For years, aficionados of Washington's seamy side have been fascinated by the travails of a small computer software company called Inslaw. It's not difficult to see why: If the claims that have been made are true, they add up to a scandal of monstrous proportions.

Inslaw's offices are bright and quiet, overlooking a boxy stretch of 15th Street NW; the proprietors, William and Nancy Hamilton, are earnest, middle-aged Midwesterners. When you meet them, you would not guess that these are people who, for the past decade, have believed that officials at the highest levels of government deliberately tried to ruin them. While some insiders at the Justice Department say their claims are laughable, the Hamiltons are accusing U.S. officials of flagrant piracy and greed.

Their charges go beyond even that. The Hamiltons have come to believe that the affair could involve foreign intelligence agencies and domestic surveillance plans, and could somehow have led to the death -- murder or suicide? -- of an American journalist. Small wonder that flakes and conspiracy buffs are drawn to the Inslaw flame.

"Conspiracy buff," however, is not a description that seems to fit Elliot L. Richardson. And it is Richardson, the Boston Brahmin celebrated for his Watergate-era rectitude, who has become the most passionate, committed and angry of the Hamiltons' allies.

In October, it will be 19 years since the famed "Saturday Night Massacre" during which Richardson resigned as U.S. attorney general rather than follow President Richard Nixon's orders to fire Watergate special prosecutor Archibald Cox. That resignation made him something of a benchmark of integrity in public service. Today, he insists that he takes a rather benign view of the powers that rule, and have ruled, America. But he is sorely vexed and deeply suspicious in the case of Inslaw. For Richardson, who has been involved with the case for nearly a decade, the matter has assumed the dimensions of a last crusade.

"It began to take on overtones of what really arouses me," he says, suddenly louder. "And that is the same kind of thing that was involved in Watergate and in Irangate -- namely the subversion of accountability to the democratic process itself, to Congress and the American people." Connecting the Dots

Elliot Lee Richardson will be 72 in July, and if his skin is a little drier, his cheeks a little rosier than you remember, he looks very much as he did two decades ago. His speech is nasal and clipped; now and then he slurs his words, and occasionally he raises his voice to make a point. He is a skilled doodler, producing elaborate patterns, and sometimes it is easy to believe he is not wholly engaged. But this appearance of mild inattention is misleading: He is a man deeply disturbed by what he believes he knows, or is about to know.

"You know those things on the comic-strip pages where you connect up the dots and it turns into a duck?" he asks, as if the thought has just occurred to him. "We're in a position now to draw pictures with different color and size dots. And it occurs to me it is worthwhile to draw a picture using only the most conclusive dots."

The "conclusive dots" he connects are dark enough for Richardson and co-counsel Charles Work to argue, as Work did before the House Judiciary Committee, that "substantial evidence of a criminal conspiracy exists" at the highest levels of the Department of Justice. Richardson and Work, a former president of the D.C. Bar, say that a coverup may reach into the Reagan-Bush White House and that the crimes involved may include perjury, subornation of perjury, obstruction of justice and conspiracy to defraud the United States.

Richardson sometimes speaks of the Inslaw case with a tone of detached disgust. At other times there is a kind of menace in his voice -- you might even describe it as a joyful menace. During a court hearing a year ago, he said, "I am not prepared to charge the government with obstruction of justice," but his tone suggested that he was prepared to do no less.

The United States is a land receptive to conspiracy theories; movies like "JFK" tap into a national spirit of distrust, a ready willingness to believe that evil lurks in the hearts of our leaders. Yet American politics also tend to be non-ideological; and Richardson, the very model of moderate Republicanism, has been non-ideological almost to a fault. That is what makes his involvement in the Inslaw matter so interesting, and so disquieting. And that is why many take notice when he says that if ever a case needed a special prosecutor, it is Inslaw.

"When the Watergate special prosecutor began his inquiry," he wrote in the New York Times last October, "indications of the president's involvement were not as strong as those that now point to a widespread conspiracy implicating lesser government officials in the theft of Inslaw's technology." In this, at least, he may be getting his wish. Last November, Attorney General William Barr asked retired Illinois judge Nicholas J. Bua to undertake "a complete top-to-bottom review" of the allegations concerning Inslaw. And the House Judiciary Committee has been looking into the case for months. Either inquiry could lead to a recommendation that a special prosecutor be appointed.

For all the sensational allegations, the Inslaw affair has not yet captured the public imagination, perhaps because of its sheer complexity. Indeed, a case could be made that the most sensational of recent scandals, such as Iran-contra and BCCI (the Bank of Credit and Commerce International), failed to ignite the public because a full understanding depends upon a grasp of detail that is often extraordinarily dull.

