Profile: Inslaw, Inc.
Inslaw, Inc. was a participant or observer in the following events:
An application known as PROMIS, the Prosecutor’s Management Information System, is developed. [Wired News, 3/1993] It is designed to be used to keep track of criminal investigations through a powerful search engine that can quickly access all data items stored about a case. [Salon, 7/23/2008] William Hamilton, one of the application’s developers, will describe what it can be used to do: “Every use of PROMIS in the court system is tracking people. You can rotate the file by case, defendant, arresting officer, judge, defence lawyer, and it’s tracking all the names of all the people in all the cases.” Wired magazine will describe its significance: “What this means is that PROMIS can provide a complete rundown of all federal cases in which a lawyer has been involved, or all the cases in which a lawyer has represented defendant A, or all the cases in which a lawyer has represented white-collar criminals, at which stage in each of the cases the lawyer agreed to a plea bargain, and so on. Based on this information, PROMIS can help a prosecutor determine when a plea will be taken in a particular type of case.” In addition, PROMIS can integrate several databases without requiring any reprogramming, meaning it can “turn blind data into information.” PROMIS is developed by a private business entity that will later become the company Inslaw, Inc. Although there will later be a series of disputes over the application’s use by the US government and others, this version of PROMIS is funded by a Law Enforcement Assistance Administration grant and is therefore in the public domain. [Wired News, 3/1993]
C. Madison “Brick” Brewer, the general counsel of the Institute for Law and Social Research, leaves his position. The circumstances of his departure from the institute, which will later be transformed into the company Inslaw, will later be disputed. The departure is significant because Brewer will later be hired by the Justice Department to manage a contract with Inslaw (see April 1982), and will adopt a combative approach to his former employer (see April 14, 1982 and April 19, 1982).
Hamilton's Account - Inslaw owner William Hamilton will later say that Brewer is asked to leave because he is unable to perform his duties, but is given sufficient time to find another job instead of being forced out. Inslaw vice president John Gizarelli will corroborate Hamilton’s account, telling the House Judiciary Committee under oath that Hamilton told him Brewer had been asked to resign.
Contradictory Statements by Brewer - Brewer will give different accounts of his departure. He will tell investigators from the Justice Department’s Office of Professional Responsibility (OPR): “At no time did he [Hamilton] ever say you are fired and at no time did he [Hamilton] ever indicate great dissatisfaction with my performance.… I never felt that I was discharged, let alone wrongfully discharged.” He will repeat this line to investigators from the House committee: “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, another statement he will make puts a different slant on this; he tells the OPR: “[I]t has been my view that Mr. Hamilton obviously wanted me gone. He had been sending these signals, if not directly indicating a job dissatisfaction, since April, and it was now February, almost one year later, and I was still extricating myself.” In addition, Brewer will say in a court appearance: “On one occasion Mr. Hamilton came and said to me, ‘can you go to lunch?’ I explained that I couldn’t. 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.’”
Impact - The committee will comment, “The circumstances surrounding Mr. Brewer’s departure from the institute appear to have had a major influence over his views about Inslaw and its president, Mr. Hamilton.” Gizarelli will say that he had occasional contact with Brewer before his departure, and: “[H]e thought that Mr. Hamilton was insane. And I think he meant that literally. He did make comments about his rationality, his sanity, thought he wasn’t capable of leading an organization. The tenor of his remarks were to me very startling.” [US Congress, 9/10/1992]
As a part of the plan to ensure Continuity of Government (COG) in the event of a Soviet nuclear strike or other emergency, the US government begins to maintain a database of people it considers unfriendly. A senior government official who has served with high-level security clearances in five administrations will say it is “a database of Americans, who, often for the slightest and most trivial reason, are considered unfriendly, and who, in a time of panic, might be incarcerated. The database can identify and locate perceived ‘enemies of the state’ almost instantaneously.” He and other sources say that the database is sometimes referred to by the code name Main Core, and one says it was set up with help from the Defense Intelligence Agency.
Alleged Link to PROMIS - The database will be said to be linked to a system known as PROMIS, the Prosecutor’s Management Information System, over which the US government conducts a long-lasting series of disputes with the private company Inslaw. The exact connection between Main Core and PROMIS is uncertain, but one option is that code from PROMIS is used to create Main Core. PROMIS is most noted for its ability to combine data from different databases, and an intelligence expert briefed by high-level contacts in the Department of Homeland Security will say that Main Core “is less a mega-database than a way to search numerous other agency databases at the same time.”
Definition of National Emergency - It is unclear what kind of national emergency could trigger such detention. Executive orders issued over the next three decades define it as a “natural disaster, military attack, [or] technological or other emergency,” while Defense Department documents include eventualities like “riots, acts of violence, insurrections, unlawful obstructions or assemblages, [and] disorder prejudicial to public law and order.” According to one news report, even “national opposition to US military invasion abroad” could be a trigger.
How Does It Work? - A former military operative regularly briefed by members of the intelligence community will be told that the program utilizes software that makes predictive judgments of targets’ behavior and tracks their circle of associations using “social network analysis” and artificial intelligence modeling tools. “The more data you have on a particular target, the better [the software] can predict what the target will do, where the target will go, who it will turn to for help,” he will say. “Main Core is the table of contents for all the illegal information that the US government has [compiled] on specific targets.”
Origin of Data - In 2008, sources will reportedly tell Radar magazine that a “host of publicly disclosed programs… now supply data to Main Core,” in particular the NSA’s domestic surveillance programs initiated after 9/11. [Radar, 5/2008]
Laurence McWhorter, director of the Executive Office for US Attorneys, tells one of his subordinates, “We’re out to get Inslaw.” Inslaw developed the PROMIS database and search application (see Mid-1970s) and is soon to become embroiled in a dispute with the Justice Department over it. Mallgrave will later tell Wired magazine: “We were just in his office for what I call a B.S. type discussion. I remember it was a bright sunny morning.… [McWhorter] asked me if I would be interested in assuming the position of assistant director for data processing… basically working with Inslaw. I told him… I just had no interest in that job. And then, almost as an afterthought, he said ‘We’re out to get Inslaw.’ I remember it to this day.” [Wired News, 3/1993]
The Justice Department issues a request for proposals (RFP) for the installation of public domain PROMIS software. Two of the 104 companies that ask for the request for proposals submit bids. However, one of them, Systems Architects, Inc., has problems in its bid and the contract will be awarded to the other, Inslaw (see March 1982).
Problems with Installation Concept - The installation is to be on minicomputers and word processors, although both Inslaw, which developed PROMIS, and other potential bidders had previously advised the department not to try to perform PROMIS functions on word processing equipment, as it is not powerful enough. One reason for this is that PROMIS involves over 500,000 lines of Common Business Oriented Language (COBOL) program code and requires a very large-capacity computer at this time. In addition, Inslaw advises the department to move toward the use of more powerful computers that could perform both case management and word processing. However, the department ignores the advice.
