruptcy judicial selection process.
The committees investigation revealed that the selection process was largely informal, undocumented and highly subjective. For example, several members of the Judicial Council indicated that one of the primary factors influencing the nonreappointment of Judge Bason, was the poor administrative condition of his court. These same members admitted that they had no firsthand knowledge of the administrative condition and based this opinion on the reports of the Merit Selection Panel and Judge Johnson. This was corroborated by the discovery of a confidential memorandum written by a member of the Merit Selection Panel which was highly critical of Judge Bason and the administrative condition of the Bankruptcy Court. While this memorandum had been seen by several judges during the selection process, committee investigators were unable to determine who authored it. The committees investigation did not reveal any evidence to support the criticisms raised in the memorandum. Martin Bloom, Clerk of the Bankruptcy Court, indicated in his sworn statement to committee investigators that under Judge Bason, the administrative condition of the court vastly improved. These sentiments were echoed by Chief Judge Aubrey Robinson who consistently complimented Judge Bason on his efforts to improve the administrative condition of the Bankruptcy Court in his remarks to the Annual Judicial Conference.
The history of the Department's behavior in the INSLAW case dramatically illustrates its (1) reflexive hostility and "circle the wagons" approach toward outside investigations; (2) inability or unwillingness to look objectively at charges of wrongdoing by high level Justice officials, particularly when the agency itself is a defendant in litigation; and, (3) belligerence toward Justice employees with views that run counter to those of the agencys upper management. The fact that the Department failed to recognize a need for an independent investigation of the INSLAW matter for more than 7 years is remarkable. Failure to do so has effectively shielded officials who may have committed wrongdoing from investigation and prosecution.
As already documented and confirmed by two Federal judges, the Department's actions in the INSLAW case have greatly harmed the company and its owners. These actions, as they pertain to the dispute with INSLAW over the misappropriation of the PROMIS software, were taken with the full knowledge and support of high level Justice officials. The harm to the company was further perpetuated by succeeding high level officials, such as former Attorney General Richard Thornburgh, who not only failed to objectively investigate the serious charges raised by the Hamiltons and their attorney, former Attorney General Elliot Richardson, but also delayed and rebuffed effective and expeditious outside investigation of the matter by Congress.
The Department of Justice is this nations most visible guarantor of the notion that wrongdoing will be sought out and punished irrespective of the identity of the actors involved. Moreover, its mandate is to protect all private citizens from illegal activities that undermine the public trust. The Department's handling of the INSLAW case has seriously undermined its credibility and reputation in playing such a role. Congress and the executive must take immediate and forceful steps to restore public confidence and faith in our system of justice, which cannot be undermined by the very agent entrusted with enforcement of our laws and protections afforded every citizen. In view of the history surrounding the INSLAW affair and the serious implications of evidence presented by the Hamiltons, two court proceedings in the judicial branch and the committees own investigation, there is a clear need for further investigation. The committee believes that the only way in which INSLAW's allegations can be adequately and fully investigated is by the appointment of an independent counsel. The committee is aware that on November 13, 1991, Attorney General Barr appointed Nicholas Bua, a retired Federal judge from Chicago, as his special counsel to investigate and advise him on the INSLAW controversy. The committee eagerly awaits Judge Buas findings; however, as long as the investigation of wrongdoing by former and current high level Justice officials remains under the ultimate control of the Department itself, there will always be serious doubt about the objectivity and thoroughness of the inquiry.
II. COMMITTEE INVESTIGATION, PRIOR STUDIES, HEARINGS AND SUBCOMMITTEE
Messrs. Richardson and Hamilton outlined their allegations of a criminal conspiracy in the Department's handling of the INSLAW contract and the theft of the Enhanced PROMIS software. Judge Bason testified that he believed that his failure to be reappointed as bankruptcy judge was the result of improper influence on the court selection process by the Justice Department because of his findings in favor of INSLAW in its bankruptcy proceedings. Mr. Ross refuted the Justice Department's rationale for withholding documents related to possible wrong doing by Justice officials involved with the INSLAW contract. GAO representatives described a wide range of deficiencies in the Department's Information Resources Management Office and its administration of the ADP contracts.
After the December 1990 hearing, the Attorney General once again vowed to cooperate with the committee. By June 1991 however, it was clear that the Department was not going to provide the committee with a substantial number of the documents that had been requested. As a result, Committee Chairman Brooks announced plans to address this and other issues related to INSLAW at the full committee hearings on the Department of Justice Authorization for Appropriations hearings scheduled for July 11 and 18, 1991.
