A STING GONE AWRY

When A Trap Didn't Net Big Game, Government Targeted The Little Guys

Dale Brown was a poster boy for the American dream, an athletic former
Eagle Scout whose start-up company near the Johnson Space Center outside
Houston hustled contracts with NASA.

Brown worked seven days a week, 18 hours a day getting his company started
in the late 1980s, trying to pair clients and their promising technologies
with niches in the billion-dollar needs of the U.S. space program.

Like most small companies, Brown’s Terraspace Technologies Inc. sometimes
struggled to make ends meet. A man who bragged about his Mississippi roots
and his ability to make things happen promised to change that in 1992. John
Clifford told Brown he had developed a product that NASA might use and he
was prepared to spend big money to get it noticed.

It was called a miniature lithotripter, an ultrasound device whose
technology might one day be used to improve the medical monitoring of
astronauts in space.

Brown checked out Clifford and his companies with Dunn & Bradstreet, the
Better Business Bureau and the banks that worked with him. All gave the
Mississippi man a thumbs-up.

"I came to believe this guy was our savior, our knight in shining armor,"
Brown said.

Brown, though, was wrong.

John Clifford was actually Hal Francis, an agent for the FBI. His new
device was phony, though legitimate companies had agreed to help the FBI by
pretending to manufacture it. It was part of an FBI sting operation aimed
at trapping Brown and several others who worked in the space program or on
its periphery.

Francis and dozens of other federal agents and prosecutors had set their
sights much higher: Key employees at NASA and a few of its contractors were
suspected of giving and taking bribes, but the feds had failed to snare
these high-placed managers.

Millions already had been spent on Operation Lightning Strike, including
enormous bills for luxury hotel suites, gourmet meals, deep-sea fishing
trips and booze-filled nights at Houston strip clubs. Federal agents needed
something to show for their effort. So they went to work trying to lure
minor space agency players into doing something illegal. Brown would be one
of these consolation prizes.

It was a scenario similar to dozens of other failed government stings that
the Pittsburgh Post-Gazette uncovered in a two-year investigation of
federal law enforcement officers’ misconduct.

Brown, now 38, eventually was charged with 21 counts of mail fraud and one
count of bribery. After a jury deadlocked, all charges were dismissed, but
the price of fighting for his innocence proved costly. Brown lost his
business, his savings, his fiancee, his health and his belief in the
American dream.

Not An Isolated Case

Brown was in good company.

The other 14 targets in Operation Lightning Strike were also college
graduates. Most had families. Only one had previously been the target of a
criminal investigation.

In 1994, two years into the government sting, federal prosecutors charged
each with violating federal laws. Several of the cases started with the
lithotripter. The government contended that Brown knew the device was
phony, and thus every act he performed in trying to win a NASA contract for
it constituted a crime, but that argument eventually self-destructed in court.

Brown produced a picture of the prototype he took while visiting a firm
that would supposedly manufacture the lithotripter. Francis showed Brown
the device to assure him it was real, and he didn’t know Brown had taken
the picture.

Francis cajoled other sting targets into situations that would bring
criminal charges, even though several said they couldn’t imagine that what
they were doing might be construed as a crime.

All but two of the 15 suspects were coerced into quickly pleading guilty.
Federal agents assured them that fighting the charges in court would result
in long prison terms, huge fines and prolonged humiliation for their families.

The physical and psychological toll of "Operation Lightning Strike" was
great. Seven small companies employing more than 100 people went bust.
Three of those arrested had nervous breakdowns. One attempted suicide.
Others experienced health problems that ranged from heart attacks to strokes.

"The government agents intentionally and methodically drove our companies
and personal bank accounts to zero and drove our reputation to ruin," Brown
said.

Court documents show the misconduct in this case originated with the
government, not the people the government had charged, nor was Operation
Lightning Strike an isolated case of a sting gone bad.

Time and again, the Post-Gazette found poorly executed government stings
that followed a similar pattern:

Federal agents took aim at wrong-doing in high places and spent large sums
of money pursuing it. When they failed to snare their high-ranking targets,
they scrambled to charge minor characters, often people with financial
problems, by enticing them into actions that might be construed as
violations of the law.

Federal agents often used former criminals to pursue their quarry,
promising con artists, dope smugglers and perjurers money, freedom and
reduced prison sentences to help nab the targets of a sting.

Because the charges were often flimsy or based on lies, government agents
worked hard to elicit guilty pleas. They would threaten defendants and
their families with adverse publicity or long trials that would deplete
their bank accounts.

