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Inslaw and PROMIS

Legal Proceedings between Inslaw and the Justice Department

Project: US Civil Liberties
Open-Content project managed by Paul, KJF, mtuck, paxvector

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February 1985: Inslaw Declares Bankruptcy

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]

Entity Tags: Bankruptcy Court for the District of Columbia, US Department of Justice, Inslaw, Inc.

Category Tags: Origin of Dispute, Legal Proceedings

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]

Entity Tags: Inslaw, Inc., US Department of Justice

Category Tags: Legal Proceedings

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]

Entity Tags: US Department of Justice, Leigh Ratiner, C. Madison “Brick” Brewer, Inslaw, Inc., Bankruptcy Court for the District of Columbia

Category Tags: Legal Proceedings

Inslaw files a claim with the Department of Transportation Board of Contract Appeals in its dispute over the Justice Department’s use of enhanced PROMIS software. Further claims will be filed on September 19, 1986 and August 24, 1987. The claims are filed subsequent to notices of appeal submitted in February 1985, as well as May and November 1986. The monetary claims fall into six categories:
bullet Time-sharing charges for a computer center operated by Inslaw and used by several US attorneys’ offices;
bullet Contract target fees and other payments;
bullet Indirect costs, including overheads;
bullet Direct costs;
bullet Costs, including legal fees, incurred by Inslaw after a portion of the original contract was terminated by the government for its own convenience; and
bullet Costs incurred because the Department withheld payments.
However, as the issue is also the subject of a dispute before a bankruptcy court and subsequent appeal courts, the matter will be held in abeyance and the board will not take any significant steps for years. [US Congress, 9/10/1992]

Entity Tags: US Department of Justice, Department of Transportation Board of Contract Appeals, Inslaw, Inc.

Category Tags: Legal Proceedings

Richard Willard, assistant attorney general of the civil division, writes a memo to Deputy Attorney General Arnold Burns about the Inslaw affair. According to Willard, George Bason, the bankruptcy court judge dealing with the Justice Department’s alleged theft of enhanced PROMIS software, should be taken off the case. Willard writes that Bason’s conduct is “so extraordinary that it warranted reassignment to another judge.” The House Judiciary Committee will comment that department officials are “concerned” about Bason’s handling of the case “very early in the litigation,” and that they think Bason tends to believe statements made by Inslaw. The committee will add: “The department believed that Judge Bason disregarded the sworn statements of department witnesses. The department also believed that Judge Bason made lengthy observations regarding the credibility of its witnesses and that Judge Bason’s uniformly negative conclusions were based on inferences not supported by the record.” Therefore, by the summer of 1987, the department is “actively seeking ways to remove Judge Bason from the case.” Bason will rule in favor of Inslaw in the autumn (see September 28, 1987). [US Congress, 9/10/1992]

Entity Tags: US Department of Justice, Richard Willard, George Bason, Civil Division, Arnold Burns, House Judiciary Committee

Category Tags: Legal Proceedings

Justice Department staff tell Attorney General Edwin Meese that Judge George Bason of the Bankruptcy Court for the District of Columbia is “off his rocker,” according to a sworn statement Meese will later make to the House Judiciary Committee. Bason is presiding over a dispute between the department and the software company Inslaw (see June 9, 1986) and will eventually rule against the department (see September 28, 1987). This comment appears to be part of a campaign to get Bason removed from the case (see June 19, 1987) and a judge more favorable to the department appointed. [US Congress, 9/10/1992]