Existence of Privately-Funded Enhancements 'Explicit' - There will later be an argument about how much the department should pay Inslaw for the software. This dispute will turn on privately-funded enhancements to the application Inslaw says it makes after an initial version of PROMIS was developed using government money. According to a report drafted by the House Judiciary Committee, during the contract negotiations, Inslaw is “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.” Nevertheless, the department will say that it owns the software, and will cite as support amendments to the RFP that make available to all bidders copies of the pilot project software, and state that the RFP does not anticipate redevelopment of the public domain PROMIS software used in the pilot offices. If any alterations are made under the contract, they are to be made available to the offices using a current version. Regarding the amendments, the committee will comment, “Unfortunately, this language may also have blinded department management to the idea that Inslaw had made privately funded enhancements that were its property.” [US Congress, 9/10/1992]
Inslaw wins a $9.6 million contract from the Justice Department to install the public domain vesion of PROMIS application in 20 US attorneys’ offices as a pilot program. PROMIS is an application designed to be used by prosecutors to keep track of case records (see Mid-1970s). If the trial installation is successful, the company will install PROMIS in the remaining 74 federal prosecutors’ offices around the country. The contract is also for the necessary training, maintenance, and support for three years. According to William Hamilton, one of Inslaw’s owners, the eventual market for complete automation of the Federal court system is worth up to $3 billion. However, this is the last contract Inslaw receives from the Justice Department for PROMIS, as the deal becomes mired in a series of disputes. [US Congress, 9/10/1992; Wired News, 3/1993]
C. Madison “Brick” Brewer gets the job of supervising a contract with Inslaw for the installation of the PROMIS database and search application (see March 1982). [US Congress, 9/10/1992; Wired News, 3/1993] According to a report by the House Judiciary Committee, Brewer gets the job from William P. Tyson of the Justice Department’s Executive Office for US Attorneys (EOUSA). [US Congress, 9/10/1992] However, according to Wired magazine, Brewer is appointed by EOUSA Director Laurence McWhorter, who had told a previous candidate for the position that he was “out to get Inslaw” (see Spring 1981). [Wired News, 3/1993] Brewer had originally been hired by the EOUSA in January. [US Congress, 9/10/1992] He once worked for Inslaw, but was allowed to resign when its founder William Hamilton found his performance inadequate (see 1976). [Wired News, 3/1993] Brewer will soon demonstrate his hostility to Inslaw, and the company will ask that he be replaced (see April 14, 1982, April 19, 1982, and Mid-April 1982).
Importance of Job - As the project manager, Brewer is involved in all major contract and technical decisions, including forming the department’s position on Inslaw’s claim that it should be paid for privately-funded enhancements it makes to PROMIS. Brewer also reports on progress on the contract to the department’s PROMIS Oversight Committee (see August 13, 1981 or Before).
Comment by Assistant Attorney General - Assistant Attorney General Lowell Jensen will later comment: “I would think that the better path of wisdom is not to do that [i.e. hire an allegedly fired employee to direct the contract of his former employer] if that’s possible to do. I think that it’s better to have these kinds of issues undertaken by people who don’t have questions raised about them one way or the other whether they are biased in favor of or against the people they deal with.” However, this thinking apparently does not impact the department’s decision to hire Brewer.
House Judiciary Committee Investigation - In the light of these circumstances, the House Judiciary Committee will call the appointment a “curious choice,” partly because Brewer tells it: “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.” After interviewing Justice Department staff, the committee will find that it is “unable to determine how Mr. Brewer came to be considered for the position.” The committee will also point out: “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.”
Findings of Government Accountability Office and Permanent Subcommittee on Investigations - The Government Accountability Office and Congress’s Permanent Subcommittee on Investigations (PSI) will find that Brewer’s appointment as project manager creates an appearance of a conflict of interest that should have been avoided by the department. The PSI report will say, “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.”
Courts' Opinions - During the legal proceedings that stem from a dispute between Inslaw and the department, two courts will comment on the issue. George Bason, of the Bankruptcy Court for the District of Columbia, will say, “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.” William Bryant, of the District Court for the District of Columbia, will add, “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.”
Brewer's Motivation - Inslaw attorney Harvey Sherzer will comment in court on one of the motivations apparently driving Brewer: “[H]e seemed to think there was something wrong with a contractor benefiting from a government contract.… 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.” [US Congress, 9/10/1992]
Office of Professional Responsibility Conclusion - On the contrary, the Justice Department’s Office of Professional Responsibility will examine the matter and rule there is no conflict of interest. Brewer will later tell a federal court that everything he does regarding Inslaw is approved by Jensen. Jensen had previously supervised a product known as DALITE, which lost a major contract to Inslaw in the 1970s. [Wired News, 3/1993]
Entity Tags: Lowell Jensen, William Bryant, Office of Professional Responsibility, Laurence McWhorter, Permanent Subcommittee on Investigations, US District Court for the District of Columbia, House Judiciary Committee, Harvey Sherzer, Bankruptcy Court for the District of Columbia, C. Madison “Brick” Brewer, Inslaw, Inc., Executive Office for US Attorneys (DOJ), George Bason, Government Accountability Office, Frank Mallgrave, William P. Tyson
Timeline Tags: Inslaw and PROMIS
A lawyer acting for Inslaw writes to the Justice Department telling it that Inslaw intends to market a version of the PROMIS software commercially. The lawyer, Roderick M. Hills of Latham & Watkins, tells Associate Deputy Attorney General Stanley E. Morris, who is also a member of the committee overseeing PROMIS, that, even though the software was initially developed with government money (see Mid-1970s), private enhancements to it mean that Inslaw can sell the improved version for a fee. The letter is accompanied by a memorandum from Inslaw owner William Hamilton explaining the situation. Inslaw and the department have just signed a contract for Inslaw to implement the public domain version of the software at US attorneys’ offices for the department (see March 1982). However, the privately-funded enhancements mean that if the department chose to use the latest version, it would have to pay for the actual software, as well as installation and maintenance costs. [US Congress, 9/10/1992]
Inslaw asks the Justice Department to appoint a manager other than C. Madison “Brick” Brewer to run the PROMIS project that Inslaw is working on for the department. Brewer had formerly worked for Inslaw, but had left under a cloud (see 1976), and later been hired by the department to supervise the contract between it and Inslaw (see April 1982). Following initial problems with Brewer (see April 14, 1982 and April 19, 1982), Inslaw asks Associate Deputy Attorney General Stanley E. Morris to replace him, as Inslaw owner William Hamilton thinks he has antagonistic feelings toward Inslaw due to their past. However, departmental officials say that Brewer’s skills and prior employment with Inslaw were important factors in his hiring by the department. Laurence McWhorter, deputy director of the Executive Office for US Attorneys, will later say that Brewer’s employment by Inslaw qualified him to “run the implementation of a case tracking system for US attorneys” and “to basically direct the implementation of a case tracking system in US attorneys offices.” The House Judiciary Committee will comment, “It is difficult to understand, however, how… McWhorter could make this statement” because Brewer himself admitted that at the time he left Inslaw, “he had very little, if any, experience in managing computer projects and government ADP [automated data processing] procurement law,” and he also “admitted to a lack of experience or detailed understanding of computers or software.” [US Congress, 9/10/1992]
Justice Department manager C. Madison Brewer displays his hostility towards Inslaw, Inc., in a meeting to discuss the implementation of the PROMIS application. An Inslaw memorandum of the meeting says, “Brewer seized upon this issue [that Inslaw wanted to be paid for privately-financed enhancements it had made to the software] and launched into a tirade which was very emotional, unorganized, and quite illogical.” Brewer’s complaints are:
The memo claiming the payments is “typical of Inslaw and [Inslaw owner] Bill Hamilton and that it was self-serving and unnecessary.”
How did the Justice Department “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?”
A press release about a contract awarded to Inslaw was inaccurate because “it described West Virginia as a successful implementation when in fact, they had spent an additional 20K [$20,000] on the project and Lanier was doing all the work.”
The memo had caused “all kinds of problems in Justice and had many people upset.”
“Illinois Criminal Justice Coordinating Council, Michigan Prosecuting Attorney’s Association, Andy Voight, and others,” would say that “Inslaw did not do good or successful work.”
“Hamilton started the PROMIS system as an employee of the DC, USAO [US Attorneys Office in Washington, DC]. 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.”
