The Case of the Missing License

"My best chance of clearing myself of the trouble you're trying to make for me is by bringing in the murderers -- all tied up. And my only chance of ever catching them and tying them up and bringing them in is by keeping away from you and the police, because neither one of you show any signs of knowing what in hell it's all about.... Getting this all right, son? Or am I going too fast for you?"

The stenographer looked at him with startled eyes and replied: "No, sir, I'm getting it all right."

"Good work," Spade said and turned to Bryan again. "Now if you want to go to the Board and tell them I'm obstructing justice and ask them to revoke my license, hop to it. You've tried it before and it didn't get you anything but a good laugh all around."

-- Dashiell Hammett, The Maltese Falcon

In Sam Spade's day, there were private dicks and there were bad guys, and no confusion about the two. Unless, of course, the bad guy our hero was after happened to be another dick.

Sometimes it still works that way. It takes a private eye to catch a private eye. Especially in Colorado, home to some of the profession's sharpest operators and most shameless scammers -- clued-in sleuths and clueless sleaze, all prowling the same purple mountains and golden plains.

A couple of years ago, private investigator Jane Cracraft got a call from a local law firm. The firm had a client who'd hired some shady P.I. to do a little domestic surveillance. The clown took a $750 retainer and skipped. No report, nothing. All the client had was a business card with a name, a company and a pager number. Could Cracraft find the skip and serve him with papers so the client could sue him in small-claims court?

A former Denver Post reporter with a sterling rep as a P.I., Cracraft got on the case like Pollard on Seabiscuit. The man's name was possibly bogus; it didn't turn up in public-records searches, not even on a driver's license. The company was a dead end, too: no business credit report, no state registration. "If there's anybody who's good at hiding," Cracraft says, "it would be a private investigator."

Cracraft called the pager number. The man called back. She told him she was afraid her husband was running around on her, boo-hoo. Could she hire him? The genius didn't even ask where she got his number. He was on her doorstep thirty minutes later, eager to pick up his retainer.

"He bounces up to the front door, rings the bell, introduces himself -- and I hand him the papers," Cracraft recalls. "He says, 'That was really clever.'"

Other crooked P.I.s, the smart ones, are harder to identify. A few years ago, H. Ellis Armistead received an anonymous package in the mail. Inside were copies of his home and cell-phone records, credit-card purchases -- even phone records for his brother, a real-estate broker who lives in another state.

A large man who keeps a surprisingly low profile, Armistead had worked as a cop in Lakewood and a DA's investigator before turning P.I. in 1991. He's since tackled some of the most complex criminal matters in the state, including Columbine (he was hired by attorneys representing gunman Eric Harris's parents) and several death-penalty cases, including Oklahoma City bomber Timothy McVeigh's appeal. But Armistead knew the package was about only one case: the 1996 murder of JonBenét Ramsey, which he worked for almost four years, chasing leads on behalf of John and Patsy Ramsey. Sending him his own personal data was a kind of opening gambit, one P.I.'s way of telling another I got your number.

Shortly after the package arrived, his brother received an anonymous fax, offering $50,000 for information on the Ramsey case or for dirt on Armistead. The stunt was par for the course for the Ramsey investigation. The pint-sized beauty queen's murder brought the wolves and wackos running to Boulder, hungry to scoop up the cash the tabloids were offering for inside dope on the case. Some got nailed for trespassing, theft, fraud and worse; others, like Armistead's would-be blackmailer, never got caught.

Dubious private eyes aren't quite as plentiful around here now as they were at the height of the Ramsey frenzy, but the state's reputation in the industry remains a tainted one. "There are many reliable investigators in Colorado," says Eddy McClain, president emeritus of the National Council of Investigation and Security Services (NCISS), the trade's largest professional association. "But there are also a lot of crooks in Colorado. It's a tragedy that all states don't require licensing."

Colorado is one of only seven states that don't license private investigators. Anyone -- a pizza delivery guy hooked on Shell Scott paperbacks, a meth dealer on parole, a panty-sniffer with a rich fantasy life and a pair of handcuffs -- can set up shop here and call himself an "investigator," an "operative" or, better yet, a "personal security consultant." It's a situation that frustrates many experienced P.I.s, including the leadership of the Professional Private Investigators Association of Colorado, a group that has lobbied the state legislature to correct the situation. Cracraft is a past president of the PPIAC, and Armistead is currently its chairman of the board.