Entity Tags: Edwin Meese, US Department of Justice, George Bason

Category Tags: Legal Proceedings

According to a sworn statement made to the House Judiciary Committee by Martin Bloom, clerk of the Bankruptcy Court for the District of Columbia, the administration of the court by the clerk’s office is “up to par” by “the latter part of 1987.” Chief Judge Aubrey Robinson will agree with Bloom, complimenting the bankruptcy court’s judge, George Bason, on improvements in the court’s administrative condition in remarks to an annual judicial conference.
Condition of Clerk's Office Later Becomes Important - The condition of the clerk’s office will later become significant because it will apparently be an important factor in the non-reappointment of Bason later this year (see December 15, 1987). For example, a confidential report about his possible reappointment (see December 8, 1987) will say, “Judge Bason evidenced no inclination to come to grips personally with the management challenge posed by the terrible shortcomings of the Office of the Clerk of our Bankruptcy Court.” Bason is currently at loggerheads with the Justice Department over the Inslaw case (see June 19, 1987) and will rule in favor of Inslaw in September (see September 28, 1987).
Previous Poor Condition - It will be established that the clerk’s office was not in good condition when Bason took over the bankruptcy court in the mid-1980s, although a May 1986 report said that the system was being brought under control and Bloom will blame the previous clerk for the problems. Bloom will also say that Bason takes an active role in providing whatever assistance he can in improving the administrative condition of the court.
Committee's Assessment of Court - However, the committee that fails to reappoint Bason will somehow come to believe that it is still a mess at this time and that this is Bason’s fault, although an investigation by the House Judiciary Committee will find that “most of the district and circuit judges interviewed [who were on the reappointment committee] said that they had little or no contact with Judge Bason and were not in a position to have firsthand knowledge of the condition of his court.” Neither Bloom nor the previous clerk will be interviewed by the panel about the court’s administration and, according to Bason, there is no mechanism in place for the judges to personally evaluate it. The committee will comment: “Considering that poor administrative controls seemed to be one of the primary reasons for Judge Bason’s failed attempt at reappointment, it is unusual that neither Judge Bason nor the other individuals most responsible for the administration of the court were interviewed by the panel. Judge Robinson made a telling comment to committee investigators when he said it is unfortunate bankruptcy judges are selected by judges furthest removed from the bankruptcy court.” [US Congress, 9/10/1992]

Entity Tags: Martin Bloom, George Bason, Aubrey Robinson, Bankruptcy Court for the District of Columbia, House Judiciary Committee

Category Tags: Legal Proceedings

Deputy Attorney General Arnold Burns asks his subordinates at the Justice Department’s civil division to “consider initiatives for achieving a more favorable disposition of this matter [a legal dispute between the department and Inslaw over PROMIS software].” This is apparently a reference to the possible removal of Judge George Bason from the case, as the department thinks he is biased against it (see June 19, 1987). In response to the comments, the department will draft a report about removing Bason (see After July 7, 1987). [US Congress, 9/10/1992]

Entity Tags: Civil Division, Bankruptcy Court for the District of Columbia, George Bason, Arnold Burns, US Department of Justice

Category Tags: Legal Proceedings

Following a request from the Justice Department’s leadership (see July 7, 1987), Michael Hertz, the director of the civil division’s commercial litigation branch at the department, writes a memo entitled “Feasibility of Motion to Disqualify the Judge in Inslaw.” The department has come to believe that the judge, George Bason, is biased against it (see June 19, 1987) and hopes to challenge his findings of fact by saying they are unsupported by evidence and reflect a desire to reach a preordained conclusion. This position is mostly based on the department’s observations that some of Bason’s findings of fact are “rambling and based on deductions that are both strained and have flimsy support.” However, Hertz writes to Deputy Assistant Attorney General Stuart Schiffer that the facts simply do not support a case of bias strong enough to disqualify Bason from the remainder of the Inslaw case. Hertz adds that he is “fairly confident” that any motion to dismiss Bason would not succeed and the denial of any such motion could not be successfully challenged on appeal. He gives the following reasons:
bullet The department has no evidence that what it views as “Bason’s incredible factual conclusions or alleged bias” actually stem from an extrajudicial source, as the case law requires;
bullet Adverse factual findings and inferences against the government are not enough to support a claim of bias; and
bullet Adverse credibility rulings about some of the government’s witnesses in a prior phase of the proceedings are not on their own sufficient to disqualify Bason from the rest of the proceedings.
Hertz says that attempting to demonstrate bias by Bason could adversely affect any future appeal by the department on the findings of fact. He also advises Schiffer that as much as the department may disagree with Bason’s findings: “[T]hey are not mere conclusory statements. Instead they reflect a relatively detailed judicial analysis of the evidence, including reasons for believing certain witnesses and disbelieving others, as well as consideration of what inferences might or might not be drawn from the evidence.” [US Congress, 9/10/1992] Despite this, the department will twice attempt to get Bason recused, failing both times (see January 19, 1988 and January 25, 1988).

