Dark Alliance...The CIA,The Contra's and The Crack Cocaine Explosion
By Gary Webb
10
By Gary Webb
10
"Teach a man a craft and
he's liable to
practice it"
The potential exposure of Norwin Meneses couldn't have
come at a more inopportune time for the Contras, or the
CIA.
During the winter of 1984–85, the Contra forces were at
their lowest ebb, both on the battlefield and in the battle for
U.S. public opinion. For twelve months the Contras had
staggered from one public relations disaster to another.
There had been a major uproar in Congress in the spring of
1984, when it was revealed that the CIA cowboys running
the Contra project had seeded Nicaraguan harbors with
hundreds of small mines, which proceeded to
indiscriminately blow holes in merchant ships from all over
the world, including those from friendly nations. Shortly after
that, a bomb went off at ARDE commander Eden Pastora jungle headquarters during a press conference, wounding
Pastora, killing or injuring a score of ARDE officials and
journalists, and throwing the Contra armies in Costa Rica
into turmoil.
Later in the year, in the midst of Reagan's reelection
campaign, an illustrated terrorism manual the CIA printed
up for the boys in the field ended up in the newspapers,
creating yet another public outcry and much congressional
breast-beating.
The hardest blow came in October 1984. With the
administration off balance and desperately hoping to avoid
any more CIA-Contra controversies before the elections,
the Democrat-controlled Congress succeeded in passing
yet another Boland Amendment. Unlike the earlier ones,
though, this had some teeth.
It prohibited the CIA, the Defense Department, or any other agency of the U.S. government from giving any money or aid to anyone for the support of the Contras. The money spigot had been officially turned off; the loopholes were sewn shut.
The CIA and Defense Department began withdrawing their trainers, advisers, administrators, tacticians, and logisticians from Central America, and by the end of the year the Contras were alone and in disarray. Thousands of rebel fighters began retreating from Nicaragua for the safety of Honduras. Money was scarce; weapons and ammo were in even shorter supply.
In early 1985, as the Contras spent their last batch of CIA money, another mini-scandal erupted. Allegations of Contra battlefield atrocities surfaced in reports from human rights groups, spotlighting murders, tortures, assassinations, and "the deliberate use of terror" by some Contra field commanders, putting the lie to Reagan's characterization of them as "freedom fighters," showing instead their connection to Somoza's hated National Guard.
Even the FDN's normally optimistic handlers in Washington began to despair. Reagan's national security adviser, Robert McFarlane, told FDN leader Adolfo Calero in January 1985 that maybe it was time to start thinking about "cutting both our losses and theirs." The administration's prestige was riding on the Contras; Reagan had gone so far during a speech as to compare them to the founding fathers of the American Revolution. The FDN's only ray of hope was to withdraw from battle and lie low until the spring, when Congress agreed to let the administration come back and make one more pitch for money.
Had Norwin Meneses popped up then with a federal cocaine trafficking indictment around his neck—after all the meetings he'd had with FDN directors Adolfo Calero, Enrique Bermúdez, Edgar Chamorro, and Frank Arana— the resultant scandal would likely have wiped out what little support the Contras had left in Washington. It would have also again tarred the CIA, which was reeling from the exposure over the harbor minings and assassination manuals. Even if nothing could have been proven conclusively about the CIA's involvement in the Contra drug ring, the agency was supposed to be the nation's primary intelligence-gathering arm—and its responsibilities specifically included monitoring the international narcotics trade. A plea of ignorance about dope dealing by its own paramilitary forces would have looked as bad as proof of complicity.
And that was assuming Meneses kept his mouth shut. If he started naming names, dates, and places, the scandal could well have spread into the CIA itself, as it would eleven years later. Former assistant U.S. attorney Eric Swenson, who was familiar with the investigations into Meneses, said the drug lord's activities with the Contras were well known to the Justice Department because he had personally reported it. And Justice wasn't the only agency that knew about it.
"The CIA knows about this guy," Swenson said in an interview. "I'm sure they do. I'm sure they do. The CIA knows a lot of crooks. I mean, the CIA knows." As it turned out, Swenson was right. A 1998 CIA Inspector General's report confirmed that, as early as 1984, the agency had information tying Meneses to a drug and arms network in Costa Rica, in partnership with top Contra official Sebastian "Guachan" Gonzalez.
Against that backdrop, and given the cozy relationship that existed between the CIA and San Francisco's U.S. attorney, Joseph Russoniello, it is hardly surprising that Norwin Meneses was not charged with drug trafficking in the spring of 1985. Even though one of his top lieutenants had pleaded guilty to cocaine charges and publicly implicated him as a major trafficker, allowing Meneses take the witness stand was out of the question. The drug lord simply knew too much. Not only was he in a position to expose the FDN's long involvement with drug merchants, but he could have led the police and the press to Danilo Blandón's booming enterprise in South Central Los Angeles.
And what a fine picture that would have presented.