The memo adds, “All of these comments were based with an obvious dislike of Bill Hamilton and a resentment for the success of Inslaw personified in him.” [US Congress, 9/10/1992]
Inslaw enhances its PROMIS software under contract to the Bureau of Justice Statistics, part of the Justice Department. The improvement, known as the “printed inquiry enhancement,” is delivered to the department on May 17, 1982. As the development of the original software and this enhancement is government-funded (see Mid-1970s), Inslaw cannot charge for providing the software to the government solely by virtue of this improvement. However, Inslaw also says it makes privately-funded enhancements at this time, enabling it to charge a fee for a version of the application with these enhancements (see April 2, 1982 and July 17, 1982). [US Congress, 9/10/1992]
Inslaw’s attorney James Rogers writes to the Justice Department in an attempt to allay fears the department has about the implementation of the company’s PROMIS software for it. Rogers provides Associate Deputy Attorney General Stanley E. Morris with a detailed description of what the company plans to do to market the software commercially from the next month, and asks that the department respond to Inslaw to “ensure that these representations are correct.” Rogers says that the version of PROMIS the company will market comprises three parts: (1) the original application developed with government money (see Mid-1970s); (2) enhancements made by Inslaw using private money (see April 2, 1982 and July 17, 1982); and (3) an enhancement made for the Bureau of Justice Statistics (see Before May 17, 1982). Parts (1) and (3) do not entitle Inslaw to market the software commercially themselves. However, part (2) does. At the Justice Department, both C. Madison “Brick” Brewer, who supervises the PROMIS contract, and Peter Videnieks, the department’s contracting officer, are unhappy with this intention. The House Judiciary Committee will comment that this letter is “followed by a very antagonistic meeting” between Brewer and Inslaw representatives, and that Brewer and Videnieks continue “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.” [US Congress, 9/10/1992]
In an internal memo, Inslaw employee John Gizarelli outlines a problem concerning the PROMIS project with the Justice Department official handling the contract, C. Madison “Brick” Brewer (see April 14, 1982, April 19, 1982, and Mid-April 1982). Brewer had left Inslaw under a cloud in the mid-1970s (see 1976), but is now overseeing the PROMIS implementation project at the Justice Department. Gizarelli writes to Inslaw vice president Dean Merrill that Brewer “has made no secret of his dislike of [Inslaw president] Bill Hamilton.” He adds: “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 who’s boss. I don’t think Brick will ever be at peace with his feelings about Bill and therefore, with us.” [US Congress, 9/10/1992]
Joyce Demy, an employee of the software company Inslaw, writes to the firm’s lawyer saying that it made enhancements to its PROMIS software worth $1 million between May 1981 and May 1982. She also tells the lawyer, James Rogers of Latham, Watkins & Hills, that no government money was used for the enhancements, which were paid for solely out of private funds. Prior to the enhancements, the original PROMIS software was in the public domain, as it had been paid for by government money (see Mid-1970s). However, the various privately-funded enhancements mean that Inslaw can claim ownership of it. [US Congress, 9/10/1992]
Associate Deputy Attorney General Stanley Morris writes to James Rogers, an attorney acting for Inslaw, and admits that the company owns privately funded improvements to the PROMIS software. Morris first points out that part of the software was financed by the government: “We agree that the original PROMIS, as defined in your letter of May 26, 1982 (see May 26, 1982), is in the public domain. We also agree that the printed inquiry enhancement is in the public domain.” This means that Inslaw could never charge the department for the use of software comprising only the original application and the printed inquiry enhancement (although it could of course charge for installation and maintenance). However, Morris adds, “To the extent that any other enhancements to the system were privately funded by Inslaw and not specified to be delivered to the Department of Justice under any contract or other arrangement, Inslaw may assert whatever proprietary rights it may have.” This means the department agrees that Inslaw can sell a version of the software with privately-funded enhancements. [US Congress, 9/10/1992] This statement is made in response to a letter sent by lawyers acting for Inslaw founder William Hamilton, informing the department that Inslaw intends to become a private company, and asking it to waive any proprietary rights it might claim to the enhanced version. Clarification will be provided in a 1988 deposition in which Deputy Attorney General Arnold Burns will say, “Our lawyers were satisfied that Inslaw’s lawyers could sustain the claim in court, that we had waived those [proprietary] rights.” [Wired News, 3/1993]
Peter Videnieks, the Justice Department’s contracting officer, writes to Inslaw and says that it is in default of a clause in a contract between it and the government on the installation of PROMIS software. The clause concerns advance payments made by the department, which Inslaw needs to receive for its work under the contract in order to keep on operating as a business. Due to Inslaw’s poor financial situation, the House Judiciary Committee will comment that withholding the advance payments would have a “devastating impact” on the company, and Videnieks will later say he was aware of this, stating, “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.” Due to its lack of cash, Inslaw had assigned rights to the advance payments to a financial institution to secure a line of credit. Justice Department PROMIS project manager C. Madison “Brick” Brewer will say that the reason the department is considering terminating the advance payments is a loan Inslaw has from the Bank of Bethesda, under which a lien was placed on the advance payments received by Inslaw from a specific account (not the account itself). According to Brewer, the lien is contrary to the contract and places the government in financial risk. [US Congress, 9/10/1992]
A technical representative for the Justice Department formally asks Inslaw for a copy of the PROMIS software currently being used by US attorneys’ offices. The department will later say that this request is motivated by concern over the financial viability of Inslaw, although the company is in financial difficulty because the government is withholding advance payments it owes (see November 10, 1982). At this time, the department has not yet obtained the minicomputer hardware for each attorney’s office and Inslaw has arranged for the largest US attorneys’ offices to use PROMIS on a time-sharing basis. [US Congress, 9/10/1992]
Peter Videnieks, the Justice Department’s contracting officer, writes to Inslaw to demand that it turn over all computer programs and supporting documentation relating to a contract to install PROMIS software for the department (see March 1982). In response, Inslaw says it will not do this without the department modifying the contract between them to acknowledge that it has inserted privately-funded enhancements into a public domain version developed for the department. This modification is apparently required because the department is using a time-share version of the application in advance of full installation, and Inslaw’s other timesharing customers also use a version with the enhancements. The department then says that the original contract called for software in which the government has unlimited rights, and asks Inslaw to identify the parts of the software it claims are proprietary. Inslaw offers to provide the enhanced software to the 94 attorneys’ offices covered by the contract at no extra charge, provided the department agrees to Inslaw’s rights and does not disseminate the software beyond these offices. However, Videnieks will later tell investigators for the House Judiciary Committee that the department believed that it had unlimited rights to any versions of PROMIS, and if restrictions were placed on data rights, then this would not satisfy Inslaw’s obligation under the contract. [US Congress, 9/10/1992]
The Justice Department’s PROMIS project manager, C. Madison “Brick” Brewer, writes a memo about potential developments in the project. In the memo, he says he is concerned about the possibility Inslaw, the company that is implementing the PROMIS software, may go bankrupt, and that staff at the Executive Office for US Attorneys may need to take over the project. Brewer also mentions the possibility that the contract with Inslaw could be terminated by the department. Inslaw will enter bankruptcy in 1985, at least partially as a result of the department withholding payments from it (see February 1985). [US Congress, 9/10/1992]
