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This is the first of six articles (and one podcast episode) about Danny Casolaro, an investigative journalist who died under mysterious circumstances thirty years ago. In the ensuing decades, he has become a legend in his own right; for many, he's sort of the Platonic ideal of an investigative journalist. For others, he's a cautionary tale about conspiracy theory belief.

Contents:

  • Part 1: How Danny Casolaro Became the Ideal Conspiracy Theorist
  • Part 2: The Parapolitics of Software Piracy
  • Part 3: Coachella (not the music festival)
  • Part 4: Death of the Poet
  • Part 5: Suicide is Painless
  • Part 6: Disinformation is a psychic rat trap that makes everybody crazy and dumb

For the last four months or so I’ve been corresponding with Samuel Israel III, a former hedge fund guy currently serving 20 years for running a Ponzi scheme. But unlike Bernie Madoff, who was arrested three years after Israel, his heart wasn’t in the scam.

Israel was the founder of Bayou Hedge Fund Group. His major innovation was Forward Propagation, software designed to find hidden patterns in the market and predict stock prices. The only problem is that Forward Propagation never quite worked. But Israel’s belief in his own imminent success was so complete that he went ahead and claimed that it did work. The Ponzi thing was supposed to be temporary, a way to bring in some cash and keep investors happy as he transformed his vaporware into something tangible. In the meantime, he formed an accounting firm to massage the books and keep the SEC off his back.

The scheme lasted almost a decade before Israel was indicted in 2005 and eventually sentenced to twenty years in prison. But instead of turning himself in on June 9, 2008, Israel drove his SUV to a bridge over the Hudson River, parked it, wrote “Suicide is Painless” (the theme song from M*A*S*H) in the dust on the vehicle’s hood, and fled in an RV. No one believed that he’d actually killed himself, and three weeks later Israel surrendered to authorities. He’s currently a resident of FCI Butner in North Carolina.

Guy Lawson tells the whole sordid tale in a book called (you guessed it!) Octopus. He not only details the intricacies of Israel’s con, he portrays the psychic toll of running a Ponzi scheme. His reporting is full of incidents like:

Once he’d welcomed his family home from a short trip standing in the driveway wearing cowboy boots, his wife’s bikini underwear, a lacrosse helmet, swim goggles, a life jacket, and a cape, then started screaming at his wife when she didn’t get the joke. (”The U.S. Government Is a Sham,” New York magazine, June 29, 2012)

Israel was clearly hurting, in the most obnoxious and insufferable way possible. He was also vulnerable. His desperate search for nontraditional business opportunities — opportunities promising big paydays, which he could then use to bail out his investors — brought him into the orbit of Jack O’Halloran, a retired boxer-turned-character actor who’d played tough guys in films like 1977’s Superman and the 1976 King Kong remake. By the time the old pug was done with Israel, the Ponzi schemer had invested $2 million in O’Halloran’s company Debit Direct, and another $500,000 in a book he was writing, which purported to be a firsthand account of the Kennedy Assassination. O’Halloran claimed Kennedy’s driver was the assassin — that he turned around and plugged the president from the driver’s seat. This wasn’t exactly a new take in conspiracy lore (famed conspiracist William Cooper had been claiming the same thing for years) but it was new to Israel, who became obsessed with seeing an unedited version of the Zapruder film that included the driver’s kill shot.

In Lawson’s Octopus book, there is a scene where Israel is bitching to O’Halloran about the stock market.

“There’s a technology I’ve heard about that might be good for your trading system,” O’Halloran says, always helpful. “But the guy who knows about it is really secretive. I shouldn’t even be talking about him. He’s very deep into CIA black ops.”

That man was Robert Booth Nichols. And the answer to Sam Israel’s problems was known as PROMIS.

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An unpublished article by Danny Casolaro was found after his death. Titled “Update on the Pursuit of the Tape and the Jailing of Danger Man,” it detailed a trip to Washington State during which Casolaro worked for ten days as a defense investigator for Michael Riconosciuto after his 1991 drug bust. Riconosciuto, of course, claimed that the arrest was an attempt to silence him. He knew too much about PROMIS and about knew too much about the Octopus.

“Update” begins with a flourish…

It is a pale moon that illuminates the characters in this story. With chords of fear and longing, it is a dark world that everyone thinks they know but few have seen. The real faces in this world are all too human. Danger Man’s mind is as balkanized as the script he lives and the land he travels. Perhaps betrayal becomes a way of life. The background music no longer echoes national anthems but T. S. Eliot’s Gerontion: “Think/neither fear nor courage saves us. Unnatural vices/are fathered by our heroism. Virtues/are forced upon us by our impudent crimes.”

