INSLAW's ANALYSIS and REBUTTAL
of the
BUA REPORT
Memorandum in Response to the
March 1993 Report of Special Counsel Nicholas J. Bua
to the Attorney General of the United States
Responding to the Allegations of INSLAW, Inc.
INTRODUCTION
The attempt by the Department of Justice (DOJ) to deal with
the INSLAW case through a Special Counsel, who is required to
report to the Attorney General, and a staff of DOJ attorneys
raises significant public policy questions. These are apparent on
the face of the Bua Report.
For example, should DOJ, as one of the parties to a civil
dispute, be able to use the authority of a federal grand jury and
the secrecy requirements of its proceedings to improve its own
civil litigation posture? Should DOJ be using its own lawyers and
investigators and a federal grand jury to investigate colleagues,
superiors, and subordinates? How should the tension between the
obligation to enforce the criminal laws of the United States and
the legitimate need to safeguard intelligence and national
security be reconciled?
The problems with the Bua Report, as set forth in INSLAW's
Analysis and Rebuttal, are much more concrete than the
aforementioned public policy questions. We do, however, think
that the problems identified by these questions should be
carefully and thoughtfully addressed as steps are being taken to
bring the INSLAW case to a fair, final and publicly acceptable
conclusion.
The main body of this memorandum is divided into sections
addressing (1) DOJ's wrongful acquisition of an enhanced version
of PROMIS to which it was not entitled and which it has continued
to use without properly compensating INSLAW, (2) DOJ's attempt,
by improper means, to cause the conversion of the INSLAW
bankruptcy from reorganization to liquidation, and (3) the
indications of a more widely ramified conspiracy involving Earl
Brian and the intelligence and law enforcement agencies of the
United States and foreign governments.
Each of these sections examines the basis for the
conclusions reached in the Bua Report and points out errors and
omissions plainly demonstrable on the basis of evidence cited in
the report itself or readily available to the investigators in
the records of prior investigations and judicial proceedings. The
sections also identify evidentiary points as to which Judge Bua
chose to believe the self-serving statements of individuals
directly implicated in the theft of INSLAW's software, to
disbelieve the testimony on the same points by INSLAW witnesses,
and to ignore evidence supporting the findings of the Bankruptcy
Court for the District of Columbia, the United States District
Court for the District of Columbia, and the House Committee on
the Judiciary.
In addition to the deficiencies apparent on its face, the
report reveals numerous failures to pursue testimony or
documentary evidence that could have contradicted its conclusions
and corroborated INSLAW's allegations. The following sections
identify these failures in at least 40 situations.
Immediately after his appointment, INSLAW called to Judge
Bua's attention the essentiality of assuring senior DOJ officials
and other government employees who had given important
information to INSLAW that they could disclose this information
to him or his staff without fear of reprisal. Any person
seriously attempting to uncover the truth would have gone to
great lengths to find a way of overcoming these apprehensions.
This was not done. Appended to this memorandum is a listing of
these informants together with a brief synopsis of information
they have furnished to INSLAW. The listing gives enough of an
indication of who they are to make clear that they deserve to be
taken seriously, but not so much as to make it possible to
identify them individually. The synopses make clear at the same
time that the information they could furnish strongly
corroborates other evidence of the wider conspiracy.
The Bua Report denigrates the findings of the Bankruptcy
Court without clearly acknowledging that those findings were
affirmed and supplemented by two other entities independent of
DOJ, the U.S. District Court and the House Judiciary Committee.
Senior U.S. District Judge William B. Bryant, Jr., issued a 44-
page opinion, in which he states in part:
It is sufficient to state that after careful review of
all of the volumes of transcripts of the hearings
before the bankruptcy court, the more than 1,200 pages
of briefs and supporting appendices, and all other
relevant documents in the record, there is convincing,
perhaps compelling support for the findings set forth
by the bankruptcy court.
. . . the court has examined the bankruptcy judge's
findings of fact in the light of the entire record, and
finds his account of the evidence is eminently
plausible; and this court is not left with any notion
that a 'mistake has been committed,' Id. at 574. This
conclusion is reached without regard to the deference
to be accorded to the judge's opportunity to assess
credibility. The cold record adequately supports his
findings under any standard of review.
The section on the wrongful acquisition of PROMIS amply
supports its thesis that the Bua Report focuses only on those
facts that its authors deemed relevant to the conclusions they
intended to reach. It calls attention to the fact that the report
based some of its most important conclusions on interviews with
unnamed individuals and on undisclosed documentary evidence. This
section also points out the report's remarkable credulity toward
professions of innocence by the very individuals heretofore
identified as the principal culprits in the theft of the
software. As the section observes, "To accept the self-serving,
long after-the-fact and post hoc rationalizations of these
individuals over their testimony at trial, which testimony
clearly evidenced their propensity for lying and covering up the
truth, as found by two federal courts, is ludicrous."
The section on the conversion of the INSLAW bankruptcy
exposes the same pattern of justifying the DOJ version of the
facts and downplaying, misinterpreting, or ignoring evidence to
the contrary. This is particularly striking in the case of the
report's attempt to minimize the testimony of Anthony Pasciuto,
Deputy Director of the Executive Office for U.S. Trustees. In
reaching for an explanation of Pasciuto's conduct, his
testimony, and his subsequent recantation, the report avoids the
one most logical explanation: the fear that he would not get the
promotion he had long sought and the fear that he would be fired
for telling the truth, as he eventually was.