The Justice Department makes a counter-proposal in the dispute over whether Inslaw should provide an enhanced version of the PROMIS software and documentation to the department to ensure against the company’s bankruptcy (see December 6, 1982). The counter-proposal is made in a letter from Peter Videnieks, the department’s contracting officer, to Harvey Sherzer, an attorney for Inslaw. Videnieks still wants a copy of the enhanced PROMIS software, but is willing to limit the software’s dissemination to the attorneys’ offices contemplated by the original contract. However, the department does not admit that Inslaw has made privately-funded enhancements to the software, so this limitation on dissemination will only apply if Inslaw can demonstrate the privately-funded enhancements that it claims have actually been made. Nevertheless, no mechanism for producing such proof will be specified. If Inslaw can show the software contains such enhancements, the department will either tell it to remove them, or negotiate regarding inclusion of the enhancements. [US Congress, 9/10/1992]
Inslaw and the Justice Department conclude a modification, number 12, to a contract under which the company is to install PROMIS software for the department (March 1982). The modification appears to resolve a dispute that has arisen between the two parties (see December 6, 1982 and March 18, 1983), as the department wants Inslaw to give it a copy of the software, but Inslaw says it has made privately-funded enhancements to the code and wants the department to undertake not to disseminate the enhanced software beyond the locations specified in the original contract (the department is entitled to disseminate an earlier, public domain version of the contract any way it wants). The modification says that Inslaw will give the department a copy of the software, and the department undertakes not to disseminate it in future, provided that Inslaw can demonstrate the enhancements were actually made. As a result of the agreement, the department will continue to make advance payments to Inslaw. It is this modification that leads to a series of legal disputes that will last well into the next decade, as the parties never come to an agreement on how the enhancements are to be demonstrated and the department begins to disseminate the software unchecked. [US Congress, 9/10/1992]
Peter Videnieks, the Justice Department’s contracting officer, writes to Inslaw to set out the department’s position on a significant modification to a contract between the two organizations. Videnieks agrees that modification 12 “continues to limit dissemination of that version of the PROMIS computer software [a privately-enhanced version] specified in the modification.” He adds that the modification “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 officer’s final decision in the matter.” [US Congress, 9/10/1992]
Inslaw implements its enhanced PROMIS software at 20 US attorneys’ offices. The implementation is performed pursuant to a contract signed by the company and the Justice Department in 1982 (March 1982). [US Congress, 9/10/1992]
A company called SCT attempts to purchase Inslaw, which designed the PROMIS database and search application. SCT is assisted by the New York investment bank Allen & Co., which helps with the finance for the proposed deal. The attempt fails, but, according to Inslaw’s founder William Hamilton, in the process a number of Inslaw’s customers are warned by SCT that Inslaw will soon go bankrupt and will not survive reorganization. Wired magazine will say that Allen & Co. has “close business ties” to Earl Brian, a businessman who is said to be interested in PROMIS software and who is well-connected inside the Ronald Reagan administration. [Wired News, 3/1993]
Inslaw, the owner and developer of the enhanced PROMIS software, declares bankruptcy, applying for Chapter 11 reorganization at the Bankruptcy Court for the District of Columbia. Inslaw’s poor financial condition is at least partly due to a dispute with the Justice Department over the software, as the department owes it a minimum of $1.6 million in contract payments for implementation, but is withholding them. [US Congress, 9/10/1992]
Inslaw representatives Elliot Richardson and Donald Santarelli, a former administrator of the Law Enforcement Assistance Administration, meet with acting Deputy Attorney General Lowell Jensen to discuss a resolution of the Inslaw affair concerning the Justice Department’s alleged misappropriation of enhanced PROMIS software. Richardson and Santarelli ask for rapid talks to resolve disputes that have caused the department to withhold money from Inslaw and the company to go bankrupt, that the department consider a new proposal for work by Inslaw, and that Jensen appoint somebody to investigate Inslaw’s claims that some department officials, in particular C. Madison Brewer (see 1976 and April 1982), are biased against it. The business proposal is that Inslaw implement PROMIS in smaller US attorneys’ offices. This was originally covered by a contract between Inslaw and the department (see March 1982), but this part of the contract was terminated in 1984 (see December 29, 1983 and February 1984). [US Congress, 9/10/1992] The department rejects the proposal for additional work, but it is unclear whether the allegations against Brewer and others are investigated (see After March 13, 1985).
The Justice Department starts an internal review of the Inslaw affair, but the content of the review will be disputed. The review follows a meeting at which Inslaw representatives made three requests (see March 13, 1985): that the department negotiate on a resolution of the disputes between it and Inslaw; that it consider a new proposal made by Inslaw for additional work; and that it investigate allegations of misconduct against departmental personnel. The review is ordered by Deputy Attorney General Lowell Jensen and performed by Deputy Associate Attorney General Jay Stephens.
Jensen's Version - According to Jensen, the review is to look at the bias allegations. He will say he recalls discussing the results of Stephens’ review, adding that, based on Stephens’ assessment of the allegations, no review by the Office of Professional Responsibility is merited.
Stephens' Version - However, Stephens will tell the House Judiciary Committee under oath that he does not undertake a review of the misconduct allegations, but only looks at Inslaw’s business proposal. The committee will point out that this is in “direct contradiction” of Jensen’s version. While examining the proposal, Stephens receives several telephone calls from Inslaw attorneys Charles Work and Elliot Richardson. He feels they are lobbying the department very hard because they believe Inslaw has what the committee will call “some special relationship” with the department. According to a report by the committee, Work and Richardson attempt to convey that, “based on a longstanding relationship between the department and Inslaw, the department should look favorably on Inslaw’s new business proposal.”
Outcome of Review - However, Stephens reports to Jensen that the need for Inslaw’s business proposal is questionable and the department thinks the work can be done in-house. Jensen then writes to Richardson, saying that the department does not have an immediate need for the work, and will not act on the proposal.
Comment by House Committee - The committee will comment, “Because the department did not adequately investigate Inslaw’s allegations, the company was forced into expensive, time-consuming litigation as the only means by which the department’s misappropriation of Inslaw’s enhanced PROMIS could be exposed.” [US Congress, 9/10/1992]
In an analysis of an Inslaw proposal for the resolution of the PROMIS dispute, the Executive Office for US Attorneys (EOUSA), a Justice Department component, says that Inslaw has not made any proprietary enhancements to the software. “It appears [to the department] that there are no proprietary enhancements,” says the analysis sent by William P. Tyson, the EOUSA director, to Jay Stephens, the deputy associate attorney general. “All proposals received from Inslaw attempt to force the department into acknowledging Inslaw’s proprietary interest in the US attorneys’ version of PROMIS by offering a license agreement for software maintenance,” Tyson adds. According to the memo, accepting Inslaw’s proposal “would, in effect, ratify Inslaw’s claim that the software is proprietary; not only the micro-computer version which Inslaw proposes to develop, but also the Prime mini-computer version currently operational in 20 districts.” The Justice Department’s position means that it would have unlimited rights to the software. The House Judiciary Committee will later comment that the department “may have used its ‘unlimited rights’ posture as a pretextual basis for its national and international distribution of Enhanced PROMIS outside of the department.” [US Congress, 9/10/1992]
The Justice Department makes enhanced PROMIS software available at multiple locations, outside the framework of its contract with Inslaw on the application’s installation and over protests by the company. The software is first installed at 25 US attorneys’ offices in addition to 20 still covered by a contract between Inslaw and the department (see Between August 29, 1983 and February 18, 1985). According to Inslaw’s counsel Elliot Richardson, an enhanced version of the software is then illegally copied to support an additional two sites. Finally, 31 additional sites are brought on line via telecommunications. These additional, smaller US attorneys’ offices had initially been covered by the contract with Inslaw, but this portion of the contract was terminated in 1984 (see February 1984). Inslaw will repeatedly protest about this installation (see March 14, 1986), and a bankruptcy court will find it is in violation of the law (see September 28, 1987), although this ruling will be overturned (see May 7, 1991). [US Congress, 9/10/1992]