Entity Tags: Michael Hertz, Civil Division, Bankruptcy Court for the District of Columbia, Stuart Schiffer, US Department of Justice

Category Tags: Legal Proceedings

Assistant Attorney General Richard Willard reports to Deputy Attorney General Arnold Burns about the Inslaw case. Willard says that the Justice Department has developed a good trial record, but: “[T]here is virtually no reason for optimism about the judge’s ruling. Even though our witnesses performed admirably and we believe we clearly have the better case, Judge Bason made it apparent in a number of ways that he is not favorably disposed to our position.” The department has been trying to have Bason removed from the case for some time (see June 19, 1987) and he will soon rule in favor of Inslaw (see September 28, 1987). [US Congress, 9/10/1992]

Entity Tags: George Bason, Bankruptcy Court for the District of Columbia, Richard Willard, Arnold Burns, US Department of Justice

Category Tags: Legal Proceedings

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]

Entity Tags: US Department of Justice, Lowell Jensen, George Bason, C. Madison “Brick” Brewer, Bankruptcy Court for the District of Columbia, Inslaw, Inc.

Category Tags: Legal Proceedings

Stuart Schiffer, deputy assistant attorney general for the Justice Department’s civil division, writes to Richard Willard, the assistant attorney general for the civil division, about the Inslaw case. Schiffer writes: “[Judge George] Bason has scheduled the next [Inslaw] trial for February 2 [1988]. Coincidentally, it has been my understanding that February 1 [1988] is the date on which he [Bason] will either be reappointed or replaced.” Bason had ruled in favor of Inslaw (see September 28, 1987) and the department had been trying to have him removed from the case for months (see June 19, 1987). After Bason’s bid for reappointment fails (see December 15, 1987), he will say that the department used its influence against him (see December 5, 1990). [US Congress, 9/10/1992]

Entity Tags: George Bason, Civil Division, Richard Willard, Stuart Schiffer, US Department of Justice, Bankruptcy Court for the District of Columbia

Category Tags: Legal Proceedings

An official written report is drafted for the panel considering the appointment of a judge to the Bankruptcy Court to the District of Columbia. The two-page report briefly assesses the final four candidates, including the incumbent George Bason, who is, however, at loggerheads with the Justice Department over his handling of the Inslaw case (see June 19, 1987 and September 28, 1987). However, another—longer but unofficial—report will be drafted two weeks later and will be critical of Bason (see December 8, 1987). [US Congress, 9/10/1992]