Plea bargains had another advantage: Once a defendant pleaded guilty,
federal agents weren’t required to reveal their evidence or their tactics.

That’s what almost happened in "Operation Lightning Strike." The 15 people
charged were told they faced decades in prison and hundreds of thousands of
dollars in fines for their crimes.

They were promised that guilty pleas would bring leniency. Of the 13 who
pleaded guilty, 11 got only probation. One man served five months in
prison; another served two months.

Brown was the first to plead innocent and fight the charge.

Ignoring The Safeguards

Congress authorized government sting operations in 1974.

The law allows federal agents to set up an illegal enterprise with the goal
of luring criminals and then arresting them. Federal agents promised it
would be a powerful tool.

But wary drug smugglers and other criminals are pretty good at spotting a
government sting. That might explain why sting targets so often end up
being people who haven’t previously been involved with crime.

In 1986, industrialist John DeLorean was tried on charges of cocaine
trafficking after his arrest in a government sting. In a videotape shown at
his trial, DeLorean said a suitcase full of cocaine that an undercover
officer brought was "better than gold," but a jury determined that the
government, not DeLorean, had crossed the line. DeLorean’s company was on
the brink of financial collapse, and undercover federal agents proposed a
drug deal to him that would bring in millions to save his business.

Federal agents didn’t go after a criminal, the jury decided. They persuaded
a desperate man to commit an act he would not otherwise have considered.

The DeLorean verdict reaffirmed safeguards that supposedly were already
part of the 1974 law:

Sting targets must be predisposed toward committing a crime. Usually this
means they already have done something criminal and the government wants to
catch them doing it again.

Sting targets must be willing to commit a crime. Talking innocent people
into doing something wrong through bribes or other means is not supposed to
be tolerated.

Not only must the targets of a sting want to commit the crime, they must
have the ability to do so. This might mean having the money or the
connections to pull it off.

The Post-Gazette’s investigation found these safeguards frequently are
ignored, especially when a sting fails to nail its original target.

No Guarantees

Many judges are willing to chastise government agents and prosecutors for
overstepping their authority in running a government sting, but there’s no
constitutional guarantee that an injustice will be discovered or, if it is,
that it will be corrected quickly.

Several South Carolina legislators can vouch for that. In 1990, federal
agents announced their open-and-shut case: They would indict 28
legislators, lobbyists and other officials caught red-handed swapping votes
for money in a sting operation called Operation Lost Trust. But as often
happens in sting operations, the key government witness, Ron Cobb, was a
criminal and drug addict.

Agents had arrested this former state legislator on drug charges in 1989,
while he was working as a lobbyist, then promised him money and immunity if
he’d become the key figure in their sting operation. Federal agents paid
him as much as $4,000 a month to operate a phony lobbying firm and promised
him a $150,000 bonus if he helped win convictions against legislators.

Over the next few years, legislators and lobbyists pleaded guilty and went
to trial, with Cobb serving as the key witness against them.

Then, the truth came out. Cobb had lied to a grand jury about the
activities of the people he had nailed. Prosecutors knew of the lies yet
withheld the information from defense attorneys, a violation of the law.
Cobb’s actions made it impossible to determine whether individuals snared
in the sting had really committed crimes. In addition, prosecutors withheld
hundreds of other pieces of evidence that would have allowed the defendants
to craft their defenses.

Last year, an outraged U.S. District Court Judge Falcon Hawkins dismissed
every outstanding charge involving the sting. Some defendants who pleaded
guilty or were found guilty before the case unraveled have started the
process of seeking to withdraw their pleas or have their convictions reversed.

"The breadth and scope of the government’s misconduct . . . [and] the
involvement of the FBI during this entire incident was and is shocking to
this court," Hawkins said. He said FBI agents hid information about Cobb’s
past, including his drug arrest.

"Most offensive to this court, however, is that the government sat silent
when it knew that its silence would not only fail the efforts of the
defendants to fully develop defenses to which they were entitled but would
misrepresent facts to both the grand jury and the trial jury and mislead .
. . the court to such an extent as to affect its rulings. . . . As
reluctant as this court is to call it such . . . this silence in several
instances was subornation of perjury."

A citizen who suborned perjury might face criminal charges, such as those
included in the articles of impeachment being considered against President
Clinton over his conversations with Monica Lewinsky prior to her appearance
before a federal grand jury. But the Post-Gazette found no evidence that
any federal agents or prosecutors in Operation Lost Trust were disciplined
for their conduct. Nor was Cobb charged with perjury, despite his repeated
lies.