The basic Inslaw facts seem simple enough: The Justice Department agreed to pay the Hamiltons for a software program they'd developed. The program, called Promis, was designed to help prosecutors keep detailed track of cases and individuals in the criminal justice system. But an unusually bitter contract dispute ensued, and the Hamiltons ended up suing the government, making startling charges of official dishonesty. Eventually, a bankruptcy court and a U.S. District Court agreed with the Hamiltons that Justice Department officials conspired to drive Inslaw out of business "through trickery, fraud and deceit." The courts found that Justice Department officials did this by withholding payment and pirating the software program, though their rulings would be thrown out by an appeals court on jurisdictional grounds.

But the case is also a great mystery. Why would any federal official treat a vendor this way? The courts could give no clear reason, but the Hamiltons and others have many intriguing theories.

Richardson has sometimes suggested that one think of Inslaw as three cases -- all of which may be related "concentric circles."

One, he says, is tied to the court rulings, and consists of the violation of the Hamiltons' Justice Department contract and the theft of Promis.

Another case, Richardson says, may involve a more massive government swindle: collusion among friends of former attorney general Edwin Meese III to get the inside track on the Hamiltons' software and secretly market it for enormous sums to foreign governments and others -- allegations that remain untested.

And, lastly, there is what Richardson calls "this wider case." The "wider case" touches upon suspicions held by the Hamiltons and others that the trail of the pirated Promis software could lead to some of the most convoluted scandals of the postwar era: from BCCI to the "October surprise," an alleged plot by Reagan campaign operatives to prevent the release of American hostages prior to the 1980 election.

"There are facts," says Richardson, that support these very dark suspicions. He doesn't have much in the way of hard evidence yet. But he knows well, from past experience, how facts sometimes take on a life of their own.

Annals of Inslaw

Bill and Nancy Hamilton speak almost matter-of-factly about Richardson's "wider case" and the potential use of Promis (an acronym for Prosecutors Management Information System) for hugely nefarious purposes.

Their program's virtues were recognized from the start; in early 1981, for example, Meese, then an aide to President Reagan, gave a speech praising Promis. Meese, a former prosecutor, said the software "provides one of the greatest opportunities for success" in the law enforcement field.

But the Hamiltons believe that Promis had other applica- tions too. After all, they point out, half a million lines of computer code written to track one thing can be used to track another. As an example of this, the Hamiltons note that two recent Inslaw customers are the Republic of Ireland's credit bureau and its National Lands Registry. And Bill Hamilton, whose background includes a seven-year stint at the National Security Agency (NSA), says that Promis is easily adaptable for use by intelligence agencies. Indeed, the Hamiltons say that unnamed informants have told them that Promis has been installed at the FBI, the CIA, the NSA and various military intelligence agencies. All these agencies have denied using the software.

"After the {bankruptcy court} trial was over, we began learning that that was the tip of the iceberg," says Bill Hamilton. Asked what that means, the Hamiltons say they've been told that Promis has been used to track inventories of missiles; that the CIA installed Promis as a deposit tracking system in BCCI; and that many foreign governments have bought pirated copies.

And then, in their 15th Street office, be- hind soundproof glass doors, the Hamiltons assert that the ultimate use of Promis is far more sensitive than anything they once might have imagined:

"My sources won't tell me what it is," says Bill Hamilton, "but what they've explained to me is that the final use of the Promis software is so sensitive that its disclosure is a matter under the four statutory members of the National Security Council -- the president, the vice president, the secretary of state and secretary of defense. And I said, 'You mean those four people are aware of the Promis software and Inslaw?' And {the source} said, 'Intimately aware.' "

And what does he think is this "final use" of Promis?

"Monitoring American citizens," Bill Hamilton says.

"That's the only thing we can come up with that would be so outrageous," Nancy Hamilton adds.

In the beginning, Inslaw appeared to be just another vendor to the federal government. In March 1982, the firm won a great plum: a $10 million, three-year Justice Department contract to install Promis in the 22 largest U.S. attorneys' offices, and a word-processor version of it in 72 others. But disputes over who owned what version of Promis began almost at once. The software, originally developed in the 1970s with federal grants, was in the public domain. But there was disagreement over title to an enhanced version, which the Hamiltons say they own outright.

New problems arose: The Justice Department began to withhold payment, claiming unacceptable cost overruns. There were delays in adapting the software to Justice Department word processors, and in 1984 the contract was canceled. Inslaw, not surprisingly, began to suffer financial strains -- upwards of $2 million had been held back by 1985 -- and eventually the Hamiltons sought protection under Chapter 11 of the federal bankruptcy code.