Entity Tags: Bankruptcy Court for the District of Columbia, George Bason

Category Tags: Legal Proceedings

An apparently unofficial, confidential memo marked “read and destroy” is drafted about the four final candidates for the position of judge at the Bankruptcy Court for the District of Columbia. The memo is clearly critical of the incumbent, George Bason, who is up for reappointment. Bason recently displeased the Justice Department by ruling against it in the Inslaw affair over the alleged theft of enhanced PROMIS software (see September 28, 1987). The memo states that “its purpose is to ‘help’ elucidate in particular our reasoning in ranking the candidates as we did,” and describes each of the four. The House Judiciary Committee will comment: “What is striking about the memorandum is that the description of each candidate except Judge Bason begins with positive commentary about the individual. The section describing Judge Bason begins, ‘I could not conclude that Judge Bason was incompetent.’ Other phrases used to describe Judge Bason include ‘he is inclined to make mountains out of molehills,’ ‘Judge Bason seems to have developed a pronounced and unrelenting reputation for favoring debtors,’ and finally, ‘Judge Bason evidenced no inclination to come to grips personally with the management challenge posed by the terrible shortcomings of the Office of the Clerk of our Bankruptcy Court.’” The memo is addressed to Judge Norma Johnson, who Bason will allege may have been an instrument of a campaign waged against him by the Justice Department (see May 1988). The panel appointing the bankruptcy court judge will meet a week later and decide not to give the position to Bason, but to a Justice Department lawyer who represented the government in the Inslaw case (see December 15, 1987). After Bason asks appeals court judges to reconsider his non-reappointment (see January 12, 1988), the memo will be circulated to them. The memo is unsigned, but an appeals court judge who later provides the memo to the House Judiciary Committee investigating the Inslaw affair will say another judge on the appointment panel drafted it. However, this judge will deny having done so. When, some years later, several members of the panel are asked by the committee whether they saw this memo, they will say they do not recognize it. [US Congress, 9/10/1992]

Entity Tags: Norma Johnson, George Bason, Bankruptcy Court for the District of Columbia, House Judiciary Committee

Category Tags: Legal Proceedings

George Bason, a bankruptcy judge who recently found in favor of Inslaw in a dispute over the Justice Department’s alleged theft of enhanced PROMIS software (see September 28, 1987), is not reappointed to the bench. Bason had been appointed in February 1984 instead of another judge who had resigned mid-term, but a decision is now taken to replace him with a Justice Department attorney named Martin Teel, who had appeared before him in the Inslaw case. Although the official report for the appointments panel about the candidates did not criticize Bason (see November 24, 1987), a subsequent unofficial report addressed to Norma Johnson, the head of the panel, did (see December 8, 1987). The unofficial report claimed that there were shortcomings in Bason’s administration of the clerk’s office, although the office appears to be running smoothly by this time (see Second Half of 1987). Several judges on the selection council will later say they did not know much about the candidates, and therefore relied on Johnson and her interpretation of reports prepared about them. The House Judiciary Committee will find that Johnson’s oral presentation “played a large role in the selection,” that Johnson ran the panel “firmly,” and that the other members “relied on her judgment.” Overall, it will call the selection process “largely informal, undocumented, and highly subjective.” Bason learns he will not be reappointed from Chief Judge Patricia Wald, of the US Court of Appeals, on December 28. Bason will later say that Teel was not qualified for the position (see January 12, 1988) and that the department had influenced the selection process in order to have him removed from the bench (see December 5, 1990). In this context, Bason will point out to the House committee that Johnson had previously worked with a departmental official named Stuart Schiffer, so he could have influenced her against Bason (see May 1988). Bason will also note that Johnson worked with Judge Tim Murphy for 10 years from 1970, and that Murphy had later worked as the assistant director on the implementation of PROMIS at the Justice Department. [US Congress, 9/10/1992]

Entity Tags: Tim Murphy, Stuart Schiffer, Norma Johnson, Martin Teel, Jr., George Bason, Bankruptcy Court for the District of Columbia, House Judiciary Committee

Category Tags: Legal Proceedings

George Bason, a bankruptcy judge who ruled in favor of Inslaw in a dispute with the Justice Department over the alleged theft of PROMIS software (see September 28, 1987) and was subsequently not reappointed to the bench (see December 15, 1987), requests a hearing on his non-reappointment before the Judicial Council of the District of Columbia. Bason criticizes the other candidate, Justice Department official Martin Teel, who was given the position, saying he has “a considerably shorter total period of legal experience,” as he has mostly worked on taxation matters, not bankruptcy, and for the last few years has worked as a reviewer and then manager, without doing his own independent work. Teel will dispute this characterization in a letter to the House Judiciary Committee, saying he was qualified and, when appointed, had “six years of fairly extensive bankruptcy experience.” The request for a hearing will not change the decision to not reappoint Bason. [US Congress, 9/10/1992]

Entity Tags: Bankruptcy Court for the District of Columbia, George Bason, Judicial Council of the District of Columbia, Martin Teel, Jr.