On July 11, 1991, Congressman John Conyers, Jr., chairman of the Government Operations Committee; Congressman Frank Horton, the ranking minority member of that committee; and Congressman Robert Wise, Jr., chairman of the Subcommittee on Government Information, Justice, and Agriculture, testified before the committee. Also appearing before the committee were Mr. Steven Ross, General Counsel to the Clerk of the U.S. House of Representatives; Charles Tiefer, Deputy General Counsel to the Clerk; and GAO officials: Milton Socolar, Richard Steiner, and Richard Fogel.
The Attorney General, who was scheduled to appear before the committee on July 18, 1991, was asked to be prepared to provide an executive branch perspective on the interbranch conflicts over GAO and Judiciary Committee access to Department documents, and to discuss the INSLAW case. 
On July 18, 1991, the committee reconvened to review the Department's fiscal year 1992 authorization for appropriations request and to hear the testimony of Attorney General Thornburgh. However, according to the chairman, the Attorney General notified the committee the night before the hearing that he refused to attend on the grounds that the committee press release announcing the hearing had been unduly aggressive and contentious and not in keeping with the tenor of an oversight hearing. The chairman added that "the Attorney General seems to be objecting to a robust interchange of views that is an essential part of the give-and-take at the heart of the political process."
On July 25, 1991, the Subcommittee on Economic and Commercial Law met to authorize the issuance of two subpoenas to the Department of Justice; one for INSLAW documents and the other for a copy of an Office of Legal Counsel Opinion regarding FBIs authority to arrest individuals overseas. The subcommittee authorized issuance of a subpoena by a vote of 10 to 6.  On July 31, 1991, the Subcommittee on Economic and Commercial Law received most of the subpoenaed INSLAW documents from the Attorney General. The Department however, claimed that 51 documents or files were missing and could not be found.  To date, the subcommittee has not received an adequate explanation from the Department on how the documents came to be missing. 
On November 2, 1981, the Department issued a request for proposals (RFP) for installing public domain PROMIS on minicomputers and word processors. Prior to the issuance of the RFP, several vendors, including INSLAW, advised the Department not to try to perform PROMIS functions on word processing equipment because the case management activities were computation-intensive and needed to be performed on full function microcomputers. 
One reason why such an approach was inherently flawed was because PROMIS involved over 500,000 lines of Common Business Oriented Language (COBOL) program code and required a very large-capacity computer at that time. INSLAW further advised the Department to move toward the use of full function microcomputers that could perform both case management and word processing. However, word processors remained in the Department's plan. Only 2 of the 104 firms that requested the RFP submitted proposals in the 30 days allowed INSLAW and Systems Architects, Inc. INSLAW was selected for the contract since Systems Architects, Inc., was considered to be non-responsive to the RFP. 
Even before the contract was awarded, there was discussion between the Department and INSLAW over a period of 2 months on the subject of public domain software as opposed to privately funded enhancements. INSLAW was explicit in stating to the Department that its version of PROMIS had been enhanced with private funds and future enhancements funded outside the Department's contract were expected. 
In March 1982, INSLAW was awarded a $10 million, 3-year contract to install the public domain version of PROMIS on minicomputers in 20 large U.S. attorneys offices and on word processors in 74 smaller offices. According to Judge Bryant, of the U.S. District Court for the District of Columbia, in commenting on the Department's appeal of the Bankruptcy Courts ruling:
. . . the contract sought proposal for (1) implementing the computerized "pilot version" of PROMIS as supplemented by the BJS (Bureau of Justice Statistics) enhancements in 20 "large" U.S. attorneys offices; (2) creating and implementing a noncomputerized version of that software for word processors in the remaining U.S. attorneys offices; and (3) providing necessary training, maintenance and support for 3 years. 
Shortly after receiving the contract to implement PROMIS at the 94 U.S. attorneys offices, INSLAW's counsel sent a detailed letter to Mr. Stanley Morris, then an Associate Deputy Attorney General at the Department. This letter, with an attached memorandum written by Mr. Hamilton, notified the Department of INSLAW's intent to market an enhanced version of PROMIS as a fee-generating product to public and private sector customers.  This claim to exclusive proprietary rights by INSLAW would naturally require the Department to pay INSLAW license fees if it chose to use Enhanced PROMIS. INSLAW based this claim on the fact that several non-Federal sources paid for continued funding of PROMIS development and implementation. 