Inslaw complains about additional installations of enhanced PROMIS software by the Justice Department. Inslaw and the department had a contract for the company to install the software in 20 large US attorneys’ offices and then dozens of smaller ones (see March 1982), but the portion of the contract for the smaller offices was terminated (see February 1984), and the department is installing an enhanced version of the software Inslaw says it owns in these smaller offices (see Between June 24, 1985 and September 2, 1987). The complaint is made in a letter by Inslaw president William Hamilton to H. Lawrence Wallace, the assistant attorney general for administration. “I am extremely disturbed and disappointed to learn that the Executive Office for US Attorneys has begun to manufacture copies of the PROMIS software for customization and installation in additional US attorneys offices, specifically those in St. Louis, Missouri, and Sacramento, California,” Hamilton writes. “This action occurs at the very time that the Department of Justice and Inslaw are attempting to resolve, by negotiation, Inslaw’s claim that the US attorneys version of PROMIS contains millions of dollars of privately-financed enhancements that are proprietary products of Inslaw and for which Inslaw has, to date, received no compensation.” [US Congress, 9/10/1992]
Peter Vidieneks, the Justice Department contracting officer working on the PROMIS contract, declares that Inslaw has not made any proprietary enhancements to the software. He therefore denies Inslaw’s claim of $2.9 million for licensing fees. This means that the Justice Department thinks it owns all versions of PROMIS, whereas Inslaw says it owns one version it has improved through privately-funded enhancements. [US Congress, 9/10/1992]
A lawyer acting for Inslaw warns the Justice Department that the department’s use of the enhanced version of PROMIS software contravenes bankruptcy legislation. Inslaw, in Chapter 11 bankruptcy due to a dispute between itself and the department (see February 1985), writes to the department’s contracting officer saying that the software’s use without Inslaw’s consent and the payment of licensing fees would contravene Inslaw’s property rights and its rights as a debtor in possession of the software under the bankruptcy code. In addition, Inslaw argues it is “a wrongful exercise of control over property of the debtor’s estate in violation of the automatic stay now in effect.” The automatic stay is a legal mechanism that prevents creditors—such as the Justice Department—harassing a debtor—such as Inslaw—in bankruptcy. Inslaw also says that the department’s dissemination of the software to third parties could damage or destroy the product’s commercial value, possibly wrecking the company. [US Congress, 9/10/1992]
Inslaw files a complaint for a declaratory judgment, the enforcement of automatic stay bankruptcy protection provisions, and damages against the Justice Department in the dispute over the department’s alleged theft of enhanced PROMIS software. The automatic stay is one of the fundamental debtor protections provided by bankruptcy laws. It stops all collection efforts, harassments, and foreclosure actions, giving the debtor temporary relief from creditors. It is important because it allows a bankruptcy court to centralize all disputes concerning property of the debtor’s estate so that reorganization can proceed orderly and efficiently. [US Congress, 9/10/1992] Inslaw’s attorney for the case, Leigh Ratiner of the Washington firm Dickstein, Shapiro & Morin, chooses the bankruptcy court for the filing based on the premise that the Justice Department, as the creditor, has control of enhanced PROMIS. He will later say: “It was forbidden by the Bankruptcy Act for the creditor to exercise control over the debtor property. And that theory—that the Justice Department was exercising control—was the basis that the bankruptcy court had jurisdiction. As far as I know, this was the first time this theory had been used. This was ground-breaking.” [Wired News, 3/1993] Inslaw claims that Justice Department manager C. Madison Brewer, who was responsible for implementing PROMIS in the department, was instrumental in propelling Inslaw into bankruptcy (see April 1982, April 14, 1982, and April 19, 1982), and that he then hindered Inslaw in its development of a reorganization plan. Inslaw also alleges that its concerns were made known to the highest levels of Justice Department’s management, without any response. [US Congress, 9/10/1992]
The Office of Professional Responsibility (OPR), a Justice Department oversight component, receives a letter from Laurie A. Westly, chief counsel to Senator Paul Simon (D-IL), asking for its view of allegations made by the software company Inslaw against the Justice Department. The letter mentions claims of misconduct by department official Lowell Jensen. Westly also refers to litigation recently initiated by Inslaw (see June 9, 1986), specifically the claim that Jensen contributed to the bankruptcy of Inslaw and had a negative bias toward its software. She also asks whether Jensen has breached any ethical or legal responsibility as a department employee. [US Congress, 9/10/1992] It is unclear what action the OPR takes in response to this matter. However, it conducts a preliminary investigation into whether Jensen was biased against Inslaw this year, and this may be in response to this letter (see 1986). It will also begin a fuller investigation the next year (see October 14, 1987).
The Office of Professional Responsibility (OPR), an oversight unit at the Justice Department, conducts an initial review of bias allegations against departmental officials in the Inslaw affair. The exact timing of the review is uncertain, although it may come after a query about the case from Senator Paul Simon in June (see June 16, 1986). The review finds that there is no misconduct by Justice Department manager Lowell Jensen. According to statements made by acting OPR counsel Robert Lyon and assistant counsel David Bobzein to the House Judiciary Committee in 1990, the OPR does not perform a full review at this time because the allegations of bias are not an issue OPR would normally review. Therefore, it plans to rely on the findings of a bankruptcy court hearing the Inslaw case (see June 9, 1986). However, after the bankruptcy court finds in favour of Inslaw (see September 28, 1987), partly because it thinks the bias allegations are well founded, OPR begins a full investigation (see October 14, 1987) and concludes there was no bias (see March 31, 1989). [US Congress, 9/10/1992]
Deputy Attorney General Arnold Burns is told that the Justice Department has waived its rights to enhanced PROMIS software (see August 11, 1982). Following a letter asking about the Inslaw case from Senator Charles Mathias (see July 9, 1986), Burns asks subordinates about the litigation with Inslaw and is told the company wants the department to pay royalties. Burns then suggests that the issue should be turned around and that a claim against Inslaw should be made for it to pay royalties to the government, which funded the development of the first version of PROMIS (see Mid-1970s). However, further research comes up with a result shocking to Burns, who will say in 1988, “The answer that I got, which I wasn’t terribly happy with but which I accepted, was that there had been a series of old correspondence and back and forthing [sic] and stuff, that in all of that, our lawyers were satisfied that Inslaw could sustain the claim in court, that we had waived those rights, not that I was wrong that we didn’t have them but that somebody in the Department of Justice, in a letter or letters, as I say in this back and forthing [sic], had, in effect, waived those rights.” The House Judiciary Committee will later comment, “Considering that the deputy attorney general was aware of Inslaw’s proprietary rights, the department’s pursuit of litigation can only be understood as a war of attrition between the department’s massive, tax-supported resources and Inslaw’s desperate financial condition, with shrinking (courtesy of the department) income.” The committee will add, “In light of Mr. Burns’ revelation, it is important to note that committee investigators found no surviving documentation (from that time frame) which reveal the department’s awareness of the relative legal positions of the department and Inslaw, on Inslaw’s claims to proprietary enhancements referred to by Mr. Burns.” [US Congress, 9/10/1992]
Former Deputy Attorney General Lowell Jensen says that Attorney General Ed Meese was informed about the Justice Department’s dealings with Inslaw. He makes the statement in a sworn deposition to the Office of Professional Responsibility, a Justice Department unit investigating the department’s alleged theft of the enhanced PROMIS case tracking software from Inslaw. Jensen says, “I have had conversations with the attorney general [Meese] about the whole Inslaw matter, as to what had taken place in the PROMIS development and what had taken place with the contract and what decisions had been made by the department with reference to that.” [US Congress, 9/10/1992] However, Meese will tell the House Judiciary Committee he has no recollection of any discussions about case tracking (see July 12, 1990).
