WACKENHUT CORPORATION - Crash Recovery · Dead Right, by John Connolly, Spy, 1/93 2. Death of a Journalist Exposes a Secret Government, by Paul DeRienzo ... November 1991 Joseph (Danny)

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Wackenhut corporation tied to the PROMIS software scam

Table of Contents:

1. Dead Right, by John Connolly, Spy, 1/93

2. Death of a Journalist Exposes a Secret Government, by Paul DeRienzo

3. Declaration of Howard Teicher

4. Deposition of Chalmer C. Hayes

5. Deposition of Richard J. Brenneke

6. Gunther Russbacher Table of Contents

7. Inside the Shadow CIA, by John Connolly

8. Inslaw-Octopus Related Deaths

9. Interview with Bill Hamilton, by Paul DeRienzo

10. Interview with Harry Martin, by Paul DeRienzo11. Interview with James Norman, by Jim Quinn12. MCA/Curry Company Table of Contents13. Oversight Hearings on Alyeska Covert Operations14. Obstruction of Justice: Exposing the Inslaw Scandal and Related Crimes, by

Karen Lee Bixman, Media Bypass Magazine, June, 1995

15. Pay Your Money, Take Your Chance 16.Software to Die for. Inslaw Lawyer Elliot Richardson Talks About Murder and the

CIA, by James Ridgeway

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17. Rigged Software Claimed to Hack Intelligence Files, by Valerie Lawton and AllanThompson

18. Snowbound, by John Cummings and Ernest Volkman, Penthouse, 7/8919. Submission to the Electoral Funding and Disclosure Inquiry, by Marshall Wilson20. The BCCI Affair, A Report to the Committee on Foreign Relations, United States

Senate, by Senator John Kerry and Senator Hank Brown, December 1992

21. The Crimes of Mena, by Sally Denton and Roger Morris, Penthouse, 7/9522. The Inslaw Octopus, by Richard L. Fricker23. The Last Circle, by Carol Marshall24. The Last Days of Danny Casolaro, by James Ridgeway and Doug Vaughan25. The Mysterious Death of Danny Casolaro, by David MacMichael26. The Napa Sentinel Table of Contents27.The Octopus, by Karen Bixman

28. Vince Foster Table of Contents29. Virginia McCullough Interview, by Paul DeRienzo30. Wackenhut Corrections Corporation, by Wackenhutcorrections.com31. Wackenhut Corporation, by Wackenhut.com32. Wackenhut Corporation -- A Patriot or a Partner in Executive Crime?, by Armen

Victorian

33. Wackenhut Corporation Namebase Search Results by pir.org34. When Osama Bin Laden was Tim Osman, by J. Orlin Grabbe35. Whitewater Table of Contents

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DEATH OF A JOURNALIST EXPOSES A SECRET GOVERNMENTby Paul DeRienzo, November 1991

Joseph (Danny) Casolaro was a poet, author and investigative journalist who wasfound dead last August, apparently from his own hand, in a West Virginia motel.Although a short suicide note was found near the body, his friends and family castdoubt on the coroner's version, that Casolaro had slit his own wrists at least tentimes while sitting in a bathtub.

Casolaro was planning to write a book that would expose the story behind the 1982theft by the Department of Justice of case management, tracking and workflowmanagement software called PROMIS (Prosecution Management Information Systems),for use by public prosecution agencies. The software, which is still in use today,allows prosecutors to quickly and accurately track cases winding through thecourts.

The investigation had taken the 44-year old divorced father of one into a mistyworld of organized crime, corporate greed and possibly CIA covert operations thatmay have led Casolaro over his head into a conspiracy by men with connections tothe highest level of the United States government, a conspiracy that Casolarocalled the Octopus, because its tentacles led from the covert action branch of theCIA into the heart of the most infamous scandals of our age.

Casolaro had maintained until his death that the PROMIS software was stolen andmodified by the government for sale to the intelligence agencies of variouscountries throughout the world. He based his theory mostly on the testimony of ascientist, Michael Riconosciuto, who told a federal court that the software hadbeen taken to the Cabazon Indian reservation in southern California.

Riconosciuto told the court that he was hired to modify the PROMIS software forsale to intelligence agencies in a number of countries, including Iraq, Egypt,Canada, Israel and Jordan, by Dr. Earl W. Brian, the head of Infotechnology Inc, aNew York based holding company financed through the junk bond market by biginstitutional investors like Merrill Lynch Inc. Among the myriad of companiescontrolled by Infotechnology Inc. is United Press International (UPI), and untilrecently, the Financial News Network (FNN).

Dr. Brian has denied the charges, which he calls a "tissue of lies", but accordingto Maggie Mahar, the senior editor of the prestigious business journal, Brian'sadvice to the wife of then Reagan advisor Edwin Meese to buy stock inInfotechnology Inc, was the focus of investigations that nearly derailed Meese'snomination as Attorney General. It was during the Meese tenure as Attorney Generalthat the theft of the PROMIS software occurred.

Riconosciuto predicted that his testimony would anger powerful figures in thegovernment and in fact soon after he gave his deposition in the Inslaw case, he wasarrested and charged with running a methamphetamine laboratory in Tacoma,Washington where he is currently imprisoned.

THE INSLAW AFFAIR

PROMIS software had been developed by a Washington DC based company called Inslaw,founded by Bill and Nancy Hamilton. Hamilton had begun work on case managementsoftware for the government in the 1970's with financing from the now defunct LawEnforcement Assistance Agency or LEAA. The Justice department, under PresidentRonald Reagan's Attorney General and long time associate Edwin Meese, bought thesoftware from Hamilton for $10 million.

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According to Hamilton, as soon as the Justice Department took delivery of the1980's version of PROMIS, they reneged on the contract and withheld payments,forcing Inslaw into Chapter Eleven bankruptcy. The Justice Department then launchedwhat Bill Hamilton called "a covert effort" to completely liquidate Inslaw, andInslaw retaliated by suing the Department of Justice in Federal Bankruptcy Court.After a three week trial, Judge George Bason ruled that officials of the JusticeDepartment "stole" forty-four copies of PROMIS, "through trickery, fraud anddeceit," and then tried to drive Inslaw out of business.

A federal appeals court later upheld the facts in the case, but overturned thedecision on the technical matter that the lawsuit was brought in the wrongjurisdiction. That decision is being appealed to the Supreme Court. However, BillHamilton says ten years later, that he hasn't "received a penny" for PROMIS, whileforty-four federal prosecutors offices across the country are still using thesoftware.

A month after Bason's ruling in favor of Inslaw, the judge learned the shocking andbizarre news that his reappointment to the court was being denied, and that hewould be replaced by S. Martin Teel, one of the Justice Department attorneys whounsuccessfully argued the Inslaw case before Bason.

Bill Hamilton traces his problems with the Department of Justice to a phone call hereceived in 1983 from Dominic Laiti, the then chairman of Hadron Inc. According toHamilton, after identifying himself, Laiti said that Hadron was seeking a monopolyin providing law enforcement software, and he wanted to "buy" Inslaw. Hamilton saysLaiti ended the call by telling him that Hadron "has very good political contactsin the current administration." When Hamilton declined to sell Inslaw he says Laitiretorted, "We have ways of making you sell."

While Laiti has denied the phone call ever took place, Hadron definitely enjoyedsome "very good political contacts." Hadron is controlled by Dr. Earl Brian'sInfotechnology Inc.

MURDER ON THE RES

In the desert west of Los Angeles near the city of Indio, lies the Cabazon Indianreservation. A tiny tribe, with only 30 members, with a huge clout. Until the1980's the tribe had no running water and no electricity and every tribal businesswas a failure.

The Cabazon's fortunes began to change after the arrival in 1978 of John P.Nichols, a non-Indian, as the tribe's chief administrator. Nichols, a selfdescribed intelligence operative who once served 18 months in prison for trying toarrange a contract killing, brought a major gambling operation to Cabazon land. Thereservation, claiming sovereignty as an independent nation within the UnitedStates, soon sported a Las Vegas style casino, and high stakes bingo hall, bothfinanced by grants from the U.S. Department of Housing and Urban Development.

According to the book "Inside Job" by Stephen Pizzo, which documents the savingsand loan scandal, John P. Nichols was a business partner with a major S&L playerwho got questionable loans from both the Bank of Credit and Commerce International(BCCI), and the Colorado based Silverado Bank, which had on it's board of directorsNeil Bush, the son of President George Bush.

A recent series of articles about the Cabazon Reservation by Robert Littman in theSan Francisco Chronicle, reported that private investors were hoping to takeadvantage of the Cabazon's sovereign nation status. The investors, which included aCanadian group, built or planned to build a $150 million power plant, a 1300 unitluxury housing project called Indian Village (with HUD funding), and a medical

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waste disposal incinerator, all without environmental impact statements that wouldnormally be necessary in California.

