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  Blandón’s source for this equipment was a man named Ronald J. Lister. Lister, who figures prominently in the story, was a former Laguna Beach police detective who at that time was running two security firms – Mundy Security and Pyramid International Security Consultants. Blandón testified at Rick Ross’s trial in March 1996 that Lister would attend meetings of Contra supporters in Southern California to demonstrate his arsenal. Lister had worked as an informant for the DEA and FBI, and boasted of his ties to the CIA during the 1980s, when the Reagan administration was waging war in Central America.

  Business was indeed booming. In 1981 Meneses had, according to Blandón’s reading of his account books, been moving 900 kilos a year. Two years later the numbers had surged to around 5,000 kilos a year – and the latter figure represents just the amount Blandón’s LA operation was handling. Ross was a brilliant businessman. His greatest coup was to recognize the potential in recent technological innovations for the mass marketing of cocaine. Ross didn’t invent the process whereby powder cocaine was converted into the “rocks” of crack that could be sold at affordable street prices; crack had first appeared in poor city neighborhoods on the West Coast in 1979. But Ross was the first to take full advantage. Crack could be bought for $4 to $5 a hit. It gave an intense, although brief, high, and was highly addictive. Consequently, as the furious black reaction to the Webb series tells us, crack engendered social disaster in neighborhoods such as South Central. Families were ravaged by addiction. Addicts stole and robbed to buy the next hit. Gangs fought bloody battles for control of turf. The plague elicited a savage response from the state. Prison sentences were a hundred times more severe for crack-related offenses than for powder cocaine.

  By 1985, Ross and his affiliates in the street gangs had begun exporting their crack operation to what the DEA reckoned to be at least a dozen other cities. Obviously, the sums accruing to Danilo Blandón in the drug trade were enormous, and he testified at Ross’s trial that “whatever we were running in LA, the profit was going to the Contra revolution.” Duane “Dewey” Clarridge, the CIA officer in charge of covert operations in Latin America, has denied, both in the press and in his memoir, allegations that the CIA would have sanctioned or turned a blind eye to Contra drug shipments for funding reasons. The CIA’s Contra operation, said Clarridge, “was funded by the US government. There was enough money to fund the operation. We didn’t need, and neither did the Contras need the money from anybody else.”

  But from the beginning, Clarridge’s plans for the Contras were much more ambitious than the initial scheme of the Reagan administration, which was to use them as part of an effort to seal off Nicaragua and try to stop it from aiding guerrilla struggles in neighboring countries. Clarridge wanted a covert war. In the summer of 1981, a week after becoming head of the CIA’s Latin American operations, he took his recommendations to CIA chief William Casey: “My plan was simple. 1. Take the war to Nicaragua. 2. Start killing Cubans.” This quickly evolved into a far-ranging program of assassinations, industrial sabotage and incursions into Nicaraguan territory from bases in Honduras and Costa Rica.

  The problem for Clarridge and for the CIA was that the US Congress tended to be dubious of such large plans, which were not politically popular. The initial appropriation was meager, amounting to only $19 million in 1982 for the CIA’s covert operations against Nicaragua. In the spring of 1982 such covert costs soared when the Argentinians who had been supervising day-to-day military training for the fledgling Contra force in Honduras pulled out at the onset of the Falklands/Malvinas War. Later that year, Congress moved to restrict CIA aid for the Contras. At the last second Rep. Edward Boland of Massachusetts introduced an amendment to the Defense Appropriations Bill for fiscal 1983, prohibiting the CIA from spending any money “for the purpose of overthrowing the government of Nicaragua.” The Agency was given only $21 million outside Boland’s restrictions for activities related to the Contras.

  In December 1983 Congress capped Contra funding for fiscal 1984 at only $24 million, which was roughly a quarter of what the Reagan administration had claimed was necessary for a proper fighting force. The shortfall was what drove Robert McFarlane and Oliver North to hunt for alternative sources of funding – for example, asking the Saudis for $1 million a month. Clarridge went on a similar mission to South Africa. North was in the process of setting up covert bank accounts in mid-1984.

