IT WAS A LITTLE AFTER 12:30 IN THE afternoon of August 10, 1991, and Barbara Bittinger, the assistant head housekeeper of the Sheraton Inn in Martinsburg, West Virginia, had just sat down with a cheeseburger when one of the girls from the laundry room burst in and told her that one of the chambermaids was calling from upstairs and saying somebody had better get over to Room 517, there was blood. Bittinger, who had been with the hotel for seven years, went to the room and hesitantly pushed open the bathroom door. Though she surmised that something must be terribly wrong, she was still unprepared for the ghastly scene. 'There was blood everywhere," she recalls. Because the door opened against the bathtub, and because the shower curtain was partially closed, Bittinger couldn't see into the tub, but she did see a half- full, open wine bottle near the toilet, and a broken glass and an ashtray on the edge of the tub. Then, as she slowly withdrew, she looked through the crack between the door jamb and the door into the bathtub, and saw two white knees sticking up. Startled, she pulled back, but not before she saw something else, something that still puzzles her today. Under the sink, lying more or less flat, were two bloody towels. "It looked like someone tried to wipe up the blood on the floor and slid the towels under the sink," said Bittinger, who was only interviewed by police briefly the day the body was found and never by any journalists before speaking to SPY. "It looked like someone" -not the maid, Bittinger tells us- "threw the towels on the floor and tried to wipe the blood up with their foot, but they didn't get the blood, they just smeared the floor.

The knees Bittinger saw in the bathtub belonged to freelance journalist Danny Casolaro. He had come to Martinsburg two days earlier to meet sources who would contribute to his already yearlong investigation into what he called the Octopus, a mess of interconnected high- level government conspiracies and supposed conspiracies. The Octopus, in Casolaro's view encompassed the alleged theft of a sophisticated computer software program by Justice Department officials; an effort by a former CIA operative to use a California Indian reservation as a front for supplying weapons to the Nicaraguan contras; the shady connections between the Wackenhut Corporation and the CIA; the burgeoning BCCI scandal; and the October Surprise. He'd diligently pursued leads and sources and uncovered an impressive amount of information, but he seemed to have had a hard time making sense of all that he had found. He also seemed to have had trouble telling the difference between people who were trustworthy and those who were not.

Accompanied by the chambermaid and a janitor, Bittinger went to the front desk and called 911. Within minutes police and paramedics were there. Casolaro was lying in a bathtub full of bloody water. I seemed pretty obvious he'd committed suicide. He had eight cuts on his left wrist and four on his right. There were two plastic trash bags floating in the water and a shoelace tied around his neck; evidently he'd thought to hasten his death by securing the bags over his head and asphyxiating but had reconsidered, either before or after slashing his wrists. There was a note that said, TO MY LOVED ONES, PLEASE FORGIVE ME-MOST ESPECIALLY MY SON-AND BE UNDERSTANDING. GOD WILL LET ME IN.

To give themselves more room to work, the paramedics took the bathroom door off its hinges. When they lifted Casolaro's body from the tub, they saw that an Old Milwaukee beer can, a paper coaster and a razor blade had been under the body. After draining the tub and examining the body, Sandra Brining, a nurse who serves as the Berkeley County coroner, declared the cause of death blood loss from multiple self-inflicted wounds. Around 4:00 p.m. she released the body to Brown's, a local mortuary.

So sure was everyone that Casolaro had killed himself that that very night, even before his family was notified of his death, Charles Brown, the undertaker, embalmed the body. Brown would later give the most ordinary of reasons for doing so- "I didn't want to come back to work on Sunday" -though embalming a body without the permission of the next of kin is illegal in West Virginia. Had Brown or the authorities spoken to Casolaro's brother Tony, they surely would have proceeded more carefully. Tony would have undoubtedly mentioned what Danny had said to him just a few days before: "'I have been getting some very threatening phone calls. If anything happens to me, don't believe it was accidental.'"

Tony wasn't the only person Danny had told that he might be in danger; he'd also told Thomas Gates, a special agent of the FBI. A mysterious character named Robert Booth Nichols had become one of Danny's sources. Nichols, who is now 49 and lives in L.A., has, as federal authorities have put it, "no visible means of income to support his rather lavish life-style." He calls himself an entrepreneur and says he has been involved with the CIA in various intelligence operations; he has even appeared in and acted as a technical adviser on Under Siege, the film starring his friend Steven Seagal. Law-enforcement officials know Nichols, though, as an international money launderer and an associate of the Gambino organized-crime family.