The Chronicle article also describes an attempt by Nichols to start a joint venturebetween the Cabazon's and the Wackenhut Corporation. Wackenhut, which counts manyex-intelligence agents among its directors, is the nations third largest supplierof privately run prisons. The company's business expanded greatly during the Iraqwar as executives and government agencies tightened their security. In recent yearsWackenhut has been replacing the U.S. Marine Corp. as the security force foroverseas embassies, and they also provide security at nuclear weapons facilitiessuch as Rocky Flats, Colorado and the Nevada nuclear test site.

A senior executive at Wackenhut told Computerworld magazine last April that whilethe company had entered into a joint venture with the Cabazon's it did not staffthe operation and the venture folded when it did not win any contracts. However,Chronicle reporter Robert Littman told Pacifica radio in September that untilrecently uniformed Wackenhut security guards could be seen patrolling on Cabazonland.

A chronicler of the Inslaw affair, Harry V. Martin, editor of the Napa ValleySentinel, described Wackenhut during a WBAI special on the Inslaw affair.

If you saw the movie RoboCop, the corporation that was running that policedepartment -- this is exactly what Wackenhut is becoming. In other words, it'staking over the functions of law enforcement on contract base. And they were formedby former FBI people. And some of the top CIA people went into that organizationwhen they retired from their system.

According to the Chronicle, the Cabazon reservation was used to demonstrate nightvision goggles for the Nicaraguan Contras. The Cabazons also met with U.S. armyofficials about developing arms, they proposed security measures for a SaudiArabian palace, and solicited proposals for developing biological weapons. The mostalarming occurrence on the Cabazon Reservation was the unsolved 1982 executionstyle murder of Fred Alvarez, a Cabazon Indian leader, and two of his companions.

While John P. Nichols denies any involvement with the still unsolved killings, aCalifornia investigative reporter, Virginia McCullough, says the case has beenrecently reopened. McCullough, in an exclusive interview with the Shadow, saidCalifornia police have named John P. Nichols Jr. as the prime suspect in themurder.

McCullough told the Shadow that Alvarez had begun to speak out against the misuseof the Cabazon people by Nichols and Wackenhut. Alvarez had also told associatesthat he was getting death threats and would probably die because of his outspokenopposition to the Nichols family.

Michael Riconosciuto says Alvarez was tied closely to the covert action side ofevents that were occurring on the Cabazon reservation. Riconosciuto claims that hewas on the Cabazon reservation, rewriting the PROMIS software for Earl Brian at thetime of the Alvarez murder. Speaking to Pacifica radio in late August, Riconosciutogave the following statement in which he maintains that Alvarez was involved in theOctober Surprise, an alleged plot by the Reagan presidential campaign to steal the1980 Presidential election that Riconosciuto maintains was hatched on the Cabazonreservation.

Riconosciuto said that "Alvarez was present at all the meetings, and he was gung-hobehind Nichols (Dr. John P. Nichols), and everything that was going on there. OK?We were all red-blooded Americans, and we believed in the things that were goingon! The way things were shaping up with the Reagan Election Committee and thethings that were being orchestrated made us all concerned. And Alvarez wrote a

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detailed letter to Ronald Reagan expressing his concern. All the details of theOctober Surprise hostage issue were outlined in that letter. I mean, in specifics.The October Surprise is the name given the alleged plot by the Reagan election teamto arrange for the government of Iran to keep the 52 American hostages until afterthe 1980 presidential election to help insure the election defeat of Jimmy Carter.

Riconosciuto, who has a history as a brilliant yet somewhat erratic genius, went onto state that the Inslaw software theft was a payoff to John P. Nichols andWackenhut Corp. for assisting with the October Surprise.

The ability to run with PROMIS from the inside, on a procurement track, was part ofa benefit reward package to the Cabazon position for what they did in helping theElection Committee. Part of that was the artillery shells. Part of that wassecurity contracts for Wackenhut.

Wackenhut has security jobs that were traditionally done by the United StatesMarine Corps. Now, it's done on open bid to private companies, and Wackenhutconsistently has gotten most of those jobs. And all our atomic weapons research andtest sites are all guarded by Wackenhut personnel. In the Reagan Administration,the shift went abruptly from Marine Corps and military personnel to Wackenhutpersonnel. It was an unprecedented move. And it's my position that this was part ofthe reward benefit package for cooperation and services rendered during theelection situation.

More Mysterious Murders

The investigation of the Alvarez murder was taken up by the respected Canadianbased Financial Times, whose reporter, Anson Ng, went to Guatemala to find JimmyHughes, a Wackenhut security guard who was named as a witness in the killing. Ngwas found in Guatemala dead with a bullet in his chest.

Soon after Riconosciuto's drug arrest, Dennis Eisman, a Philadelphia attorney whowas on his way to Washington State to take on Riconosciuto's defense, was foundshot to death in his car. Eisman was reportedly en route to meet with a woman in aPhiladelphia parking lot. The woman reportedly had evidence of threats againstRiconosciuto by associates of Dr. Earl Brian. According to Harry Martin, two weeksbefore Casolaro's death, a player in the affair, John Friedrich was found dead witha single bullet wound to the head in Australia. Martin writes that Friedrich was aclose ally of Lt. Col. Oliver North and Israeli counter-terrorist chief Amiran Nirand had "a lot of knowledge about the Iran-Contra and Inslaw cases." Nir died lastyear in a mysterious plane crash in Mexico.

The Octopus

The Octopus was the name Danny Casolaro gave his theory explaining the Inslawaffair and its connection to the covert action arm of the CIA. Casolaro, who wasplanning to write a book on the Octopus called Indio (the town near the Cabazonreservation), had focused on reports that former national security advisor RobertMcFarlane had actually given the PROMIS software to the Israeli government. The reports were based on the allegations of former Israeli intelligence agent AriBen-Menashe, who said the software was given to the Israel Defense Force SignalsIntelligence Unit in 1982. According to papers filed in the Inslaw case, thesoftware was to be used to penetrate the computers of unsuspecting foreigncompanies that had also been provided with the same software. (Ben-Menashe was theprimary source for a new book on the Israeli nuclear arms program called SamsonOption, by former New York Times correspondant Seymour Hersh. The book, whichclaims that Israel has more than 300 nuclear warheads aimed at Arab and Sovietcities, quotes Ben-Menashe as saying that Israeli spies working in the United

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States stole secrets which were then passed on to the Soviet Union by the Israeligovernment).

McFarlane, who was deputy director of the National Security Council at the time,has denied the charges. The former national security advisor to Ronald Reagan, whoalso worked with Oliver North, plead guilty last year to lying to Congress inconnection with the Iran-Contra scandal.

Ben-Menashe served 12 years in the Israel Defense Force, including two years as anintelligence consultant to Prime Minister Yitzhak Shamir, before leaving in 1989.In an affidavit filed in the Inslaw case in March, Ben-Menashe said he attended a1987 meeting in Tel Aviv where Dr. Earl W. Brian made a sales pitch for increaseduse of the PROMIS software by the Israeli defense establishment.

Also in a sworn statement, self-proclaimed Iranian arms dealer Richard Babayan toldof the alleged involvement of Brian in the illegal sale of PROMIS to Iraq and SouthKorea. Babayan, who was recently being held in a federal jail in Miami on fraudcharges, also said former Air Force Maj. Gen. Richard Secord was present at a 1987meeting with Iraqi officials in Baghdad, during which Earl Brian made a PROMISsales pitch.

The CIA Drug Connection

In his book, "The Politics of Heroin: CIA Complicity in the Global Drug Trade,"Alfred W. McCoy tells how the CIA covert war in Laos, which began after the Frenchdefeat by the Vietnamese at Dien Bien Phu in 1954, paved the way for massive heroinshipments to the United States. The CIA offered protection for Hmong tribes in themountains along the Chinese border to enlist them as soldiers in the early years ofthe Vietnam war.

In return Laotian generals supplied heroin to the crime syndicates in Saigon. McCoyestimates that more than one third of all United States troops in Vietnam becameaddicted to heroin supplied by gangsters associated with the same South Vietnamesegovernment U.S. troops were supposed to be protecting.

The CIA station chief in Laos at the height of the heroin operation, from 1966-1968, was Theodore Shackley, who exercised overall command of the CIA's secret warin Laos. A friend of Shackley and the deputy CIA station chief operative was ThomasClines, who handled the details of the Laos operation. Air Force Maj. Gen. RichardSecord was the air force liaison who supplied most of the aircraft essential forcombat in northern Laos. Heroin was often shipped aboard aircraft operated by a CIAfront company called Air America until revelations of the Laos operation forced aname change. The descendant of Air America became the air wing of the CentralAmerican Contra war supply operation, a company known as Southern Air Transport.

By 1977, the CIA had undergone a major reorganization by then President JimmyCarter, responding to the disclosure of criminal activities by the CIA, includingdomestic spying and the activities of rogue CIA operative Edmund Wilson. Afterbeing convicted of running a private arms supply operation to Libya, Wilson washanded down a life sentence.