Looking back, the Hamiltons believe they had reasons to be suspicious from the start about their treatment. The original Promis project manager at Justice soon was replaced by someone who arguably was not a disinterested party: C. Madison Brewer, a former Inslaw employee who, according to court papers, had been "dismissed for cause" in 1976. Brewer, who denies he was fired, will not comment on the case. The contracting officer, a man named Peter Videnieks, had been hired by Brewer from the U.S. Customs Service.

Nor were the Hamiltons confident about the impartiality of D. Lowell Jensen, who had held a number of top positions at Justice. Jensen had worked in the Alameda County, Calif., district attorney's office in the 1970s, and there developed a case-tracking program called Dalite -- a Promis competitor. The Hamiltons believed Jensen was still smarting over Promis's success. Jensen, now a federal judge in California, will not comment on the case, though at his confirmation hearings he said, "I have never seen any evidence that any such bias {by Brewer}, if it exists, has affected our handling of the Inslaw contract."

As the dispute escalated, the Hamiltons were baffled by what was happening to their company. If there was a question as to whether Justice should have use of the enhanced version of Promis, why not just modify the contract and work it out? And why, just when it seemed that such a compromise had been reached -- in a contract modification in April 1983 -- did it all begin falling apart again?

Terry Miller, president of a Great Falls consulting firm and someone who has advised vendors as well as the government in contractual matters, says, "It's very clear that Justice manufactured a fake dispute in order not to pay them." Miller, who says he knows the Hamiltons but was never hired by them, adds, "It's like no contract dispute I've ever seen. It's obvious there are bigger forces at work here."

Former attorney general Dick Thornburgh would later characterize Inslaw as a "disgruntled vendor." A former Justice employee familiar with the dispute mocks the Hamiltons' claim, saying they simply failed to deliver what they'd promised: "The criminal division and the U.S. attorneys' offices were the laughingstock of the Justice Department. Because they'd been waiting on this system, ironically named Promis, for years and years and years."

But the Hamiltons came to believe that their company was at the center of a far wider mystery. And they turned to Elliot Richardson for help. A Life of Passionate Involvements

On the wall close to Richardson's desk in the Washington office of Milbank, Tweed, Hadley & McCloy is a black-and-white photograph of a gathering of secretaries of defense. Along the table, you can spot Robert McNamara, Clark Clifford, Melvin Laird. You recognize James Schlesinger and Harold Brown. And, finally, there is Richardson, who held the office for only a few months in 1973 -- before becoming Richard Nixon's attorney general.

On another wall is a firefighter's hat, given to Richardson when he left Gerald Ford's Department of Commerce. Over his desk is a canoe paddle, signed by employees at the Department of Health, Education and Welfare, the first Cabinet post he held under Nixon (he was an assistant HEW secretary in the last years of the Eisenhower administration). Behind the desk is the blue chair he used as Massachusetts attorney general between 1967 and 1969.

Richardson is senior resident partner at Milbank, Tweed, but there are few indications of his connection to the New York-based firm. By the door hang a few of his watercolors, including one of his grandmother's barn in Brookline, Mass. He still paints occasionally -- "just enough to stay even, but not enough to improve."

If there were an American WASP ideal, it might be embodied by this man, the son of a Harvard Medical School professor. Richardson's resume charts an impressive course from Harvard College to the Bronze Star and two Purple Hearts he won in World War II (his nickname then was Fearless Fosdick) through the various Cabinet posts to the dignified legal present. He is someone who was "noticed" from the start; in 1956, for example, columnist Drew Pearson called him "the modern, progressive type of Republican Mr. Eisenhower wants in his administration."

His life has been one of passionate involvements. Some of these -- the Law of the Sea Treaty, for example, which he spent four years negotiating only to have the Reagan administration reject the deal -- have become causes, albeit lost ones; others -- his service on a United Nations mission to Baghdad after the Persian Gulf War -- he says he welcomes as obligations. Elective office has eluded him, for the most part; the Massachusetts attorney generalship turned out to be the last he would hold. (In 1984, he ran for the Massachusetts U.S. Senate seat being vacated by Paul Tsongas but lost badly in the GOP primary.)

Much of his work has been marked by a careful attention to detail. That was true when he was a law clerk to Judge Learned Hand and Supreme Court Justice Felix Frankfurter in the late 1940s. It was true when he was legislative assistant to Massachusetts Sen. Leverett Saltonstall in the early 1950s and when, three years ago, he became special representative for the Multilateral Assistance Initiative for the Philippines.