Category Tags: Legal Proceedings

The Justice Department files a motion that bankruptcy court judge George Bason recuse himself from further participation in a case over the bankruptcy of Inslaw and the department’s alleged theft of the enhanced PROMIS application, saying that he is biased against the department. Bason had ruled in favor of Inslaw (see September 28, 1987) and the department has been trying to have him removed from the case for months (see June 19, 1987). The motion is filed despite a report from Michael Hertz, the director of the civil division’s commercial litigation branch at the department, saying that such a move would not succeed (see After July 7, 1987). The bankruptcy court denies the motion three days later. [US Congress, 9/10/1992] The department will make a similar request later in the month (see January 25, 1988).

Entity Tags: Bankruptcy Court for the District of Columbia, George Bason, US Department of Justice

Category Tags: Legal Proceedings

The Justice Department again tries to get Judge George Bason removed from the Inslaw case over the company’s bankruptcy and the department’s alleged theft of an enhanced version of the PROMIS software. Bason had ruled in favor of Inslaw (see September 28, 1987) and the department has been trying to have him removed from the case for months (see June 19, 1987). Following the failure of a recusal motion to Bason (see January 19, 1988), the department argues a motion before Chief Judge of the District Court for Columbia Aubrey Robinson for a writ of mandamus directing Judge Bason to recuse himself over allegations of bias. Robinson denies the department’s writ, ruling: “I can’t see anything in this record that measures up to the standards that would be applicable to force another judge to take over this case. There isn’t any doubt in my mind, for example, that the declaration filed by the Justice Department in support of the original motion is inadequate.” When the department appeals Bason’s ruling (see Between February 2, 1988 and November 22, 1989), it will again raise the issue of recusal, but District Court Judge William Bryant will say, “This court like the courts before it can find no basis in fact to support a motion for recusal.” [US Congress, 9/10/1992]

Entity Tags: George Bason, Bankruptcy Court for the District of Columbia, US Department of Justice, US District Court for the District of Columbia, William Bryant, Aubrey Robinson

Category Tags: Legal Proceedings

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]

Entity Tags: Bankruptcy Court for the District of Columbia, US Department of Justice, Inslaw, Inc.

Category Tags: Legal Proceedings

The Justice Department appeals an adverse ruling by the Bankruptcy Court for the District of Columbia in its dispute with Inslaw (see September 28, 1987). The main grounds of the appeal include the following claims:
bullet The bankruptcy court judge appeared to be biased and should have recused himself. In addition, he used the bankruptcy proceedings to find culpability by the government;
bullet Inslaw did not prove that automatic stay protection provisions had been violated;
bullet The bankruptcy court lacked jurisdiction over Inslaw’s claim because the department had not waived its immunity from monetary judgements against the United States;
bullet The dispute is really a contract dispute, not a bankruptcy argument, and should therefore have been heard by the Department of Transportation Board of Contract Appeals;
bullet The court exceeded its authority in the field of damages, and no attorney fees should have been awarded.
The appeal court will find for Inslaw (see November 22, 1989), although its ruling will later be overturned (see May 7, 1991). [US Congress, 9/10/1992]

Entity Tags: US District Court for the District of Columbia, Inslaw, Inc., US Department of Justice

Category Tags: Legal Proceedings

A news reporter tells George Bason, a bankruptcy judge who found in favor of Inslaw in a dispute over the alleged theft of enhanced PROMIS software (see September 28, 1987), that his failure to be reappointed to the bench was because of pressure from the Justice Department. According to the House Judiciary Committee, Bason says that the reporter has “excellent contacts and sources in the department.” Bason will say the reporter suggests his removal from the bench could have been procured as follows: “The district judge chairperson of the Merit Selection Panel [Judge Norma Johnson, who was crucial to his non-reappointment (see December 15, 1987)] could have been approached privately and informally by one of her old and trusted friends from her days in the Justice Department. He could have told her that I was mentally unbalanced, as evidenced by my unusually forceful ‘anti-government’ opinions. Her persuasive powers coupled with the fact that other members of the panel or their law firms might appear before her as litigating attorneys could cause them to vote with her.” The reporter also tells Bason that a high-level department official has boasted to him that Bason’s removal was because of his rulings on the Inslaw affair. [US Congress, 9/10/1992]