  In April 1984, it emerged that the CIA had undertaken the mining of Nicaraguan harbors. The political uproar in the US resulted in the most restrictive of the Boland amendments, passed by Congress in October 1984. During fiscal 1985, the amendment read, “no funds available to the Central Intelligence Agency, the Department of Defense, or any other agency or entity of the United States involved in intelligence activities may be obligated or expended for the purpose or which have the effect of supporting, directly or indirectly, military or paramilitary operations in Nicaragua by any nation, group, organization, movement, or individual.” The year 1985 also marked the peak of the Meneses-Blandón drug sales, at the time of the CIA’s greatest need for money for its Contra army. The Boland amendment expired on October 17, 1986, and immediately the portion of the CIA budget allocated for the Contras rose to $100 million.

  During this stressful period of desperate Contra need for cash, when Reagan secretly decreed to National Security Adviser McFarlane that whatever Congress might stipulate, the Contras had to be kept together “body and soul,” the drug operation run by Contra supporters Meneses and Blandón led a charmed life, without any disruption of its activities by law enforcement. Indeed, several law enforcement officers have complained publicly that actions targeted against Meneses were blocked by NSC officers in the Reagan administration and by the CIA.

  Only a few weeks after the Blandón-Meneses partnership was launched in the summer of 1981, a young DEA agent in San Francisco named Susan Smith began an investigation of Norwin Meneses. Smith had picked up rumors on the street that a group of Nicaraguan exiles headed by Meneses was selling cocaine in the Bay Area and sending money and weapons back to Central America. She checked the DEA files on Meneses and found a bulging record of the man’s criminal activities, dating back to a 1978 FBI report charging that Norwin and his brother Ernest were “smuggling 20 kilos of cocaine at a time into the United States.” One of the entry points for Meneses’s cocaine was apparently New Orleans, where Smith came across records from the DEA’s “Operation Alligator.” This government sting had busted a large cocaine ring in New Orleans. One of the arrested men, Manuel Porro, told DEA agent Bill Cunningham that Meneses was the source of the cocaine. However, Meneses was never arrested.

  A few months later, Smith discovered, the San Francisco DEA office received a tip that Meneses was also the supplier for cocaine seized in a major bust in Tampa, Florida in February 1980. The cocaine had apparently been flown to Tampa from Meneses’s ranch in Costa Rica, to be distributed by Meneses’s relatives. Smith also learned that, beginning in early June 1981, Detective Joseph Lee of the Baldwin Park Police Department in Los Angeles had been investigating a Nicaraguan dealer named Julio Bermúdez, who was making two trips a month to San Francisco, where he would pick up 20 pounds of cocaine at a time from Meneses’s warehouses.

  Smith mustered this information into an affidavit for a search warrant, dated November 16, 1981, and began trailing Meneses and his dealers. On one occasion, Smith followed Meneses’s men to a house in Daly City, just south of San Francisco, which was owned by Carlos Cabezas, a Nicaraguan lawyer and accountant who had served as a pilot in Somoza’s National Guard. Cabezas was a leading figure in the anti-Sandinista movement in California.

  Then Smith’s superiors abruptly terminated her investigation and she was reassigned to cover drug dealing by motorcycle gangs in Oakland. Despite her huge file on Meneses, Smith told Webb, DEA managers evinced no interest. Smith quit the DEA in 1984, asking her superiors if they wanted her extensive files on the Meneses drug ring. They declined, and the files wer
e shredded.

  What’s more than a little curious about the DEA’s lack of interest in Meneses in 1984 is that in February 1983 the FBI had scored one of the largest cocaine seizures in California history, in the so-called Frogman case. Members of the Meneses drug syndicate had been caught attempting to swim ashore at the San Francisco docks from a Colombian freighter, the Ciudad de Cuta, with 400 pounds of cocaine. According to the DEA, the drugs had a street value at that time of more than $100 million. Ultimately, thirty-five people were arrested in the Frogman case, including Julio Zavala and the man whose house Susan Smith had staked out, Carlos Cabezas. The Frogman trial was going on at the very moment the DEA was telling Susan Smith that information about Cabezas and Meneses held no interest for it.

  But then again, the Frogman case was not exactly your run-of-the-mill drug trial. On November 28, 1984, Cabezas testified in that trial that this cocaine-smuggling operation was a funding source for the Contras. Furthermore, he testified that the cocaine he brought into the US came from Norwin Meneses’s ranch in Costa Rica. His testimony at the trial was limited, because the judge would not allow the defense to explore the CIA’s role in any detail. In a subsequent interview recorded for a British TV documentary, Cabezas said that the CIA was aware of, and in fact had supervised, a crucial phase of his drug-trafficking operation. “It wasn’t until the second trip that I had to go to Costa Rica,” Cabezas said, “when I met this guy [Ivan Gomez] that’s supposed to be the CIA agent. They told me who he was and the reason he was there, it was to make sure that the money was given to the right people and nobody was taking advantage of the situation and nobody was taking profits that they were not supposed to. And that was it. He was making sure that the money goes to the Contra revolution.”