As Casolaro worked on his Octopus story, he came to rely increasingly on Nichols as a source, and as a friend. But in July 1991, after Nichols visited him in Washington, D.C., Danny began to suspect that Nichols was far more sinister than he'd imagined, and began to investigate his activities. Three days before he died, he called Gates, who works in the bureau's L.A. office. As Gates has testified before the House Judiciary Committee, Casolaro told him that Nichols had warned Danny, "If you continue this investigation, you will die." Other publications, notably Vanity Fair, have wondered whether Casolaro committed suicide; none has had the benefit of the evidence we've been able to amass. Spy has discovered that on July 31- ten days before he died, six days before he had a 64-minute phone conversation with Nichols, seven days before he spoke to Agent Gates- Danny Casolaro learned a terrible secret of Robert Booth Nichols's, a secret that, if revealed, could cost Nichols his life, a secret that Casolaro might well have told Nichols he knew.

DANNY CASOLARO WAS BORN ON JUNE 16, 1947, the first of six children. His father was a prominent obstetrician in McLean, Virginia. Along with prosperity, however, the Casolaros endured a large share of grief. One child was born with a heart defect and lived only briefly, and the eldest sister, Lisa, died of a drug overdose, an apparent suicide.

When he was 20, Casolaro dropped out of Providence College and went to Ecuador for six months to look for Incan treasure. When he came back, he fell in love with a married woman, Terrill Pace. They eventually married and had a son; after 13 years, they would divorce. He went back to college but quit to become a stringer for the National Enquirer and later a reporter for the trade magazine Computer Age. His friends all speak well of him. They say he was one of the sweetest and most tolerant people they ever met; that he never seemed to care about money; that he was a dreamer. He had many friends of both sexes but was especially close to women. Gabrielle Miroy, a onetime lover and longtime friend- one of at least five former lovers whom he visited frequently and spoke with on an almost daily basis- expressed the feelings of many people when she said, "Danny was always there for me; he was my best friend." There was a Peter Pan-ishness about him. His friend Larry Stitch, a retired attorney, says, 'Although Danny was nobody's fool, he had a tendency to trust everyone.

But if he was Peter Pan, he was Peter Pan with an obsessive streak. In the late 1970s he worked for almost two years on an alternative explanation for Watergate. He spent a year on a novel he ended up publishing with a vanity house. He worked hard at staying fit but also smoked too much, occasionally drank too much and certainly pursued women too much. He also worked hard at his job. Computer Age was a daily newsletter, and for ten years Casolaro was its only reporter, and effectively ran the thing. In 1989 he took a second mortgage on his house in Fairfax, Virginia, and bought Computer Age. But a year later, pressed by the IRS for back taxes incurred under the previous owner, he sold the company at a loss. He could have worked out a payment schedule, but by then he was already chasing the story of his life.

IN 1990, CASOLARO GOT A LEAD ON THE INSLAW- conspiracy story. Inslaw was a computer software firm formed in 1980 by William and Nancy Hamilton to supply a program they'd created called Promis to the Justice Department. The Hamiltons received tens of millions of dollars from the federal government to develop Promis, a system to help prosecutors across the country keep track of complex investigations. In what has become a highly publicized case, the Hamiltons allege that in 1983 a cabal of top Justice Department officials and friends of former attorney general Edwin Meese conspired to delay payments and drive them out of business to gain control of Promis for their own profit. (Meese denies all wrongdoing.) Indeed, Justice did stop paying the Hamiltons in 1983, claiming they weren't fulfilling their obligations, and eventually Inslaw did go bankrupt. In 1987 a federal judge ordered the government to pay Inslaw $6.8 million; the order was later overturned on a technicality. Promis is widely used today, both in the U.S. and by foreign law-enforcement and intelligence agencies.