Entity Tags: Bankruptcy Court for the District of Columbia, Norma Johnson, George Bason

Category Tags: Legal Proceedings

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]

Entity Tags: William Bryant, US Department of Justice, Inslaw, Inc., US District Court for the District of Columbia

Category Tags: Legal Proceedings

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]

Entity Tags: US Department of Justice, Inslaw, Inc., Elliot Richardson, Richard Thornburgh

Category Tags: Legal Proceedings, Internal DoJ Investigations

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).

Entity Tags: Inslaw, Inc., US Department of Justice

Category Tags: Legal Proceedings

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]

Entity Tags: Inslaw, Inc., House Judiciary Committee, US Department of Justice

Category Tags: Legal Proceedings

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:
bullet 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;
bullet 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;
bullet That the department has not filed a claim, so it is still entitled to sovereign immunity; and
bullet 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]

Entity Tags: US Department of Justice, Inslaw, Inc., US Court of Appeals for the District of Columbia

Category Tags: Legal Proceedings

The House Subcommittee on Economic and Commercial Law holds a hearing about the failure of Attorney General Richard Thornburgh to provide full access to all documents and records about the Inslaw case. At the hearing, Inslaw owner William Hamilton and its attorney Elliot Richardson air their complaints about an alleged criminal conspiracy in the Justice Department’s handling of a contract with Inslaw and its alleged theft of an enhanced version of the PROMIS application. Steven Ross, the general counsel to the clerk of the US House of Representatives, refutes the Justice Department’s rationale for withholding documents related to possible wrongdoing by its officials involved with the Inslaw contract. In addition, Government Accountability Office representatives describe deficiencies in the Justice Department’s Information Resources Management Office and its administration of data processing contracts.
Bason's Allegations - Judge George Bason, a bankruptcy judge who had found in favor of Inslaw in a dispute with the department (see September 28, 1987), testifies that he believes his failure to be reappointed as bankruptcy judge was the result of improper influence on the court selection process by the department because of his findings. Bason cites information provided to him by a reporter (see May 1988) and negative statements about him by departmental employees (see June 19, 1987 and June 1987 or Shortly After). After investigating these allegations, the committee will find: “The committee could not substantiate Judge Bason’s allegations. If the Department of Justice had influence over the process, it was subtle, to say the least.” Bason will point out that Norma Johnson, the judge who chaired the meeting at which he was not reappointed (see December 15, 1987), had previously worked with departmental official Stuart Schiffer, who was involved in the Inslaw case. However, the committee will comment that it has “no information that Judge Johnson talked to Mr. Schiffer about Inslaw, Judge Bason, or the bankruptcy judge selection process.”
Thornburgh's Reaction - Following this hearing, Thornburgh agrees to cooperate with the subcommittee, but then fails to provide it with several documents it wants. [US Congress, 9/10/1992]

Entity Tags: Steven Ross, William Hamilton, Richard Thornburgh, Government Accountability Office, Elliot Richardson, George Bason, House Subcommittee on Economic and Commercial Law

Category Tags: Oversight by Congress, Legal Proceedings

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]

Entity Tags: House Judiciary Committee, Inslaw, Inc., US Court of Appeals for the District of Columbia, US Department of Justice

Category Tags: Legal Proceedings

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]

Entity Tags: Inslaw, Inc., US Supreme Court, US Department of Justice

Category Tags: Legal Proceedings

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]

Entity Tags: Department of Transportation Board of Contract Appeals, House Judiciary Committee, Inslaw, Inc., US Department of Justice