Blandón was dumping a small mountain of cocaine into L.A.'s black neighborhoods every week, as well as providing South Central's crack dealers with assault rifles, submachine guns, and sophisticated telecommunications and eavesdropping gear.
Blandón was having the time of his life. As far as he and Ricky Ross were concerned, 1984 had been a terrific year. And 1985 was only going to be better. For one thing, Blandón was now an official guest of the U.S. government. The State Department, after two earlier rejections, had suddenly changed its mind in 1984 and decided to approve his application for political asylum. Now he could stay in America indefinitely and no longer had to worry about being summarily tossed out of the country. Had that fact been made public, all the propagandists and spin doctors in Washington would have been hard pressed to explain why the "Just Say No" administration had allowed South Central's biggest cocaine trafficker to call the United States his home.
Though the administration could have claimed ignorance, there were easily obtainable records proving that the DEA was fully aware of what Blandón was doing. Further, it is State Department policy to check with the DEA before approving applications for political asylum.
Records showed the drug agency had opened a NADDIS file on Blandón on May 24, 1983, after getting a tip from a confidential informant that he was a member of a cocaine trafficking organization. His attorney, Bradley Brunon, said in court in 1992 that the DEA's voluminous knowledge of Blandón's dope dealing stretched back even further than that. "I have some 300 DEA-6 reports regarding Mr. Blandón, and the reports relate to activities between approximately 1981 and May 1992," Brunon told a San Diego federal judge.
In early 1984, while Blandón's asylum application was under review at the State Department, the DEA learned from an informant that Blandón was "the head" of his own cocaine distribution organization based in Los Angeles, information that, as history shows, was accurate.
The same odd sequence of events happened with Blandón's wife, Chepita. First the DEA learned she was a drug dealer, then the State Department gave her political asylum. In early 1985 she was reported to the DEA as a "member of a cocaine distribution organization," and on March 15, 1985, the agency dutifully opened a NADDIS file on her. Later that same year she was granted political asylum.
Immigration experts agree that, normally, even the slightest hint of drug involvement by an alien results in deportation. "I've had clients deported because anonymous sources, people who were never even identified to us, allegedly told the DEA they were involved in drugs," said one California immigration lawyer. "One of my clients, he was a college professor from Thailand, was denied entry because he'd been arrested for smoking marijuana when he was a teenager, for Christ's sake. When it comes to drugs, it's an almost automatic no." In an interview, a State Department official confirmed there was a blanket zero tolerance policy for immigrant narcotics suspects.
Why those same standards didn't apply to Blandón and his wife is not known, nor is it likely to be. When the Justice Department's Inspector General looked at the Blandóns' immigration records, he found them "in disarray."
During 1984 and 1985, Ross and Blandón have admitted, their cocaine trafficking empire was at its zenith. Ross was selling dope so fast he didn't have time to turn it into crack anymore. He would just take Blandón's kilos, put a hit on them, and pass them along to smaller crack manufacturers, who more and more frequently were members of various Crips "sets" from across Los Angeles.
"It continued growing, growing, growing, until sometime he buy from me 100 a week," Blandón said. Ross was driving him nuts with his constant telephone orders for more kilos. "I was getting crazy because you have to move—I was the, the man that made the delivery every day, so he was calling me every day, two or three times. Sometimes we deliver at 2 o'clock, sometimes we deliver at 4 o'clock, and anytime—one o'clock, two o'clock, one A.M."
Blandón finally worked out an arrangement with his Colombian suppliers to give Ross large amounts of cocaine for little or no money up front—sell now, pay later. "I spoke with the Colombian and I told him, 'Hey, let's go and give some credit to this guy because he pays. He's a good payer.' I give 20, the first 25 keys on credit and tell him, 'Hey, don't bother me until you got the money.'" That initial advance by itself was worth about $1 million, wholesale.
There was a reason Blandón wanted Ross out of his hair for a while. The Blandón family had moved from Northridge, a suburb near downtown L.A., to neighboring San Bernardino County, settling into a sprawling Spanish-style home in the city of Rialto, some thirty miles outside Los Angeles. He'd withdrawn $175,000 in cash from his bank account in Panama and given it to Orlando Murillo, the former Somoza banker, who bought the house under his name to keep Danilo's name off the property rolls. From his hot tub on the terraced hillside behind his new house, Blandón could gaze out at the bucolic, rolling hills and towering pines of a country-club golf course.
In one sense, Blandón had a right to be proud of his accomplishments. He was the epitome of Reagan-era success, along with brigand financiers Ivan Boesky and Michael Milken. In only three years he'd gone from working in a car wash to running a multimillion-dollar-a-week operation, employing, directly and indirectly, hundreds of people, many of them inner-city residents who would have otherwise had little or no income. Thanks to Blandón, they were making thousands or tens of thousands of dollars a week.
He was the chief supplier to the largest minority-owned business in an area so forbidding that the government was offering to pay companies just for moving there. Blandón's "company" moved in and began producing high-paying jobs without ever once asking for a handout. Unlike many legitimate industries that merely pay lip service to the concept, the cocaine industry is a fervent believer in the get-government-off-our-backs philosophy of commerce.