"It hurts us on a national level," says Armistead of the lack of licensing. "Colorado is considered the dumping ground of the industry. There are corporations that will send investigators here from other states because they don't want the liability of working with local, unlicensed people."

It isn't often that members of a close-mouthed profession beg the government for tighter regulation, but the PPIAC has been trying to get a licensing law for the past thirty years -- ever since the old one was thrown out on a technicality. The effort has been stymied by skepticism from lawmakers and opposition from other private eyes, who can tick off a long list of reasons why bureaucratic oversight of their business is a bad idea. But the campaign to regulate the state's P.I.s received a boost in recent months from the uproar over so-called data brokers who use "pretexting" -- impersonating a customer over the phone or online in dealings with banks, utilities and other companies -- in order to obtain cell-phone records and other personal information, which are then sold. Several of the firms under scrutiny are based in Colorado, including one owned by state legislator Jim Welker of Loveland. At congressional hearings on the practice in June, Representative Diana DeGette declared that Colorado "seems to be a hotbed of pretexting" and vowed to urge state lawmakers to license P.I.s.

Yet the situation may be more complicated than DeGette realizes. Although their techniques overlap, P.I.s and data brokers are different animals, and there's little agreement within the trade concerning what kind of training and educational requirements investigators should have. The push for licensing has other dimensions, too, well beyond issues of public safety -- including the P.I.s' worries over losing access to records when more and more information is being restricted to "licensed professionals." In a world of shadowy agendas, private inquiries and sneaky-Pete subterfuge, things aren't always what they seem.

Armistead sees licensing as part of being a responsible P.I. It would, he says, provide a way to protect the most sacred aspect of the business -- the P.I.'s vow not to disclose confidential information -- and to punish those who violate a client's trust.

"Most people never have to contact a private investigator," he says. "When they do, it's usually because they're in trouble. You'd be amazed at the kind of information we come across. We learn the deepest, darkest secrets of their lives."

"In here, mister, a dick license don't mean any more than a calling card. Now let's have your statement, verbal at first. We'll take it down later. Make it complete. Let's have, say, a full account of your movements since ten P.M. last night. I mean full. This office is investigating a murder and the prime suspect is missing.... You think any goddam private eye is going to quote law at me over this, mister, you got a hell of a tough time coming your way."

-- Raymond Chandler, The Long Goodbye

For nearly a century, Colorado licensed "detective businesses" in much the same way it now licenses accountants, kickboxers, cosmetologists and plumbers. In the late 1970s the state had 214 licensed P.I.s. No one knows how many are operating here today because there's no central registry.

One business database lists 241 agencies, but there may be another hundred operating under the radar. Many P.I.s do their snooping part-time while working a day job (tuckpointing, taxidermy -- you name it), and they have no business listing in the phone book or company registered with the secretary of state. Largely because of the struggling fly-by-nights, the average annual income in the profession is reported to be less than $30,000.

Ray Pezolt, now director of operations in six states for Pinkerton Consulting and Investigations, remembers what it was like in the old days. You'd fill out some paperwork, have a quick chat with some desk jockey at the secretary of state's office, then pick up your license. Pezolt's license was #283, making him the 283rd official P.I. in the history of the state. His required bond was $5,000. "They suspended a couple of people, but I don't think they ever pulled a license," he says.

In 1977, a court case out of Colorado Springs brought the whole system down. El Paso County had challenged a local security company's right to conduct investigations without a license. The Colorado Supreme Court declared the licensing law too vague because it didn't adequately define a "detective business." Pezolt and like-minded P.I.s responded by forming the PPIAC, in an effort to introduce a tougher licensing procedure, one that would add some educational requirements.

"We made a mistake," Pezolt says now. "We decided this was our opportunity to correct a lot of things in the law. What we should have done was just fix the language and define an investigator."

A bill supported by the PPIAC made it through the Colorado House before dying on the Senate floor. Subsequent efforts in the 1980s and 1990s didn't get nearly that far. "The legislature always asks, 'Why do you want to be licensed? Show us where the public's been hurt,'" Pezolt says.

