The fact is, we violate laws every day. In addition to actual violations, we do many more things that look suspicious and can be construed as potential violations. The government doesn't have to convict you in order to radically lower your quality of life. It merely has to investigate you.
For example, I knew a person that protested against the RNC convention in 2008. Though they were protesting peacefully, their group was broken up and arrested by the FBI. For the next two years, their case was bounced down from federal court to state courts, and then from state courts to county courts. Two and a half years later, the case was dismissed without any explanation or apology. However, while the case was ongoing, this person was unable to get a job, unable to get housing, unable to do anything that would require a background check or a credit check.
Was this person involved in major criminal or subversive activity? I don't see how she could have been, given that all charges were dropped. However, the actions taken against her can only be described as harassment.
You've polled every single federal and state employee, as well as various contractors?
Federal law enforcement only cares about petty crimes when they can lead to stopping major crimes. If they think you have information they want, they'll hold the maximum penalty for anything you do over your head until they get it. But they have no reason to harass someone who isn't involved in major criminal or subversive activity.
Being on a watch list sucks and it's going to cause this guy inconvenience for life, for whatever he does. But federal agents tend to be intelligent and driven people. They aren't any more likely to waste time harassing a stranger than you are.