As the case became known, conspiracy theories about why Promis was stolen were floated. Among those claiming to have information was Michael Riconosciuto a convicted drug dealer who had been on the periphery of many illegal and clandestine operations, who therefore knows many inside stories but also invents tales that have certain credible elements. Riconosciuto, an accomplished programmer, claims that Promis was stolen as a favor to software-company executive Earl Brian, a friend of Meese's, for Brian's help in persuading the Iranian government to hold on to the embassy hostages until the 1980 election was over. (Brian denies any involvement with Inslaw.)

Led down this rabbit hole by Riconosciuto (who loves an audience), egged on by Bill Hamilton (who had millions at stake), Danny Casolaro pursued the story. In time it came to possess him. He worked on it 16 hours a day, staying on the phone past midnight, sleeping only 2 or 3 hours a night, talking with quasi- spooks and bona fide spies, chasing leads, always enlarging his vision of the Octopus. He stopped working out; the man who would boastfully do 50 pushups with a cigarette in his mouth no longer could do even two. There was no question that he was onto some remarkable stories, including aspects of the BCCI scandal -(long before the scandal became public, Casolaro was saying he was going to nail Clark Clifford), the takeover of the Cabazon Indian reservation by a former CIA operative [see Spy, "Badlands," April 1992], and the Wackenhut-CIA connection ["Inside the Shadow CIA," September 1992]. With less insistence on proving a monolithic conspiracy, he may well have pinned down those stories.

For a long time, Casolaro relied heavily on Riconosciuto, often accepting too much at face value. When Riconosciuto was arrested in March 1991 on drug charges, Casolaro flew to Seattle to serve as his volunteer pretrial investigator. In time, however, he became more skeptical, and within a few months he was refusing to accept Riconosciuto's collect calls from jail. But Casolaro had not abandoned his investigation. In August 1991 he told friends he was going to Martinsburg-where the IRS has its main national computer center-to meet sources.

THE BEST REASONS TO BELIEVE DANNY Casolaro committed suicide are the obvious ones: His corpse was found; the wounds appeared to be self-inflicted; there was a note. That evidence was certainly sufficient to quell the curiosity of the authorities who found his body. Apart from what we know about his reporting, however, there are compelling reasons to doubt that he killed himself. Admittedly, it is hard for any of us to know what is in someone's heart, even those whom we know well. That said, however, nearly everyone who knew Casolaro was surprised to hear that he had committed suicide. Certainly he was not a depressive by nature, and no one who talked to him during the last days of his life regarded him as depressed then. His friend Doug Chisholm, whom he visited a few weeks before his death, says, "Danny was excited about his story and quite taken with the woman he'd brought to lunch." Danny spent the Sunday before he died with Danielle Stallings, a longtime friend and lover. "He was in a very upbeat mood," she told us. On Monday he spoke to his pal Art Winfield, who says he was very excited about meeting a new source." The night before he left for Martinsburg, he visited his pal Larry Stitch, who says, "He was his usual upbeat and pleasant self." Indeed, he seemed to be a man who expected to live awhile. The morning he left, he stopped by his insurance agent's office and paid his homeowner's premium. He also called Stallings and asked her to arrange a meeting for when he got back. And in Martinsburg he indeed met with at least two sources, and perhaps a third; Charlotte and Ronnie DeHaven of Martinsburg told Spy they saw an alert-looking Casolaro waiting in his car in an out-of-the-way spot back behind the IRS building.

Other explanations for a suicide have been suggested-that he was lonely, or broke, or despondent over contracting multiple sclerosis, a potentially fatal disease. It's true he had no mate, but he seemed truly to prefer it that way. Moreover, he had a cozy circle of friends, stayed close to his family (once, speaking of his sister's death, he told Stallings, "I could never commit suicide after what Lisa's death did to my family") and had a good relationship with his 22-year-old son. It's also true that he was having money problems. His investigation was costly, and he was facing a balloon payment on his mortgage. Still, the payment was three months off, and as Danny's ex-wife puts it, "The Casolaro children had been raised to believe that money was not a problem." Danny knew that at least two people stood ready to help him financially: his brother Tony, a well-to-do physician who had helped him before, and Stitch, a retired IBM attorney, who thought Danny was onto something important. When he visited Stitch the day before he left for Martinsburg, Stitch told him, "If push comes to shove, you can count on me financially." He replied, "I'm not there yet, but I may come back to you on that offer." It's also true that Casolaro had M.S. (which is fatal in about 1 percent of cases), but this was not known to his friends and family until after the autopsy. He had occasionally suffered the symptoms of the disease, but he didn't seek treatment, at least not from his regular doctor. He did have a general conversation about the disease with his lifelong friend Ann Marie Winfield, a nursing teacher, who told him that when the disease appears in someone Casolaro's age, it is less likely to be fatal. "I really didn't think Danny was terribly concerned," Winfield says.