As detailed by the Bankruptcy Court in its chronology of events surrounding the INSLAW matter, Mr. C. Madison (Brick) Brewer had just assumed the departmental position of PROMIS project manager at the time of contract award. Mr. Brewer reacted negatively to INSLAW's efforts to protect its proprietary interest and in retaliation considered canceling the Department's contract with INSLAW just 1 month after it was initiated. A Department team meeting, including Messrs. Brewer, Videnieks (Justice Contracting Officer), and Rugh (Acting Assistant Director for Office of Management Information Systems Support OMISS), was held on April 14, 1982, in Mr. Brewers office to discuss Mr. Hamiltons "scurrilous"  memo. According to Mr. Videnieks notes of the meeting:
Discussed INSLAW's "PROMIS II" memo . . . Termination for Convenience discussed. 
Mr. Brewer apparently also discussed other reprisals against INSLAW on its other contracts with the Department.  However, when subsequently questioned in the course of litigation, there developed a severe memory loss with respect to the Department witnesses recollection of this meeting, as noted by Judge Bason:
All of the DOJ witnesses who attended the April 14, 1982, meeting professed a total lack of memory about it. They testified they had no recollection of any such meeting. This court disbelieves that testimony. None of them could offer any credible explanation, or indeed any explanation, of the meaning of Videnieks handwritten notes other than what this court finds to be their meaning in this Finding of Fact No. 165. These notes constitute a "smoking gun" that clearly evidences Brewers intense bias against INSLAW, his single-minded intent to drive INSLAW out of business, and Rughs and Videnieks complicity. 
In an apparent effort to respond to the concern raised by Department officials over whether the Department or INSLAW would own any enhancements to the PROMIS software, INSLAW's attorney, Mr. James Rogers, wrote on May 26, 1982, to Associate Deputy Attorney General, Stanley E. Morris. In this letter, Mr. Rogers provided a detailed description of what the company planned to do to market the software commercially, and asked that the Department respond to INSLAW to "ensure that these representations are correct." Mr. Rogers went on to explain:
(Y)ou expressed concern about the software itself, PROMIS 82, which INSLAW proposes to license to users for a fee commencing in June of 1982. We are prepared to make the following representations, which should alleviate the Department's concerns:
PROMIS 82 is the sum of only three parts:
(1) the "Original PROMIS," that is, the public domain software as of May 15, 1981 as memorialized in tapes delivered to the Bureau of Justice Statistics;
(2) enhancements undertaken by INSLAW at private expense after the cessation of LEAA funding; and
(3) the so-called printed inquiry enhancement, which was created under contract to the Bureau of Justice Statistics and delivered to the Department of Justice on May 17, 1982.
It is apparent that both Mr. Brewer and Mr. Videnieks, the PROMIS contracting officer, reacted very strongly to INSLAW's notice that it had developed Enhanced PROMIS with private funding. There followed a very antagonistic meeting between Mr. Brewer and INSLAW representatives soon after INSLAW's assertions of proprietary claims to PROMIS.  Messrs. Brewer and Videnieks continued to believe that, because the Department was currently funding the implementation of PROMIS, they could ignore INSLAW's proprietary interest in the privately funded enhancements made to the PROMIS software.
However, in an August 1982 response to INSLAW, Mr. Stanley Morris, the Department's Associate Deputy Attorney General, stated that the original PROMIS, as well as an enhancement known as printed inquiry,  was in the public domain. He added that, to the extent that any other enhancements to PROMIS were privately funded by INSLAW and not specified to be delivered to the Department, INSLAW could assert whatever proprietary rights it might have. 
For those who have formally reviewed the INSLAW matter, both in the judicial and legislative branches, the selection of Mr. Brewer by Mr. William P. Tyson of the Executive Office of U.S. Attorneys (EOUSA) to serve as the PROMIS project manager looms as a curious choice when matters of the conflict of interest, appearance and actual, are considered.  Indeed, Mr. Brewer worked for Mr. Hamilton between 1974 and 1976 as general counsel for the Institute for Law and Social Research, a not-for-profit corporation owned by Mr. Hamilton which later became INSLAW. Mr. Hamilton has testified that in this capacity, Mr. Brewer was unable to perform the duties required of him; and, as a result, he was asked to leave.  Mr. Hamilton testified that he provided Mr. Brewer with a sufficient time period to find a job rather than summarily forcing him out of the company. After the initial conflict with Mr. Brewer flared up over the PROMIS software enhancement issue in April 1982, INSLAW formally complained to Mr. Morris that Mr. Brewer was biased against INSLAW because he had been asked to resign his position with the company; and that in any event, the Department should have placed another official in charge of managing the project who was not tainted with past direct (and very possibly negative) associations with the company. Mr. Hamilton strongly believed that Mr. Brewer harbored antagonistic feelings about his past working relationship with Mr. Hamilton. Department officials were apparently impervious to these concerns and stated that Mr. Brewers skills and prior employment with INSLAW were important factors in his hiring by the Department. Mr. McWhorter, Deputy Director of the EOUSA, who was involved in Mr. Brewers hiring, believed that Mr. Brewers employment by INSLAW qualified him to:
. . . run the implementation of a case tracking system for U.S. attorneys to . . . basically direct the implementation of a case tracking system in U.S. attorneys offices. 