The judge made clear prosecutors failed in their most important role: to
make sure defendants receive a fair trial. "While lawyers representing
private parties may -- indeed, must -- do everything ethically permissible
to advance their clients’ interests, lawyers representing the government in
criminal cases serve truth and justice first," Hawkins wrote. "The
prosecutor’s job isn’t just to win but to win fairly, staying well within
the rules."

The Justice Department has appealed the judge’s dismissals in Operation
Lost Trust.

Sting operations and other new crime-fighting tools that Congress
authorized come with few protections against overzealous federal agents and
prosecutors, said Bennet L. Gershman, a former New York state prosecutor
and a law professor at Pace University of New York. "There’s really no
significant restraint on federal law enforcement power," said Gershman,
whose 1997 law book "Prosecutorial Misconduct" is in its second printing.
"It’s a green light to federal officials to do virtually anything they want
to do."

‘Lightning’ Strikes

Dale Brown learned he was a target of Operation Lightning Strike on a
sweltering summer’s day -- Aug. 4, 1993 -- at a Houston warehouse, about a
year after he met John Clifford.

A videotape showing him talking to an undercover agent was playing on a
videocassette recorder. Audio tapes with his name on them were stacked on
the floor. Photographs of Brown, surreptitiously shot, were enlarged and
tacked to the walls.

He’d come to the warehouse to meet Clifford, the man with the invention
that Brown was trying to peddle to NASA. Brown hadn’t seen his so-called
partner for months and Clifford owed him $30,000, a sum Brown was eager to
collect.

Clifford was there but he identified himself as FBI Agent Hal Francis.
Several other FBI agents were with him. Francis told Brown the felony
counts he faced might mean 30 years in prison and more than $1 million in
fines.

For four hours, agents questioned Brown. He repeatedly asked if he was
under arrest and was told he was not. He asked to leave. Twice, agents
physically restrained him, he said. He asked for a lawyer. They refused his
request.

Federal law says that once a suspect requests a lawyer, all questioning
must stop until he gets one. In Operation Lightning Strike, agents simply
ignored the law, said Brown and other suspects who were taken to the
warehouse.

Other Operation Lightning Strike suspects independently described their
warehouse experience as almost identical to Brown’s, yet the government has
denied in court that it took anyone there. "They did the same thing to
everyone that went [to the warehouse]," said Charlie Portz, a Houston
lawyer who would eventually represent other targets of the sting. "Every
story was identical."

Brown said the government has thousands of documents describing various
aspects of the sting but not one interview log for the day Brown spent in
the warehouse or for the warehouse visits of any other person charged in
the operation.

At the warehouse, Brown said, the agents told him he could help himself by
helping them. The officers took him to a 10th-floor suite at Houston’s
Astrodome Hilton Ho-tel. Behind the mirrored walls, more agents sat with
recording equipment and cameras.

Gone were Francis and the heavy-handed threats. Now, agents told Brown that
Francis had made a lot of mistakes and that they knew Brown was a good guy.
If Brown would testify against others who were targets in the sting,
including a businessman named Scott Sadaway and an astronaut Brown knew
named David Wolf, they promised leniency.

Brown balked at the offer. "I told them Sadaway was one of the nicest
businessmen I’d ever met, and for them to want me to help them go after
David Wolf, I decided right on the spot that I was going to fight these
people as hard as I could," Brown said.

But Brown hedged his bets. He provided the agents information about a
former business partner whom Brown said once claimed to be involved in
contract corruption, but no charges were ever filed against the man.

Burdens on the psyche

Besides Brown, only Sharon Hogue of Houston pleaded innocent in Operation
Lightning Strike.

A judge dismissed all charges against her after the prosecution concluded
its four-week case, ruling there was no evidence to find her guilty.

Had other targets of the sting not succumbed to the government’s tactics,
they, too, would have been exonerated, Brown believes.

Anthony Verrengia, a retired Air Force reserve general, was indicted for
accepting a kickback in Operation Lightning Strike. He said the money was
payment for legitimate work. The indictment cost him his job as the manager
of advanced programs for the Space and Aeronautics Division of Martin
Marietta Services Group.

He said he pleaded guilty because fighting the charge seemed an
insurmountable task.

The ordeal destroyed him mentally.

"It was a culmination of knowing you’re trapped, knowing you’re not guilty,
but there is no way for you to escape this situation," he said. He ingested
200 sleeping pills in a suicide attempt a few months after his indictment.