Interestingly, Casolaro was posthumously evaluated by two psychiatrists. The Martinsburg police hired one who thought Casolaro capable of suicide based on his mortgage difficulties and the fact that his book proposal had received three rejections-demoralizing news, certainly, but hardly extraordinary to anyone familiar with publishing. A second profile was written a week after Casolaro's death by Louis J. Petrillo, a New York psychiatrist and Casolaro's cousin. He wrote the Martinsburg police to tell them, "Casolaro did not manifest any symptoms or character traits during the day immediately preceding his death, during the past twelve months or at any time in his personal history that could, in any way, be associated with a potential for suicide."

FOR TWO DAYS AFTER THE DISCOVERY OF HIS body, the Martinsburg police considered the Casolaro case to be an inconsequential matter. It wasn't until Monday, when the department received calls from Agent Gates, The Washington Post and CNBC, that they realized they had something stickier on their hands. Late on Monday-having wasted the 48- hour period after the discovery of the body that most homicide detectives regard as the most crucial in gathering evidence-they began their investigation.

It is almost an axiom among official agencies: First the screwup, then the cover-up. The authorities' initial acts-removing the door, draining the tub without straining the water to preserve evidence, not sealing the room as a crime scene-compromised the investigation from the start; so did the unauthorized embalming. Still, on January 25, 1992, five months after Casolaro died, the Martinsburg police, in conjunction with the West Virginia State Medical Examiner's Office, the Berkeley County Medical Examiner and the Berkeley County Prosecuting Attorney's Office, issued a press release reaffirming their original conclusion: Casolaro had killed himself.

Since issuing their report, the police have refused to say anything further about the case. SPY repeatedly called the chief of the department, as well as the county prosecutor; neither would comment. All that speaks for the local investigation, then, is the police department's press release. It says that officials reaffirmed the original conclusion for several reasons. First, they somewhat tautologically cite the conclusion of the original autopsy that Casolaro had committed suicide and maintain that the embalming of the body in no way hampered the subsequent autopsy and toxicological studies. Second, neither the police nor the coroner were able to detect evidence of foul play. They found no signs of forced entry or a struggle. The room was neat, and neighbors had heard nothing. Third, they had the suicide note, and were convinced through handwriting analysis and fingerprints that Casolaro had written it.

Finally, they conclude that he'd brought the implements of his self-destruction with him. The razor blades are sold around where Casolaro lived but not near Martinsburg. The alcohol and trace amounts of a painkiller, oxycodone, that were found in his bloodstream seemed self-ingested. There was a half- empty bottle of Portuguese wine in the room, and Casolaro had more of it at home; the oxycodone could have come from Vicodin, a painkiller prescribed for him after dental surgery in 1987 and an empty vial of which was found in the room. The plastic bags in the tub were from a box of plastic bags that he had in his luggage, and the shoestrings may have been from a pair of laceless sneakers found in his home.

It's hard to argue with these conclusions based on the material the police have made public. However, the work of Martinsburg's Finest inspires little confidence. It's understandable that they treated the initial Casolaro investigation so lackadaisically-Hey, it's hot, it's Saturday, it looks like the guy did himself, let's go home-but you'd think the national press scrutiny in the aftermath of Casolaro's death would have inspired a little more conscientiousness, if only temporarily. It didn't. Twenty days after Casolaro's death, a Martinsburg man was found by the police with a .22 caliber bullet wound in his left temple. His fiancée told them he had suddenly pulled out a gun and shot himself. Without conducting a simple and rather standard paraffin test on the girlfriend to detect gunpowder residue, the police ruled it a suicide. For some reason, they ignored the fact that the previous evening, officers had been summoned to the home by a call that shots had been fired. Nor did they question neighbors. If they had, they might have found-as I did when I talked to them-that the night before he died, the man told two people his girlfriend was after him with a gun.