And it is Richardson's ability to focus intently -- implacably, some would say -- that has served him in the Inslaw matter. "A lesson he taught me," says onetime Richardson protege Richard Darman, now director of the Office of Management and Budget, is that "you absolutely have to have command of the substance . . . The person who had command of the substance best was in the best position to manage. And he's applied it to everything."

As you listen to Elliot Richardson explain how he got drawn into the Inslaw case, you see what Darman means: "My initial effort," Richardson says, "was based solely on my interest in the criminal justice system and my concurrent interest in data and information. The problem with the U.S. government today is a problem of complexity and the growth of demand for resources that have not grown as fast as the complexities."

The effect of such pronouncements is to make the listener feel a bit frivolous. The temper of the age is to turn away from complexity on the ground that it does not make interesting conversation, except among policy wonks. But then the thought occurs that Richardson has many of the wonk's best qualities, and they are what stay with him even in moments of high drama. In fact, it is Richardson's almost preternatural ability to focus on the kinds of questions that stupefy most Washington power-trackers that has gotten him many of his jobs.

His involvement with the Hamiltons began early in the 1980s, when Roderick Hills, a former Securities and Exchange Commission chairman (and husband of U.S. Trade Representative Carla Hills), asked him to serve on the Inslaw board. (Of Richardson, Roderick Hills says, "He belongs to the club I belong to: the legion of Don Quixote.")

Thinking he could play an informal role in resolving the Justice Department contract dispute, Richardson recalls, he went to Justice with the idea that "there must be some way to work this out. {I got} the name of the assistant attorney general for administration, a guy I remembered from my own tour over there. And we had what looked like a perfectly cordial meeting and I thought that it was on its way to solution."

But then, from Richardson's standpoint, a curiously familiar thing happened: High government officials seemed to be stonewalling.

"I came to the conclusion," he says, "that they didn't really want it resolved. What really tore it was . . . I got a draft memorandum from the Hamiltons and sent it to Lowell Jensen with a covering letter saying that we really ought to be able to straighten this out. And the up- shot of that was that we eventually had another meeting with Jensen. And he eventually wrote me a letter saying, in effect, flat no, screw you. And at that point I concluded they just don't want to do this right. And at that point, Inslaw was going into bankruptcy and I advised them to sue."

Inslaw filed for bankruptcy in February 1985, and the following year brought suit against the federal government. The Hamiltons chose to pursue their case in bankruptcy court, arguing that they had found themselves in Chapter 11 because the Justice Department had refused to pay for their software. 'In Wanton Disregard of the Law and the Facts' In recent years, some commentators have begun to use Watergate-era terminology to talk about Inslaw. Mary McGrory, the syndicated Washington Post columnist, called it a case "that involves as much stonewalling as Watergate and as much intrigue as Iran-contra." Columnist James J. Kilpatrick said the case "stinks to heaven."

Strange things certainly have happened, at least from the perspective of the plaintiffs. For example, in March 1987, the Hamiltons learned that a Justice Department official, the U.S. bankruptcy trustee for the Southern District of New York, had told a court that there had been "a conspiracy to get the Inslaw software" by forcing the Hamiltons to convert the Chapter 11 bankruptcy proceeding to a Chapter 7 -- which would have meant liquidation of the company. Four months later, the trustee, Cornelius Blackshear, said he had been mistaken.

The Hamiltons and their attorneys were not the only ones suspicious of Blackshear's recantation. So was U.S. Bankruptcy Court Judge George Francis Bason Jr. Bason initially believed Blackshear had made a simple mistake, but in December 1990 he told the House Judiciary Committee, "I don't see how anyone could get closer to confessing that he has perjured himself in order to hurt less people than, unfortunately, Judge Blackshear did in this case."

When he ruled on the case in 1987, after hearing from dozens of witnesses, Bason made clear that he was appalled at what he'd found. He awarded Inslaw $6.8 million in compensatory damages, and in making the judgment, he used language unusual in its vividness. The actions of the Justice Department, he wrote, "were done in bad faith, vexatiously, in wanton disregard of the law and the facts, and for oppressive reasons -- to drive Inslaw out of business and to convert, by trickery, fraud and deceit, Inslaw's Promis software."

Bason was no less forgiving of various players in the case. He judged former Inslaw employee C. Madison Brewer's testimony "most unreliable and entirely colored by his intense bias and prejudice against Hamilton and Inslaw." He also found that the testimony of contract officer Videnieks was "substantially unreliable," and said he was "under Brewer's domination . . . and that his attitude toward Inslaw was directly the consequence of Brewer's influence on him." Other witnesses were also treated unsparingly.

The Justice Department appealed, but in late 1989, Senior U.S. District Judge William B. Bryant upheld the bankruptcy court, writing in his decision that the Justice Department had "acted willfully and fraudulently."