These impudent crimes are the subject of this update and a brief capsule seems as hopeless as carving the Lord’s Prayer on the head of a secret agent. For, like Danger Man himself, this story will resist shrinkage. Its events are too febrile, its local color too relentless.

…and the purple prose doesn’t let up for eight typed pages.

“Danger Man” is Casolaro’s name for Riconosciuto. He describes the character like this: “Under six feet tall, he was immense in frame but agile and graceful in movement like some giant white rabbit or perhaps some hybrid fugitive creature related to a fox.” Pretty flattering for someone who most observers would describe as obese, balding, or troll-like. Either way, the trip was a turning point in Casolaro’s relationship with Riconosciuto. Danger Man had successfully predicted his own arrest, and when the prediction came to pass, Danny saw it as confirmation of Riconosciuto’s credibility.

Riconosciuto was found guilty and sentenced to almost thirty years in prison. If the bust was intended to silence him, however, it failed miserably. Until his release in 2017, Riconosciuto had a reputation for calling journalists collect from prison in marathon sessions calculated to draw them into his psychodrama — just as he had done to Casolaro. Jack Calhoun, a journalist and author who worked on PROMIS and other parapolitical stories in the 1990s, has had his fair share of calls with Riconosciuto. “He's not easy to trust,” Calhoun says. “You can only try and verify what he says, and the shadowy stuff usually can't be verified.”

I recently met another journalist who knew Riconosciuto. This guy asked not to be named — it’s been decades, he said, and his recollections are almost nonexistent — but he was kind enough to give me his files on the convict. Judging by the contents of the two overflowing manilla folders, Danger Man’s time in prison did nothing to slow down his conspiracy theory research. The folders were stuffed with clippings from various newspapers and magazines, including one from the (Louisville) Courier-Journal about lawyers indicted in a drug probe, and a clipping from the Wall Street Journal titled “Former CIA Ally Faces Drug Charge.” The September/October 1995 issue of aerospace trade mag Airliners provided an overview of the Lockheed P-3 Orion maritime surveillance aircraft, and a clip from the Valley Times furnished details of a biotechnology company called Bio-Rad. Each of the stories included highlighted passages and handwritten notes describing how these disparate pieces of the Octopus conspiracy were supposed to fit together.

In addition to the documents, the Riconosciuto files contained a twelve-page handwritten letter to the journalist that doesn’t attempt to describe The Octopus so much as bludgeon the recipient with so many details about Robert Booth Nichols, John Philip Nichols, arms deals, Danger Man’s treatment behind bars, and several other tangents. The document is so dense with detail that after reading it, I can’t imagine anyone getting to the end without either cutting Riconosciuto off completely or getting sucked permanently into his paranoid worldview.

Another letter from Riconosciuto also grabbed my attention. Curiously, the first page is written on the back of an NSA document describing an experimental supercomputing architecture called Splash 2. The letter recounts the unnamed journalist’s visit with Riconosciuto. Apparently, his photographer had made the switch to digital and wasn’t happy with the results he was getting. Riconosciuto then proceeds to debug the photographer’s camera and computer in four handwritten pages covering everything from Photoshop, the progressive JPEG graphics standard, image artifacting, and how “PC based image technology is based on techniques developed by the military and intelligence community originally implemented on mainframes and expensive specialized hardware.”

Maybe Riconosciuto is some sort of a genius, I thought when I first read this. He can still troubleshoot a computer he’s never seen — and place this knowledge in the context of cutting-edge military technology — even after being in jail for over five years.

Also standing out among the Riconosciuto files is a complaint he registered with the prison over items removed by guards during a routine shakedown of his cell. There were old magazines, including issues of Popular Mechanics and Design News; letters to various attorneys; U.S. Air Force documents; and other prisoners’ legal papers. A response to Riconosciuto’s complaint, dated August 29, 1996, explains that the confiscated material was “[n]uisance contraband such as newspapers and or magazines in excessive quantities which present a health, fire, or housekeeping hazard.” While I trust prison officials about as far as I can throw Danger Man, it sure sounds like there might be a reasonable explanation for Riconosciuto’s detailed Photoshop knowledge (besides raw genius). Riconosciuto was a hoarder, a person whose time in prison was spent crafting arcane conspiracies using whatever literature he could get his hands on. The confiscated material were the raw components of his grift, an always-evolving tale that has come to captivate untold numbers of journalists and conspiracy researchers over the decades. Casolaro must have sensed something similar about Riconosciuto as his statements became increasingly bizarre.