Here, then, is what we've been able to discover. Most of our findings amount to highly anomalous facts and unanswered questions. But we also found relevant physical evidence that the police have simply ignored. Let's begin with the police department's proof.

First, on the matter of the integrity of the body after embalming, Dr. Michael Baden, a noted forensic pathologist, says the "embalming of the body makes the report fatally flawed." For example, he says, the measurements of alcohol in the bloodstream could have been affected by the embalming fluid.

Second, the police say they found no evidence that Casolaro had struggled against an attacker, yet they seem to have ignored two signs. According to the medical examiner, three fingernails on Casolaro's right hand appeared to have been chewed. None of his friends we've spoken to-a half dozen in all-knew him to be a nail-biter. Could fingernails broken in a fight, having been submerged for several hours in bathwater, give the appearance of being bitten? Additionally, no one looked under the nails for skin scrapings or blood. More important, the coroner found a bruise on the top of his head that probably would have induced "moderate hemorrhaghing" under the skin. What collision might have caused this? The police do not mention the bruise in their statement.

The police further dismiss the possibility of a struggle by pointing to the neatness of Casolaro's room as a sign that nothing happened there. But this neatness raises questions more than it settles them.

On Thursday, Danny met with a source. That day, he hit on a waitress in the restaurant where he had lunch, and later flirted with two other women in a bar. On Friday he met with Bill Turner, a former employee of Hughes Aircraft who was one of the sources he had gone to Martinsburg to see; Turner gave him a stack of documents. The two were supposed to have dinner, but Danny begged off, saying he had to meet a source. Later he ran into friends of his brother's, who were staying at the Sheraton; they say he seemed cheerful. These were the last known people to see him alive. Authorities say Danny died in the early-morning hours of Saturday. The distance between being hard at work and in a good mood to despondently scribbling a suicide note is a long one to travel in a few hours. But even if Casolaro had plunged into a fugue state overnight and before sunup killed himself, questions occur. Except for the bathroom, Room 517 was extremely neat: The place was picked up, the bed was crisply made and undisturbed, and Casolaro's pants were folded on the bed. But as his friends tell us, he was not an especially neat person. So we are asked to believe that a cheerful Danny went to meet a source, then either went somewhere else and got depressed or went back to his room and-without disturbing anything, but taking the time to uncharacteristically fold his pants-scribbled a desperate note and killed himself.

On the other hand, maybe there were other people in the room, and they tidied up.

The police seem to be on firm ground on the third element of their conclusion, the suicide note. Yet friends offer two observations: Its mention of God was very odd for someone unreligious, and the 19-word note was uncharacteristically succinct. Danny was a wordy fellow. The brevity of the note-like the bitten nails of a non- nail-biter, like the sudden swing into black depression of someone who had not much earlier been feeling fine- makes it seem as though Danny was highly agitated when he began writing, and was not composing his farewell calmly. This raises the possibility that the note was written under duress.

Finally, the local authorities make much of the fact that Casolaro had brought with him razor blades, shoestrings, wine and Vicodin (they say he bought the plastic bags in town). They say this indicates premeditation on his part. Of course, that's at complete variance with everything we know about Casolaro's outward behavior during his final days.

Still, let's say that Casolaro was fooling everyone at the end-being sociable, paying his house insurance, hitting on women in a bar, all to hide his pain. Then we have to wonder what he was planning to do with these telling items. Perhaps the idea was to take the codeine and wine and drift away, possibly hastening death by tying the bags on his head. If so, then he prepared poorly. There was a very low level of oxycodone in his bloodstream-perhaps one or two tablets' worth, not enough to do himself in. But let's say that's the case, that he prepared poorly and did not feel himself growing drowsy and (not liking the feeling of the bag on his face, or perhaps never putting the bag on) decided to cut his wrists.