Bryant praised Bason, but his praise did not help Bason's career. The judge was not reappointed to the bankruptcy court, and while there is no evidence that Inslaw affected his prospects, Bason believes it did.

"If Justice Department officials were willing to steal from and try to liquidate Inslaw, and then to lie about it under oath," he told the House Judiciary Committee, "there is every reason to believe they would not hesitate to do whatever was necessary and possible to remove from office the judge who first exposed their wrongdoing and would otherwise then be in a position to make further adverse rulings."

To some, the Hamiltons' legal victories are no more than smoke and politics. James M. Spears, who worked in the Justice Department while the bankruptcy court case was being argued, says that he is especially angry that trial lawyers at the Justice Department have been subject to accusations of misconduct: "When this thing is over, someone is going to owe them a big apology."

A lawyer versed in Justice Department contract disputes says Bason's court had no business getting involved in the Inslaw case. "If {the Hamiltons} had competent counsel, they would have filed a wrongful termination claim" -- the standard procedure for vendors with a grievance -- says the lawyer, who requested anonymity. "I have to assume either they didn't know what they were doing, or they didn't have much of a claim."

Last year, the U.S. Circuit Court of Appeals for the District of Columbia agreed with this view. While it did not rule on the merits of the case, it took to task the bankruptcy court's "expansive mood" and set aside the ruling, saying the court had overstepped its legal jurisdiction. In October, the U.S. Supreme Court declined to review that finding. The Hamiltons say they are preparing to bring a new lawsuit, charging the government with the theft of Inslaw's proprietary software.

Throughout the battle, it seems indisputable that Richardson's reputation has been a boon to the Hamiltons. It has opened doors, and made people listen more attentively.

Last October, he wrote an extraordinary 1,500-word article that was published on the op-ed page of the New York Times. In it, Richardson set forth many of the allegations involved in the "wider" Inslaw case -- the kind of allegations that make Inslaw so difficult to grasp.

One is that Earl Brian, a friend of Ed Meese who was California's health secretary under Gov. Ronald Reagan, "was linked to a scheme to take Inslaw's stolen software and use it to gain the inside track on a $250 million contract to automate the Justice Department litigation division."

That charge is unproven, but it is a fact that Brian was a director and major stockholder of Hadron Inc., a Fairfax company that won a $40 million Justice Department contract. According to Bill Hamilton, Hadron once tried to take over Inslaw.

Hamilton says that Dominic Laiti, then Hadron's chairman, called him in April 1983, offering to buy Inslaw. "He said, 'We have the contacts at the highest levels of the Reagan administration.' . . . I said, 'We're not interested in selling it.' . . . At the end, he said, 'We have ways of making you sell.' " Laiti, in 1988, told Barron's that Hamilton's often repeated account was "ludicrous"; he has told The Washington Post that he has no recollection of the conversation.

In the Times, Richardson went on to set forth an even more startling allegation: that the Promis software was pirated and sold, with the profits going as a payoff to Brian "to get some Iranian leaders to collude in the so-called October surprise . . ."

Brian denies all of this. "Since I know there's not a grain of truth in {Richardson's} theory of intrigue and conspiracy, I'm at an utter loss to understand why a person of his reputation would subscribe to such a bizarre tale," he says, adding that he "never heard of Inslaw, Promis or anything related to it until I read about it in 1987." Richardson, in the Times, conceded that many of his informants are "not what a lawyer might consider ideal witnesses." One source, for example, was recently convicted of drug charges -- charges the source claims were trumped up.

The more Richardson believes information is being kept from him, however, the more his suspicions grow. In an interview, he is willing to step, however gingerly, into the spookiest of the theories about the case.

"It is a fact," he says, "that the CIA had a U.S. security interest from time to time in allowing a foreign government to believe it had beaten the system through acquiring U.S. computer hardware in violation of U.S. export controls. In fact, it was hardware that the U.S. wanted the country to have because a microchip had been planted in it that would broadcast the electronic signal . . .

"It's extremely plausible that if the hardware also contained software with which the U.S. was totally committed, it would then be possible to interpret the signal. If the purchaser was a foreign intelligence agency, the U.S. would thus have succeeded in penetrating the intelligence files."

Richardson pauses, seemingly unconcerned that he is beginning to sound a bit like a Robert Ludlum character.

"The Inslaw software is uniquely well adapted to being the software used in tracking the activities of an espionage network," he says. "We now have totally uncorroborated information that as many as 80 governments are using it." Richardson v. Thornburgh

Among the more baffling elements of the case for students of Inslaw is the role of Dick Thornburgh. While much of the drama unfolded, Thornburgh was far from the fray, serving as director of the Institute of Politics at Harvard's John F. Kennedy School of Government. Why, it is asked, did he not resolve the case expeditiously after Reagan chose him to replace Meese as attorney general in the summer of 1988?