Wilson was a good friend and associate of both Theodore Shackley and Thomas Clinesfrom the days of the CIA's covert war in Laos. Because of the connection to Wilsonand over the objection of senior CIA bureaucrats, Shackley and Clines were bothdemoted and forced to resign from the agency by then CIA director StansfieldTurner. After retiring, Clines and Shackley went into business arranging arms salesfor various countries. In the 1980's, when then Marine Lt. Col. Oliver North, whowas operating under the command of National Security Council chief RobertMcFarlane, formed a secret network to arm the Contras fighting the Sandinista

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government in Nicaragua, he recruited recently retired General Richard Secord tooperate the arms pipeline. Secord went on to tell a Congressional committeeinvestigating the Iran-Contra affair that he recruited his former "close associatefrom CIA days", Thomas Clines, to assist in carrying out the Contra war.

Massachusetts Senator John Kerry's subcommittee looking into allegations of cocainetrafficking by the pilots who were flying the arms shipments to the Contras fromthe United states, heard testimony from five witnesses who claimed direct personalknowledge of the involvement of CIA operatives in the cocaine trade. At the heartof the allegations is an American, John Hull, who operated a ranch in Costa Rica,used to stage Contra attacks against Nicaragua.

Hull was named two years ago in a Costa Rican government investigation as a drugtrafficker and was later banned from living in Costa Rica. Hull was also implicatedby the Costa Ricans in an assassination attempt against a recalcitrant Contracommander named Eden Pastora. The bombing killed several journalists who wereinterviewing Pastora at the time of the blast.

The Banks

In December of 1989, U.S. troops invaded Panama and seized Panamanian dictatorManuel Noriega, destroying a poor neighborhood and killing more than 3,000civilians in the process. The purpose of the attack was to unseat Noriega, who hadbeen indicted in Florida for allowing Panama to be used as a way-station forcocaine traffickers. While several mid-level drug dealers with knowledge of theinternational trade recently interviewed by the Shadow scoff at Noriega's role inthe drug trade as "inconsequential," the role of Panamanian banks was, and is stillimportant. Panama has some of the world's least strict banking laws, which allowfor the laundering of vast sums of drug money from the U.S. to the Colombiancocaine cartels. In his book "Crimes of Patriots," Jonathan Kwitney exposes therole of the Australian Nugan-Hand Bank in financing covert activities and herointrafficking in Southeast Asia. The bank's mysterious growth and demise traces thereach of the tentacles of the Octopus.

The bank was founded by Frank Nugan, an insecure and incompetent Australian lawyer,and by Michael John Hand, a man with a high school degree who had gone to Vietnamwith the Green Berets. He had served in Laos in the 1960's as a contract CIAoperative, fighting with Thomas Clines, Theodore Shackley and Richard Secord, allvery big names in the Iran-Contra scandal.

Michael John Hand worked with William Colby, who had been CIA director during thetime Shackley was in charge of the CIA office in Laos. Colby went on to becomelegal counsel for the Nugan-Hand bank where he worked with Michael Hand who wasalso a veteran of the CIA-run Laos war.

After allegations of drug smuggling against the bank surfaced in 1977, theAustralian government began a fraud investigation into the bank's operation, and in1980 Frank Nugan committed suicide. The investigations uncovered a network of moneylaundering, drug and arms dealing and still mysterious ties to the CIA.

In 1988, agents of the United States Customs Office in Tampa entrapped officials ofBCCI in a drug money laundering scheme. In the ensuing years, the scandal wideneduntil 1991, when the British government seized the bank on fraud charges.

Bank of Credit and Commerce International

BCCI was established in 1972 by Agha Hasan Abedi, who was president of Pakistan'slargest private bank. Abedi had close connections to the rulers of the oil rich

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Persian gulf kingdom of Abu Dhabi, and spread his banking empire throughout theArab world. BCCI eventually grew to have branches in 73 countries and with $20billion in assets, BCCI became the 7th largest private bank in the world. In July the Senate banking committee held hearing into BCCI and called severalinvestigators, former customs chief William Von Rabb and Democratic party powerbroker Clark Clifford. It was revealed at the hearings that Clifford had lent hisname in return for cash payments as a director of First American, a bank secretlypurchased by BCCI in violation of United States banking laws.

While the Senate brought up questions of impropriety by BCCI, the Senators avoidedsome of the most sensitive questions raised about CIA involvement in the bank.Author Alfred McCoy discussed one of those unanswered questions with the Shadow,the expansion of the heroin trade from Southeast Asia to the border region betweenPakistan and Afghanistan.

Beginning shortly before the Soviet invasion of Afghanistan in 1979, the CIA armedthe small Afghan guerilla group under the control of Gulbuddin Hekmatyar, afavorite of the Pakistani Intelligence Service, and a Moslem fundamentalist notedfor throwing acid in the face of Moslem university women who refused to wear veils.Built up into a formidable military force by the CIA, the Hekmatyar army seizedprime Afghan land and used it to grow poppy plants, the raw material for heroinproduction.

The size of the heroin shipments from Afghanistan grew with the involvement of thePakistan military. By the time of the 1988 plane crash that killed Pakistanidictator Zia ul-Haq, heroin trafficking was widespread among the ranks of officersin the Pakistan military. Heroin trafficking from Pakistan soon outstrippedshipments from Southeast Asia and by 1991 more than 60% of the heroin sold on thestreets of New York City originated in Afghanistan.

Alfred McCoy speculates that if a congressional investigation would ask toughquestions about BCCI, it would uncover drug trafficking and money laundering byUnited States allies protected from prosecution by the CIA. McCoy told the Shadow,"I think what we'll possibly discover is that the CIA was shipping its funds intoPakistan through BCCI, protecting BCCI thereby from serious investigationselsewhere in the world. That the Pakistan military were in fact banking their drugprofits, moving their drug profits from the consuming country back to Pakistanthough BCCI.

In fact the boom in the Pakistan drug trade was financed by BCCI. Theinterrelationship between the Afghan resistance and the CIA and the Pakistan drugtrade can all be seen through the medium of BCCI, the banker to both operations,the resistance and the drug trade."

The BCCI story brings full circle the theory of the Octopus, the existence of asmall group of intelligence operatives involved in the major scandals of our time,a theory developed by Danny Casolaro to explain the theft of PROMIS software by theUnited States Justice Department.

Inslaw and BCCI

The next aspect of the investigation into the Inslaw affair is the connection toBCCI. Allegations have been repeated that monies raised through the illegal salesof PROMIS software were laundered through BCCI. It begs the question, "how couldBCCI be operating without the bank regulators doing anything about it whenobviously there were flags going up and there was evidence going back seven, eightyears that BCCI was involved in drug-running and in laundering of drug money, andin various nefarious schemes?"

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The reason that the regulators and the Congressional hearings don't seem to want totouch upon it is that, very possibly and probably, BCCI had direct ties to theJustice Department and to the regulators who were supposed to be watching thestore. In fact, the reason that BCCI was not investigated and not prosecuted a lotearlier for its activities was because it was providing necessary services -- afull service bank.

DECLARATION OF HOWARD TEICHER

UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF FLORIDA

UNITED STATES OF AMERICA, Plaintiff, v. CARLOS CARDOEN, FRANCO SAFTA, JORGE BURR, INDUSTRIAS CARDOEN LIMITADA, a/k/aINCAR, SWISSCO MANAGEMENT GROUP, INC., EDWARD A. JOHNSON, RONALD W. GRIFFIN, andTELEDYNE INDUSTRIES, INC., d/b/a, TELEDYNE WAH CHANG ALBANY, Defendents.

Case No.: 93-241-CR-HIGHSMITH

DECLARATION OF HOWARD TEICHER

I. Howard Teicher, hereby state that, to the best of my knowledge and belief, thefacts presented herein are true, correct and complete. I further state that to thebest of my knowledge and belief, nothing stated in this Declaration constitutesclassified information.

1. My name is Howard Teicher. From 1977 to 1987, I served in the United Statesgovernment as a member of the national security bureaucracy. From early 1982 to1987, I served as a Staff Member to the United States National Security Council.

2. While a Staff Member to the National Security Council, I was responsible for theMiddle East and for Political-Military Affairs. During my five year tenure on theNational security Council, I had regular contact with both CIA Director WilliamCasey and Deputy Director Robert Gates.

3. In the Spring of 1982, Iraq teetered on the brink of losing its war with Iran.In May and June, 1982, the Iranians discovered a gap in the Iraqi defenses alongthe Iran-Iraq border between Baghdad to the north and Basra to the south. Iranpositioned a massive invasion force directly across from the gap in the Iraqidefenses. An Iranian breakthrough at the spot would have cutoff Baghdad from Basraand would have resulted in Iraq's defeat.

4. United States Intelligence, including satellite imagery, had detected both thegap in the Iraqi defenses and the Iranian massing of troops across from the gap. Atthe time, the United States was officially neutral in the Iran-Iraq conflict.

5. President Reagan was forced to choose between (a) maintaining strict neutralityand allowing Iran to defeat Iraq, or (b) intervening and providing assistance toIraq.