State lawmakers weren't the only ones asking that question. The PPIAC currently has 125 members, but it doesn't speak for all segments of the industry. Every time a licensing bill would surface, a vocal pack of P.I.s would show up to oppose it -- not just part-timers fretting over covering the cost of a license, but ex-cops who'd gone private. Given all their law-enforcement training, they didn't see why they should have to meet continuing-education requirements or dance to any bureaucrat's tune. Their vehemence astounded the licensing proponents -- "Just because you wore a police badge doesn't mean that you're a detective or know how to do complex investigations," Pezolt notes -- and exposed a deep divide in the business.

The PPIAC last made a serious run at the legislature four years ago. This time the group had the backing of the state sheriffs' association, chiefs of police and the criminal-defense bar, all of whom agreed that licensing P.I.s was a good idea. But they were quickly torpedoed at public hearings by a posse of retired FBI agents. Picture it: square-jawed, silver-haired ex-feds in dark suits, snoops who've been picking up government checks for years, complaining that the government wants to stick its nose in their business. Bitching about the cost. Griping that they won't have enough scratch left to feed their thoroughbreds and polish their wingtips.

"These are guys whose retirement is more than most private eyes make in an entire year," says Rick Johnson, the current PPIAC president. "There were no fewer than twenty of them, all dressed up in their coats and ties. It was a joke."

The PPIAC has another draft of a licensing bill that it's circulating now in hopes that the legislature will consider it next year. But the group expects the usual dissenters to be out in force. Armistead recalls making a presentation to a bunch of retired cops in Jefferson County; some of them seemed ready to throw their walkers at him. "I almost got lynched," he says.

But Armistead doesn't think ex-cops necessarily make the best P.I.s, anyway, because a lot of them lack people skills. "They're used to going up to people with a badge," he says, "and demanding information."

Down these mean streets a man must go who is not himself mean, who is neither tarnished nor afraid. The detective in this kind of story must be such a man. He is the hero, he is everything. He must be a complete man and a common man and yet an unusual man. He must be, to use a rather weathered phrase, a man of honor.... He must be the best man in his world and a good enough man for any world. -- Raymond Chandler, "The Simple Art of Murder"

Daril Cinquanta has a suggestion for the P.I.s who'd like to be licensed by the state: "If they want a badge, they can go order one."

Formerly one of the "Supercops," an elite Denver police undercover unit that collapsed in the late 1980s amid allegations of misconduct, tainted testimony and staged crimes, for the past sixteen years Cinquanta has made a living as a private investigator. Not having a badge or a license suits him just fine; in fact, he says, the entire P.I. business in Colorado is "running like a Swiss watch."

"There's no upside to licensing," he insists. "It puts you on the same level as attorneys. Attorneys get grieved routinely -- and wrongly. They can penalize you and put you out of business. Who's going to be on the board that oversees us -- other investigators? Why would we want to open that door? Is this competition elimination?"

When the PPIAC shows up at the legislature to argue for licensing, Cinquanta is one of the ex-cops who lines up on the other side. He says that he has lots of friends in the association but that their concerns about P.I.s victimizing clients are overblown.

"When was the last time you heard of a private investigator doing something wrong?" he asks. "We do get fly-by-nights. It's aggravating. Sometimes they give us a bad rep because they do a bad job. But as a whole, this state has some great private eyes. You got some class guys here."

The pro-licensing camp responds that horror stories rarely become public because there's no place for bilked clients to go; some hired private eyes in the first place because their problem is too sensitive to take to court or the cops. "People who've been ripped off by private investigators don't usually talk about it much," says Cracraft.

Certainly, there's no lack of yarns about wildly wayward P.I.s in Colorado (see "Farewell, My Lowlife). But states that license P.I.s have their share of bad apples, too. Even California, the fabled land of Spade and Marlowe and Archer, has its rogue agents. The current buzz in Hollywood is over the sins of Anthony Pellicano, disgraced snoop to the stars, whose nuke-the-enemy attitude has triggered a federal investigation into wiretapping, racketeering and bribery allegations that has studio execs and top lawyers trembling.

Licensing, in other words, doesn't automatically purge a profession of the ethically challenged. "The idea that licensing is going to reduce scams is ludicrous," says Ryan Ross, a former Westword writer who's been working as an investigator for the past three years. "Look at how lawyers are regulated, and how many scam artists are in the bar. If you're going to be a crook, it doesn't matter how much training you get."