Thornburgh's behavior is a source of particular frustration for Richardson, who had every reason to expect the new attorney general to help him clear things up. After all, the two went back a long way.

"I think I did a lot to give Thornburgh his start," Richardson says, explaining that as Nixon's attorney general -- and as a former U.S. attorney -- he had set up a committee to keep U.S. attorneys in touch with Washington. He had named Thornburgh, then the U.S. attorney for the Western District of Pennsylvania, as the committee's chairman.

"And that was what of course brought him to the notice of people in the department," says Richardson. "So when the next vacancy for assistant attorney general in the criminal division came up, he was appointed to that. And he went on to become governor {of Pennsylvania}.

"And I thought when he took office, well, I didn't expect any favors. I just thought, here's somebody who will take a look at this situation."

In July 1988, Richardson wrote a "Dear Dick" letter to the attorney general-designate, congratulating him on his nomination to succeed Meese and noting that the Inslaw matter would be on his desk when he arrived. He recounted the court rulings, and praised Thornburgh's reputation for fairness, signing the letter, "With warm regard and every good wish . . . Elliot."

On August 19, having heard nothing, Richardson wrote Thornburgh again, suggesting that his earlier letter might have been mislaid. This time, he referred to the hearing on Inslaw held a short time before by the Senate permanent subcommittee on investigations, and observed that Judge Bason's ruling "could lead to criminal cases against officials in the Justice Department."

This "Dear Dick" letter was signed, "With best wishes . . . Elliot."

Richardson's next letter to Thornburgh came in May 1989 -- after the change of administrations from Reagan to Bush. This letter, with the salutation "Dear Mr. Attorney General," began: "As you undoubtedly know . . . I have for some time been seeking the opportunity to talk to you about an aspect of the Inslaw matter that seems to me to belong squarely in your lap. This is the conflict of interest involving the Department of Justice itself . . ." The writer recalled many details of the case, and said the "only solution" was appointment of an independent counsel. The letter was signed, "Very truly yours, Elliot Richardson."

Thornburgh, within weeks of his appointment, was engaged in exchanges of letters with the House Judiciary Committee chairman, Rep. Jack Brooks. At one point, he promised full cooperation with the committee, then withheld some documents, arguing that they dealt with ongoing litigation. In the course of the back-and-forth with Brooks, Thornburgh attempted to dismiss the Inslaw matter, writing, "I regret the fact that an unfounded and continuing stream of allegations by a disgruntled vendor can be repeated and accepted simply because the target is a federal department and its employees."

The Senate permanent subcommittee on investigations found no evidence of a conspiracy, but judged the Justice Department to be uncooperative. And it found department "employees who desired to speak to the subcommittee, but who chose not to, out of fear for their jobs." Thornburgh, when asked about this, says he urged Justice Department employees to cooperate. House Judiciary Committee staffers, who continue to pursue the case, say they asked Thornburgh to issue such a directive but he never did.

For some, Thornburgh's response to Inslaw is the central mystery of the case.

Thornburgh, who was defeated last fall in a race for the U.S. Senate, is now U.N. undersecretary general for administration and management. "I didn't give any credence to the conspiracy theory being peddled {by the Hamiltons}," he says. "It's the longest-running show in town, fueled and pumped up by people who obviously buy into Mr. Hamilton's theory."

When Thornburgh is asked why he didn't appoint someone to conduct an independent review, as his successor has done, he says this: "There didn't seem to be any threshold evidence or need to follow up on it." When he is asked how he can say that, given the rulings of the bankruptcy court and U.S. District Court, he says, "I chose to pursue it through the normal processes of appeal that were available to us rather than accede to these constant demands and the conjuring up of one conspiracy after another."

He also says he had "never heard of Inslaw" when he took the attorney general's job, and, of Richardson, he adds, "I find it inexplicable that he's made a variety of personal attacks on me. I always felt there was a mutual esteem."

No more.

"Thornburgh," Richardson murmurs when he is asked about the former attorney general. "I can only imagine that his ambition got the better of him. And he started to calculate . . .

"When I was a law clerk for Frankfurter," he continues, after a pause, "we got into a conversation one day in which he developed the point that people who set their eyes on a fixed goal -- that is, status or position -- would find themselves scheming and playing the angles to get there, which undercut the satisfaction of what they were doing and got in the way of their performance by diverting their attention and risked even the likelihood that they would ever make it.