If he did so, he slashed himself with brutal ferocity. He was cut 12 times; the cuts on the right wrist extended to the tendons, and the cuts on the left hit tendons. "I've never seen such deep incisions on a suicide," Martinsburg paramedic Don Shirley told Spy. "I don't know how he didn't pass out from the pain after the first two slashes." Agent Gates has testified that he asked a Martinsburg police captain how it happened: "The captain said, 'He hacked his wrists.' I said, 'What does that mean?' He said, 'The wrists were cut, but they were cut almost in a slashing or hacking motion."' Dr. James Starts of George Washington University reviewed the autopsy-which he on the whole found to be thorough-and said in an interview, "One thing that was surprising to me is that I didn't see any hesitation marks. In suicides, you tend to find hesitation marks. People generally don't know the amount of pain they can tolerate, so they will hesitate and take, literally, a little slice. This man really cut deeply. . .down to the tendons. That's significant. That's unusual." Unusual indeed. Both Danny's brother and his ex-wife told us that Danny had always been afraid of needles and blood.

It's worth noting that while plastic bags can be used in suicides, they also have a recognized place in torture and interrogation techniques. According to Lynn Nottage of Amnesty International, putting a bag over the head produces the same effect as repeatedly dunking the head underwater. Its great attraction, she says, is that it leaves no marks.

But along with their bungling of the evidence, the police leave some questions unanswered. Casolaro carried with him everywhere an accordion file full of notes and references. The police say nothing about its whereabouts, other than that they conducted a canine search along a one-mile stretch of highway near the hotel and didn't find it. Neither did they find anything resembling Bill Turner's stack of documents. Obviously, someone could have taken the papers away-it's possible to reach Room 517 from the parking lot, without going through a lobby.

Other friends-his female friends-point out something else unusual: Casolaro didn't like to be seen in the nude. "Danny never would have been caught naked by strangers," Terrill told us. Other lovers say that even after making love, he would cover himself with a towel to go to the bathroom. Danielle Stallings says that "on a few occasions at my pool, Danny would suggest we all sunbathe naked, but Danny's idea of being naked was for the women to be naked and Danny to be in the pool." Her comments echoed Terrill's. "Danny was not comfortable being naked," she said, and she thought it unusual that he would decide to go to his death that way.

Had police spoken to Casolaro's friends, they would have known about his upbeat mood, his feelings about nakedness, his propensity for untidiness, his squeamishness about blood, his wordiness, his attachment to his files, and much more. But the police didn't interview any of them. Had police spoken to his cousin, Dr. Petrillo, they would have learned something about his psychological profile. But even after Petrillo contacted the authorities, they didn't interview him. Had police spoken to FBI Agent Gates, they would have known that Casolaro felt he was in mortal danger. But even after Gates contacted the authorities, they didn't interview him.

And apart from a cursory questioning on August 10, the police didn't even thoroughly interview Barbara Bittinger, one of the first people to view the scene, the hotel housekeeper who saw the towels under the sink in Room 57.

'It looked like someone threw the towels on the floor and tried to wip up the blood with their foot," she told us. Given that she'd spent seven years cleaning up bathrooms at the Martinsburg Sheraton, Barbara Bittinger's opinion of what a floor looks like when somebody has tried to wipe it up may be considered expert. It's inconceivable that Casolaro- painfully wounded and rapidly losing consciousness- would have wiped up the floor. But someone who did not want to leave footprints or fingerprints or his own bloodstains might have tried to clean up the scene.

As part of their investigation, the Ma?tinsburg police asked Dr. Henry C. Lee of the Connecticut State Police Forensic Science Laboratory, a renowned blood-splatter expert to examine the evidence. His conclusion, cited in the police press release, held that "none of the physical evidence found at the scene is inconsistent with that of a suicide." But when we talked to Dr. Lee, he told us he didn't recall seeing any smear marks or bloody towels in the photos supplied him. "A reconstruction is only as good as the information supplied by the police," he said. The Martinsburg police apparently didn't think the towels were worth treating as evidence.

We spoke to Ernie Harrison, who worked for a professional cleaning company called Le Scrub that the hotel hired to clean Room 517 after the police had finished their physical examination. "There were bloodstained towels on the bathroom floor that I picked up," he told us. After Harrison finished cleaning the room, he tossed the towels away.

BY THE LATE SpRING OF 1991, ROBERT BOOTH Nichols had become one of Danny C asolaro's most important sources. They spoke frequently and at length, and it's not hard to see how Casolaro would come to depend, not only for information but in an emotional way, on someone who knew so much and with whom he could puzzle out the mysteries before him. "It is as though he considered him a friend and not just a source of information," says Wendy Weaver, one of Casolaro's ex-girlfriends.