Pages 28-35 of the section on the more widely ramified
conspiracy pull together the numerous indications that INSLAW's
PROMIS software is widely used throughout the United States
Government. A thorough investigation would, at a minimum, have
conducted the relatively simple and inexpensive computer-based
code comparisons between PROMIS and its suspected clones in U.S.
intelligence and law enforcement agencies, that might have shown
whether or not these claims are true. The Bua investigation made
no attempt to arrange such comparisons.
Relevant both to DOJ's bad faith in its dealings with INSLAW
and to its involvement in a broader conspiracy is the issue of
the DOJ's complicity in the denial of reappointment to George F.
Bason, Jr., who presided over the Bankruptcy Court trial. The
report reveals that the criticisms of Judge Bason by his
predecessor, Roger Whelan, were influential in the Merit
Selection Panel's deliberations about Judge Bason's suitability
for reappointment. Whelan told the Panel that Judge Bason was a
poor administrator. Chief Judge Aubrey Robinson of the U.S.
District Court, however, told the Judiciary Committee that Judge
Bason's only administrative problems were inherited from Judge
Whelan and that these were soon brought under control by Judge
Bason. In the Chapter 11 proceeding, Roger Whelan represented the
INSLAW creditor which pressed hardest for INSLAW's liquidation
and which, in so doing, appears to have acted in collusion with
DOJ. The report also discloses direct communications on the
INSLAW case between a DOJ attorney and the Chair of the Merit
Selection Panel, communications whose existence was not revealed
in the course of two Congressional investigations on the subject.
It is noteworthy in the circumstances that Judge Bua made an
eleventh-hour approach to INSLAW's lawyers in an effort to broker
a $25 million settlement between INSLAW and the DOJ. The
inference that Judge Bua was aware of the weaknesses in his own
report is difficult to avoid.
I. DOJ WRONGFULLY OBTAINED AN ENHANCED VERSION OF PROMIS
TO WHICH IT WAS NOT ENTITLED AND THEREAFTER HAS USED
THAT VERSION WITHOUT PROPERLY COMPENSATING INSLAW
In assessing the validity of the so-called "tentative"
factual conclusions reached in the Bua Report, one need be
mindful of the following telling admission of the authors:
Our discussion here of the factual background of the
1982 contract does not purport to be exhaustive.
Instead, _we have attempted to focus on those facts
that are relevant to the conclusions we have reached_.
Where it is necessary to explain specific findings or
conclusions, we have undertaken a more detailed
examination of certain events in subsequent sections of
this report. (Emphasis added.) (Page 15)
In effect, the authors of the Bua Report determined,
apparently in advance, the conclusions that they intended to
reach and, thereafter, set about to "focus" on only those facts
that they deemed relevant to support those conclusions, to the
exclusion of the massive factual record that otherwise would, and
did, lead to the very opposite conclusions found not only by two
federal courts, but, in part, by the Committee on the Judiciary
of the U.S. House of Representatives and the Permanent
Subcommittee on Investigations of the Committee on Government
Affairs of the U.S. Senate.
It is remarkable that the authors of the Bua Report either
ignored or rejected every conclusion reached by the federal
courts and the two legislative committees that was contrary to
the conclusions reached by the Bua Report, while at the same time
accepting those conclusions that were supportive of the
conclusions reached in the Bua Report. It is even more remarkable
that the Bua Report could find, on the one hand, that DOJ neither
obtained the enhanced version of PROMIS through fraud nor
wrongfully distributed PROMIS while, on the other hand, Judge Bua
repeatedly informed journalists covering the INSLAW case and once
conveyed directly to INSLAW's attorneys that he had reached the
opposite conclusion and had recommended that DOJ settle its
dispute with INSLAW by the payment of $25 million to INSLAW.
The following is an attempt merely to highlight some of the
most glaring errors in the factual conclusions reached in the Bua
Report.
A. Negotiation of the 1982 Implementation Contract
The Bua Report found that DOJ had issued a Request for
Proposals (RFP) in late 1981 that solicited proposals on a
contract to: (1) implement computer-based PROMIS software in 20
"larger" United States Attorneys' Offices and (2) create and
install word processing based case management software in the
remaining 74 offices. There is no dispute that, at the time that
the RFP was issued and the contract was awarded to INSLAW, both
DOJ and INSLAW understood that DOJ intended to utilize the
computer-based PROMIS only in the 20 larger offices; it clearly
was understood that the remaining 74 offices would not receive
this software.
The Bua Report acknowledged that INSLAW, in responding to
the RFP, specifically stated that:
During the life of this project -- but not as part of
this project -- Inslaw plans new enhancements and
modifications to the basic PROMIS software and to the
original version of PROMIS for U.S. Attorneys.
....[I]mprovements funded by other [i.e. non-
governmental] sources and developed and accepted for
inclusion in the software supported by Inslaw, will be
made available to the U.S. Attorneys' offices. (Page
19)
However, the Bua Report concluded, without any factual
support, that INSLAW did not clarify what it meant by "accepted
for inclusion" or "will be made available." This is wrong.
First, the Bua Report ignores the fact that the quoted
statement was made specifically in response to the Statement of
Work, which in part required that:
All systems enhancements, modifications, and
development performed _pursuant to this contract_ shall
be incorporated within the systems which have already