“I’ve come up with the cheapest way to refine platinum there is,” Danger Man told Danny, explaining the meth lab bust. “But I’m screwed because they’ll try to show that the chemicals I use at the mine are precursor ingredients for making methamphetamine.”

Soon, Casolaro was refusing to accept Riconosciuto’s calls from jail.

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By the time of Riconosciuto’s latest arrest, Danny Casolaro had been introduced to another tale-spinner by the name of Robert Booth Nichols, through their mutual associate William Hamilton of Inslaw. “Casolaro’s phone bills to Nichols grew in direct proportion to his disillusionment with Riconosciuto,” Ridgeway and Vaughan wrote in the Village Voice.

Casolaro met Nichols in person for the first time at the Four Seasons hotel in Washington, D.C. on July 10, 1991. Nichols told lots of stories that day and announced his imminent appointment as the state security minister of the island nation of Dominica. This was somehow part of a scheme involving international development in the wake of the Iraq War. He also told Casolaro that he was in league with the Illuminati. “I’m afraid of them because I know them,” Nichols said, cryptically. “I lived in a hole. They gave me an exit.” Details on the exchange are contained in Casolaro’s notes, along with research material on the 18th-century Bavarian secret society. More relevant than the historical masonic group (it disbanded about 200 years ago) is the modern-day legend that the Illuminati not only still exists, but that it’s using conspiracies like the Octopus to bring about some sort of New World Order. This has been a major preoccupation of right-wing cranks for decades.

If perhaps Nichols wasn’t in league with the Illuminati somehow, or a bigwig in Dominican affairs, the man might have been stringing Casolaro along the same as Riconosciuto was. And much like Riconosciuto, Nichols was larding his far-fetched claims with enough genuine facts to keep Danny Casolaro on the hook.

More than anything, the July meeting convinced Casolaro that Nichols himself should be investigated. And this is where the story becomes deadly.

Journalist John Connolly writes in Spy magazine that:

On July 31, 1991, Casolaro had a 55-minute conversation with [former DOJ special prosecutor Richard] Stavin. Danny must have thought he hit the jackpot: Stavin told him that Nichols had been a money launderer and that he was connected to the Gambino crime family and the Yakuza.

But Stavin told Casolaro something else, something that upon reflection, he now says, “maybe I shouldn’t have told him.” Stavin told Casolaro that in the late 1970s, Robert Booth Nichols had offered to become a confidential informant for the Department of Justice — in other words, a snitch. Stavin doesn’t know whether any law enforcement agency accepted Nichols’s offer. When the prosecutor asked other agencies, “we received denials across the board,” he says, “but it seemed like a cover-your-ass situation.” To some people, of course, it would be irrelevant whether Nichols had ever actually performed as a stool pigeon or not. But if John Gotti, for example, had ever found out what Danny Casolaro found out, Nichols would be a dead man. (“Dead Right,” Spy, January 1995)

Six days later, Casolaro was back on the phone with Nichols, who tried to convince Casolaro to give up the Octopus.

Two days after that, Casolaro left for Martinsburg, West Virginia.

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By 2004, when Jack O’Halloran introduced Sam Israel to PROMIS, the software had become a permanent fixture in conspiracy lore. The idea that it was so powerful — magical, almost — and could be used to do damn near anything meant that anyone with an outlandish conspiracy theory could invoke PROMIS and make their absurd theories seem plausible. In The Dulce Wars (1999), a book revealing the “truth” about underground extraterrestrial bases in the American southwest, the author places Michael Riconosciuto and the stolen PROMIS software squarely in the Wackenhut-Area 51 nexus said to be waging a secret war with the alien invaders. In November 2001, Michael C. Ruppert wrote in his conspiracy newsletter From the Wilderness that PROMIS was used by Osama Bin Laden to evade capture after 9/11. Even Chris Carter of X-Files fame got into the action: In March 2001 — six months before 9/11 — his TV series The Lone Gunmen featured a story about a passenger jet that was hijacked by terrorists in an attempt to destroy the World Trade Center. Fortunately, the heroes of the series were able to hack the jet’s autopilot and steer it to safety. This was done with a piece of software unmistakably based on PROMIS.