6. In June, 1982, President Reagan decided that the United States could not affordto allow Iraq to lose the war to Iran. President Reagan decided that the UnitedStates would do whatever was necessary and legal to prevent Iraq from losing thewar with Iran. President Reagan formalized this policy by issuing a National

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Security Decision Directive ("NSDD") to this effect in June, 1982. I have personalknowledge of this NSDD because I co-authored the NSDD with another NSC StaffMember, Geoff Kemp. The NSDD, including even its identifying number, is classified.

7. CIA Director Casey personally spearheaded the effort to ensure that Iraq hadsufficient military weapons, ammunition and vehicles to avoid losing the Iran-Iraqwar. Pursuant to the secret NSDD, the United States actively supported the Iraqiwar effort by supplying the Iraqis with billions of dollars of credits, byproviding U.S. military intelligence and advice to the Iraqis, and by closelymonitoring third country arms sales to Iraq to make sure that Iraq had the militaryweaponry required. The United States also provided strategic operational advice tothe Iraqis to better use their assets in combat. For example, in 1986, PresidentReagan sent a secret message to Saddam Hussein telling him that Iraq should step upits air war and bombing of Iran. This message was delivered by Vice President Bushwho communicated it to Egyptian President Mubarak, who in turn passed the messageto Saddam Hussein. Similar strategic operational military advice was passed toSaddam Hussein through various meetings with European and Middle Eastern heads ofstate. I authored Bush's talking points for the 1986 meeting with Mubarak andpersonally attended numerous meetings with European and Middle East heads of statewhere the strategic operational advice was communicated.

8. I personally attended meetings in which CIA Director Casey or CIA DeputyDirector Gates noted the need for Iraq to have certain weapons such as clusterbombs and anti-armor penetrators in order to stave off the Iranian attacks. When Ijoined the NSC staff in early 1982, CIA Director Casey was adamant that clusterbombs were a perfect "force multiplier" that would allow the Iraqis to defendagainst the "human waves" of Iranian attackers. I recorded those comments in theminutes of National Security Planning Group ("NSPG") meetings in which Casey orGates participated.

9. The CIA, including both CIA Director Casey and Deputy Director Gates, knew of,approved of, and assisted in the sale of non-U.S. origin military weapons,ammunition and vehicles to Iraq. My notes, memoranda and other documents in my NSCfiles show or tend to show that the CIA knew of, approved of, and assisted in thesale of non-U.S. origin military weapons, munitions and vehicles to Iraq.

10. The United States was anxious to have other countries supply assistance toIraq. For example, in 1984, the Israelis concluded that Iran was more dangerousthan Iraq to Israel's existence due to the growing Iranian influence and presencein Lebanon. The Israelis approached the United States in a meeting in Jerusalemthat I attended with Donald Rumsfeld. Israeli Foreign Minister Yitzhak Shamir askedRumsfeld if the United States would deliver a secret offer of Israeli assistance toIraq. The United States agreed. I travelled wtih Rumsfeld to Baghdad and waspresent at the meeting in which Rumsfeld told Iraqi Foreign Minister Tariq Azizabout Israel's offer of assistance. Aziz refused even to accept the Israelis'letter to Hussein offering assistance, because Aziz told us that he would beexecuted on the spot by Hussein if he did so.

11. One of the reasons that the United States refused to license or sell U.S.origin weapons to Iraq was that the supply of non-U.S. origin weapons to Iraq wassufficient to meet Iraq's needs. Under CIA Director Casey and Deputy DirectorGates, the CIA made sure that non-U.S. manufacturers manufactured and sold to Iraqthe weapons needed by Iraq. In certain instances where a key component in a weaponwas not readily available, the highest levels of the United States governmentdecided to make the component available, directly or indirectly, to Iraq. Ispecifically recall that the provision of anti-armor penetrators to Iraq was a casein point. The United States made a policy decision to supply penetrators to Iraq.My notes, memoranda and other documents in my NSC files will contain references tothe Iraqis' need for anti-armor penetrators and the decision to provide penetratorsto Iraq.

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12. Most of the Iraqi's military hardware was of Soviet origin. Regular UnitedStates or NATO ammunition and spare parts could not be used in this Sovietweaponry.

13. The United States and the CIA maintained a program known as the 'Bear Spares"program whereby the United States made sure that spare parts and ammunition forSoviet or Soviet-style weaponry were available to countries which sought to reducetheir dependence on the Soviets for defense needs. If the "Bear Spares" weremanufactured outside the United States, then the United States could arrange forthe provision of these weapons to a third country without direct involvement.Israel, for example, had a very large stockpile of Soviet weaponry and ammunitioncaptured during its various wars. At the suggestion of the United States, theIsraelis would transfer the spare parts and weapons to third countries or insurgentmovements (such as the Afghan rebels and the Contras). Similarly, Egyptmanufactured weapons and spare parts from Soviet designs and provided these weaponsand ammunition to the Iraqis and other countries. Egypt also served as a supplierfor the Bear Spares program. The United States approved, assisted and encouragedEgypt's manufacturing capabilities. The United States approved, assisted andencouraged Egypt's sale of weaponry, munitions and vehicles to Iraq.

14. The mere request to a third party to carry out an action did not constitute a"covert action," and, accordingly, required no Presidential Finding or reporting toCongress. The supply of Cardoen cluster bombs, which were fitted for use on Soviet,French and NATO aircraft, was a mere extension of the United States policy of assisting Iraqthrough all legal means in order to avoid an Iranian victory.

15. My NSC files are currently held in the President Ronald Reagan PresidentialArchives in Simi Valley, California. My files will contain my notes and memorandafrom meetings I attended with CIA director Casey or CIA Deputy Director Gates whichincluded discussions of Cardoen's manufacture and sale of cluster bombs to Iraq. MyNSC files will also contain cable traffic among various United States agencies,embassies and other parties relating to Cardoen and his sale of cluster bombs andother munitions to Iraq and other Middle Eastern states.

16. Under CIA Director Casey and Deputy Director Gates, the CIA authorized,approved and assisted Cardoen in the manufacture and sale of cluster bombs andother munitions to Iraq. My NSC files will contain documents that show or tend toshow the CIA's authorization, approval and assistance of Cardoen's manufacture andsale of cluster bombs and other munitions to Iraq.

17. My files will contain notes, memoranda and other documents that will show thatthe highest levels of the United States government, including the NSC Staff and theCIA, were well aware of Cardoen's arrest in 1983 in Miami in a sting operationrelating to the smuggling of night vision goggles to Cuba and Libya. My files willalso show that the highest levels of the government were aware of the arrest andconviction of two of Cardoen's employees and his company Industrias Cardoen.

18. CIA Director William Casey, aware of Cardoen's arrest and the conviction of hisemployees and his company, intervened in order to make sure that Cardoen was ableto supply cluster bombs to Iraq. Specifically, CIA Director Casey directed theSecretaries of the State and Commerce Departments that the necessary licensesrequired by Cardoen were not to be denied. My files will contain notes, memorandaand other documents showing or tending to show that CIA Director William Casey'sintervention was in order to maintain Cardoen's ability to supply cluster bombs andother munitions to Iraq.

I declare under penalty of perjury that the foregoing is true and correct to thebest of my memory and recollection.

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Executed on 1/31/95

Howard Teicher (signature appears on original)

DEPOSITION OF CHALMER C. HAYES

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY LONDON CRIMINAL #96-00060

UNITED STATES OF AMERICA, PLAINTIFF, VERSUS CHALMER C. HAYES, DEFENDANT.

LONDON, KENTUCKY JANUARY 15, 1997 9:00 A.M. DAY III TRANSCRIPT OF TRIAL PROCEEDINGS BEFORE THE HONORABLE JENNIFER B. COFFMAN, UNITEDSTATES DISTRICT JUDGE, and a jury

APPEARANCES:

FOR THE PLAINTIFF: MR. PATRICK MOLLOY MR. MARTIN HATFIELD ASSISTANT U.S. ATTORNEYS 110 WEST VINE ST. LEXINGTON, KY 40507

FOR THE DEFENDANT: MR. GATEWOOD GALBRAITH ATTORNEY AT LAW 1305 NICHOLASVILLE ROAD LEXINGTON, KY

NATHAN F. PERKINS OFFICIAL COURT REPORTER P.O. BOX 5161 LONDON, KY 40745 (606) 878-8450

AFTERNOON SESSION, 1:10 P.M.

6 Q. Mr. Hayes, have you ever been employed by the CIA?

7 A. Yes, sir.

8 Q. For how long?

9 A. On and off, ever since I was about 19 years old, sir.

10 Q. Okay, sir. Have you ever traveled abroad for them?

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11 A. Yes, sir.