They had a lot in common. Nichols's father, like Casolaro's, was a physician, and both sons grew up with privilege. Danny was a college dropout; Nichols got a degree through the mail. Both men liked the ladies. But Nichols was smooth and polished and exciting. Although he was only a few years older than Casolaro, he was very much the elder, the mentor, the teacher. He had even promised to help Danny financially; apparently he was going to lend Casolaro money in return for a 25 percent interest in his home. "It seemed as though Danny had this father-son-type relationship with Nichols," says Gabrielle Miroy, Danny's friend. It's telling that in the cast of characters Casolaro drew up for his projected exposé of the Octopus, the name of Nichols, one of his major sources, is never included

How much Casolaro learned about Nichols is unclear; we know Nichols was a man as comfortable in the underworld as in the intelligence community and that he was associated with people who treated killing as an ordinary part of doing business

According to an affidavit sworn to by Agent Gates during the course of a 1987 investigation into mob activities in Hollywood, Nichols was identified by the FBI as early as 1978 as a drug trafficker and money launderer. Just two years later, Nichols was representing a group of unknown investors who wanted to take over Summa Corporation, the holding company of Howard Hughes's empire. Hughes had just died, and Nichols had convinced a Saudi company called Ali & Fahd Shobokshi Group to become partners in the (failed) takeover attempt. Joseph Cicippio, who would later be taken hostage in Lebanon, was then the London manager of Ali & Fahd. In a 1980 letter to William Lummis, chairman of Summa, obtained by Spy, Cicippio states, "We are ready, willing and able to provide such finances as may be necessary to acquire Summa."

Cicippio, who lives in Princeton, New Jersey, says he specifically remembers Nichols telling him he was representing interests of the U.S. government in the acquisition of Summa. In an interview with Spy, Cicippio said that over a six- or seven-week period, "Nichols presented me with U.S. Justice Department identification and furnished us with financial and other information on Summa of a highly confidential nature. I assumed he only could have gotten this information from someone high up in the government.

By 1981, Nichols had become partners with a retired arms manufacturer named Peter Zokosky to form a munitions company, Meridian Arms, which in turn joined up with a tiny California Indian tribe and the CIA-connected Wackenhut Corporation in a scheme to manufacture arms on the Indians' reservation. Nichols had his own connection to the agency. In obtaining the required California permits to possess and sell machine guns in Meridian's quest to provide guns for the contras, Nichols received a recommendation from a CIA official named Larry Curran. Apparently neither Curran nor the California Justice Department agents who issued the permits were alarmed by the FBI's reports on Nichols, or by the fact that he had used several aliases at different times in his life. They even overlooked Nichols's listing of Harold Okimoto, believed by intelligence sources to be a high-ranking member of Japan's Yakuza crime syndicate, as a former employer on his application to carry a concealed weapon.

One of the members of the board of directors of Meridian Arms's parent company was Eugene Giaquinto, then president of the home-entertainment division of MCA, the parent company of Universal Pictures. As part of Gates's investigation of mob influence in the movie industry, the FBI targeted Giaquinto, who was suspected of a variety of criminal acts. They placed him under surveillance and tapped his phones [see Spy, The Fine Print, July and August 1989]. Agents caught Giaquinto and Nichols lunching at Le Dome, the swank Los Angeles show business restaurant, and afterward transferring a box from Giaquinto's car to Nichols's. The taps caught them discussing possible takeovers of MCA, and the effect on stock prices. It was also evident from the wiretaps that Giaquinto enjoyed a special relationship with John Gotti. (The investigation was later quashed by Reagan-administration officials.)

When reports of the investigation surfaced, Giaquinto left MCA, as well as the board of Meridian. Before that happened, though, he tried to get his friend Nichols a big assignment. Spy has learned that Giaquinto-in his capacity as MCA's home-video honcho-approached Jack Valenti, the powerful chairman of the Motion Picture Association of America, and proposed that Valenti hire Nichols to coordinate the industry's anti-video-piracy effort in Asia. Valenti met with Giaquinto and Nichols but passed. "I didn't feel comfortable with Nichols," Valenti told Spy. One advantage Nichols might have enjoyed in the job of Asian antipiracy policeman would have been his close relationship with the Hawaii-based Okimoto, the alleged Yakuza associate; the two reportedly go back a long way. On the other hand, an antipiracy policeman with close ties to the Gambinos and the Yakuza might not be much of a policeman at all

Nichols has replied to Gates's affidavit linking him to John Gotti and the Gambinos through connections at MCA by suing the 17-year veteran and the U.S. government for libel and slander. (The case was recently dismissed.) Some say he has replied in other ways: Gates has testified before the House Judiciary Committee that he has twice heard from informants that Nichols has put a contract out on his life.