Judge George Bason of the Bankruptcy Court for the District of Columbia issues an oral finding that the Justice Department “took, converted, and stole” the enhanced version of Inslaw’s PROMIS software by “trickery, fraud, and deceit.” The ruling is issued at the end of a trial that lasts over two weeks and involves sworn statements from over 40 witnesses and thousands of pages of documentary evidence. Bason finds that a key departmental official, project manager C. Madison Brewer, was biased against Inslaw (see April 1982, April 14, 1982, and April 19, 1982). In addition, Brewer’s boss Lowell Jensen (see December 29, 1983 and February 1984) is said to have “a previously developed negative attitude about PROMIS and Inslaw,” because he had been associated with the development of a rival case management system while he was a district attorney in California, and this affected his judgment throughout his oversight of the contract. Further, the department violated bankruptcy protection legislation that applied to Inslaw by using and exercising control over Inslaw’s property—the enhanced PROMIS software—without negotiating a license fee. This oral finding is confirmed in a written opinion issued on January 25, 1988. In the written finding, Bason adds, “[T]his court finds and concludes that the department never intended to meet its commitment and that once the department had received enhanced PROMIS pursuant to Modification 12 (see April 11, 1983), the department thereafter refused to bargain in good faith with Inslaw and instead engaged in an outrageous, deceitful, fraudulent game of ‘cat and mouse,’ demonstrating contempt for both the law and any principle of fair dealing.” [US Congress, 9/10/1992]
The Office of Professional Responsibility (OPR), an oversight component at the Justice Department, begins an investigation into allegations made by the software company Inslaw against some Justice Department staff. The OPR had conducted a preliminary investigation the previous year (see 1986), concluding the officials were not biased against the company. However, after a bankruptcy court finds serious wrongdoing by departmental officials (see September 28, 1987), Deputy Attorney General Arnold Burns asks for “a complete and thorough investigation into the allegation of bias and misconduct by various Justice Department officials against Inslaw.” The full investigation will again conclude that the officials were not biased against Inslaw (see March 31, 1989). [US Congress, 9/10/1992]
The software company Inslaw submits allegations about the Justice Department’s conduct in the dispute over the enhanced PROMIS application to the Public Integrity Section (PIS), a departmental oversight component. The allegations follow on from the findings of a bankruptcy court favourable to Inslaw (see September 28, 1987 and January 25, 1988). In the complaint, Inslaw charges the department with:
Procurement fraud. Inslaw claims that Attorney General Edwin Meese and former Deputy Attorney General Lowell Jensen schemed to ensure that enhancements made to the PROMIS software by Inslaw would be obtained for free by the department, which would then make them available to a businessman named Earl Brian;
Violation of automatic stay debtor protection provisions invoked by the bankruptcy court. Inslaw says that by using the enhancements it made to the software after the bankruptcy case was filed, the department violated federal bankruptcy law. The bankruptcy court found that the department committed such violation, an act that could constitute an obstruction of the bankruptcy proceedings; and
Attempts to change Inslaw’s Chapter 11 bankruptcy, for the company’s reorganization, into a Chapter 7 bankruptcy, for the company’s liquidation. Inslaw says that the department unsuccessfully attempted to have an official named Harry Jones detailed from the US Trustee’s office in New York to Washington to take over the Inslaw bankruptcy to get Inslaw liquidated. Inslaw also says unsuccessful pressure was exerted by departmental official Thomas Stanton on US Trustee William White to convert the bankruptcy case into a Chapter 7 liquidation.
The PIS says it will examine some of the allegations, but in the end it will not open a formal preliminary investigation (see February 29, 1988). [US Congress, 9/10/1992]
The Bankruptcy Court for the District of Columbia awards $8 million in damages to Inslaw in the dispute over the Justice Department’s use of the enhanced PROMIS software. The decision follows on from a ruling by the court that the department had violated Inslaw’s automatic stay bankruptcy protection rights by using and copying an enhanced version of Inslaw’s PROMIS software (see September 28, 1987). The award consists of $6.8 million in actual and punitive damages, as well as $1.2 million in attorneys’ fees. [US Congress, 9/10/1992]
The Public Integrity Section (PIS), a Justice Department oversight component, decides not to open a preliminary investigation of the Inslaw affair over the department’s alleged misappropriation of PROMIS software (see February 1988). The decision is communicated in a memo drafted by William F. Weld, the assistant attorney general for the department’s criminal division, of which the PIS is a part. The PIS finds that at least some of the people Inslaw complains about, including Attorney General Edwin Meese, former Deputy Attorney General Lowell Jensen, and Deputy Attorney General Arnold Burns, are appropriate targets of an investigation and that Inslaw is generally a credible source for allegations. However, according to Weld, the information Inslaw provides is not specific enough to constitute grounds to begin a preliminary investigation of the need for an independent counsel. This is because the PIS regards the facts Inslaw presented as unsupported speculation that the officials were involved in a scheme to get the enhanced PROMIS software. Therefore, the review should be closed “due to lack of evidence of criminality.” The House Judiciary Committee will be critical of the PIS’s finding, calling its investigation “shallow and incomplete,” and saying the department appeared to be “more interested in constructing legal defenses for its managerial actions rather than investigating claims of wrongdoing which, if proved, could undermine or weaken its litigating posture.” [US Congress, 9/10/1992]
The Office of Professional Responsibility (OPR), an oversight unit at the Justice Department, issues a report on the Inslaw affair over the department’s alleged theft of enhanced PROMIS software. The report finds that allegations of bias made by Inslaw and seconded by a bankruptcy court (see September 28, 1987) against departmental officials are unsupported. Inslaw had questioned the performance of former Attorney General Edwin Meese, former Deputy Attorney General Lowell Jensen, former Deputy Attorney General Arnold Burns, and others. The OPR says that the court’s findings on misconduct by department officials are “clearly erroneous.” In addition, the report says: “There is no credible evidence that the department took or stole Inslaw’s enhanced PROMIS by trickery, fraud, and deceit. Additionally, we have found no credible evidence that there existed in the department a plot to move to convert Inslaw’s Chapter 11 bankruptcy to one under Chapter 7 of the bankruptcy code.” The House Judiciary Committee will be extremely critical of this investigation, commenting, “During its investigation OPR chose to ignore the court’s findings and conclusions that there was bias against Inslaw at the department.” In addition, the committee will say that the OPR looked at the bias allegations in isolation and “incredibly” did not examine the merits of the contract dispute, meaning its conclusions on the taking of PROMIS and the type of bankruptcy were “gratuitous,” especially as Burns had told it the department agreed Inslaw owned the enhancements it made to PROMIS (see August 11, 1982). The committee will also point out that the OPR’s deputy counsel, Richard M. Rogers, said he was recused from the investigation because of his association with Burns, although he was present when Meese provided a sworn statement. In this context, the committee will highlight problems found by the Government Accountability Office with OPR around this time (see February 7, 1992). [US Congress, 9/10/1992]
Elliot Richardson, an attorney acting for the software company Inslaw, writes to Attorney General Richard Thornburgh about the dispute with the Justice Department over the department’s alleged misappropriation of enhanced PROMIS software. Richardson complains about a review of the case by the Public Integrity Section (PIS), an oversight component at the department, which came down against Inslaw’s claims (see February 29, 1988). He says that there is a conflict of interest because the department is defending itself against a civil action by Inslaw while at the same time investigating itself over the allegations that form the basis of the action. If the internal investigation found wrongdoing by the department, this would destroy the department’s case in court. His view is that the department has given priority to defending itself against the civil action, not the criminal investigation of its own wrongdoing. Richardson adds that no one from the PIS has contacted him, Inslaw counsel Charles Work, some of the witnesses in the case, or Inslaw’s owners. Despite this, the owners provided the PIS with the names of 30 people who had information relevant to the investigation in December 1988. Therefore, Richardson concludes that the only solution is for the department to appoint an independent counsel. [US Congress, 9/10/1992]
