Figure in Bombing Case Ordered Freed : Court: Judge says there is little evidence to connect James D. Nichols to Oklahoma blast. He is released with restrictions.

In a setback for the prosecution, a federal judge Monday ordered the release of James D. Nichols, who was being held as a possible witness in the Oklahoma City bombing investigation.

Nichols, under indictment on grounds that he conspired to make explosives on his Michigan farm with two others accused in the bombing, was freed on his personal recognizance after being jailed for a month.

In freeing the 41-year-old Nichols, U.S. District Judge Paul D. Borman said that he found scant evidence of any connection with the Oklahoma case except for the alleged involvement of Nichols’ younger brother, Terry L. Nichols, and their friend, Timothy J. McVeigh.

Borman, assessing the case against James Nichols, found “not one iota of evidence of dangerous acts toward others.” At the same time, he restricted Nichols’ travel and required him to wear an electronic monitoring device.

Before the Detroit hearing, a source close to the investigation contended that freeing Nichols would remove pressure investigators had hoped would lead to his cooperating with prosecutors. This source expressed the strong belief that Nichols had “guilty knowledge” about the worst terrorist act committed on U.S. soil.

This source said the government was prepared immediately to appeal a ruling to set Nichols free. But the judge’s sharp criticism of the government’s arguments for holding him appeared to leave little hope an appeal would succeed.

Nichols’ release climaxed an all-day hearing in the federal courthouse as U.S. investigators sought to keep Nichols in custody by linking him to a philosophy they said espoused violence against police, judges and lawyers and believed the government would be overthrown.

They said informants had told the FBI that Nichols was tied to a group known as the Patriots. Weeks ago, the FBI said he also had attended meetings of the Michigan Militia.

In testimony Monday, FBI special agent Patrick Wease told Borman that a confidential informant reported Nichols and the Patriots once considered killing “cops, judges and lawyers.” The informant reported that Nichols believed “once they got enough people, they would take over the government by force.”

Another person, said Wease, related that he had learned last year that Nichols was making and storing grenades and grenade launchers and was stockpiling ammunition for the Patriots.

The court testimony was intended to shore up an indictment of Nichols earlier this month charging that he had conspired along with his brother and McVeigh to manufacture and test explosive devices on his 200-acre farm near Decker, Mich. The charges were not explicitly connected to the Oklahoma bombing.

However, Assistant U.S. Atty. Robert P. Cares, referring to FBI information about the Patriots, told Borman he saw a clear connection to the bombing of the Oklahoma City federal building on April 19, which claimed at least 167 lives.

“If it was just rhetoric, we wouldn’t be here today,” Cares said. “But he and Terry Nichols and Tim McVeigh turned those words into action.”

Robert Elsey, Nichols’ lawyer, objected to the remarks and Borman sustained the objection. Borman said: “I don’t see a connection [to Oklahoma City], no evidence other than friendship.”

The judge rejected Cares’ speculation that “the next step” in this rhetoric was the Oklahoma tragedy.

Meanwhile, the demolition of the remaining wreckage of that building, scheduled for early this morning, will take more explosives than previously expected, according to authorities there.

Jim Santoro, project manager for Controlled Demolition Inc., said earlier estimates that the building could be brought down with about 100 pounds of strategically placed dynamite had been revised upward. Officials had not estimated the effect of shoring material placed there by rescue crews, Santoro said.

With the additional dynamite, the nine-story structure should come down in eight seconds, he said. The building is scheduled to be demolished between 5 a.m. and 5:15 a.m. PDT.

At the court hearing, friends and neighbors of Nichols testified to his good standing in his community. All said they had never heard of an organization called the Patriots.

Dick Ralston, a retiree who co-founded the Michigan branch of the Patriots, told The Times that sign-up sheets indicated Nichols had attended a February session in Mt. Pleasant, about a two-hour drive from Decker.

Chuck Kupferer, a retired U.S. marshal’s investigator who tracks right-wing groups, said in an interview that the Patriots sometimes called themselves the Christian Patriots and were “more militant than a lot of the survivalist groups.”

“They see themselves as being akin to the American Revolution, and that’s what’s dangerous,” Kupferer said.

In another development, the Justice Department announced that the team of prosecutors on the Oklahoma City bombing case will be headed by Joseph Hartzler, a 14-year veteran of federal prosecutions as an assistant U.S. attorney in both the Springfield, Ill., and the Chicago districts.

Hartzler, 44, will replace Merrick Garland, 42, who will return to his position as senior adviser and chief of staff to Deputy U.S. Atty. Gen. Jamie S. Gorelick. Garland will also continue to oversee the department’s “national response” to the bombing, the announcement said.

U.S. Atty. Gen. Janet Reno is expected to recommend that Garland be named by President Clinton to head the department’s criminal division, one of the most important jobs in the 93,000-employee department.

He was honored by Clinton in a White House ceremony Friday as 1995 National Multiple Sclerosis Father of the Year. Garland was diagnosed with MS six years ago.

The senior prosecutor from the Oklahoma City U.S. attorney’s office, already on the team, is Assistant U.S. Atty. Arlene Joplin, who has 17 years of experience as a federal and state prosecutor.

Times staff writers Ronald J. Ostrow in Washington and Judy Pasternak and Stephen Braun in Chicago contributed to this story.