It is difficult to understand, however, how Mr. McWhorter could make this statement. By Mr. Brewers own admission, he had very little, if any, experience in managing computer projects and Government ADP procurement law at the time he was hired. Perhaps even more damaging, while under oath to committee investigators, he admitted to a lack of experience or detailed understanding of computers or software:
. . . I was not a computer person. We talked about my role, viewed as being liaison, the person who would make things happen, a coordinator. It was not contemplated that I would, by osmosis or otherwise, learn computer science. 
Even after interviewing Mr. Brewers supervisor (Mr. Tyson) and other Department personnel involved with his hiring, committee investigators were unable to determine how Mr. Brewer came to be considered for the position. Still unexplained given the appearance of a conflict of interest created by his past employment with Mr. Hamilton and his total lack of experience and training in ADP contracting is why the Department would have considered him prepared, much less best qualified, for the job.
As project manager throughout the implementation of the contract, Mr. Brewer was involved in all major contract and technical decisions including the development of the Department's position on INSLAW's claim of proprietary software enhancements made to the public domain version of PROMIS. Significantly, Mr. Brewer, also reported on the progress on the contract to the Department's PROMIS Oversight Committee, a senior level decisionmaking committee organized in 1981 as part of the Department's overall control point for the PROMIS project. 
Investigations by both the Senate and GAO into the INSLAW matter flagged serious concerns about Mr. Brewers appointment and the possible conflict of interest his appointment represented. The Permanent Subcommittee on Investigations (PSI) drew the same conclusion as the GAOs audit manager that Mr. Brewers appointment as project manager created an undeniable appearance of a conflict of interest that should have been avoided at all costs by the Department. The PSI report stated:
The staff finds that the Department exercised poor judgment in ignoring the potential for a conflict of interest in its hiring of the PROMIS project director (Brewer), and then, after receiving allegations of bias on his part, in failing to follow standard procedures to investigate them in a timely manner. 
The potential conflict of interest was an unsatisfactory situation irrespective of his admittedly negative feelings about his forced resignation from the company. Had Mr. Brewer taken actions which could have been construed to unduly favor INSLAW throughout the life of the contract, similar questions of potential conflict could just as easily have arisen either from within the Department or from outside competitors of the company. In either situation, the Department had placed itself in an undeniable ethical situation that could have been easily avoided had it followed basic procedures to prevent any possible appearance of a conflict. On this point, Judge Jensen stated that:
I would think that the better path of wisdom is not to do that (hire an alleged fired employee to direct the contract of his former employer) if thats possible to do . . . I think that its better to have these kinds of issues undertaken by people who dont have questions raised about them one way or the other whether they are biased in favor of or against the people they deal with. 
While phrased in the abstract, Judge Jensen and other Department officials apparently ignored the circumstances surrounding Mr. Brewers departure from INSLAW and did not consider the potential bias or conflict of interest issues either before or after his hiring. In fact, Mr. Brewer stated that no formal inquiry into these charges was made by the Department until after the contract expired in 1985. On the issue of his departure from INSLAW, Mr. Brewer stated under oath to OPR investigators that:
At no time did he (Mr. Hamilton) ever say you are fired and at no time did he (Mr. Hamilton) ever indicate great dissatisfaction with my performance.
I dont believe anything Mr. Hamilton did regarding my employment or relationship with the Institute . . . was wrong. I never felt that I was discharged, let alone wrongfully discharged.
Mr. Brewer again asserted this position under oath to committee investigators:
I never thought that he asked me to leave. It has always been my understanding that I was not asked to leave. . . . I have never viewed my departure from the Institute as either being a discharge, or forced.