Other targets of the sting also plunged into depression.

Verrengia has asked a federal court judge to allow him to withdraw the
guilty plea he says was coerced.

The other targets of Operation Lightning Strike are considering similar
actions.

Charges’ costly legacy

Brown knew there was no way he could win.

Even if he were exonerated, his business was destroyed. The indictment
ensured that Brown would never win another contract in the space community.

At the time of his arrest, Brown had little money to pay an attorney. His
uncle hired Dick DeGuerin, a well-known criminal lawyer, to take the case.

The government almost immediately reduced the 21 felonies against Brown to
one bribery charge. DeGuerin’s defense was that Brown would never have
committed a crime — if prosecutors could even prove his action constituted
a crime — had the government not entrapped him.

FBI Agent Francis assured jurors that Brown knew the lithotripter, the
device he was trying to sell, was phony and was part of the effort to
defraud NASA by trying to win contracts for a bogus product. Francis said
Brown had never seen a prototype of the device because none existed.

That’s when Brown produced the picture of the prototype.

Francis also testified about the "bribe" Brown had offered a lobbyist to
help get the lithotripter noticed. Brown said Francis gave him the $500 and
called it "entertainment money." Brown said he thought that’s exactly what
it was — spending money to give to the lobbyist while he was in Houston.

The FBI recorded the March 1993 conversation that followed the "bribe":

Francis: "How did that feel?"

Brown: "I didn’t mind doing it. We gave the guy five hundred bucks. You’re
making it sound bad."

Francis: "You bribed that guy."

Brown: "I did?"

Brown said that conversation exemplified the government’s approach in
Operation Lightning Strike: convoluted actions aimed at trapping someone
into saying or doing something that might be construed as incriminating.

The jury deadlocked in Brown’s case. Rather than retry him, prosecutors
asked the judge to dismiss the charges.

Brown was elated, broke and outraged. He spent the next two years
investigating the government’s sting. He said he found 200 occasions where
government agents and prosecutors had lied or destroyed evidence.

He battled health problems. While he was under investigation, the
33-year-old Brown had a massive heart attack that led to open-heart
surgery. That caused a viral infection that forced another operation; he
was on life support in a California hospital on the day he was indicted.

A few days after he turned over the information he’d gathered about
government misconduct to his attorneys to prepare a lawsuit, he had a
massive stroke that left the right side of his body partially paralyzed. "I
lost my [fiancee], my health, my cars, my house, was forced into bankruptcy
and underwent two open-heart surgeries, intestinal surgery and brain
surgery because of a massive stroke due to the stress," he said.

During a recent walk down a Houston street, Brown lamented the disastrous
turn in his life. He had been an athletic entrepreneur who enjoyed
skydiving, deep-sea diving and fast living. Now he is almost destitute and
physically broken. Brown refuses to use crutches, braces or a wheelchair,
despite having problems walking. He swears he will again go deep-sea diving
but also admits that doctors believe his health problems have shortened his
life.

His lawsuit charging misconduct against the government and others involved
in the sting was dismissed, though he has appealed. His chances are slim.
The Supreme Court has long ruled that federal law enforcement officers are
immune from most civil lawsuits related to their job-related actions.

"No one wants to listen, but I won’t stop until someone does," he said.

Agent Francis left the FBI. He is a private investigator in Houston. He has
not responded to written requests for an interview.

Brown remembers the last time he heard from Francis outside a courtroom. On
Oct. 20, 1993, his voice was on Brown’s answering machine, though Francis
didn’t realize it. An associate of Francis had made the call then forgot to
hit the end button on her cellular phone. Brown’s answering machine picked
up her subsequent conversation with Francis.

Francis talked about Operation Lightning Strike. He described himself as a
"study in aberrant behavior" who could get anyone to do anything.

Brown thought at first Francis might be talking in jest, then he decided he
wasn’t. "He sure got me to do what he wanted." Brown said those few minutes
of conversation scared him more than anything else he’d heard in Operation
Lightning Strike.

Burdens On The Psyche

Besides Brown, only Sharon Hogue of Houston pleaded innocent in Operation
Lightning Strike.

A judge dismissed all charges against her after the prosecution concluded
its four-week case, ruling there was no evidence to find her guilty.

Had other targets of the sting not succumbed to the government’s tactics,
they, too, would have been exonerated, Brown believes.