  Concerns that the drug money might have been diverted to the bank accounts of Contra leaders were not without foundation. Two of Cabezas’ colleagues in this Costa Rica/San Francisco cocaine enterprise were Troilo and Ferdinand Sánchez, close relatives of Contra leader Aristides Sánchez. Sánchez was a member of the FDN’s directorate. He and his relatives maintained an offshore bank account in the Dutch Antilles, which Oliver North’s aide Robert Owen suspected was being refreshed with cash intended for the Contra effort. Owen wrote a memo to North that he believed that “the CIA is being had.” North took no action. Clearly, Reagan’s National Security staff knew well that drug money from the Meneses syndicate was supposed to go, with CIA approval, to the Contra war effort, and they were chagrined that the money might have been diverted from that mission.

  One of the other leaders of the Frogman operation was Julio Zavala, a brother-in-law of Cabezas. After his arrest, FBI agents seized $36,800 in cash from Zavala, which the government considered to be drug money and therefore subject to seizure. Zavala claimed that the money was cash meant to buy weapons for the Contras. His attorney, Judd Iverson, submitted letters to the court from two Contra leaders backing up Zavala’s story. US District Attorney Joseph P. Russoniello, who had also been urged by the CIA to return the money, stipulated in a court filing on October 2, 1984 that the money would be given back. In 1987 this deal came to the attention of Jack Blum, investigator for Senator John Kerry’s committee probing the stories of Contra drug running. Blum and Kerry called Russoniello to ask about the case. “We had a telephone conversation with Mr. Russoniello,” Blum recalled during his testimony before the Senate Intelligence Committee on October 23, 1996, “and he shouted at us. He shouted at Senator John Kerry, who chaired the committee. He accused us of being subversives for wanting to get into it.”

  So Zavala got his money back, though he did spend some time in prison. Norwin Meneses, the kingpin of the operation, was never indicted or arrested for his part in the Frogman case. Witnesses testified before Kerry’s committee in 1988 that Meneses had been tipped off about the planned arrest “by his sources in US law enforcement.” Another witness said he believed that Meneses was working “as an FBI informant” at the time of the arrest.

  In fact, the US government did not indict Norwin Meneses until 1989, after the end of the Contra war, and the indictment was for conspiracy to sell precisely 1 kilo of cocaine in 1984. By then Meneses, sensing his veil of protection might have worn thin, had left San Francisco for his ranch in Costa Rica. No attempt was made to secure Meneses’s arrest or to persuade the Costa Rican government to extradite him. The indictment wasn’t made public and was kept under seal in San Francisco at the request of the federal government. Interestingly enough, 1984 – the year for which the US government chose to charge Meneses with dealing in cocaine – was the very year in which he had been most conspicuous as a big figure in the Nicaraguan émigré movement supporting the Contras. During that year Meneses had been entertaining Contra leaders, hosting Contra fundraising dinners and having his photograph taken with Adolfo Calero.

  Webb uncovered evidence that even Contra supporters in San Francisco were uncomfortable about the source of Meneses’s disbursements in the Contra cause. The Mercury News series included an interview with, Dennis Ainsworth, a former Cal State/Hayward economics professor who was a well-connected Reagan Republican and active in the Contra cause. In 1985 he was told by Renato Peña, an FDN leader in San Francisco, “that the FDN is involved in drug smuggling with the aid of Norwin Meneses who also buys arms for Enrique Bermúdez, a leader of the FDN.” Ainsworth finally told his friends in the Reagan administration about Meneses, and asked what they knew about the Nicaraguan. He was told that the DEA had a drug file on Meneses “two feet thick.” Ainsworth gave a detailed interview to the FBI on February 27, 1987, a severely edited version of which had recently been declassified by the US National Archives. In this interview, Ainsworth not only backed the contention that Meneses was using drug profits to buy weapons for the Contras, but also gave details of how US Customs and DEA agents trying to investigate Meneses “felt threatened and intimidated by National Security interference in legitimate narcotics smuggling investigations.”