12 Q. Have you ever lived abroad for them?

13 A. Sir?

14 Q. Have you ever lived abroad for them?

15 A. I am sorry?

16 Q. Have you ever lived abroad, have you ever lived in other 17 countries?

18 A. Yes, sir, yes, sir.

19 Q. Doing their work?

20 A. Yes, sir.

21 Q. Now, sir, when a person works for the CIA, do they get a 22 paycheck every week from the CIA?

23 A. No, sir.

24 Q. Would you - would you describe - would you describe for 25 the jury how they work?

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1 A. Well, it's according to - you get paid by a lot of times 2 by on a job. It's not like drawing a payday and they take 3 out Social Security and what have you, and your withholding. 4 You contract for certain labor and certain jobs to be done. 5 You had several places that you could pick up payment. Our 6 government runs companies under different names and they own 7 the companies. Whenever you need money you can go there and 8 pick up your - the kind of money you have got coming.

9 Q. So the checks you would have picked up as an agent for 10 the CIA would in fact have been done under the ruse of being 11 employed in another fashion?

12 A. Some of them and some of them you are - you can also 13 pick up cash that way too, sir.

14 Q. Yes, sir. Mr. Hayes, during the course of your 15 employment with the CIA, have you run businesses or done 16 business that gave you either a front for making a living or 17 allowed you to make a living?

18 A. Yes, sir.

19 Q. And what had those businesses - would you enumerate for 20 the jury what some of those businesses have been?

21 A. One of them, I had a business in Brazil that was 22 Challenger Limited, that I had some other purposes of being 23 there, sir.

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24 Q. Did you in fact, when you were in Brazil, get involved 25 in a deal smuggling - a gem smuggling ring?

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1 A. I got involved around it. I wasn't involved in it, sir, 2 I was involved around it.

3 Q. Okay. Well, before we get to that, let's pass, get some 4 time --

5 A. But I --

6 Q. Well --

7 A. I had other needs for being in Brazil before this ever 8 come up, sir.

9 Q. Yes, sir. In the course of your employment with the 10 CIA, have you in fact developed contacts and resources 11 within the intelligence community?

12 A. I have, sir.

13 Q. And are you in reasonably consistent contact with those 14 resources?

15 A. A number of them, sir.

16 Q. Is it safe to say, sir, that given your CIA contacts - 17 excuse me. Let me lay a little bit more foundation. 18 In your experience with the CIA, have you come into 19 contact with operatives who would carry out assignments on 20 behalf of the government?

21 A. All the time, sir.

22 Q. Did you run across people who have free lanced on those 23 assignments?

24 A. Yes, yes, sir.

25 Q. Would, given your experience, would it be hard to find

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1 someone in the CIA or the other intelligence community that 2 would either satisfy or find someone to satisfy a request on 3 your part for an assassin?

4 A. It wouldn't be hard at all, sir.

5 Q. How long were you with the CIA, sir?

6 A. Since I was 19 years old, sir.

7 Q. That's 42 years?

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8 A. Yes, sir.

9 Q. Now, if the government called up the CIA and say this 10 Chalmer C. Hayes or this C. Charles Hayes, does he work for 11 you? What are they going to find out?

12 A. Sir, they are not going to find out much. In fact, the 13 government probably already knows, they can call and they 14 won't even give them information. Other organizations 15 within the government they don't give information to. 16 That's their privilege.

17 Q. Prior to your getting involved in gems, what other kinds 18 of businesses were you involved in?

19 A. I was around cars, selling of cars, Mercedeses. There 20 was several other covers, sir. I - I don't think that some 21 of them I can reveal at this particular time because I - the 22 record is - a lot of it is redacted, as you know, and I 23 don't think that that would - that some of the other things 24 I can reveal at this time, sir.

25 Q. Have you in fact in the course of - course of your life

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1 been subpoenaed to testify in front of grand juries, federal 2 grand juries?

3 A. I have numerous times been subpoenaed in front of 4 federal grand juries, House investigating committees, 5 subcommittees. I have been subpoenaed for all of it, sir.

6 Q. Have you in fact testified in front of Congress or 7 Congressional members?

8 A. I have, sir. Yes, sir, I have.

9 Q. We're going to - we're going to talk about the gem case 10 for a second, Mr. Hayes. Is the gem case the first time - 11 well, would you describe for the jury what the gem case is 12 about, sir?

13 A. Yes, sir. I was contacted in Brazil by some of the high 14 government officials which I knew there, that wanted to get 15 some jewels that was in the United States. A member of this 16 company, Embrine(?) Corporation, supposedly had went crooked 17 and was sitting over here with a lot of gems. They asked me 18 if I would try to help them retrieve the merchandise. 19 I wasn't too much interested until I found out one 20 thing. The guy that had the gems and what have you was from 21 Berea, Kentucky. And I said, yes, that's close to home, I 22 might. I don't know. And I went from there to Brasilia to 23 Goias, G-O-I-A-S, in other words, and also Brasilia, to talk 24 to them while in Brazil about the situation they had here 25 with the agent that they had. They also told me they had

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page 16


1 problems over here with the United States Customs where they 2 were holding $5,000,000 worth of diamonds in Miami, and I 3 was to find out why they were holding them and what have you 4 and report back to them.

5 Q. In your capacity, were you being asked to do this in 6 your capacity with the CIA or as a private citizen?

7 A. More or less as a private citizen.

8 Q. On contract with the CIA?

9 A. No, sir, I wasn't on contract with them on that.

10 Q. You didn't enter into a formal contract with them?

11 A. That's right, at that time I was strictly on a contract 12 basis, and they knew of it, but they had no part in that, 13 sir.

14 Q. Okay.

15 A. None.

16 Q. Okay. Mr. Hayes, did you - did in fact, due to your 17 efforts, a gem seizure result?

18 A. Yes, sir, there have been many millions of dollars worth 19 seized in the United States because of this.

20 Q. Was there anybody arrested --

21 A. Yes, sir.

22 Q. -- as a result of your investigation?

23 A. Yes, sir, a number of people have been arrested in it. 24 There is fugitives from justice right now, there has been 25 prison sentences been handed down, there have been - in

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1 fact, the government pays you a mordi(?).

2 Q. That's what I want to get into. I want to stop you.

3 A. Well, what I --

4 Q. Were there any government officials of any country 5 arrested as a result of your investigation?

6 A. Yes. And there were investigations of officials here in 7 the United States as well, sir.

8 Q. Who was - who was arrested, that you recall, that might 9 have been a government official?

10 A. The minister of justice in Brazil was arrested. He was 11 the minister. There were senators arrested over there,

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12 several others. They had quite a number of people that was 13 high - mayor of the town.

14 Q. Was that carried in the mainstream media at the time it 15 happened?

16 A. Yes, sir, all over the world.

17 Q. Yes, sir. As - under - do you believe that a United 18 States law exists that gives you a percentage of what was 19 seized in that matter?

20 A. Yes, sir. And it was discussed beforehand and 21 afterwards, yes, sir.

22 Q. Have you in fact - do you have any idea of how much 23 worth of gems were - were seized as a result of your work?

24 A. No, sir, I'm in the process now of trying to get a 25 complete accounting.

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1 I would say this. It was well over $12,000,000 that 2 were seized. Well over $12,000,000. The gem seizure was 3 listed, and by United States Customs and all the papers, as 4 the largest gem seizure that was ever had in the United 5 States of America.

6 Q. How much did you think you have coming to you from the 7 government as a result of your work for them in that matter?

8 A. Well, somewhere in the neighborhood of - when they are 9 all put together, several different cases, you know what I 10 mean? They are all being fairly completed. It's been over 11 10 years ago. When it all comes out it will be somewhere 12 over - a little over a million dollars.

13 Q. And have you asserted that claim against the United 14 States government?

15 A. I have, and they have - they are attempting now to pay 16 some of the claims.

17 Q. They - they don't agree with your assessment of how much 18 of the jewels belong to your work, do they? 19 A. Well, they haven't agreed or they haven't denied, sir. 20 I am working for an accounting. We asked for - I asked for 21 an accounting on a check that they was trying to present to 22 me as, you know, $903. And I told them, I said I would like 23 to have an accounting what this goes on for. In the 24 meantime they sent me another check, I don't know, for 25 several hundred dollars, or sent me a paper that if I will

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1 sign a paper that they will send to me. They want me to - I 2 told them I wanted an accounting of exactly where it come

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3 from, how much and which claim and everything else. And as 4 to this date, I - I haven't got it back yet, sir.

5 Q. Do you think you have been treated fairly by Customs 6 officials for whom you believed you were working?

7 A. No, sir.

8 Q. Do you in fact think that they are trying to - do you 9 think they have paid you what you have forthcoming?

10 A. I haven't received anything yet, sir. And it's been 11 over 10 years. They are in the process now of just starting 12 to dribble some of the money out.

13 Q. Do you know people in Customs?

14 A. Sir?

15 Q. Do you know, did you ever have any official contact with 16 people in Customs?

17 A. Yes, sir.

18 Q. The Customs Department itself?

19 A. Yes, sir.

20 Q. Do people in Customs know who you are?

21 A. Yes, sir, they sure do.

22 Q. Now, is that the first big brouhaha that you have had 23 with this government?

24 A. No, sir. 25 Q. What, prior to that time, did you - were you, you and

Page 148

1 your government ever in conflict over anything else?