However, in other parts of his testimony to OPR and the committee investigators he appears to acknowledge that Mr. Hamilton asked him to leave. For example, he stated to OPR:
. . . it has been my view that Mr. Hamilton obviously wanted me gone. I had been sending these signals, if not directly indicating a job dissatisfaction, since April, and it was now February, almost 1 year later and I was still extricating myself.
Mr. Brewer's statements that he was not asked to leave are also contradicted by other witnesses statements on this point. As indicated above, according to Mr. Hamilton, Mr. Brewer was unable to perform the duties required of him and; as a result, he was asked to leave.  Mr. Hamiltons account was corroborated by Mr. John Gizzarelli, Jr., who stated under oath that Mr. Hamilton mentioned that Mr. Brewer had been asked to resign and Mr. Hamilton asked for advice on how Mr. Brewer could be removed while preserving his professional dignity and feelings. 
Mr. Brewer appears to contradict his own assertions that he was never asked to leave by Mr. Hamilton. At trial, Mr. Brewer stated under oath that:
. . . on one occasion Mr. Hamilton came and said to me, "can you go to lunch?" I explained that I couldnt. . . . And he said, "Well, what I have to say over lunch I can say right now. I think you ought to find (an) alternative that you ought to leave the Institute."
The circumstances surrounding Mr. Brewers departure from the institute appears to have had a major influence over his views about INSLAW and its president, Mr. Hamilton. Several witnesses asserted that Mr. Brewer exhibited considerable bias against INSLAW and Mr. Hamilton during critical points of the contract. When asked about his relationship to Mr. Hamilton, Mr. Brewer stated:
He was very supportive, and I thought that he was a very dynamic and creative person, a very skilled communicator and a very talented individual, but as to some aspects of life, one who did not have a realistic viewpoint on some things . . . he had said some things to me on occasion that made me think that he was somewhat of a zealot about his pursuits and the things he did. . . . Mr. Hamilton is a difficult person to deal with, or that he is not realistic. . . . 
However, several witnesses provided a considerably different description of Mr. Brewers feelings toward INSLAW and Mr. Hamilton. Mr. Gizzarelli stated under oath that:
I also had occasional contact with Mr. Brewer during the period of his employment with INSLAW . . . specifically, he thought that Mr. Hamilton was insane. And I think he meant that literally. He did make comments about his rationality, his sanity, thought he wasnt capable of leading an organization. The tenor of his remarks were to me very startling.
* * * * * * *
. . . mental observation . . . was used to describe a person for whom that process might be advisable, mental observation being a psychiatric evaluation to determine whether or not a person is or is not afflicted with a psychosis. And Mr. Brewer used that term to describe Mr. Hamilton. He said he was M.O., (mental observation) which is a colloquialism means he should be examined by a psychiatrist.
* * * * * * *
After he became the project manager . . . a flood of memories about his prior involvement with INSLAW and his characterization of Bill Hamilton came back, and I was afraid that his bias would be overwhelming would overwhelm him. 
Mr. Gizzarelli later stated by memorandum to Mr. Dean Merrill that Mr. Brewer:
. . . has made no secret of his dislike of Bill Hamilton. In his present job, he is in a position to demonstrate his dislike. Bill, however, has kept his distance from the project and probably will continue to do so, until and unless there are large problems which Bill in his role as president must deal with personally. It is entirely possible and I believe likely that Brick will escalate the level of controversy until he draws Bill into the project, at which time he will be able to "lord it over him" and show whos boss. I dont think Brick will ever be at peace with his feelings about Bill and therefore, with us. 
Mr. Harvey Sherzer, INSLAW's attorney, made similar assertions about Mr. Brewers bias against INSLAW during the trial:
. . . I think the most descriptive answer is to say that Mr. Brewer exhibited an animus toward INSLAW and toward Mr. Hamilton.
He viewed with . . . skepticism and negativism and some hostility INSLAW's allegations with regard to its financial condition. And I recall specifically that I reached the conclusion at that time that, and I recall expressing it to him, that he had a problem, that he seemed to think there was something wrong with a contractor benefiting from a government contract. Let me be more specific on that point. The gist of what he seemed to be saying was that by performing this contract INSLAW and Mr. Hamilton, specifically, was making an effort to expand the company . . . And there seemed to be a negative inference toward INSLAW's ability to use the base created by this contract to expand.
And I recall explaining to him that that was perfectly legitimate, and, indeed, that the Government often in its efforts to support congressionally the appropriations for the space program and other programs often points out that a byproduct of a space program is a better toaster oven because various alloys (are) created or what have you. Its a common phenomenon whereby the . . . by-product of Government work is the ability to benefit both the company the Government and the community generally in a broader way. And Mr. Brewer seemed to resent the fact that INSLAW might use the benefits of this large contract to expand its company, which at that time it was doing. 