Anthony Verrengia, a retired Air Force reserve general, was indicted for
accepting a kickback in Operation Lightning Strike. He said the money was
payment for legitimate work. The indictment cost him his job as the manager
of advanced programs for the Space and Aeronautics Division of Martin
Marietta Services Group.

He said he pleaded guilty because fighting the charge seemed an
insurmountable task.

The ordeal destroyed him mentally.

"It was a culmination of knowing you’re trapped, knowing you’re not guilty,
but there is no way for you to escape this situation," he said. He ingested
200 sleeping pills in a suicide attempt a few months after his indictment.

Other targets of the sting also plunged into depression.

Verrengia has asked a federal court judge to allow him to withdraw the
guilty plea he says was coerced.

The other targets of Operation Lightning Strike are considering similar
actions.

Charges’ costly legacy

Brown knew there was no way he could win.

Even if he were exonerated, his business was destroyed. The indictment
ensured that Brown would never win another contract in the space community.

At the time of his arrest, Brown had little money to pay an attorney. His
uncle hired Dick DeGuerin, a well-known criminal lawyer, to take the case.

The government almost immediately reduced the 21 felonies against Brown to
one bribery charge. DeGuerin’s defense was that Brown would never have
committed a crime -- if prosecutors could even prove his action constituted
a crime -- had the government not entrapped him.

FBI Agent Francis assured jurors that Brown knew the lithotripter, the
device he was trying to sell, was phony and was part of the effort to
defraud NASA by trying to win contracts for a bogus product. Francis said
Brown had never seen a prototype of the device because none existed.

That’s when Brown produced the picture of the prototype.

Francis also testified about the "bribe" Brown had offered a lobbyist to
help get the lithotripter noticed. Brown said Francis gave him the $500 and
called it "entertainment money." Brown said he thought that’s exactly what
it was -- spending money to give to the lobbyist while he was in Houston.

The FBI recorded the March 1993 conversation that followed the "bribe":

Francis: "How did that feel?"

Brown: "I didn’t mind doing it. We gave the guy five hundred bucks. You’re
making it sound bad."

Francis: "You bribed that guy."

Brown: "I did?"

Brown said that conversation exemplified the government’s approach in
Operation Lightning Strike: convoluted actions aimed at trapping someone
into saying or doing something that might be construed as incriminating.

The jury deadlocked in Brown’s case. Rather than retry him, prosecutors
asked the judge to dismiss the charges.

Brown was elated, broke and outraged. He spent the next two years
investigating the government’s sting. He said he found 200 occasions where
government agents and prosecutors had lied or destroyed evidence.

He battled health problems. While he was under investigation, the
33-year-old Brown had a massive heart attack that led to open-heart
surgery. That caused a viral infection that forced another operation; he
was on life support in a California hospital on the day he was indicted.

A few days after he turned over the information he’d gathered about
government misconduct to his attorneys to prepare a lawsuit, he had a
massive stroke that left the right side of his body partially paralyzed. "I
lost my [fiancee], my health, my cars, my house, was forced into bankruptcy
and underwent two open-heart surgeries, intestinal surgery and brain
surgery because of a massive stroke due to the stress," he said.

During a recent walk down a Houston street, Brown lamented the disastrous
turn in his life. He had been an athletic entrepreneur who enjoyed
skydiving, deep-sea diving and fast living. Now he is almost destitute and
physically broken. Brown refuses to use crutches, braces or a wheelchair,
despite having problems walking. He swears he will again go deep-sea diving
but also admits that doctors believe his health problems have shortened his
life.

His lawsuit charging misconduct against the government and others involved
in the sting was dismissed, though he has appealed. His chances are slim.
The Supreme Court has long ruled that federal law enforcement officers are
immune from most civil lawsuits related to their job-related actions.

"No one wants to listen, but I won’t stop until someone does," he said.

Agent Francis left the FBI. He is a private investigator in Houston. He has
not responded to written requests for an interview.

Brown remembers the last time he heard from Francis outside a courtroom. On
Oct. 20, 1993, his voice was on Brown’s answering machine, though Francis
didn’t realize it. An associate of Francis had made the call then forgot to
hit the end button on her cellular phone. Brown’s answering machine picked
up her subsequent conversation with Francis.

Francis talked about Operation Lightning Strike. He described himself as a
"study in aberrant behavior" who could get anyone to do anything.

Brown thought at first Francis might be talking in jest, then he decided he
wasn’t. "He sure got me to do what he wanted." Brown said those few minutes
of conversation scared him more than anything else he’d heard in Operation
Lightning Strike.

Checked-by: Richard Lake