The PPIAC's Johnson says that licensing would at least give scam victims a way to track down and seek redress from the crooks; it would also provide background checks that should discourage career felons from getting into the business. When he worked as an investigator for the Denver district attorney, Johnson once helped put away a bail bondsman on eighty counts of forgery; a few years later, the same man had an ad in the Denver Yellow Pages advertising his services as a P.I.

As president of the association, he adds, "I receive a lot of complaints at my office about other private investigators. Money paid, no report issued, bad advice -- that kind of thing. There are a lot of private eyes out here who are pretty clueless, and they have no idea of the harm they can do to their clients.

"I would bet that most attorneys in this state don't realize that private investigators aren't licensed. They don't know that a lot of them don't carry liability insurance. Some investigators don't want to pay for insurance or a license. But if you can't afford a licensing fee, maybe you should find another line of work."

Cinquanta contends that licensing would encourage clients to make frivolous complaints and possibly compromise the confidential nature of his work. "It will force you to do business much differently to protect your ass," he says. "It's going to cost taxpayers or the P.I.s a lot of money to do business."

The former supercop has eleven employees, all former police officers. And, although his agency has never been sued, he's always carried insurance. "I have a million dollars' liability," he says. "I'd be scared to death not to have it."

"You admit you were there? You admit that Dalling was dead."

"I was there. He was dead."

"You didn't report it to us. We had to wait until the blood soaked through the floor and made a spot on the ceiling of the apartment underneath and somebody finally got around to noticing it. That wasn't smart of you, Archer, it wasn't cooperative, it wasn't even legal. It's the kind of thing that makes for license trouble." He leaned forward across the desk, his eyes jumping like blue Bunsen flames, and tossed me a change-of-pace: "Of course license trouble is the least of your worries."

-- Ross Macdonald, The Way Some People Die

The Colorado Department of Regulatory Agencies is currently conducting what's known as a "sunrise review" of the PPIAC's licensing proposal to determine whether to recommend legislation. The primary consideration is whether allowing investigators to operate unlicensed endangers the public, says Bruce Harrelson, director of DORA's office of policy research and regulatory reform. Harrelson expects to make a report to the General Assembly this fall.

Public safety may be DORA's chief concern, but the advocates of licensing have other agendas, too. "I operated for twenty years without a license," Pezolt says. "Now, there's probably more need for it. But we're not protecting the public. The biggest reason we wanted it is to control the competition. You want to make sure the guys you're working with have gone through the same vetting process you have, that they're not convicted felons."

There are plenty of practical reasons some P.I.s want to be licensed. Insurance would probably be cheaper for licensed P.I.s who are required to have thousands of hours of investigative experience and to keep current on changes in technology and law. Discouraging amateurs, who don't have the required experience or the moxie to get it through an apprenticeship with a licensed P.I., would be another bonus. And there's the issue of reciprocity -- numerous law-enforcement, corrections and other agencies in other states won't deal with P.I.s who aren't licensed. Colorado investigators often obtain a license in Kansas, New Mexico or Arizona if they expect to be operating out of state.

"I once had a sheriff in Nebraska ask for a copy of my P.I. license," Pezolt recalls. "When I told him I didn't have one, he said, 'I wouldn't let the sun set on you in this town tonight.'"

The most pressing issue, though, is access to credit reports and consumer databases compiled by companies such as ChoicePoint -- all those Social Security numbers, dates of birth, last known addresses and other goodies that are the essential tools of the trade for a gumshoe in the computer age. Pending federal legislation could restrict data companies from peddling such information to anyone except for a narrow range of banks and finance companies, law-enforcement agents, attorneys and other credentialed professionals. Without licenses, a lot of Colorado P.I.s could be shut out of the data harvest entirely.

"Some private eyes don't understand that information you can access today, you may not be able to access tomorrow, so you may not be in business," Johnson says. "If the feds don't do it, the data companies will."

Several data vendors have already taken steps on their own to restrict access, truncating Social Security numbers and beefing up internal security in an effort to ward off identity thieves. Earlier this year, ChoicePoint paid $10 million in penalties to the FTC after admitting that personal financial records of 163,000 consumers had been compromised because of lax security measures; the company also agreed to "ensure that consumer reports are provided only to those with a permissible purpose."