Charles Work, counsel for the software company Inslaw, writes to the Justice Department over the department’s alleged misappropriation of enhanced PROMIS software. Work says that an investigation of the case by the Public Integrity Section, an oversight component at the department, is deficient, and he describes specific problems with it (see February 29, 1988). However, the department does not re-open the inquiry. [US Congress, 9/10/1992]
The US District Court for the District of Columbia upholds a bankruptcy court ruling in favor of Inslaw. The ruling concerned the dispute over the PROMIS software between Inslaw and the Justice Department, which was found to have violated bankruptcy protection provisions (see September 28, 1987 and February 2, 1988), but had appealed (see Between February 2, 1988 and November 22, 1989). Judge William Bryant finds that the department knew an enhanced version of PROMIS was Inslaw’s central asset, that ownership of the software was critical to the company’s reorganization in Chapter 11 bankruptcy, and that the department’s unilateral claim of ownership and its installation of the enhanced version in offices around the United States violated automatic stay bankruptcy provisions in multiple ways. In addition, Bryant agrees with the bankruptcy court’s conclusion that the department never had any rights to the enhanced version and that “the government acted willfully and fraudulently to obtain property that it was not entitled to under the contract.” In addition, when Inslaw suggested mechanisms to determine whether the private enhancements had been made, the government rejected them, and “when asked to provide an alternative methodology that would be acceptable, the government declined.” The department could have used established procedures to get relief from the automatic stay provisions, but simply chose not to do so. Bryant, who also finds that the department tried to convert Inslaw’s bankruptcy to Chapter 7 liquidation, adds, “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.” Finally, Bryant finds that, as the case was grounded in bankruptcy law, the bankruptcy court was an appropriate forum to hear the dispute and it did not have to be submitted to the Department of Transportation Board of Contract Appeals, an arena for contract disputes. Although most of the damages awarded are upheld, as Bryant finds the bankruptcy court assessed damages based on the evidence it obtained, he reduces compensatory damages by $655,200.88. [US Congress, 9/10/1992]
A US District Court rules that Attorney General Richard Thornburgh does not have to appoint a special prosecutor in the Inslaw affair. Inslaw’s attorney Elliot Richardson had filed the case because of a dispute with the Justice Department over allegations that the department had stolen a version of the PROMIS database and search application from the company. However, the court rules against Inslaw, stating that a prosecutor’s decision not to investigate—“no matter how indefensible”—cannot be corrected by any court. [Wired News, 3/1993]
The Justice Department asks an appellate court to consider its dispute with Inslaw over the enhanced PROMIS software for the Appellate Mediation Program. The program, which has been running for about two years, is intended to benefit parties to a dispute by providing a forum which encourages cases to be settled, or at least the resolution or simplification of some of the issues, through an independent and neutral mediator. However, the success of such attempts hinges on their confidentiality, as cases are not to be shared with judges or anyone outside the relevant court. [US Congress, 9/10/1992] Despite this, the mediation attempts will fail when news of them is leaked to the Washington Post (see October 1, 1990).
Former Attorney General Edwin Meese is interviewed by the House Judiciary Committee about the Inslaw affair. He says that he cannot recall any discussions with former Justice Department official Lowell Jensen about office automation or case tracking at the department. He adds that if there were such a discussion, it would have been casual conversation. [US Congress, 9/10/1992] However, Jensen previously said he discussed the “whole Inslaw matter” with Meese (see June 19, 1987).
The Washington Post reports that the Justice Department has asked an appeals court to consider its dispute with Inslaw over enhanced PROMIS software for mediation. The request was made several months earlier (see June 28, 1990), but the process requires confidentially, so the leak forces Inslaw to withdraw and ends the mediation attempts. The House Judiciary Committee will comment that the leak was “completely contrary to the standards of the Appellate Program.” The committee will add: “It is difficult to understand the department’s strategy by this action. It may be that the department wanted to maintain the facade of working diligently to settle a sticky contract dispute while working behind the scenes to sabotage it and keep pressure on Inslaw by forcing it to expend additional resources on legal support during the mediation process. If this is the case, the department was successful. But the department also succeeded in maintaining a near-flawless record of seeking delay over resolution and raising the level of suspicion about its motives to a point where the public trust in the untarnished pursuit of justice is subject to grave doubts.” [US Congress, 9/10/1992]
The US Justice Department appeals an adverse decision of the US District Court for the District of Columbia in the dispute with Inslaw over the alleged theft of the enhanced PROMIS application (see November 22, 1989). The department raises some of the same issues previously raised in its appeal of a bankruptcy court ruling to the District Court and requests a reversal on the basis of the facts found in the bankruptcy court, which it says made “clear errors.” In addition, it argues:
That its use of enhanced PROMIS did not violate automatic stay bankruptcy protection, so the argument should not have been in the bankruptcy court, but before the Department of Transportation Board of Contract Appeals under the Contract Disputes Act;
That since no motion was filed to convert Inslaw from a chapter 11 bankruptcy to a chapter 7, there was no violation of the automatic stay protection in this respect;
That the department has not filed a claim, so it is still entitled to sovereign immunity; and
That damage awards for violation of the automatic stay can only be paid to individuals, not corporations.
The department will be successful and the District Court ruling will be overturned (see May 7, 1991). [US Congress, 9/10/1992]
The US Court of Appeals for the District of Columbia reverses two rulings in favor of Inslaw in the dispute over enhanced PROMIS software, following an appeal by the Justice Department (see October 12, 1990). The rulings had been issued by Bankruptcy Court for the District of Columbia (see September 28, 1987) and the US District Court for the District of Columbia (see November 22, 1989). The reversal is granted on what a House Judiciary Committee report favorable to Inslaw will call “primarily jurisdictional grounds.” The appeal court says the bankruptcy court was the wrong place to litigate the issues it decided and, in any case, the department has not violated automatic stay bankruptcy provisions. However, the appeal court notes that both lower courts found that the department had “fraudulently obtained and then converted Enhanced PROMIS to its own use,” and that “such conduct, if it occurred, is inexcusable.” [US Congress, 9/10/1992]
Following an adverse ruling in an appeals court, Inslaw files an appeal for a writ of certiorari to the Supreme Court. If the writ were granted, it would mean the Supreme Court agreed to hear a further appeal in the case. The appeals court had reversed bankruptcy and district court rulings favorable to Inslaw in its dispute with the Justice Department over the enhanced PROMIS software (see September 28, 1987, November 22, 1989, and May 7, 1991). The application will be denied (see January 13, 1992). [US Congress, 9/10/1992]
A judge hearing the PROMIS case for the Department of Transportation Board of Contract Appeals (DOTBCA) says that findings by the Bankruptcy Court for the District of Columbia and the US District Court for the District of Columbia have left a “cloud” over the Justice Department. The two courts originally found for Inslaw (see September 28, 1987 and November 22, 1989), which is in dispute with the department over an enhanced version of the PROMIS software, but these rulings were overturned on appeal, mostly on jurisdictional grounds (see May 7, 1991). At a hearing, counsel for the department says, “I think those trials speak for themselves, and every order has been vacated.” However, the judge responds: “There is one problem. The fact that a judge or a court doesn’t have jurisdiction doesn’t mean that the court is completely ignorant. True, Mr. Bason [the bankruptcy court judge] and Mr. Bryant [the judge that heard the initial appeal] did not have jurisdiction, but they did make some very serious findings on the basis of sworn testimony. They had been truly vacated, and it may be that all the statutes to run have run and they can’t go anywhere. Those cases may be dead forever. But it has left a cloud over the respondent [the department].” The House Judiciary Committee will comment: “As the DOTBCA judge concluded, there definitely remains a cloud over the department’s handling of Inslaw’s proprietary software. Department officials should not be allowed to avoid accountability through a technicality or a jurisdiction ruling by the Appeals Court.” [US Congress, 9/10/1992]
