I stumbled into this story about a week ago and have been fascinated by it ever since. It’s the story of how the United States government essentially stole some very powerful software twenty years ago — they liked it, they installed it, they used it, then they just stopped paying for it. Worse, they then sold it to other countries.
And this isn’t a conspiracy theory — The Justice Department has all but admitted that they did this. Multiple investigations and lawsuits have found fault on the part of the United States. In the end, however, the company that got screwed is still bankrupt, and the government still has the software.
Here’s a thumbnail sketch. It’s complicated, so I might not have it all right, but I’ll give you enough resources to look into it on your own and draw your own conclusions.
Inslaw was a company that developed a database system called PROMIS (Prosecutors Management Information Systems) in late 70s and early 80s. The system was used to track criminals, and did so by aggregating hundreds of other databases. It was based on a public domain version developed with a grant from LEAA (Law Enforcement Alliance of America). However, Inslaw took the software private when they upgraded its architecture to 32-bit over the orginal 16-bit version.
Here’s what the software did:
[PROMIS would] tap into the computers of such services as the telephone company, the water board, other utility commissions, credit card companies, etc. Promis would then search for specific information. For example, if a person suddenly started using more water and more electricity and making more phone calls than usual, it might be suspected he had guests staying with him. Promis would then start searching for the records of his friends and associates, and if it was found that one had stopped using electricity and water…
Heady stuff, to be sure. It was developed from a public domain platform by a guy named William Hamilton who quit the National Security Agency to start marketing PROMIS via Inslaw. The Justice Department loved the software and had it installed in about 100 U.S. attornies offices.
Then they stopped paying for it.
The whole reason the government just stopped paying for the software is a little murky. Apprently they claimed that Inslaw had never proven they were the ones who made the 32-bit improvements to Enhanced PROMIS. Lots of contract disputes started coming out of the woodwork. Inslaw was a small company, and it eventually ran out of money and filed for bankruptcy.
In 1986, Inslaw filed suit against the government. In 1987, they won it, with judge Georga Bason writing that The Justice Department “took, converted and stole” PROMIS through “trickery, fraud and deceit.” He awarded the company about $8 million, and would have given them $25 million in punitive damages but, at the time, he wasn’t sure if he could, given that the defendent was one of the largest federal agencies in the U.S. government.
Sadly, the entire thing was reversed on appeal.
So, why did the U.S. government (which certainly isn’t short of money) stop paying for software that they apparently loved and were using with wild abandon? That’s the big question, and the answer is where the story gets really good.
The assertion is that The Justice Department wanted to force Inslaw into bankruptcy so they would have to liquidate their assets, including the gold mine that was PROMIS.
During bankruptcy proceedings, Inslaw was contacted by a company called Hadron. Hadron offered a way out: they would buy PROMIS from Inslaw, thus relieving them of the whole mess. It turned out that Hadron was in bed with The Justice Deparment through a convoluted series of relationships — Hadron was an elaborate end run to try and get legal, unencumbered rights to PROMIS.
Inslaw turned Hadron down, but it didn’t matter: the Justice Department had the software — unemcumbered or not — and had given a copy to Israel. Israel then turned around and asked Hadron to sell it to other countries. Why? This is where it really gets good.
The copy of PROMIS that Israel gave to Hadron to sell to other countries had been hacked. A trap door had been installed to allow remote monitoring of all the data in PROMIS. The first customer? Jordan, enemy of Israel. Isn’t that handy? Makes the whole White House hack look tame by comparison. (Makes you wonder why Jordan was buying software from Israel in the first place…)
(How did Inslaw know that the U.S. government had sold the product without authorization? Because — get this — Canada called Inslaw one day looking for user manuals. Problem was, Inslaw had never sold it to Canada. I’m sure an awkward pause ensued…)
From there, the story branches off into a million different directions. A judge loses his appointment. Someone commits suicide. Someone else dies suspiciously. The administration changes. However, the one constant is that Inslaw remains screwed, and remains bankrupt.
Again, I may not have this story completely right, but here are some links for you to follow up on. It reads like a spy novel with a geek twist. Be forewarned that it’s awfully addcitive.
The Inslaw Affair: This is a good collection of links to resources such as the House committee investigation report.
Real History Archives: Inslaw: Some more information, including a summary of Inslaw’s claims.
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