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Atty. Gen. Janet Reno said Thursday that the U.S. Justice Department was considering an investigation into the group led by white supremacist Matthew Hale, a day after FBI and police officials interviewed Hale about his ties to alleged spree killer Benjamin Smith.

Smith, 21, who authorities believe killed two people and wounded nine others in a two-state shooting spree over the holiday weekend before allegedly committing suicide, had been distributing racist literature for Hale’s World Church of the Creator, which operates from Hale’s upstairs bedroom in his East Peoria home.

But Reno said that alone was not enough to begin an investigation. “The standard is that we have got to have a reasonable indication of criminal conduct on the part of the group,” Reno said during her weekly news conference in Washington.

Justice Department guidelines prevent the FBI from investigating organizations simply because of their political views. And the consideration of an investigation into the World Church raises complex legal questions about when hate speech evolves into criminal conduct, legal experts said.

Hale, 27, who has said his group advocates non-violent and legal action, told authorities Wednesday night that he did not know Smith allegedly was plotting a shooting spree targeting blacks, Asians and Jews.

During a 30-minute interview at Hale’s home conducted in the presence of a Tribune reporter, FBI agents and police detectives repeatedly asked Hale why he did not call police when he suspected Smith might have been the shooter.

At one point, Hale threw up his hands and said, “I just didn’t do it.”

But while authorities are looking at Hale’s relationship with Smith, opening a wide-scale investigation into his group or charging a group leader is an entirely different matter, legal scholars said.

Leaders of groups who advocate the destruction, in general terms, of minorities cannot be charged if one of their members commit a hate crime, experts said. Such speech is protected under the 1st Amendment.

“You can be as offensive as you want, as repugnant as you want, and you can also counsel hatred and calls to violence in the abstract,” said Brian Levin, a professor of criminal justice at California State University in San Bernardino and director for the Center for Hate and Extremism.

But leaders cannot incite violence by advocating the commission of a specific act, the experts said. In that case, criminal charges could be warranted.

A federal law enforcement official said Thursday that investigators indeed are trying to determine whether Hale or others aided Smith or provoked him to act.

Since the shootings, Hale has sought to distance himself from Smith.

But Hale’s public statements about Smith and their relationship have been contradictory.

In an interview with the Tribune on Sunday, Hale said he had met Smith once, about eight months ago, but didn’t know him well. Hours later, he acknowledged he was well acquainted with Smith, saying the two had seen each other about one or two weeks before the shootings.

In fact, Smith had testified on Hale’s behalf before the Illinois State Bar Association as Hale unsuccessfully tried to gain admission to the bar.

On Wednesday, Hale described Smith as “a friend” during his interview with the FBI.

Hale has said Smith left the church by May, although a June church newsletter indicates Smith moved to East Peoria to be near the headquarters.

A handwritten letter purportedly written by Smith, which Hale said he received by certified mail Wednesday, has further piqued investigators’ interest, a federal source said.

The letter states that Smith had renounced his beliefs in the group’s teachings and was breaking from it. Hale maintains the letter proves Smith had left the group.

If Hale knew what Smith was planning but did not notify authorities, he could be charged under a rarely used law called “imprision of a felony,” or failing to notify authorities that a crime was imminent. Michael Fortier, an associate of Timothy McVeigh’s, was convicted of the same crime in connection with the 1995 Oklahoma City bombing.

Meanwhile, investigators are trying to establish that Smith had planned and organized the shooting rampage weeks in advance, according to a law enforcement official close to the investigation.

He had tried to buy a gun from a central Illinois gun shop as early as June 23, more than a week before the first shootings last Friday night in West Rogers Park, Skokie and Northbrook.

Smith, who was unemployed but was carrying several thousand dollars in a backpack the night he died, had access to a substantial amount of cash, perhaps from a trust fund, officials said. Investigators have determined Smith cashed some certificates of deposit or made bank withdrawals totaling about $17,500 in recent weeks, an investigator said.

Exactly how Smith used that money remains unclear, although investigators did recover receipts from Smith’s Morton apartment indicating he had spent at least $5,000 to print hate literature.

“Smith was pretty much subsidizing Hale, from what we can tell,” one Chicago-area investigator said.

Officials searching Smith’s apartment also found a loose-leaf binder of handwritings and drawings describing his philosophy of white supremacy and of a holy war among the races, an investigator said. The material included a reference to the new millennium and contained a passage about how white supremacists would shoot at non-whites from motor vehicles after its dawning, the investigator said.

Smith’s television and parts of his computer were missing when investigators searched the apartment, officials said.

Authorities found a computer Wednesday night when they searched an East Peoria storage locker rented by Hale. In addition the search turned up pallets of pamphlets, armbands and flags, law enforcement officials said.

Hale contends he saw Smith for the last time at the locker five days before the shootings began.

Meanwhile Thursday, Donald Fiessinger, 64, of Downstate Pekin, who admitted to investigators he sold two guns to Smith, was released on $10,000 bond. He still faces one count of selling firearms without a license, a felony punishable by up to 5 years in prison.

Federal prosecutors said they could find no evidence linking Fiessinger to extremist groups.

Following the shooting spree and a recent study of illegal gun use, Cook County prosecutors will now seek jail time instead of probation for most cases involving the illegal use of guns, Cook County State’s Atty. Richard Devine said Thursday.

The announcement comes after a study by Devine’s office that shows that most illegal gun arrests involve gang members, and that more than three quarters of the weapons seized from admitted gang members are from the Chicago-area’s eight largest gangs.

The results of the study, coupled with continuing violence, such as the shooting spree across Illinois and Indiana last weekend, show illegal gun use is a dangerous problem that needs new solutions, said Marcy O’Boyle, a Devine spokeswoman.

Thursday night, about 450 people turned out for a “solidarity vigil” in Indian Boundary Park at Lunt and Campbell Avenues in West Rogers Park, near the site of the first shooting last Friday. Local religious leaders and politicians, including Mayor Richard Daley and a number of aldermen, appeared.

“There’s no place in Chicago for hate,” Daley said. “. . . And where it exists, we will stand against it as a united community.”

Ephraim Wolfe, 15, who was hit in the leg during Friday’s shootings, drew thunderous applause when he talked about rising above hatred.

“No matter how many times I get shot, I am not going to hide–I am going to go outside,” he said.