  Norwin Meneses was finally arrested in 1990, when Nicaraguan authorities caught him trying to transport 750 kilos of cocaine. Reporters in Managua soon unearthed the sealed San Francisco indictment. The Nicaraguan police and the Nicaraguan judge presiding over Meneses’s trial expressed outrage that the United States had known about the drug lord’s activities for fifteen years, but had never arrested him. “We always felt there was an unanswered question,” recalled René Vita, a former narcotics investigator, to the British TV documentary crew. “How was it that this man, who was known to be involved in drug-related activities, moved so freely around Central America, the US and Mexico?”

  Meneses had been turned in to the Nicaraguan police by his long-time associate Enrique Miranda, a former intelligence officer in Somoza’s National Guard, who had been Meneses’s link to the Bogotà cocaine cartel in Colombia. Miranda testified that from 1981 through 1985 Meneses transported his cocaine out of Colombia through the services of Marcos Aguado, a Nicaraguan who had become a senior officer in the Salvadoran air force. Aguado was a contract pilot for the US “humanitarian aid” flights to the Contras, based at Ilopango airbase in San Salvador. The overseer for such operations at this airport was a career CIA officer, Félix Rodríguez. Miranda testified that Aguado flew Salvadoran air force planes to Colombia to pick up cocaine shipments and delivered them to US Air Force bases in Texas. On the basis of Miranda’s testimony, Norwin Meneses was sentenced by the Nicaraguan court to thirty years in prison.

  Danilo Blandón enjoyed good fortune as far as any intrusion by law enforcement into his affairs was concerned. All the way through the first half of the 1980s, the prime wholesaler of cocaine to Los Angeles was not once raided or inconvenienced in any way by any authorities. The Boland amendment barring aid to the Contras was lifted on October 17, 1986. On October 27, 1986, warrants were issued by the FBI, IRS and Los Angeles County Sheriff’s office for the arrest of Blandón and his wife. The arrest warrants from the LA Sheriff’s office included an affidavit from Sergeant
Tom Gordon, charging that “Danilo Blandón is in charge of a sophisticated cocaine smuggling and distribution organization operating in southern California. The moneys gained from the sales of cocaine are transported to Florida and laundered through Orlando Murillo who is a high-ranking officer of a chain of banks in Florida named Government Securities Corporation. From this bank the moneys are filtered to the Contra rebels to buy arms in the war in Nicaragua.” Orlando Murillo was a cousin of Blandón’s wife, Chepita. Police raided twelve warehouses suspected of being used by Blandón. No drugs were found. The police were convinced that Blandón had received a tip-off about the impending raids and had cleaned up.

  One of the targets in those early morning raids on October 27 was the Mission Viejo home of Ronald Lister, the former Laguna Beach police detective who had been the arms supplier to the Blandón ring. Lister opened the door wearing his bathrobe, and sheriff’s deputies flooded in. Lister became belligerent and told the deputies they were “making a big mistake.” He informed the police that he didn’t deal drugs, but that he did do a lot of business in Latin America for the US government, and that his friends in the government weren’t going to be happy about the deputies ransacking his house.

  Then Lister picked up the phone and said he was calling his friend “Scott Weekly of the CIA.” The cops continued in the search, and though they found no cocaine, they did turn up an amazing cache of weapons, military manuals and training videotapes. Even though Lister escaped arrest, the police seized boxes of military material. Again, the police were convinced that someone had tipped Lister to the impending raid. These suspicions magnified when, less than a week later, all of the evidence carted from Lister’s house mysteriously disappeared from the Sheriff’s Department’s property room.

  The Lister investigation went nowhere for ten years. Then Gary Webb came across Lister’s name and details of his ties to Blandón and Rick Ross. Webb asked the LA Sheriff’s office for information on their raid of Lister’s house. The Sheriff’s Department denied there had ever been any such raid, and also denied that the department had been involved in the 1986 investigation into the Blandón drug ring. The documents regarding the raid on Lister’s house surfaced only after Rep. Maxine Waters paid a surprise visit to the LA Sheriff’s office in September 1996, in the aftermath of the Webb series. The Sheriff’s Department handed over to Waters a partial inventory of what had been seized from Lister’s house. It included films of military operations in Central America, technical manuals, information on assorted military hardware and communications, and numerous documents indicating that drug money was being used to buy military equipment for US-backed troops in Central America. There were also pictures of Lister with the Contras in El Salvador, featuring equipment and military bases, and the names and addresses of CIA officers and CIA contractors in Central America.