"So when they got to be 57 or so, having spent 25 years scheming and plotting, playing the angles, they still didn't get the job." At this, Richardson's thin voice breaks into a suppressed yet bubbly kind of laughter. "On top of the dilution of satisfaction at what they had done, they ended up with bitter disappointment to boot."

Richardson's expression suggests that, in the 59-year-old Thornburgh's case, justice has been done. Watergate Meets 'Octopus'

Over the years, as Richardson's immersion in Inslaw has grown deeper, he has heard stories told by informants that seem at times to defy not only credibility, but sanity. He is not unaware of the problem this presents.

"In these cases," he says, "I look at the evidence in terms of its adequacy to establish a given point. On things that are uncertain, I just suspend judgment. It remains provisional. You think of a wall on which a mural is painted -- blank. Or on a map, the terra incognita. That's a long way of saying {that} in the case of Inslaw, there's a lot that I really just don't know whether it happened at all or not."

Take, for example, the death of Joseph Daniel Casolaro, a freelance writer who'd been investigating the Inslaw case during the last year of his life.

Casolaro, whose journalistic credentials appeared thin by mainstream standards, apparently had come to believe that Inslaw was what Ron Rosenbaum, in Vanity Fair, called the "Missing Link" between the BCCI and October surprise scandals. Friends and acquaintances of Casolaro have suggested that he'd gotten a glimpse of what he'd come to think of as the "Octopus" -- a mammoth, shadowy conspiracy linking numerous 20th-century scandals and suspicious goings-on.

Last August, Casolaro was found dead, his wrists slashed, in a West Virginia hotel room. Police ruled it a suicide; Rosenbaum, who knew Casolaro, is among those who believe the police version. But Casolaro's family and many of his friends believe he could never have taken his own life.

The Hamiltons believe that Casolaro was murdered because of what he knew. "The people we had talked to were warning us that he would be killed, a week before he died," says Bill Hamilton. "Danny had told two women friends and one intelligence source of his, in the week before he died, that he had already been to West Virginia, meeting with a source about Promis and Inslaw and that he had to go back for a final meeting to pick up one piece of evidence."

Richardson, although much more cautious, has suggested that any investigation ought to carefully examine Casolaro's death. And he does say this: "I've talked to a number of very senior people, all of whom, without exception, say they wouldn't put even the wildest Octopus hypothesis beyond {former CIA director William} Casey. That seems to be a universally held view."

The connections Casolaro was apparently attempting to make are often puzzling, and Richardson is among the students of Inslaw who have learned to examine these in, so to speak, another room of the house. Somehow -- Casolaro never made clear how -- he had sought to link the Cabazon Indian reservation in Riverside, Calif., to the Inslaw case. In a three-part series last fall, the San Francisco Chronicle reported that federal and state agencies had spent nearly $250 million on projects for the reservation, and that Cabazon representatives had proposed developing and selling arms to foreign governments. What made this so very odd is that the Cabazon population is less than 30.

In his New York Times article, Richardson referred to yet another bizarre Inslaw protagonist named Michael Riconosciuto, "an out-of-fiction character believed by many knowledgeable sources to have CIA connections." It was Riconosciuto, now serving a jail sentence on drug charges, who "claimed that the Justice Department software was part of a payoff" to Meese's friend Earl Brian for participating in the alleged October surprise, Richardson wrote.

Riconosciuto and "other informants from the world of covert operations," Richardson wrote, "have talked to the Hamiltons, the Judiciary Committee staff, several reporters and Inslaw's lawyers, including me. These informants, in addition to confirming and supplementing Mr. Riconosciuto's statements, claim that scores of foreign governments now have Promis . . ."

Asked about this several months after his article appeared, Richardson says he holds two opinions about Riconosciuto. One is "that he is brilliant. As a boy, he got science fair awards." The other is "that he's a pathological liar." In other words, while Richardson does not wholly discount his story, it definitely belongs in another room of the house.

Ultimately, all the Hamiltons' allegations -- from simple theft to grand conspiracy -- depend on proof that their proprietary software has been stolen and adapted for use by various organizations. In theory, the claim should be easy to check, but nothing in the Inslaw case has been easy.

The Hamiltons say that informants affiliated with U.S. or Israeli intelligence have told them that "cutout" companies have provided ongoing support for the software sold to foreign governments; it is, not surprisingly, difficult to confirm this.

A much easier claim to prove, or disprove, should be the allegation that the FBI's Field Office Information Management System (FOIMS) is, in fact, a pirated version of Promis. The FBI says it's not so, but the Hamiltons assert that FOIMS contains 570,000 lines of code written in COBOL -- and so does Promis.