Alan Boyack, a former CIA operative now practicing law in Utah, has known Nichols for 15 years and says, "Nichols is lethal." Spy has obtained the transcript of a conversation between Boyack, Michael Riconosciuto and a former FBI agent, Ted Gunderson, in which Riconosciuto describes an occasion where Nichols wanted to deliver a message to a mobster from Chicago. He hung the man upside down on a hoist in an airplane hangar in front of a prop plane, then started the engine of the plane and revved it up, so that the man hanging on the hoist was sucked toward the propellers. According to Riconosciuto, "By the time Bob got finished with him, he wanted to die."

CASOLARO WAS INTRODUCED TO Nichols by Bill Hamilton, the Inslaw man. Hamilton seems aware that Nichols and Casolaro had grown close. In fact, on August 9, 1991, at 12:50 p.m.-about 12 hours before Casolaro died-Hamilton called Nichols at his home in California. They talked for three and a half minutes. Hamilton claims now that he was looking for Casolaro, whom he hadn't heard from in a few days. "Robert Booth Nichols," Hamilton told Spy, "is a very strange and dangerous guy.

Nevertheless, despite Hamilton's professed reservations about Nichols's char- acter, the man who designed a program for tracking criminals and the man who has been linked by the FBI to two crime organizations communicate with surprising frequency. Last summer I visited Hamilton's office in Washington to get a copy of the phone records that would show his call to Nichols on August 9, 1991. He seemed reluctant. It took a fair amount of persuasion to convince him to turn it over-and what he gave me was a photocopy with all but that call blocked out. Shortly after leaving, I remembered that I had wanted to ask him something else and returned to his office. While I was waiting in the reception area, the phone rang. The receptionist buzzed Hamilton: "Robert Booth Nichols, returning your call." When I asked Hamilton about the call, he replied, "I call Nichols all the time. It was just a coincidence that it was right after you left."

By July 1991, the relationship between Nichols and Casolaro had begun to deteriorate. On July 7, Nichols flew from Puerto Rico to Washington to meet with Casolaro. He stayed several days. There's no telling exactly what they talked about, but it was after this visit that Casolaro told Agent Gates that Nichols had warned him, "If you continue this investigation, you will die." One night, Casolaro and Nichols went out to dinner, accompanied by Wendy Weaver. "During the evening," she told Spy, "Nichols took exception to the imagined slight made to me by a patron at the bar. Nichols grabbed the man, slammed him against the wall and threatened to kill him. Later that night, Danny told me that Nichols really scared him."

After that, Casolaro began trying to find out who Robert Booth Nichols really was. He found Gates and began asking questions, telling him where he was going and finally, three days before he died, asking whether he should take Nichols's threats seriously. But Casolaro was talking to someone else on the West Coast as well, a man named Richard Stavin a former special prosecutor for the Justice Department who had been assigned to the MCA case. In his investigation of the MCA case, Stavin had unearthed documents about Nichols, who was also a target of his probe. On July 31, 1991, Casolaro had a 55-minute conversation with Stavin. Danny must have thought he had 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 ofJustice-in other words, a snitch. Stavin doesn't know whether any lawenforcement agency accepted Nichols's offer. When the prosecutor asked other agencies, "we received denials across the board," he says, "but it seemed like a coveryour-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 had found out, Nichols would be a dead man.

Six days after speaking to Stavin, Danny Casolaro, who "still had a young man's vision of his immortality," according to his friend Larry Stitch, had a long phone conversation with Robert Booth Nichols. The next day, Casolaro was telling Agent Gates that Nichols had warned him to abandon the investigation. The following morning he left for Martinsburg, where two days later Barbara Bittinger saw his blood on a pair of towels underneath a hotel sink.