Clouded in Mystery

updated 10/14/1991 AT 01:00 AM EDT

originally published 10/14/1991 AT 01:00 AM EDT

IN HIS 20-ODD YEARS AS A REPORTER, DANNY Casolaro never stirred even a ripple of controversy. There were no splashy scoops or front-page exclusives, mostly a lot of obscure laboring on the fringes of mainstream journalism. But when Casolaro, 44, turned up dead in room 517 of the Sheraton hotel in Martinsburg, W.Va., last Aug. 10, sprawled in a bloody bathtub with his wrists slashed, he suddenly attracted a lot of attention. For in the weeks prior to his death, Casolaro had told colleagues, friends and his brother Tony, a physician who lives near Washington, D.C., that he had received death threats. "He said if there were an accident," says Tony, "not to believe it."

The reason for his fear, Danny said, was that he was close to breaking what he called the story of the century: a mind-boggling conspiracy he referred to as the Octopus. Top-level government officials, he hinted, were linked to a host of sinister operations, including the BCCI scandal and the so-called October Surprise plot, an alleged effort by the Reagan-Bush campaign to delay the freeing of the American hostages in Iran as a means of sabotaging Jimmy Carter's 1980 presidential reelection campaign. In recent months a host of news organizations had already taken the allegations seriously enough to launch full-scale investigations of their own. Meanwhile a House judiciary subcommittee has begun delving into the case of Inslaw, a Washington computer-software company that Casolaro was scrutinizing. Inslaw officials contend that the Reagan Justice Department stole their software and drove them out of business; those actions, they now suspect, had Byzantine links to BCCI and October Surprise.

Initially, West Virginia authorities ruled Casolaro a suicide. In addition to the physical evidence, he was deeply in debt; when he died, Casolaro had $2,700 in his checking account, no steady income and a huge mortgage on his three-bedroom house. But the mystery surrounding his final days refuses to go away, as do questions about the October Surprise. Recently former Attorney General Elliot Richardson, now in private practice and representing Inslaw, called for a federal investigation of Casolaro's death. It is a request that brother Tony, still grieving and perplexed, strongly endorses. "I think I'm being objective," says Tony, 37, "but the unanswered questions now outnumber the answered questions."

As support for the murder theory, Tony points to what he considers suspicious circumstances surrounding his brother's death. For starters, authorities in Martinsburg and Fairfax, Va., took two days to locate Danny's family to notify them of his death. By then, the corpse had been embalmed. West Virginia officials maintain they did their best to find the family and that embalming remains after a few days is routine.

Tony is also troubled that notes and papers Danny usually carried in the car were never recovered. (Danny had gone to Martinsburg to meet a source.) Tony recently received another disturbing piece of information. A New York City newspaper editor told him that on the evening of Aug. 11, the day before the Casolaro family heard the news of Danny's death, an anonymous caller informed the journalist of Danny's death and urged him to investigate.

Tony believes that his "upbeat" brother was simply not the type to commit suicide. He and Danny and their four siblings grew up in the Washington suburbs, where their father, Joseph, was a physician. After attending Providence College, Danny returned home and worked as a stringer for trade publications, newspapers and magazines, including the National Enquirer; along the way he married and divorced and had a son, Trey, now 22. Danny was drawn into his conspiracy investigation about a year ago. In the week prior to his death he talked excitedly of reaching a breakthrough. Just days before he died, however, Danny's proposal for a book about the Octopus was rejected by Little, Brown publishers because it had nowhere near the necessary documentation. "He was frustrated," says Tony, but for Danny, he adds, "setbacks weren't anything new."

Still, some of Casolaro's friends believe that he had an overactive imagination. "He dealt in a nebulous and murky world of conspiracies," says Richard O'Connell, a fellow journalist in Fairfax and a close friend. "Since I've known him he was chasing the 'big conspiracy.' " Driven to pursue the Octopus, Casolaro may have come up short. His debts had apparently reached enormous proportions, perhaps as much as $235,000.

Of course to proponents of the conspiracy theory, the very plausibility of the suicide scenario is merely evidence of how cunning were the forces arrayed against Danny Casolaro. "The so-called suicide was artistic work," says Michael Riconosciuto, 42, a former CIA operative who acted as a key source for Danny on the Inslaw case and who is now awaiting trial on drug charges in Tacoma, Wash. (He insists the charges were trumped up after he came forward about Inslaw.) "We are dealing with damage control by the pros." For all the suspicions, some relatives and friends aren't willing to go that far. "If he did himself in, okay, let's move on," says O'Connell. "But if he didn't, we have to find out what happened."

BILL HEWITT
MARILYN BALAMACI in Washington, D.C., CIVIA TAMARKIN in Chicago, TOM NUGENT in Martinsburg

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