On this same issue the Bankruptcy Court concluded that:
On the basis of the . . . evidence taken as a whole, this court is convinced beyond any doubt that . . . Brewer was consumed by hatred for and an intense desire for revenge against Mr. Hamilton and INSLAW, and acted throughout this matter in a thoroughly biased and unfairly prejudicial manner toward INSLAW.
In reviewing Judge Bason's substantive findings of fact and conclusions of law, the District Court also concluded that:
The nature and circumstances of his separation from that employment are somewhat in dispute, but it is clear that Brewer was not happy in his job when he left it after being urged to do so by Hamilton.
INSLAW attributed its troubles to an acute bias on the part of Brewer, who according to it was intent on running the company out of business. INSLAW lodged many complaints of bias and made several request of DOJ to investigate these complaints and give some relief from what it perceived to be grossly unfair treatment. DOJ made no meaningful response to these complaints, and INSLAW's fortunes did not change.
INSLAW's problems began soon after the contract was awarded and immediately after its assertion of proprietary enhancements to public domain PROMIS. Mr. Brewers animosity toward INSLAW was strongly manifested in a meeting (April 19, 1982) to discuss INSLAW's proposal to market its Enhanced PROMIS software, as noted in an INSLAW memorandum on the meeting:
Brewer . . . seized upon this issue and launched into a tirade which was very emotional, unorganized and quite illogical. He said that:
"1. the memo was typical of INSLAW and Bill Hamilton and that it was self-serving and unnecessary.
"2. that how did they know that we might say work was not finished under our Government contracts and the next week copyright the work and begin selling it back to the Justice Department.
"3. that the press release about the contract award was not accurate in that it described West Virginia as a successful implementation when in fact, they had spent an additional 20K on the project and Lanier was doing all the work. . . .
"7. that the memo had caused all kinds of problems in Justice and had many people upset.
"8. that if you ask Namely, Illinois Criminal Justice Coordinating Council, Michigan Prosecuting Attorneys Association, Andy Voight and others, they would tell you that INSLAW did not do good or successful work.
"9. that Bill Hamilton started the PROMIS system as an employee of the D.C., U.S.A.O. and that all of the software was developed with Federal funds and what right did Hamilton have to try to claim ownership of the software."
All of these comments were based with an obvious dislike of Bill Hamilton and a resentment for the success of INSLAW personified in him. 
After this meeting, INSLAW complained to Associate Deputy Attorney General Morris that Mr. Brewer was obviously biased against INSLAW because he had been asked to leave his employment at the company. On this basis, INSLAW requested that Mr. Brewer be recused from further Department consideration of the proprietary software enhancement issue. Subsequently, Mr. Morris decided to remove Mr. Brewer from face-to-face negotiations with INSLAW officials on the enhancement issue. By note dated May 27, 1982, Mr. Laurence McWhorter, Deputy Director of the Executive Office of U.S. Attorney, stated that he was directed by Mr. Morris to "take the point outside the Department" on the proprietary enhancement issue. It is clear from this action that Mr. Morris was concerned about the possibility of an appearance of a conflict of interest with having an ex-employee of INSLAW operating as the Department's project manager on a contract involving the same company. However, this solution was only superficial because Mr. Brewer continued to have substantive influence over the management and administration of the INSLAW contract. Mr. Brewer acknowledged under oath that he remained involved in the Department negotiations with INSLAW on all important issues including the enhancement issue throughout the life of the contract. He also stated that Mr. Hamilton had "shot himself in the foot" and created considerable "ill will" within the Department by asserting that INSLAW had proprietary interest in the PROMIS software.  INSLAW's expanding problems with the Department are detailed in the following sections of the report.
During the contract negotiations the Department acknowledged INSLAW's cash-poor situation by inserting a contract clause that enabled INSLAW to receive payment in advance of the Department receiving and approving finished products.  During November 1982, the Department learned that INSLAW had assigned Government invoices to a financial institution to secure a line of credit, and Mr. Videnieks, by letter dated November 10, 1982, asserted to INSLAW that it was in default of the advance payments clause of the contract. 
Cancellation of the advance payments would have had a devastating impact on INSLAW. Mr. Videnieks told committee investigators under oath that:
I think I was advised at the same time. . . . that INSLAW may indeed have difficulty in meeting the December payroll, and I think in general I was advised that they were in bad financial condition. 