2 A. I have had a case in computers. Is that --

3 Q. No, this is - this is later. I want to go prior to the 4 gem situation.

5 A. Yes, I had a gun case that was a number of years ago 6 that there was a conflict over with the government.

7 Q. Okay. What - what is your general attitude toward your 8 government, Mr. Hayes?

9 A. Well, I love my government. As I have always said, I 10 love my government second to my God and would put my life on 11 the line for it. 12 Now, that doesn't mean that I appreciate some of the 13 government organizations that doesn't give people a fair

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14 break and what have you, and doesn't try to do the right 15 thing. But I love my country, sir.

16 Q. Are you afraid of the government, Mr. Hayes?

17 A. Sir?

18 Q. Are you afraid of the government?

19 A. No, sir.

20 Q. Are you afraid of any of their agents?

21 A. No, sir.

22 Q. Mr. Hayes, have you ever sued the government?

23 A. Not to my knowledge, sir.

24 Q. Have you ever countersued?

25 A. Yeah, I countersued, yeah.

Page 149

1 Q. How many times has the government sued you?

2 A. Four or five, six times I guess. I don't know. 3 Somewhere along there.

4 Q. And are we talking about the state or federal 5 government?

6 A. Federal government, sir. I have never been, had any 7 allegations with the state government.

8 Q. And you have never initiated a suit but you have 9 countersued on suits that you - have been initiated against 10 you?

11 A. Yes, sir.

12 Q. Okay. There was a - would it be fair to say that there 13 was an even more heated confrontation between you and the 14 government later on after the gem seizure case?

15 A. Several of them, sir.

16 Q. What was the next time when you got involved in a heated 17 battle with the United States government?

18 A. After the gem case, I'm in the salvage business and buy 19 salvage, and the United States District Attorney's office, 20 the same one that Mr. Hatfield works for in Lexington, 21 Kentucky, right now, from them up there I bought a bunch of 22 computers from GSA that they sold as surplus equipment. 23 The government found out that they had left some witness 24 protection plans on it, on the tapes. They had also left 25 all their financial records on there. I think they was more

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Page 150

1 interested in their financial records than the other. 2 That's neither here nor there. But they wanted it back. 3 And my situation was, well, pay me for it and you can have 4 it. And no, we don't want to pay you, you are going to have 5 to give them back to us regardless. And I said, you mean I 6 just lose my money? And they never would answer that 7 question. They just said, no, we'll get them back, we'll 8 get a court order. Well, whatever. And they did.

9 Q. Did they sue you?

10 A. Yes, sir.

11 Q. You countersued them?

12 A. Yes, sir.

13 Q. They got the materials back?

14 A. Yes, sir.

15 Q. Sir, based upon your possession of those materials, have 16 you ever been asked to produce an affidavit as to the 17 content, nature or form of that material you found on those 18 computers?

19 A. Yes, sir.

20 Q. Have you in fact initiated such --

21 A. I did not.

22 Q. -- such an affidavit?

23 A. I did not. He asked me if any other government agency 24 had got a copy of what I had retrieved, and my answer was, 25 if you have an argument with them, you go ask that other

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1 government agency.

2 Q. Okay. Sir, has it - have you purported that the 3 material discovered on those computers was in fact a 4 software program that is currently the subject of major 5 litigation in this country?

6 A. It is, sir.

7 Q. Was the material derived off of those computers a 8 derivative of a software program called Inslaw software?

9 A. Yeah, it's Inslaw. That's not the name of the software 10 but that's the name of the company that produced the

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11 software.

12 Q. Is that some important software, Mr. Hayes?

13 A. Even to this day, it's still one of the best tracking 14 softwares that there is. The enhanced version is.

15 Q. What is the software that's been produced by Inslaw? 16 What is it called? How should we refer to it?

17 A. In this case here, it's called Promise and Enhanced 18 Promise software.

19 Q. What was that software designed to do, sir?

20 A. To track people, money. It can track anything except 21 maybe a rabbit or a hound dog. I doubt if it could do that. 22 But it could do just about anything as far as tracking goes, 23 keeps - keeps good records for tracking.

24 Q. Now, by tracking, let's try to clear it up. What do you 25 mean by tracking?

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1 A. Keeping tabs on something. Being able to look at it and 2 bring it up the instant that you need it.

3 Q. Was this capable of tracking international financial 4 transactions?

5 A. If it's programmed right, yes, sir, very much so.

6 Q. Is that what it's designed to do?

7 A. Sir?

8 Q. Is that what it was designed to do?

9 A. No, sir, that was just sort of swift and chips, was 10 designed for that originally along with Promise. And it 11 was - that was the NSA, based out of Maryland, N-S-A, done 12 this out of Maryland, originally done that, sir.

13 Q. Why were you called as a witness in front of a grand 14 jury -- pardon me. Were you called as a witness in front of 15 a federal grand jury regarding Inslaw and the software that 16 we've talked about here?

17 A. Yes, sir, I was.

18 Q. You have been a sworn federal grand jury witness 19 regarding this?

20 A. Subcommittees and grand jury, yes, sir.

21 Q. What is different about this software developed by 22 Inslaw that is different from software developed by anyone 23 else?

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24 A. Well, some of it is not different, some of them stole it 25 from Inslaw too like the government did, and some of them

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1 didn't pay for the program and have copied it. 2 It's like a tape. You know, Kenny Rogers can make a 3 tape and have music on it. You can go to a store and buy 4 the tape and the tape that you buy in the store, Mr. Rogers 5 gets so much royalties, the company that made it does, and 6 the music company, everybody gets paid royalties. Yet you 7 can go home and take that tape and somebody else wants to 8 borrow it, say can I have that tape? If you make a copy of 9 that tape and give it to them, it is illegal. In other 10 words, not for distribution. 11 This is what they do with software a lot of times. They 12 will take somebody's software and copy it, or the government 13 will buy 50 copies and then they'll turn around and make 50 14 more copies, which you are not allowed to. And so it's hard 15 to answer exactly, Mr. --

16 Q. Is there a federal suit going on between the company 17 that developed the software and the Department of Justice?

18 A. There is, and as a result of it, last April of - in '96, 19 I think it was April, I would have to get the exact date, 20 you have a copy of the transcript exactly, that was my 21 latest problem with Department of Justice Lexington, 22 Kentucky, Mr. Famularo's office. I had a problem with my 23 learned colleague here, Mr. Hatfield sitting at the table's 24 office over there.

25 Q. Did you give a - did they take your deposition in that

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1 matter?

2 A. I was there for over four hours with somebody from the 3 Department of Justice, and there in Mr. Hatfield's office 4 for over four - well, quite a bit over four hours. I don't 5 know. He can give you the exact time on it. I went in 6 there in the morning and never even got dinner and stayed 7 until late that evening.

8 Q. Now, Mr. Hayes, it has been alleged that you and a group 9 of other people have used this software to track the 10 financial banking transactions of high placed government 11 officials in this country. What can you tell the jury about 12 that, Mr. Hayes?

13 A. Well, without compromising somebody else, I - the proof 14 of the pudding is in the eating, so the saying goes. It's 15 happened, as we said it would. Yes, there is a company 16 known as the Fifth Column, that comes from section D that 17 was developed within the CIA many years ago. That section 18 is a split-off branch of it. They have been known to

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19 champion a lot of people's rights.

20 THE COURT: I am not sure if you answered the 21 question. 22 Could you ask him that question again, Mr. Galbraith?

23 MR. GALBRAITH: Yes. 24 I am sorry, sir, could you read it back?

25 THE COURT: Let see if I -- let me see if I can

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1 summarize it. Wasn't the question whether he has used this 2 computer software to track the financial affairs of highly 3 placed government officials?

4 MR. GALBRAITH: Yes, yes, sir.

5 THE COURT: Would you answer that question, 6 please, sir?

7 BY MR. GALBRAITH:

8 Q. You or members of this Fifth Column?

9 A. I am not so sure that I can answer that legally. I can 10 say that I have used Promise [Promis] software, yes.

11 Q. Is Promise software, that's --

12 A. Regardless of what I done with it. Now, that's 13 something else.

14 Q. Is Promise software what in fact is - is the subject 15 matter of this federal action, this Company D with the 16 federal government?

17 A. Yes, sir.

18 Q. What does this company - Inslaw, did you say?

19 A. Yes, sir.

20 Q. What does this company allege that the federal 21 government did with this software?

22 A. Well, the company alleges - the company is Inslaw 23 Corporation. It's in New York. It's run by a fellow, the 24 president of it is named Bill Hampton [Hamilton], who has been 25 bankrupt. They are still in operation under chapter

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1 something. All right. Whatever. 2 But anyhow, what happened they developed this Promise 3 software. They sold it to the government for tracking. It 4 tracks prisoners, it tracks cases, it tracks a lot things.