The increasing obstacles to getting data alarms P.I.s on all sides of the licensing issue. "The country runs off dates of birth and Social Security numbers," says Cinquanta. "Most of what you get now is worthless. They're crippling us with all this bullshit. You know who wins when they do that? The bad guys: deadbeats, criminals, con men."

Investigators use the data services on a variety of legit jobs, from tracking assets in a divorce case to locating witnesses in a personal-injury lawsuit or a criminal defense. Sometimes the information is used to find identity thieves or uncover employee fraud, cases that the police might decline to pursue unless the evidence is handed to them in a gift-wrapped package.

"The nightly news and Hollywood constantly portray our profession as a bunch of crooks," sighs Eddy McClain of NCISS. "Legislators watch television, too, and they begin to believe that stuff. They think private eyes are out there doing domestic work, spying on spouses. That's such a small part of what we do. We work for corporations. Insurance companies. If you shut down what we do, it would have a tremendous effect on commerce -- not to mention the civil and criminal-justice systems."

Yet the same data the P.I.s use to keep commerce humming can, in the wrong hands, drain bank accounts, supply stalkers with their victims' vitals and ruin lives. The current pressure to restrict access through legislation stems partly from the data companies' own security lapses and partly from the ingenuity of the pretexters employed by data brokers -- several of whom operate openly in Colorado. At congressional hearings in late June, lawmakers got a primary education in how easy it is to hoodwink the guardians of such personal data as credit-card numbers and cell-phone records. Their instructor was none other than James Rapp, the ex-P.I. whose prosecution for interfering with the Ramsey case marked one of the first successful investigations of the pretexting business.

Rapp told DeGette and other committee members that he'd learned a little bit about finding people while in prison in Cañon City on a probation violation in the early 1980s. As a favor to other inmates, he'd contact utility and phone companies and trick them into divulging the whereabouts of the cons' ex-girlfriends or family members. After he got out, he and his wife launched a lively business tracking down deadbeats and their assets on behalf of creditors.

Over time, Rapp's client list swelled. Tabloids, attorneys, P.I.s, even the occasional federal or local police officer -- they all wanted information, and they weren't too choosy about where it came from. For his part, Rapp wasn't always clear on who was obtaining the data or for what purpose.

"We had, at one point, over 1,500 clients that were private investigators throughout the country," he testified, "and they would bombard us, literally, with ten to twenty cases a day...so we didn't have time to look into each and every aspect."

Rapp used the Internet very little in his work, afraid of leaving a trail that could lead back to him. His specialty was calling up customer service at a phone company, a bank -- anyone that might have the target's address, credit-card records or other data on file. He'd convince them he was the customer, and he needed his password or his latest bill right now, and this is his Social Security number...no? You have a different one? Well, which one do you have? Oh, you've got it confused with my father.... Armed with the info he'd tricked out of one customer-service rep, Rapp was ready to move on to another and another, until he had all the data he needed.

"It's just playing the game," Rapp explained. "When you've convinced them that they're wrong, they want to prove to you that they're right."

The lawmakers were aghast. They never dreamed it was so easy for a fluent liar like Rapp to get past the human firewalls that guard personal data. At one point Rapp unwittingly tracked down addresses and phone numbers of an undercover Los Angeles police squad for one of his shadowy clients; the information was used by mobsters to identify informants and threaten detectives, one of whom was later killed. "That's the kind of thing that gives my former industry a tremendously bad name," he told the committee.

Rapp told the committee that he's been out of the business since 1999; that same year, Congress passed a law making it illegal to use pretexting to obtain financial data. But Rapp's legacy lives on in Colorado. He told the Rocky Mountain News that in the 1990s he used traplines provided by one of Jim Welker's companies to identify the owners of pager numbers. Welker has been under fire for offering consumer cell-phone records for sale; this spring, he decided not to make another run for his seat as a state representative. Welker's company has also done business with companies in Frederick, Colorado, operated by John Strange, the data broker who sold Governor Mitt Romney's credit-card numbers to the Boston Globe. Strange has been sued by the Texas attorney general over the marketing of cell-phone records.

When summoned on June 22 to testify before Congress about data security, both Welker and Strange took the Fifth. Welker didn't respond to an interview request, but he has said that he no longer offers cell-phone records for sale. Strange and his attorney say he's now out of the data-broker business entirely, except for a court-document retrieval service. Worldwide Investigations, Strange's Denver private-eye agency, is also defunct.