The US Supreme Court denies an application for a writ of certiorari made by Inslaw, meaning that the court will not hear its case. The application had been filed the previous year (see October 9, 1991), as Inslaw wanted to overturn an adverse ruling by an appeals court in its dispute with the Justice Department over the alleged theft of enhanced PROMIS software (see May 7, 1991). [US Congress, 9/10/1992]
Inslaw counsel Elliot Richardson writes to Justice Department special counsel Judge Nicholas Bua urging further investigation into the death of reporter Daniel Casolaro (see August 10, 1991). Richardson writes: “During the three days preceding his [Casolaro’s] death he told four friends in the course of four different telephone conversations that he was about to go to West Virginia to meet someone from whom he was confident of receiving definitive proof of what had happened to the PROMIS software and to Inslaw. There is no apparent reason why Casolaro would have lied to those four friends, nor is there any apparent reason why his friends would deliberately and concertedly misrepresent what he said to them. It is not likely, on the other hand, that Casolaro had unrealistic expectations either toward the significance of the evidence he anticipated receiving or toward the prospect that it would be delivered. He had, after all, been on the Inslaw case for one year, and he was bound to know as well as any other of the investigative reporters then pursuing it that promises of hard evidence had often been made and just as often disappointed. In the light of these facts, the key question is, with whom was Danny Casolaro expecting to meet and with whom did he meet?” [US Congress, 9/10/1992]
An unnamed US intelligence official tells businessman William Hamilton that there is a connection between the PROMIS database and search program and the Main Core database. Hamilton is a former NSA official who helped developed PROMIS, but is now involved in a series of disputes with the government over money he says it owes his company, Inslaw. Main Core is a database that is said to collect sensitive information, including about US persons. The specific type of connection is not certain. This is one of three times officials will tell Hamilton about the link (see 1995 and July 2001). [Salon, 7/23/2008]
The Justice Department issues a 187-page report clearing department officials of wrongdoing in the Inslaw affair, which concerned the alleged misappropriation of an enhanced version of PROMIS software. According to a department press release, “there is no credible evidence that department officials conspired to steal computer software developed by Inslaw, Inc. or that the company is entitled to additional government payments.” This concurs with a previous report by Nicolas Bua, a special counsel appointed by the department. The main points of the report are:
The use of PROMIS by the Executive Office of United States Attorneys and in US attorneys’ offices conforms with contractual agreements, and Inslaw is not entitled to additional compensation for the use of its PROMIS software;
No independent counsel should be appointed and the matter should be closed;
The investigative journalist Danny Casolaro, who died while investigating the Inslaw affair and other issues, committed suicide;
MIT professor Dr. Randall Davis was hired to compare the computer code in Inslaw’s PROMIS software with the code in the FBI’s FOIMS software, which Inslaw claimed was a pirated version of PROMIS. Davis concluded that there was no relation between FOIMS and PROMIS;
Two of the people who made allegations about the distribution of PROMIS outside the Justice Department, Michael Riconosciuto and Ari Ben-Menashe, are untrustworthy. The departmental press release calls them “primary sources relied on by Inslaw”;
None of the anonymous sources that had previously been reported to have made statements supportive of Inslaw came forward, despite assurances from Attorney General Janet Reno that they would be protected from reprisals. The press release says, “Individuals who were identified as sources denied making the statements attributed to them by Inslaw”;
The department did not obstruct the reappointment of bankruptcy Judge George Bason, who ruled in favour of Inslaw (see September 28, 1987, November 24, 1987, December 8, 1987, December 15, 1987, and January 12, 1988);
No documents related to the matter have been destroyed by the Justice Department command center;
There is no credible evidence that Inslaw’s PROMIS is being used elsewhere in the government (see 1982-1984, December 11, 1990, and May 2008), or has been improperly distributed to a foreign government or entity (see May 6, 1983, May 12, 1983, November 1990, and January 1991);
PROMIS was not stolen to raise money to reward people working for the release of American hostages in Iran, to penetrate foreign intelligence agencies, as part of a US-Israeli slush fund connected with the late British publisher Robert Maxwell, or in aid of a secret US intelligence agency concealed within the Office of Special Investigations Nazi-hunting unit. [US Department of Justice, 9/27/1994]
A former NSA official tells businessman William Hamilton that there is a connection between the PROMIS database and search program and the Main Core database. Hamilton is a former NSA official who helped developed PROMIS, but is now involved in a series of disputes with the government over money he says it owes his company, Inslaw. Main Core is a database that is said to collect sensitive information, including about US persons. The specific type of connection is not certain. This is one of three times officials will tell Hamilton about the link (see Spring 1992 and July 2001). [Salon, 7/23/2008]
Judge Christine Miller of the Court of Federal Claims rejects allegations by the software firm Inslaw that the Justice Department illegally stole its enhanced PROMIS software and distributed it. The finding is contained in a 186-page opinion issued by Miller that says there is “no merit to the claims.” The decision follows a three-week trial. The matter was sent to the court by Congress, which referred the case as a part of considerations about whether to pass a private bill to compensate Inslaw. The original contract required Inslaw to install in US attorneys’ offices a public domain version of PROMIS owned by the government. But, according to Miller, without notice to the government, Inslaw installed a different version of the software and then asserted that the government could not use the software in other offices. (Note: the contract was signed in March 1982 (see March 1982), and Inslaw notified the department of the enhancements on April 2 (see April 2, 1982).) Miller’s findings are:
Inslaw has not shown it has any ownership rights to the software and that the enhancements it claims are not proprietary to it. Miller says that some of the enhancements do actually exist—12 of the over 100 Inslaw says it made—but Inslaw cannot demonstrate it owns them;
Neither has Inslaw shown that the department acted improperly in any way in connection with the software, as it had unlimited rights to the enhanced software it received and acted in good faith;
Inslaw’s decision to take its case to the bankruptcy court, rather than courts with certain jurisdiction to hear it, was a tactical one (see June 9, 1986);
A panel of independent experts appointed by the judge to review other software applications Inslaw claims are pirated versions of PROMIS found that Inslaw’s allegations were false;
In addition to not having a legal claim against the US, Inslaw does not have an equitable claim either, because it did not own the software and the Justice Department acted properly.
Assistant Attorney General Frank Hunger, head of the civil division, comments: “Both parties benefit from having a decision from a court with authority to resolve the matter—a court that has heard all the evidence. And the public benefits because all the evidence has been aired and they can be confident that the facts have finally been revealed. Certainly, the department benefits from the lifting of the cloud that has hung over it for a decade.” As the court investigated the matter at the request of Congress, the decision will be sent back there, although Inslaw will have the chance to appeal the matter to a three-judge panel at the same court beforehand. [US Department of Justice, 8/4/1997]
Retired Admiral Dan Murphy, a former deputy director of the CIA, indicates to businessman William Hamilton that there is a connection between the PROMIS database and search program and the Main Core database. Hamilton is a former NSA official who helped develop PROMIS, but is now involved in a series of disputes with the government over money he says it owes his company, Inslaw. Main Core is a database that is said to collect sensitive information, including about US persons. The specific type of connection is not certain and Murphy does not specifically mention Main Core, but says that the NSA’s use of PROMIS involves something “so seriously wrong that money alone cannot cure the problem.” Hamilton will later say, “I believe in retrospect that Murphy was alluding to Main Core.” This is one of three times officials will tell Hamilton about the link (see Spring 1992 and 1995). [Salon, 7/23/2008]
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