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5 When they sold it to the government, they first sold it to 6 the Department of Justice, of all people. And they - I 7 think they sold it also partly to - only partly, partly to 8 the FBI. Well, this program was used to track operations 9 within the government. It's been alleged that the 10 government... 11 And then they come out with an enhanced version, which 12 is a lot faster, a lot better. Just like a car, you know, 13 an improvement comes along all the time. Come out with a 14 better version called Enhanced Promise software that is out. 15 They have alleged that the government has taken this, and 16 instead of buying copies for everybody that was involved, 17 they have taken it and not only given it to other agencies 18 within the government, they also state that, believe it or 19 not, an ex-Attorney General and a fellow that was just 20 convicted here a few weeks ago out there, Mr. Brian in 21 California, not only took it from the government, took this 22 same software program and went out and not only sold it to 23 other countries, sold it to companies within the United 24 States in competition against Inslaw.

25 Q. So in fact --

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1 A. The money --

2 Q. The allegation is that the government illegally 3 reproduced this software and in fact sold it itself to other 4 entities around the world?

5 A. Or people. I don't like to say that the government done 6 this, I would say - I would rather - my government didn't do 7 this, sir. The people within the government is the culprit 8 that's done it. People that was high up in the government 9 done it. The government didn't do nothing on this.

10 Q. Has - has this knowledge that the government - that 11 people within the government may have been accused of this, 12 and has your familiarity with the Promise software, has that 13 caused you to be examined for any unusual political affairs 14 in this country?

15 A. Yes, sir, they don't - any time that - I know they will 16 say no to this, but our government lies. I hate to say 17 this. That - our government doesn't lie, but the people in 18 it do.

19 Q. Answer the question, please, sir.

20 A. If - if - to answer this question, they - ask the 21 question one more time, Mr. Galbraith.

22 THE COURT: Just a minute, Mr. Galbraith.

23 A. This is all --

24 THE COURT: Excuse me, Mr. Hayes.

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25 THE WITNESS: Yes, ma'am.

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1 THE COURT: We're not having a lecture here and 2 we're not having a sermon. I want you to listen to the - to 3 what the question is and answer the question, and nothing 4 else. You will be given latitude to explain your answer, 5 but let's avoid the digressions as much as we can. 6 Let's start with that again, Mr. Galbraith.

7 MR. GALBRAITH: Would you repeat the question, 8 Mr. Perkins?

9 (The last question was read by the reporter.)

10 MR. GALBRAITH: That's not a question, clear 11 question. Let me - I will withdraw that question and give 12 something that's a little more direct.

13 THE COURT: Yes, you may.

14 BY MR. GALBRAITH:

15 Q. Mr. Hayes, have you been responsible for the resignation 16 of any elected officials in this country?

17 A. I could have been a part of a group that has.

18 Q. Is that group the Fifth Column?

19 A. It is.

20 Q. You have in fact claim credit, along with the Fifth 21 Column, for having forced the resignation of various, 22 high-placed officials in this country, have you not?

23 A. Whatever the Fifth Column is guilty of, I am too, or 24 whatever they are praised for, I am with the Fifth Column.

25 Q. Did the Fifth Column obtain financial records of elected

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1 Senators and Representatives, Federal Senators and 2 Representatives in this country?

3 MR. MOLLOY: Your Honor, I am going to object. 4 We're not here about the Fifth Column, we're here about 5 Mr. Hayes. If the question can be directed to him and not 6 about all these other folks, that would be fine.

7 THE COURT: Well, I think he has just, with that 8 last answer, said that he is one and in lock step with the 9 Fifth Column. And I think Mr. Galbraith is trying to 10 establish his opposition to government officials and various 11 agencies. So the objection is overruled and I will allow

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12 it.

13 MR. GALBRAITH: Thank you, Your Honor.

14 A. At the point of not admitting to a crime, if we unduly 15 tapped a phone or something that way, I'd say that we could 16 have been responsible, yes, sir.


18 Q. You are not familiar with any law that has been broken 19 in - by the Fifth Column, are you?

20 A. Well, nobody has ever been charged with it.

21 Q. Okay. Did the Fifth Column obtain financial records of 22 high placed elected officials in this country?

23 A. I am sure they --

24 MR. MOLLOY: Your Honor, I have no objection to 25 that question, if and when he can show that he is a

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1 participant in that.

2 THE COURT: All right. That's fair enough. 3 That's a fair enough objection.

4 MR. GALBRAITH: Yes, ma'am.

5 THE COURT: You need to reword that question then.


7 BY MR. GALBRAITH:

8 Q. As a part of your participation in the Fifth Column, do 9 you know if that group obtained financial records of high 10 placed elected officials in this country?

11 A. Yes, sir.

12 Q. Can you tell this jury a couple of names of whose 13 financial records were obtained?

14 A. At the point of a lawsuit that I could be sued by these 15 people, but this is fine, I can answer it one way. And I'm 16 not looking for a forum, Mr. Galbraith, in other words, to 17 put anything out. I can answer it very simply this way.

18 Q. Please.

19 A. As of last year, there was more Senators and Congressmen 20 resigned in Congress than has been known in the history of 21 the United States of America.

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22 THE COURT: If you can answer the question, answer 23 the question. If you cannot answer the question, the Court 24 will presume that your attorney knows that you cannot answer 25 the question and won't ask it. So let's run that by one

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1 more time. 2 Have you or have you not, by virtue of your 3 participation in the Fifth Column, gotten financial 4 information regarding elected officials in the Senate or the 5 House? Yes or no.

6 A. We have, yes.

7 THE COURT: All right. And are you going to give 8 their names or no?

9 A. I might give a couple of them, Your Honor. You are 10 asking me to the point that I cannot answer the question 11 properly.

12 THE COURT: That's the question that was asked. 13 Who are they?

14 A. And then I answered you - all right, one of them is 15 Mr. Coyne [William Cohen] that just got appointed by your President.


17 Q. Mr. who?

18 A. Coyne.

19 Q. Who is he?

20 A. From Maine --

21 Q. Who is he?

22 A. He resigned. 23 Q. Was he a Representative or a Senator from Maine?

24 A. He was a Senator from Maine. In other words, from up 25 there. You had a lady out west, Pat Schroder. [Schroeder]

Page 162

1 Q. Are you telling this jury that you believe that 2 financial information obtained on these people would have 3 forced them to resign from their elected office?

4 A. Yes, sir. And I can even prove it to you with the last 5 name that I gave you, without getting into a match here, in 6 other words, of names and what have you.

7 Q. Are you familiar with the name Vince Foster?

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8 A. Yes, sir.

9 Q. How do you know the name Vince Foster?

10 A. He worked for the White House and when he was counsel 11 out in Arkansas.

12 Q. He was in fact counselor to President Clinton?

13 A. Sir?

14 Q. Was he counselor to President Clinton?

15 A. Yes, sir.

16 Q. What has become of Mr. Vince Foster?

17 A. Mr. Vince Foster got killed.

18 Q. I believe that's been - has that been ruled a suicide? 19 Do you know?

20 A. I think it is. They had ruled it suicide, and they 21 couldn't make it stick so they had to reopen the case, and 22 it hasn't been ruled anything yet. In --

23 Q. Do you have any reason to believe that you know why 24 Mr. Foster would have been murdered or committed suicide?

25 A. Yes, I do.

Page 163

1 Q. What is that reason?

2 A. Mr. Foster had been relieved of his bank account in 3 Bern, Switzerland.

4 Q. Well, now, that's - I realize that's a very succinct way 5 to put it. And without lecturing or a forum, I want you to 6 tell this jury what you know about that.

7 A. Okay. He had an account --

8 Q. Mr. Vince Foster?

9 A. Yes, Mr. Vince Foster had an account in Bern, 10 Switzerland. He had several million dollars in it. Money 11 was transferred to another account and Mr. Foster was told 12 if he wanted to get it, all he had to do is prove how he had 13 paid taxes on it, [had not] lied to the United States government, and 14 he could get the money back.

15 Q. He hadn't paid?

16 A. Mr. Foster was unhappy. So not only that, in the 17 meantime, during all of this going on when Mr. Foster was

page 29


18 there, there is ways of laundering and tracking money.

19 MR. MOLLOY: May we approach?

20 THE COURT: Yes, you may approach the bench. Just 21 a minute, Mr. Hayes.

22 (At the bench)

23 THE COURT: Let the record reflect the attorneys 24 are at the bench outside the jury's hearing.

25 MR. MOLLOY: I have never made this objection

Page 164

1 before. This is McCarthyism. This man is sitting up there 2 making totally unsubstantiated accusations with no 3 foundation laid whatsoever as to how he has this 4 information, what his participation is, and he is sitting 5 here in this courtroom degrading people. And it's just 6 McCarthyism, unless and until he can show some reasonable 7 basis for the information that he purports to have.

8 THE COURT: Well, I am concerned that he's using 9 this as a forum, and if he - if you want to establish his 10 opposition to the government, you don't need to go this far.