Category Tags: Legal Proceedings

Former Drug Enforcement Agency (DEA) agent Lester Coleman submits a sworn affidavit to a court hearing the dispute between Inslaw and the Justice Department about the alleged theft of PROMIS software.
PROMIS Allegedly Provided to Middle Eastern Countries - Coleman says that in spring 1988 he worked with a DEA proprietary company in Nicosia, Cyprus. He found that the DEA was using the company to sell computer software called “PROMISE” or “PROMIS” to drug abuse control agencies in Cyprus, Pakistan, Syria, Kuwait, and Turkey. Coleman claims to have seen reels of computer tapes and computer hardware being unpacked at the Nicosia Police Force Narcotics Squad. The boxes allegedly bore the name and red logo of a Canadian corporation with the words “PROMISE” or “PROMIS” and “Ltd.” According to Coleman, the DEA’s objective in aiding the implementation of this system in these countries was to enhance the United States’ ability to access sensitive drug control law enforcement and intelligence files. Coleman adds that a DEA agent was responsible for both the propriety company, Eurame Trading Company, Ltd., and its initiative to sell “PROMIS(E)” computer systems to Middle Eastern countries.
Apparent Link to Case against Michael Riconosciuto - Coleman also says he believed the agent’s reassignment in 1990 to a DEA intelligence position in Washington State prior to the arrest of Michael Riconosciuto in March 1991 on drug charges was more than coincidental. Riconosciuto has also made a number of claims about PROMIS. According to Coleman, the agent was assigned to Riconosciuto’s home state to manufacture a case against him. Coleman says this was done to prevent Riconosciuto from becoming a credible witness concerning the US government’s covert sale of PROMIS to foreign governments.
Meeting with Danny Casolaro - Coleman also says he was contacted by the reporter Danny Casolaro on August 3, 1991. Casolaro apparently told him he had leads and hard information about (1) Justice Department groups operating overseas, (2) the sale of the “PROMIS(E)” software by the US government to foreign governments, (3) the Bank of Credit and Commerce International (BCCI), and (4) the Iran-Contra scandal.
Mentioned by House Committee in Report - These charges will be mentioned in the House Judiciary Committee’s final report on the Inslaw affair, but the committee will not endorse them. [US Congress, 9/10/1992]
Later Conviction for Perjury - Coleman will later admit fabricating a claim that a secret drug sting enabled terrorists to evade airport security in the bombing of Pan Am Flight 103, which was blown up over Lockerbie, Scotland, in 1988. Pleading guilty to five counts of perjury, he will say he lied for a variety of reasons: to obtain money, to evade pending federal charges that he filed a false passport application, to enhance his status as a consultant on international security and terrorism, and to get back at the United States Drug Enforcement Administration for firing him. [New York Times, 9/12/1997]

Entity Tags: Lester Coleman, House Judiciary Committee, Daniel Casolaro, Eurame Trading Company, Ltd., Michael Riconosciuto

Category Tags: Legal Proceedings, Oversight by Congress, Use Outside Justice Department

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]

Entity Tags: Inslaw, Inc., US Supreme Court, US Department of Justice

Category Tags: Legal Proceedings

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:
bullet 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;
bullet No independent counsel should be appointed and the matter should be closed;
bullet The investigative journalist Danny Casolaro, who died while investigating the Inslaw affair and other issues, committed suicide;
bullet 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;
bullet 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”;
bullet 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”;
bullet 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);
bullet No documents related to the matter have been destroyed by the Justice Department command center;
bullet 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);
bullet 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]

Entity Tags: George Bason, Daniel Casolaro, Inslaw, Inc., Randall Davis, US Department of Justice

Category Tags: Legal Proceedings, Internal DoJ Investigations

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:
bullet 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;
bullet 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;
bullet 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);
bullet 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;
bullet 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]

Entity Tags: Inslaw, Inc., Frank Hunger, Christine Miller, Court of Federal Claims, US Department of Justice

Category Tags: Legal Proceedings, Use Outside Justice Department

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