If even part of this is true, however, there's an obvious question: Why didn't the government simply pay the Hamiltons to shut up?

"You couldn't have a situation in which a private company was being paid for software being sold for such a purpose," Richardson explains, referring to the alleged intelligence uses of Promis. "You'd have to destroy them! The CIA at the time would have thought it your patriotic duty to destroy them! And there are people in the CIA now who tell the Hamiltons what happened and they won't help. They say, 'It's too bad. You're just a victim of the Cold War.' "

Then, as he talks about what kind of information the Promis software might have turned up, Richardson tries to bring the rooms of the Inslaw house together, combining the experience of the veteran Cabinet official with the zeal of the conspiracy buff:

"You know, the people in government who occupy positions like deputy secretary of state, secretary of defense -- the intelligence briefers carry in this stuff in their hands and take it out. They will not leave it even in the office of the secretary of defense or the secretary of state . . .

"If you're intercepting information about somebody else's spy network, you better believe that that is classified beyond belief. And the result therefore is that you can't have people like the Hamiltons collecting -- where would their money be coming from?" A Tale of Two WASPs

If Inslaw is a classic Washington mystery, unsolved and perhaps unlikely ever to be solved, the passion of Elliot Richardson for the case is something of a mystery too.

Not everyone has a charitable view of his involvement. "He's earned a lot of money for legal fees," says Dick Thornburgh. A former Justice Department prosecutor, John Loftus, says, "If it were any other attorney but Elliot Richardson, I'd wonder whether intelligence issues are being dragged in as part of a trial strategy to settle this suit."

But those who've known Richardson well tend to have few doubts about his sincerity. "He has always had this sense of justice and the desire to see a fair result, and became persuaded that the Inslaw folks were getting screwed," says J.T. Smith, a former Richardson assistant at the Justice Department. Says Dick Darman: "Passion's not a word people normally associate with him, but it applies. He's still working on reforming the world."

The impulse to reform can be deeply rooted. And there are times when one is talking to Richardson -- impeccably dressed, simultaneously intent and detached as he is -- that one thinks of a John P. Marquand hero, a member of a family for whom "the conscience-ridden shades of their ancestors could prod them onward, without their own added effort."

Richardson is fond of saying, "We all have the defects of our qualities," and a longtime Richardson friend, requesting anonymity, believes that may be why Richardson is someone who -- by Washington standards -- never realized his full promise.

"In terms of understanding, policy and brain power, he is one of the two or three most impressive people who have passed through this town in the past 20 years," says the friend. "Why is he now expending energies on Inslaw when {James} Baker is secretary of state and Dick Cheney is secretary of defense and John Kenneth Galbraith has just produced his 14th stimulating book?

"Some of that is that the political process passed Elliot by, and he became a quasi-extinct species of moderate Republican. Certainly he was viewed with skepticism by the Reagan White House. But some of it is, he is so darned cerebral, he isn't crisp, he doesn't reach decisions easily, he's not comfortable with quick, precipitate action."

The inevitable comparison is with George Bush -- a man of similar background, but one who has tracked unflaggingly upward in political life by quickly -- some might say precipitately -- adapting to changed political circumstances.

"You can have two young men of approximately the same age, born to educated, successful families in the Northeast, and yet they can be entirely different in their capacities for reasons no more profound than how God built their minds," says the Richardson friend. "There are parallels. Both would have a reputation for being inartful public speakers. But Bush's is for mangled syntax and awkward jargon and lack of overall coherence. Elliot is so wedded to coherence."

"I think Bush and I, despite our similarities, are very different people," says Richardson. "But I am always conscious of what was called 'Miles' law' " -- named after a senior civil servant in Eisenhower's HEW. "Miles' law goes, 'How you stand depends on where you sit.' And that someone obeys or exemplifies Miles' law is not to be construed as criticism. It's intrinsic to the human condition."

Yet Richardson, as fate would have it, finds himself sitting on the outside, not at 1600 Pennsylvania Avenue. And from that perch, with what he calls "a kind of tunnel vision," he's able to pursue his duty as he sees it -- much as he did on that Saturday night two decades ago.

"I'm conscious of the fact that if a lot of {the Inslaw allegations} were true, it could have very serious fallout for the Republican administration and so on and so on," he says. "But I have looked that possibility squarely in the face and I have simply come to the conclusion that if these things happened, they should come out.

"These things have to be dragged out, they have to be exorcised," he continues, his voice sounding almost strained. "They're the kind of thing that in order to maintain representative self-government, we have to extirpate if they exist -- regardless of the short-term cost."

Jeffrey A. Frank is an editor of The Post's Outlook section. His last article for the Magazine was on Ambassador Robert Strauss.