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FBI Raised Possibility of Terrorism Even as Agents Probed Fraud Lead

February 12, 1991

WASHINGTON (AP) _ The FBI raised the possibility of a terrorist connection in the attempted bombing of two Norfolk, Va., chemical storage tanks hours after agents learned that insurance fraud may have been the motivation.

The FBI said it issued its Feb. 4 statement from headquarters here without consulting with its field agents in Norfolk. Those agents were already pursuing a lead that ultimately led to Saturday’s arrests of three men on charges of conspiring to set off the bombs to collect insurance.

The FBI statement said it was entering the case ″because of a potential for a terrorist nexus.″ It was issued after an FBI spokesman in Norfolk told reporters that investigators had not yet found any evidence of a terrorist connection.

″It’s much too early to say something like that,″ FBI spokesman Tom Love had said in Norfolk.

FBI spokesmen in Washington were careful that day not to suggest there was any evidence of terrorism, but did say the bureau was entering the case because of heightened concern about the threat of Iraqi-inspired terrorism.

Tom Jones, the FBI’s chief Washington spokesman, on Monday defended the Feb. 4 statement, saying terrorism couldn’t be eliminated in the first hours of the investigation.

But Jones conceded that the statement was prepared and issued before senior headquarters officials were aware of the lead developed by Norfolk agents.

″We did not become aware of what Norfolk was doing until later that night,″ Jones said.

The FBI’s announcement, however, was criticized by Rep. Don Edwards, D- Calif., for fueling unfounded fear of terrorism.

″The FBI has a responsibility to investigate cases carefully and quietly and avoid any announcements that would alarm the public,″ said Edwards, who chairs the House Judiciary subcommittee on civil and constitutional rights.

″There is a real threat to civil liberties when the public becomes unduly fearful about terrorism. So I am sorry to see that the FBI contributed to that fear in this case,″ Edwards said.

The FBI’s lead came when an informant called the Norfolk office at 12:20 p.m., several hours after the first of two sets of bombs were discovered attached to one of the storage tanks, according to court papers.

The informant told agents that Maryland businessman Charles E. Gresham Jr. had once approached him about setting off a bomb to collect insurance on sodium hydrosulfide he stored in a leased tank at the facility.

Gresham told the informant he was having trouble selling the chemical and provided a map of the tank site, according to an FBI affidavit.

Officials of Allied Terminals Inc., which operates the tank site, then told FBI agents that Gresham owed $66,650 in unpaid rent on the tank, the court papers said. The company had planned to file suit that day to try to collect the money.

Company records also indicated that Gresham had insured the contents of the tank, according to the affidavit by FBI Special Agent Jeffrey A. Lampinski.

Jones said that despite this information, the FBI still had no basis for eliminating terrorism as a possible motive.

″Even though they had that caller coming in, without really verifying the veracity of what that person was saying, we would be kind of remiss in relying solely on that, so we had not ruled out that potential for terrorism,″ Jones said.

Because the discovery of the bombs received extensive publicity that day, ″anybody could have called in at that point,″ Jones said.

But law enforcement agencies concluded by the next day that terrorists had not attached bombs on the tanks, including one that contained highly flammable methanol, said one source who spoke on condition of anonymity.

FBI agents obtained further confirmation of their lead on Feb. 5, when they contacted a Norfolk insurance company, where officials said Gresham had recently doubled the coverage on the sodium hydrosulfide to $2.7 million, according to the Lampinski affidavit.

On Friday, the head of the federal Bureau of Alcohol, Tobacco and Firearms took the unusual step of issuing a statement saying that terrorism had been officially discounted as a motive for the attempted bombing. Stephen E. Higgins said that he issued the statement to allay unwarranted fears about terrorism.

The next day, the FBI announced the arrest of Gresham and two Arizona business associates.

Gresham, 57, of Ellicott City, Md., is charged with conspiracy to use explosives to commit wire or mail fraud along with Joseph Wayne Openshaw, 36, of St. John’s, Ariz., and Cecil Ross, 31, of Glendale, Ariz.

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