Privately, other data brokers say that many of the services are merely retailing information obtained from other sources. Some refuse to deal with private investigators; others will sell to anyone. Few seemed convinced that the proposed legislative crackdown will make it through a Republican Congress. "There's too many large financial companies that want this information available," says one.

"Then I'm just another citizen again?"

"That's right, with no license and no gun. Nor will you ever have one again."

"Are you booking me for anything?"

"I can't very well. I wish I could."

He must have read what was coming in the lopsided grin I gave him because he got red from his collar up. "For a D.A. you're a pain in the behind," I said. "If it wasn't for me the papers would have run you in the comic section long ago."

"That will be enough, Mr. Hammer!"

-- Mickey Spillane, Vengeance Is Mine!

Public outrage over pretexting has prompted numerous efforts to expand existing laws against criminal impersonation. Most of the proposed laws would make it a crime to pretend to be someone else to obtain a wide range of personal information. The movement could have far-reaching implications, not only for private investigators, but for journalists and other sometimes-covert information-gatherers. One such bill in California is opposed by groups representing the recording and movie industries, which say they need to be able to conduct undercover operations to thwart music and video piracy.

"It is totally necessary to use subterfuge on many investigations," says the NCISS's McClain. "You can't just go up to a crook and tell him you're a private investigator and ask what he's doing. I'd say 95 percent of the work we do is covert. You don't reveal who you are."

Local investigator Ryan Ross says he's more likely to use "non-texting" -- simply not identifying himself as a private investigator -- than outright deception. He adds that many aspects of the work require pretexts that don't involve extracting financial data or Social Security numbers; for example, allowing an employer to think you're a bureaucrat calling to update some records when you're really trying to confirm whether a certain person works there.

"It's not illegal," he notes. "Private investigators don't, as a rule, represent themselves as law enforcement. But if you say you're a private investigator, a citizen might hang up on you."

Like many of his colleagues, Ross sees the outrage over leaked cell-phone records as misplaced. "The problem is with the Verizons and the T-Mobiles of the world, who won't take the steps they need to protect their customers," he says. "They don't train their people adequately to protect their own data."

And private sleuths are hardly the only threat to the security of corporate America's data warehouses. Even super-pretexters such as Rapp are mere pikers compared to the snoops in the Bush administration. Last month, while lawmakers in Washington lamented the loss of personal privacy at the hands of a few money-hungry data brokers, a judge in San Francisco ruled that a privacy group's lawsuit could proceed against AT&T for allegedly supplying customer phone records and e-mails to the National Security Agency. The domestic surveillance program reportedly encompasses several major telecoms -- AT&T, Verizon, BellSouth -- and hundreds of millions of phone records.

When it comes to rifling through the love letters, phone bills and electronic garbage of American citizens in search of the great maguffin, nobody beats Uncle Sam. Nobody.

The contempt was still strong in her voice. "You don't care how you get results, do you? Blackmail, threats -- the works. Just so you can earn your stinking whatever-it-amounts-to a day."

"I do my job," I said, my voice dull in my ears. "Make up your mind, Mrs. O'Flynn. Do I get what I want from you the easy way or do I have to use the cops as a club? You've done a lot of slick yammering about ratting on friends. I say at least one of your friends is a killer and needs to be ratted on. Which is it going to be, you or her?"

-- Howard Browne, Halo in Brass

Rick Johnson envisions a day when every private investigator who walks the mean streets of Denver, Dacono or Durango does so with a state-issued license in his pocket. Ideally, the licensed P.I. will have a rudimentary understanding of trespassing and privacy law and proper surveillance techniques; enough training and experience not to hand over the address of a battered women's shelter to an angry ex-boyfriend; and a proper reverence for the confidential nature of the trade.

The public will be better off that day, he says, and so will his profession. He figures the entire system will be a bargain once it's up and running.

"It will be largely self-regulating," he says. "A lot of private eyes will rat off other private eyes who aren't licensed. I guarantee it."

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Alan Prendergast has been writing for Westword for over thirty years. He teaches journalism at Colorado College; his stories about the justice system, historic crimes, high-security prisons and death by misadventure have won numerous awards and appeared in a wide range of magazines and anthologies.
Contact: Alan Prendergast