INSLAW, at that point, was supporting the Department's utilization of PROMIS with its proprietary enhanced software through time-sharing on a mainframe. The Department, lacking the hardware to implement public domain PROMIS, moved to obtain a copy of INSLAW's proprietary Enhanced PROMIS software, as described in an internal memorandum dated March 7, 1983:
Of course, an INSLAW failure at any time prior to contract completion would have a detrimental effect on the implementation project. Currently, programmatic risk is very high. So long as INSLAW continues to support U.S. attorneys offices in a timesharing mode, withholds time-sharing (the enhanced) PROMIS software, and fails to complete delivery of at least one system operating on a Government furnished Prime computer and at least one system operating on a Government-furnished Lanier word processor, programmatic risk will remain high. 
Mr. Videnieks told committee investigators under oath that:
We were afraid if they indeed were for financial reasons required to close their doors . . . then we would have to revert to a manual PROMIS in these U.S. attorneys offices. So the reason for requesting copies of this data and documentation were to be able to continue, if indeed INSLAW were to close its doors, automated PROMIS on Government computers. 
An internal Department analysis notes, however, that:
Because DOJs computers were not in place, DOJ purchased time on INSLAW's computer. INSLAW retained the software to use for time-sharing purposes in its offices and had not yet delivered it to the various U.S. attorneys offices. 
Judge Bryant pointed out that:
On November 19, 1982, DOJs technical representative formally requested a copy of the PROMIS software that was then in use by the U.S. attorneys offices. According to the Justice Department the request was motivated by concern over the financial viability of INSLAW. It is without dispute that because the Government had not obtained the minicomputer hardware for each office, INSLAW arranged for the largest U.S. attorneys offices to use PROMIS on a time-sharing basis.
Mr. Brewer stated in a December 9, 1982, memorandum that he was concerned with the possibility of INSLAW's bankruptcy, the possible need for in-house EOUSA personnel to take over the PROMIS project, and the possibility of terminating the PROMIS contract. In December 1982, Mr. Videnieks demanded that INSLAW turn over all computer programs and supporting documentation relating to the contract.  INSLAW responded that it would not do this without the Department modifying the contract to acknowledge that proprietary enhancements had been inserted into the Department's public domain version of PROMIS. INSLAW required this acknowledgment because INSLAW's other timesharing customers also used this proprietary version of PROMIS.
The Department responded that the contract called for software in which the Government had unlimited rights, and asked that INSLAW identify those portions of the software that it claimed were proprietary. INSLAW offered to provide the enhanced software if the Department agreed to INSLAW's rights and controlled its dissemination. Mr. Videnieks stated to committee investigators that the Department believed that it had unlimited rights to any versions of PROMIS, and data rights restrictions would not satisfy INSLAW's obligation under the contract. 
INSLAW proposed that the Department use its enhanced software at the 94 U.S. attorneys offices at no additional cost, but that the Government not disseminate the Enhanced PROMIS beyond those offices. The Department objected to this proposal and made a counter-proposal that a contract modification be made which, in exchange for the software and documentation requested previously, the Department would agree not to disseminate Enhanced PROMIS beyond the 94 offices and the EOUSA pending resolution of the enhancement dispute. 
Mr. Videnieks further proposed that, if INSLAW could demonstrate that the software contained enhancements to which the Department was not entitled, the Department would either direct that INSLAW remove the enhancements or negotiate with INSLAW regarding inclusion of the enhancements. 
INSLAW and the Department ostensibly resolved their dispute by "good-faith" action on a contract modification (Mod. 12) dated April 11, 1983. As a result, DOJ agreed to continue to provide advance payments to INSLAW.  According to Judge Bryant, under this agreement:
The parties reaffirmed their understanding that their initial contract governs the rights to the disputed software.
By letters dated April 5, and April 12, 1983, INSLAW attempted to demonstrate that its enhancements were privately funded, but the Department did little to assist INSLAW in determining what documentation would be acceptable.  By letter dated April 21, 1983, Mr. Videnieks reiterated that the contract entitled the Government to a version of PROMIS with no restrictions, and demanded that INSLAW:
. . . . provide all information necessary to demonstrate that the change was developed both at private expense and outside the scope of INSLAW's performance of any Government contract.
INSLAW sent another proposed methodology to demonstrate private funding by letter dated May 4, 1983.  Mr. Videnieks responded that INSLAW's methodology was unacceptable because it did not identify enhancements developed without Federal funds.  Mr. Videnieks never provided INSLAW with a methodology on standards by which INSLAW could demonstrate his evidence requirements.
