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@ -55,11 +55,11 @@ In a July 17, 1987 letter to Attorney General [[Edwin Meese]] transmitting one o
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On February 25, 1987, INSLAW applied to the bankruptcy court for independent handling of its adversary proceeding, asking that the Department conduct the case "completely and entirely independent of any Department of Justice officials who are involved in the allegations." The petition charged that [[C. Madison Brewer]] was biased against the company.[^11] In March 1987 [[Bill Hamilton]] and [[Nancy Hamilton]] met [[Anthony Pasciuto]], deputy director of the [[Executive Office for United States Trustees]]. Pasciuto testified to the Senate subcommittee staff that he told them he had heard from the U.S. Trustee [[William White]] that the office's director, [[Thomas Stanton]], had called White repeatedly to express displeasure with his handling of the case and had pressured him to act against INSLAW. Nancy Hamilton's contemporaneous notes read "St call Wh & sd had to be convertd," while Pasciuto told the staff he did not remember using the word "convert."[^12]
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[[Cornelius Blackshear]], the former U.S. Trustee for the Southern District of New York, testified in a March 25, 1987 deposition that White had told him Stanton thought the case should be converted or dismissed and wanted one of Blackshear's assistants detailed to Washington, and answered "Yes" when asked whether White had said he had received pressure from Stanton to have the case converted to Chapter 7. Within two days he signed an affidavit recanting that testimony, stating that after two telephone conversations with White he now recalled that no such discussion took place. White, Stanton and the assistant, Harold Jones, contradicted Pasciuto's account.[^13] The Senate subcommittee staff wrote that facts it obtained, including tape recordings of an American Bar Association conference session, "severely undercut the credibility of Blackshear's recantation."[^14]
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[[Cornelius Blackshear]], the former U.S. Trustee for the Southern District of New York, testified in a March 25, 1987 deposition that White had told him Stanton thought the case should be converted or dismissed and wanted one of Blackshear's assistants detailed to Washington, and answered "Yes" when asked whether White had said he had received pressure from Stanton to have the case converted to Chapter 7. Within two days he signed an affidavit recanting that testimony, stating that after two telephone conversations with White he now recalled that no such discussion took place. White, Stanton and the assistant, Harold Jones, contradicted Pasciuto's account.[^13] The Senate subcommittee staff wrote that facts it obtained, including tape recordings of an American Bar Association conference session, "severely undercut the credibility of Blackshear's recantation."[^14] The Associated Press reported in May 1988 that the attorney for Pasciuto, Gary Simpson, quoted Blackshear in a March 17 letter to the Justice Department as saying, "I felt less people would be hurt if I just bailed out," and "I thought that by changing my story I would hurt less people." Ruling from the bench on June 12, 1987, Bason said, "I believe that Judge Blackshear's original testimony is accurate and his recanted testimony is inaccurate," and that "people do have a capacity to forget things when it is painful for them to remember, or maybe even inconvenient for them to remember."[^79]
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At the close of the hearing in June 1987, Bason gave oral findings that Brewer had obtained a commitment from the Executive Office for United States Trustees to convert INSLAW's Chapter 11 reorganization into a Chapter 7 liquidation.[^15] The written findings of January 25, 1988 state that DOJ "unlawfully, intentionally and willfully sought to cause the conversion of INSLAW's Chapter 11 reorganization case to a Chapter 7 liquidation case without justification and by improper means."[^16] Bason found that Stanton had struck a bargain with Brewer under which Stanton would make efforts to liquidate the company, and that Brewer "sought and obtained assistance for his unlawful plan from Thomas Stanton, Director of the Executive Office for U.S. Trustees."[^17]
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Deputy Attorney General [[Arnold Burns]] referred allegations of misconduct against Pasciuto to the [[Office of Professional Responsibility]] in July 1987, and on December 18, 1987 the office recommended that Pasciuto be fired. Its memorandum stated: "Mr. Pasciuto's recantation notwithstanding, Judge Bason relied on [Pasciuto's] testimony about his remarks at the breakfast meeting to support his conclusion that Mr. Stanton engaged in misconduct. We have found no evidence that this conclusion was at all correct."[^18] The Special Counsel's report states that the office recommended termination primarily because of Pasciuto's admitted decision to harm Stanton by any means possible, including providing false information to the Hamiltons.[^19] A House Judiciary Committee report states that Pasciuto recanted at trial under strong pressure from senior Department officials, and that his attorney wrote on March 17, 1988 that what Pasciuto had told the Hamiltons was true and that he had backed away at trial because Blackshear and White would not acknowledge the truth and Stanton was pressuring him over an appointment as an Assistant U.S. Trustee.[^20] The Office of Professional Responsibility reported on March 31, 1989 that Bason's independent-handling findings were "clearly erroneous" and that no evidence showed Department employees had tried to pressure White to convert the case.[^21]
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Deputy Attorney General [[Arnold Burns]] referred allegations of misconduct against Pasciuto to the [[Office of Professional Responsibility]] in July 1987, and on December 18, 1987 the office recommended that Pasciuto be fired. Its memorandum stated: "Mr. Pasciuto's recantation notwithstanding, Judge Bason relied on [Pasciuto's] testimony about his remarks at the breakfast meeting to support his conclusion that Mr. Stanton engaged in misconduct. We have found no evidence that this conclusion was at all correct."[^18] The Special Counsel's report states that the office recommended termination primarily because of Pasciuto's admitted decision to harm Stanton by any means possible, including providing false information to the Hamiltons.[^19] The Associated Press reported that Pasciuto, "on the verge of tears in Bason's courtroom," testified that he had made up the story because he was angry with Stanton about delaying his promotion.[^79] A House Judiciary Committee report states that Pasciuto recanted at trial under strong pressure from senior Department officials, and that his attorney wrote on March 17, 1988 that what Pasciuto had told the Hamiltons was true and that he had backed away at trial because Blackshear and White would not acknowledge the truth and Stanton was pressuring him over an appointment as an Assistant U.S. Trustee.[^20] The Office of Professional Responsibility reported on March 31, 1989 that Bason's independent-handling findings were "clearly erroneous" and that no evidence showed Department employees had tried to pressure White to convert the case.[^21]
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### The Adversary Proceeding (September 1987)
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@ -207,3 +207,4 @@ A September 27, 1994 report of the Department of Justice reviewing Bua's report
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[^76]: Bua report, p. 13 (executive summary conclusion); p. 188 (§ VIII.F).
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[^77]: Bua report, p. 131.
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[^78]: U.S. Department of Justice, *Report on the Review of Special Counsel Nicholas J. Bua's Report on the Allegations of INSLAW, Inc.* (Sept. 27, 1994), Part VII, pp. 185-186 (quoting *In re INSLAW*, 83 B.R. at 156, on Hamilton's testimony), printed in the same volume as the Bua report. https://archive.org/stream/InslawPROMISBuaReport/Inslaw%3APROMIS%20Bua%20Report_djvu.txt
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[^79]: Associated Press, "U.S. Probing Possible Perjury in Inslaw Case," *Los Angeles Times*, May 6, 1988, Part IV, pp. 9, 12. https://www.newspapers.com/image/404305287/
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