11 MR. GALBRAITH: Your Honor, and it must be on the 12 record. It must be on the record. Based on my 13 investigation, based on my being hired into this case, I 14 have certain preliminary steps that needed to be shown to me 15 before I would take this man seriously. My background 16 investigation shows that I have been totally unable to 17 impeach this man on what he has told me. If he - our 18 defense to this is a conspiracy against this man. Every one 19 of the lower folks, all the folks down the line have --

20 THE COURT: I am sorry, I didn't hear you.

21 MR. GALBRAITH: All the folks down the line, the 22 agents, the field agents, the field supervisors, they all 23 claim that no, there is no reason for us to have a 24 conspiracy against this man; there is no reason for us to 25 bring a charge that we would not think was true against this

Page 165

1 man. And I understand that's the reaction. But certainly I 2 should have the opportunity to show that there are people 3 outside this field supervisor who - who would have a great 4 reason to want to see this man --

5 THE COURT: But here is my concern. By all of 6 this elaborate detail that he's giving, for example, with 7 regard to Vincent Foster, he still has not shown that he 8 made anybody aware that he knows all of this.

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9 MR. GALBRAITH: He has been published in major 10 magazines.

11 THE COURT: I am not talking about that. I am 12 saying that he has - he is just sitting there espousing a 13 theory and that's all. If he wants to show that he has 14 become known for having that theory, then that might make it 15 relevant here. But even then, it wouldn't be necessary to 16 get into this kind of detail.

17 MR. GALBRAITH: Okay.

18 MR. MOLLOY: May I ask Mr. Galbraith a question, 19 Your Honor? 20 Are you going to be able to bring any witnesses in here 21 to show, to substantiate the claims of knowledge that this 22 man has?

23 MR. GALBRAITH: Yes, I am.

24 THE COURT: Well, now, wait a minute, though. 25 Whether - regardless of what he knows, it has to be shown

Page 166

1 that someone in the government - government is a very broad 2 term.

3 MR. GALBRAITH: Yes.

4 THE COURT: -- knew that he had these theories.

5 MR. GALBRAITH: Yes, okay. Yes, ma'am.

6 MR. MOLLOY: I would like --

7 THE COURT: Now, my question is, are you going to 8 be able, through him or some other witness, establish that 9 the government knew he had these theories?


11 THE COURT: That's my first question.


13 THE COURT: Are you? Now, my second question is, 14 is all of this detail necessary?

15 MR. MOLLOY: What?

16 THE COURT: Is all of this detail necessary? 17 Because this gets to the heart of this objection.

18 MR. GALBRAITH: Yes, I understand that. I 19 understand that. Your Honor, you must admit, I have never 20 heard a story like this in this courtroom. I have never 21 heard a defense like this.

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22 THE COURT: I have never seen aliens walk in that 23 door, but that doesn't mean it's admissible.


25 THE COURT: My question is, is all of this detail

Page 167

1 necessary?

2 MR. GALBRAITH: Well, you know, I don't know, Your 3 Honor. It depends on how the jury rules after it's all 4 over. I will try to cut back on the detail. And I 5 certainly don't want to eviscerate the name of somebody. 6 But this man, this is what this man --

7 THE COURT: Unnecessarily.

8 MR. GALBRAITH: Unnecessarily.

9 THE COURT: Unnecessarily. Now, if this man has 10 gone out - if this man has gone out and let everybody in the 11 world know that he has a certain theory, no matter what it 12 is, and no matter in what detail, then that may make it 13 relevant.

14 MR. GALBRAITH: I understand, yes, ma'am.

15 THE COURT: But so far you haven't laid that 16 foundation at all, not at all.

17 MR. GALBRAITH: Given the nature and character of 18 what his testimony is, that's going to be hard to do to 19 begin with. But no, I understand the objection and I 20 understand what the Court's direction is on this, and I 21 don't think we need to go into a great deal of detail.

22 THE COURT: All right.

23 MR. GALBRAITH: And I'll certainly watch...

24 (In open court)

25 THE COURT: There has been an objection,

Page 168

1 Mr. Hayes, to the detail into which you are going. And I 2 have expressed some concern as to whether it's necessary. 3 I also want a foundation laid about any government 4 understanding of what this gentleman knows, and therefore 5 the basis for the defense's theory that the government was 6 somehow retaliating.

7 MR. GALBRAITH: Thank you, Your Honor.

page 32


8 THE COURT: This detail must be shown to be 9 necessary before we'll go any further at this - at this 10 level of detail.

11 MR. GALBRAITH: Yes. Thank you very much, Your 12 Honor.


14 Q. Mr. Hayes, have you been a spokesperson for the Fifth 15 Column in the past?

16 A. I have.

17 Q. Have you been interviewed by journalists as to your role 18 in the Fifth Column?

19 A. I have.

20 Q. Have you in fact been presented in the media as a 21 spokesperson for the Fifth Column?

22 A. That's correct, sir.

23 Q. In that media exposure, sir, have you alleged that this 24 Fifth Column obtained financial records on elected 25 individuals and tried to force their resignation --

Page 169

1 A. I have.

2 Q. -- regarding this? Have you alleged that this financial 3 information was so embarrassing that it has led to the 4 resignation of an elected official?

5 A. It has, and some of the officials have complained, but 6 to no avail.

7 Q. Have you alleged publicly, sir, that you delivered some 8 of these financial transactions to these officials?

9 A. Yes.

10 Q. Was - for what purpose did you deliver this financial 11 transaction information to these officials?

12 A. I would get into a match - there is more than one reason 13 here, and without getting into a match again with Your Honor 14 up here, there is two or three reasons, sir. One, it was to 15 get them to resign. And another reason is why we wanted 16 them to resign rather than to see them prosecuted. But the 17 main reason was we wanted them to resign. We couldn't get 18 them prosecuted.

19 Q. And is that an allegation that you have made publicly?

20 A. I have, sir.

page 33


21 Q. Have those allegations appeared in the media?

22 A. Yes, sir, they sure have.

23 Q. And have they just locally appeared or have they 24 appeared nationally or internationally?

25 A. No, it's been all over the United States, it's even been

Page 170

1 carried abroad, London Times Telegraph.

2 Q. In your opinion, sir, how many elected officials were 3 forced to resign as a result of your delivering information 4 to them?

5 A. Well, the only thing I wanted to go into without numbers 6 exactly, Mr. Galbraith - I am not authorized to go into the 7 rest of it - as far as history goes, last year was more 8 Senators and Congressmen resigned than any other time in the 9 history of the United States.

10 Q. How many Senators and Congressmen resigned in the last 11 session?

12 A. I don't know exact number as of right now, sir. I have 13 been incarcerated for two and a half months and don't --

14 MR. HATFIELD: Objection, Your Honor.

15 THE COURT: Sustained. The jury will disregard 16 that comment.


18 Q. Would you - would you have - have you been blamed or 19 taken the credit for forcing the resignation of those 20 officials?

21 A. A good number of them, yes, sir. A very good number of 22 them.

23 Q. Have you been described as such in the media that has 24 carried this information?

25 A. I have, yes, sir.

Page 171

1 Q. Then would it be fair to say that there is no 2 surprise -- excuse me. Have you been the front man for this 3 whole effort, sir?

4 A. I have, yes, sir. Yeah, I have been the front man for 5 the Fifth Column. I'm the spokesman.

page 34


6 Q. Have you, aside from - aside from this, what's going on 7 right here, has the government sought any kind of sanction 8 against you as - for your activities?

9 A. Some branches of it have, yes, sir.

10 Q. Can you, keeping it within this context and given the 11 judge's parameters that she told to you stick to --

12 THE COURT: I am not setting any parameters, I 13 just want him to answer the questions.


15 THE COURT: And right now I think we're doing a 16 real good job.

17 MR. GALBRAITH: Thank you, Your Honor, I 18 appreciate that.


20 Q. I want you to be pertinent on your answers now, 21 Mr. Hayes.

22 A. Okay.

23 MR. GALBRAITH: Could you read back my last 24 question, Mr. Perkins?

25 THE COURT: Has the government sought any

Page 172

1 sanctions against you?

2 Q. Has the government sought any sanctions against you?

3 A. Certain departments have.

4 Q. Can you - keep it brief and to the point - can you 5 describe for the jury what might have been done regarding 6 your activities?

7 A. Well, the Federal Bureau of Investigation, I get 8 periodic visits from them quite often.

9 Q. Do you believe that it is this that led to your being - 10 testifying in front of a federal grand jury in Chicago?

11 A. That's part of it. And also the House subcommittees and 12 stuff, yeah. That's part of it.

13 Q. Mr. Hayes, do you feel that there are people or 14 officials within the government who are out to discredit 15 you?

16 A. Yes, they are out to keep their job and discredit me as 17 far as they can, yes, sir.

page 35


18 Q. Do you have a theory as to what branch of government 19 these people work for?

20 A. Sir?

21 Q. Do you have a theory as to what branch of people these 22 government work for - or what branch of government these 23 people work for?

24 A. Yes, sir, I do.

25 Q. And who do you think they belong to?

Page 173

1 A. Well, since the FBI is not a chartered organization, 2 they all come under the Department of Justice, sir.

3 Q. So you believe it's employees within the Department of 4 Justice; is that correct?

5 A. That's right.

page 36

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