Mr. Jack Rugh, the Department's Acting Assistant Director for Office of Management Information Systems Support (OMISS), analyzed the INSLAW submissions supporting its contentions that Enhanced PROMIS had been privately funded. Mr. Rugh stated under oath during the Bankruptcy Court hearing that it was his opinion that the methodology used by INSLAW to support its assertion was flawed and that the companys presentation "probably" (emphasis added) lacked accounting records to support its claims. Mr. Rugh further stated that he could not recall if he had informed INSLAW of his concerns regarding their lack of accounting records to substantiate their claims. Mr. Rugh said that although he could see no reason why he would withhold this information from INSLAW, he could see no reason for including it.  Mr. Rugh stated, however, that INSLAW had an excellent method of documenting the changed (enhanced) source code, so that those changes could be considered proprietary if they were attributed to a particular private source.  This admission caused the bankruptcy judge to conclude:
This process of comparing the enhancements proofs with the previously-provided PROMIS software could have been performed easily by INSLAW with DOJs assistance in the summer of 1983, when INSLAW attempted to negotiate this issue with DOJ and submitted to DOJ its memoranda proving specific enhancements. All of the documents used by INSLAW in this proceeding to identify the funding of its enhancements existed at the time the negotiations should have occurred. As Mr. Rugh conceded at trial, the proofs offered by INSLAW would have satisfied him that the enhancements were indeed privately funded. (Rugh, T. 1517-1520). DOJ was required to negotiate then, in 1983, as Videnieks specifically had proposed under Modification 12, (see PPFF 228-236) but instead it wrongfully and cynically failed either to negotiate in good faith or even to reveal to INSLAW any purported concerns of Messrs. Rugh and Videnieks at that time with INSLAW's proposed method of proof (see PPFF 246-250). 
Mr. Videnieks never accepted any INSLAW attempts at defining proprietary enhancements, and Department officials concluded that the Department had the same unlimited rights to Enhanced PROMIS as it had with public domain PROMIS. This posture was made clear from a variety of sources, including Messrs. Brewer and Videnieks. In a sworn statement before this committee, Mr. Brewer responded to the following questions:
Question: At this April 19th meeting, do you recall making the statement that the Department had unlimited rights to the software?
Mr. Brewer: That was our position throughout this whole thing, yes.
Question: What is your view today on that?
Mr. Brewer: I maintain that we negotiated for and received unlimited rights and data.
Mr. Videnieks also believed that the Department had title to Enhanced PROMIS, which he characterized while discussing his position regarding Modification 12 in a sworn deposition before this committee:
Initially, Im the one who wanted no modification. I wanted only a letter saying, "Give us the data," because if we we dont need any signatures, if we can get the goods. My words. The goods were ours under the contract. All we would have to pay for to effect delivery of those goods were reproduction costs.
Brewer, I believe, wanted a supplemental agreement but not a modification. I didnt want any of them. But the legal advice was that Bill Snider (the Department's legal counsel) felt strongly that there should be a Modification 12, but my opinion was supported by Patricia Rudd, who was the Chief Procurement Officer at that time.
So we in Procurement, the hands-on people, thought that the contract as it stands had the mechanism in there for satisfying the Program Officers needs. But the lawyers on all sides felt that we needed to write escrow agreements and make the thing look pretty, I guess. 
Mr. Videnieks, by letter dated July 21, 1983, told INSLAW that:
We agree with you that Modification No. P0012 to the Contract continues to limit dissemination of that version of the PROMIS computer software specified in the modification. Modification No. P0012 will continue to apply in the event that the Government invokes the provisions of Clause 22, "Disputes," in that the Government will limit dissemination pending a Contracting Officers Final Decision in the matter. 
On December 29, 1983, in spite of a report that there was progress with INSLAW counsel on resolution of the contract problems, Judge Jensen and other members of the PROMIS Oversight Committee approved the termination of the word processing portion of the contract for default based on their view that INSLAW had failed to perform this portion of the contract.  However, in February 1984, Department procurement counsel William Snider issued a written legal opinion showing that the Department lacked sufficient legal justification for a default termination. Instead, the PROMIS Oversight Committee approved the termination of the word processing portion of the contract for convenience. Shortly thereafter, Mr. Brewer notified Mr. Hamilton by telephone that Judge Jensen had decided to only terminate the word processing portion of the INSLAW contract at the 74 smaller U.S. attorneys offices for convenience of the Government.