And then there is the author Joseph P. Farrell:

What if [the PROMIS software’s] “multilingual” ability to read several databases was used to do more than compile lists of terrorists, subjects to be rounded up for Continuity of Government operations, satellite positioning and imaging, tracking financial flows, invading Deutsche Bank computers, or placing puts and shorts on the markets prior to 9/11, or gaining access to exotic weapons technologies? What if it was used in the ultimate alchemical wedding of high technology and deep black magic? What if it was used to coordinate and plan the details of a MegaRitual? (Hidden Finance, Rogue Networks, and Secret Sorcery, p. 243)

Compared to all that, Sam Israel’s scheme was almost mundane. If he could get his hands on PROMIS “he’d be able to watch the flow of money into and out of the Federal Reserve in real-time and thus trade ahead of the market,” according to Guy Lawson. “He’d make billions.”

Sam Israel tagged along to a business meeting with Jack O’Halloran — a meeting that, in retrospect, looks like an obvious attempt by O’Halloran and Robert Booth Nichols to lure Israel into their trap. At one point, Sam cornered Nichols and asked him about PROMIS. But before Nichols could answer the question, he took a phone call that sounded, to a prying Israel, like some sort of hot-shit business communication. Nichols also “accidentally” revealed a return sheet that recorded fourfold profits on days-old investments totaling in the millions of dollars. This, Nichols said, was where the real action was — on the “shadow market.” The upside of this secret market was literally unbelievable; once accepted into the club, Israel could expect to make 100% returns on investments in a matter of days. And it was cut-throat: intelligence agents and ruthless “businessmen” like Robert Booth Nichols all competed for opportunities on the shadow market, and things often got violent.

“Under the sway of Nichols, Israel spent a year trying to trade in the shadow market,” Guy Lawson writes. “He traveled to the financial capitals of Europe. His companions were a cast of masters of high finance, European royalty, spies and scammers. Israel’s guide and constant companion – his ‘handler,’ in the parlance of the long con – was Nichols.” And Nichols was able to keep the heat on, creating enough tension that Israel never had time to think about what he was doing. Israel was chased through the streets of London, assaulted in Amsterdam, and nearly kidnapped in Zurich. At one point, at a rendezvous in Hamburg, a from Pakistani intelligence (or so he claimed) gave Israel two 9mm Beretta handguns with silencers. What happened next, as Sam Israel told Guy Lawson, is mind-blowingly bizarre: Sam Israel spotted an assassin making a move for Robert Booth Nichols on the streets of the German city.

“I pulled my Beretta out, and I shot at the guy,” Israel says. “Everything was moving in slow motion. The guy dropped the gun and fell to the ground. By that time, Bob had pulled out his gun and he plugged the guy in the right shoulder. I walked over and shot him in the head. Point-blank. Killing him. His head exploded all over the sidewalk. Blood and brains were everywhere.”

Of course, there is no proof that the shooting even happened. “Staging a murder is one of the oldest ruses of grifters,” according to Lawson. “Blood, guts, guns, the frisson of extreme danger, the need to flee before the law arrives — the elements are eternal.”

Whatever happened, it must have worked. The next day, Sam Israel wired $120 million to Germany to invest in the shadow market.

Robert Booth Nichols died in a hotel room in Geneva, Switzerland on February 14, 2009. He’d had a massive heart attack, then sustained a head injury when he collapsed. A friend arranged to have the body cremated, and the U.S. Embassy notified Nichols’ wife Ellen at their home in California.

In an email, Sam Israel tells me that he and Nichols had hatched the plan to fake his death years before:

Basically, it would look like either a heart attack, or a fall in which whomever did it, struck their head on the way down, which resulted in their death. Naturally, there was none of that. The guys in Switzerland were paid off to transport the non-body to a clinic where a specific doctor would pronounce the person no-more, and the proper paperwork would be issued. Because of the family's wishes, the body would be cremated right away. Problem solved. Coincidentally, this is exactly what happened to Bob Nichols. All you need, was one guy with you who called the proper people and then to sign off on the cremation and the death certificate as witness.

If the above is true, it looks like Nichols got away free and clear. Unlike Israel’s “suicide,” which bought him a mere a week of freedom.

I also asked Sam if he thought Nichols killed Casolaro:

I asked Bob flat out if he killed Danny. He told me no and then said that he tried to warn Danny off of what he was doing but he would not listen. Bob had been speaking to him a lot. He said that Danny would not let things go. I kind of thought that may have been bullshit. I think he knew who did it if it was not he who actually did.

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I received a Google Alert for Sam Israel recently, and this time it didn’t involve conspiracies or con artists at all. He’s featured in the forthcoming book Love Lockdown, an insider’s look at prison romance. Sam’s story is a perennial favorite of cable news programmers, author Elizabeth Greenwald said in an interview for The New York Times. And every time the story airs, “he gets letters from people, usually women, who are intrigued and want to meet him and get to know all about him.”

Well, at least Sam Israel has that going for him.