Nichols Talked of Bomb Tests, FBI Agent Says

James D. Nichols, who is being held as a material witness in connection with the Oklahoma City bombing, once told a neighbor that Timothy J. McVeigh was testing homemade bombs and that it was possible to build one large enough to destroy a federal building, an FBI agent testified Tuesday.

The FBI agent, Randal Farmer, said the conversation occurred after the neighbor visited the Nichols farm and smelled chemical fumes near a large shed.

“My brother and an old Army buddy are out making bombs.” Farmer said Nichols told the neighbor, who was not identified in the testimony. “The technology exists for a super bomb to blow up a federal building.”

The disclosure came on a day when the hopes of FBI officials were raised over the arrest of two men at a motel in southwestern Missouri--men who agents thought might have been involved in the bombing. Those hopes dwindled, however, as agents who questioned the two men, including one initially believed to be the elusive “John Doe No. 2,” apparently could not link them to the blast.

Late Tuesday night, the FBI released the men, who had been held as material witnesses in the case.

The death toll from the explosion reached 140, including 15 children. Rescue officials said 37 bodies remain in the rubble and that eight of them have been seen but cannot be reached. Officials predicted that they will retrieve all of the bodies by Friday. They began using heavy equipment to pull large chunks of concrete from the wreckage. “We’re beginning to wrap this up,” said Ray Blakeney, director of operations for the Oklahoma state medical examiner’s office.

The testimony about Nichols was presented in a hearing at which U.S. Magistrate Virginia Morgan agreed that the Michigan farmer should be held without bond pending additional investigation.

In addition to being held as a material witness in the April 19 attack, Nichols has been arrested on charges of making explosive devices with his brother, Terry L. Nichols, and McVeigh, the only person charged with direct involvement in the Oklahoma explosion.

Characterizing Farmer’s testimony, Assistant U.S. Atty. Robert Cares told Morgan: “McVeigh and the Nicholses were very close. They shared a fascination with explosives, and the Nichols farm was a testing ground. James Nichols was motivated by his hatred of the federal government. That brings us full circle to April 19.”

The arrest of the two men at the Kel-Lake Motel in Carthage, Mo., led to what may have been the most frustrating day yet for law enforcement teams investigating the explosion. Officials said the men became suspects apparently only as the result of a series of stunning coincidences.

Atty. Gen. Janet Reno told reporters at the White House within hours after the men were seized that they were being held as material witnesses, based on the belief that “they possessed information concerning the April 19, 1995, bombing in Oklahoma City.”

But by the end of the day, investigators said they had little confidence that the men, Gary Alan Land, 35, and Robert Jacks, 60, are in any way connected to the worst terrorist attack to occur in the United States.

“Looks like one of those G-D cosmic coincidences,” muttered a crestfallen source close to the investigation.

New Developments

In other developments:

* Edward Paulsen and David Paulsen, father-son gun dealers from the Midwest, were called to appear before a grand jury that was meeting well out of the public eye at Tinker Air Force Base, near Oklahoma City, as the government began to seek an indictment of McVeigh. The government wants to know whether the gun dealers supplied explosives to McVeigh, a transaction that would be illegal, a government source said.

* Investigators continued to try to determine whether McVeigh’s 21-year-old sister, Jennifer, and a friend of McVeigh’s in Kingman, Ariz., Michael Fortier, are connected to the conspiracy that officials believe involved at least four or five people. Fortier served in the Army with McVeigh and Terry Nichols. FBI agents raided Fortier’s mobile home Monday night, pulling off baseboards and carting away cardboard boxes and plastic crates. He was said to have driven off shortly before the agents arrived.

* FBI agents operated a roadblock outside Junction City, Kan., near Geary County Lake, which divers had searched earlier as they tried to determine whether the site was used to assemble the bomb used in the attack.

Agents at the roadblock wanted to find drivers who regularly visit the area, seeking anyone who had seen a large truck similar to one believed used in the bombing. They also asked about possible sightings of a dark-colored truck, but there was no immediate explanation about its possible role in the crime. FBI officials have said they believe that the bomb was assembled somewhere in central Kansas.

* President Clinton asked Congress for $142 million to pay for his anti-terrorism initiative, and to pay for such needs as the eventual demolition and replacement of the destroyed federal building, the cost of the investigation of the bombing and enhanced security measures.

“The magnitude of the tragedy in Oklahoma demands that we provide these emergency funds as quickly as possible,” the President said in a written statement.

* McVeigh’s attorneys filed a motion in U.S. District Court in Oklahoma City asking for an order barring the federal government from removing any evidence from the bomb site. They suggested that some of it could clear their client. They listed “all physical evidence” removed from the site, “including debris and even the residue left from the conducting of tests by the government’s experts.”

Federal prosecutors did not respond immediately to the motion.

Bond Hearing

The bond hearing in Michigan took place in a windowless, sparsely furnished room at the federal penitentiary in Milan, where James Nichols is being held. Nichols, dressed in prison-issue gray shirt and dark slacks, did not speak.

Farmer, reading from an FBI interview on April 24 with a Nichols neighbor who refused to be publicly identified, said the neighbor told of visiting the 500-acre farm five or six years ago. When the neighbor remarked about the smell of chemicals, James Nichols told him that his brother and “an old Army buddy” were testing bombs. Terry Nichols and McVeigh served together in the same infantry division in 1988.

Federal officials have stressed that the explosives-making charges against the Nichols brothers were not related to the Oklahoma case. But now legal sources in Milan said they expect a broader indictment of James Nichols sometime before May 12, when a preliminary hearing is scheduled to determine whether he can be held for trial on the initial charge.

Morgan said the decision to hold James Nichols without bond was “a close call” and that he did not seem to pose a danger to the community. But, she said, she based her decision to keep him in custody on “other considerations,” including the role of Terry Nichols in testing bombs with McVeigh.

Since April 20, one day after the explosion, a massive law enforcement team spearheaded by the FBI has searched across the country for the man identified as the square-jawed, dark-haired John Doe No. 2. He is believed to have accompanied a man resembling McVeigh when a 24-foot Ford truck was rented in Junction City two days before the explosion. The truck carried a volatile mixture of 4,800 pounds of ammonium nitrate and fuel oil.

But what dawned as a day of extraordinary promise, with the arrest at first light of Jacks and Land--whose 3-year-old driver’s license photograph was believed to resemble three composite sketches of John Doe No. 2--turned quickly into an awkward, perhaps embarrassing, day for the FBI that reflected the urgency of the investigation and a remarkable chain of coincidences.

For several months, it appeared at first to investigators, Land and Jacks had crossed paths with McVeigh. They lived at the El Trovatore Motel in Kingman from Nov. 3 to April 3. McVeigh lived nearby, first at the Hilltop Motel, from Feb. 11 to Feb. 17, and then at the Imperial Motel, from March 31 to April 12.

Land and Jacks headed for Oklahoma in April, checking into a motel in Vinita, about 150 miles northeast of Oklahoma City. They showed up at the Dan D Motel in Perry, 63 miles north of Oklahoma City, on April 19--the day of the bombing and of McVeigh’s arrest. McVeigh was being held in the Noble County Jail, in custody at the time on motor-vehicle and weapons charges.

Investigators figured that the two had somehow gotten word that McVeigh, who at that point was not wanted as a suspect in the bombing, was in the jail and they were getting ready to break him out.

Government sources said the travel by Land and Jacks came to light after agents combed the records of “every fleabag motel” between Oklahoma City and Kansas City, and also after some undisclosed “suspicious activity in Arizona brought them on the screen.”

But there were details that tended to rule out the two men:

Land, whom the FBI had targeted as John Doe No. 2, had no tattoo, and their suspect had been described as bearing a tattoo on his left arm.

The pair cooperated with the FBI in the investigation, consented to have their property searched and agreed to be interviewed by the agents, Reno said.

The interviews made it appear less and less likely they were involved in the bombing, said a government source.

And Land, whose 3-year-old photo may have resembled the composite sketch, now has long hair and weighs 240 pounds. John Doe No. 2 has been described as weighing 175 to 180 pounds.

Before investigators would completely rule out Land and Jacks as suspects, however, the pair were to be given polygraph tests and could be viewed by some witnesses.

The two were under surveillance during the night, after Missouri State Highway Patrol Officer Rick Baird spotted their white 1981 Ford Thunderbird, for which an all-points-bulletin had been issued, about 9:20 p.m. Monday in the parking lot of the Kel-Lake Motel.

FBI Swoops Down

During the night, more than 40 FBI agents converged on the one-story brick structure on State Highway 96, setting up a command post at the Flying W Mini-Mart across the street.

At 5:45 a.m., said Larry Walbridge, 40, the manager of the convenience store, agents knocked on the doors of six other motel rooms, rousing the occupants and sending them across the street.

Then, with weapons drawn, agents converged on Room 1, which was occupied by Land and Jacks. A U.S. flag, flown at half-staff in the national tribute to the Oklahoma City dead, was displayed outside the door. Agents called Land and Jacks on their room phone to tell them to come out.

The two men obeyed.

Jackson reported from Milan and Ostrow from Washington. Also contributing to this story were Times staff writers Richard A. Serrano, Tony Perry and Sara Fritz in Oklahoma City, Bettina Boxall in Kingman, and James Gerstenzang in Washington.