The fact that Blandón's activities happened to be illegal —as were Boesky and Milken's, for that matter—was a technicality. After all, it wasn't his idea to start selling drugs; he'd done it to help the Contras. He was furthering official U.S. foreign policy in a very unofficial way.
As his longtime attorney Brad Brunon said, with a slight laugh: "You teach a man a craft and he's liable to practice it."
Blandón had practiced his craft well, and he was now enjoying the fruits of his labors. He hired a live-in maid and nanny for Chepita and his daughters, opened a restaurant —the Nicamex—and bought a car lot in nearby Fontana with an old college buddy, Sergio Guerra, a Mexican millionaire whose family owned major automobile franchises in Guadalajara. Guerra had the distinction of owning the last parking lot on the California side of the Mexican border in San Ysidro, which is like having a license to print money. The government valued its worth at around $29 million in the early 1990's.
Blandón's businesses were merely fronts through which to launder his drug money and provide a respectable explanation for his wealth and lifestyle. The used car lot—a favorite ploy among Nicaraguan traffickers—was especially handy. It was a cash-heavy business; lots of different vehicles were moving in and out all the time and their trunks were perfect places to store cocaine overnight, providing a plausible denial in case of accidental discovery. Cars that were sold for $2,000 were declared as being sold for $4,000. The car lot paid taxes on $4,000—at a rate cheaper than any money launderer would charge—and suddenly, $2,000 in drug profits had a legitimate pedigree.
Now that Danilo was a suburbanite with businesses to run, Ricky Ross certainly couldn't expect him to hop in his Mercedes and come running down to South Central every time Ross began getting low on blow. Blandón started asking Ross to drive out to Rialto to meet him, or he would bring the cocaine only halfway into town, leaving it in a load car at a shopping center parking lot.
Ross didn't mind the trips to Rialto, at first. Danilo and Chepita were fun to be around, he said, and he grew close to the couple and their daughters. "It would be just like any other wife if one of the employees come by the house," Ross said. "She'd cook dinner for us. 'Here, this is your room where you'll sleep at tonight. Here's your towels.' Know what I'm saying? So, she was playing along with the whole thing." Ross said she also knew the kind of business her husband was in. Once, he said, he found kilos of cocaine stored in their freezer, nestled in among the steaks and ice cubes.
At other times Blandón would take Ross and Ollie Newell out to dinner, question them closely about their business dealings, and then offer advice on how to improve their operations and safeguard themselves against both the police and other dealers. One of the best pointers he ever got from Blandón, Ross said, was "not to flash. Don't buy a lot of jewelry. Don't dress too fancy. That was the way he was. Always had on a nice suit and tie. Drove a nice car, but not too nice, know what I'm saying? No way you would look at him and say he was a dope dealer. Told us to buy some businesses, invest our money, so you can explain that you got a job. He taught us a lot."
The Torres brothers, in an interview with police in 1996, confirmed that "Blandón became very close to Ricky Ross. . .. Ross looked up to Blandón as a 'father figure.'"
But Ross noticed a change in his mentor's demeanor after he joined the country-club set in Rialto. "Danilo started getting relaxed. He didn't want to leave the house. 'I'm at home, man, I drinking.' Fuck that shit, man," Ross said.
Blandón was getting drunk frequently and snorting a lot of cocaine. "He would use so much his nose got red and he kept trying to get me to use it. 'Here, just take a little.' I didn't want no part of that shit," Ross said. "And I ain't never had a drink in my life."
Blandón's habits would leave him soft and bloated. The other Nicaraguan dealers began calling him Chanchin, "the fat pig." Ironically, that disparaging nickname turned up as an alias in Blandón's DEA files.
It all made Ross a little nervous. The way he saw it, people who got lazy got sloppy, and sloppy people made stupid mistakes. This was a business where you couldn't afford even one mistake. It had taken Ross two years to perfect his delivery and distribution system—using nondescript decoy cars and load cars, walkie-talkies, stash houses, cash houses, and safe houses—and everything was running smoothly. He'd never had any troubles with the cops. Nearly every big crack dealer in town was getting cocaine from him, and he'd done it without resorting to attention-getting violence.
The dollar was a powerful persuader, he discovered. There was no limit to the average cocaine dealer's greed. You could buy your way into anything, or out of any disagreement. But deep inside, Ross was gnawed by the fear that his cocaine empire could vanish as suddenly as his tennis career had, leaving him in jail, dead, or back out on the streets, running at cars again.
When he looked closely at his operation, he saw a glaring weakness: his exclusive relationship with Danilo Blandón. It didn't make sense to have his entire life resting in the hands of one person, Ross concluded. At first he'd had no choice. He was tied to Blandón by circumstance. "If Danilo had disappeared, we wouldn't have been getting no ounces, no nothing, you know what I'm saying? When we got started, if we wouldn't have had him, we wouldn't have been able to have found it nowhere else," Ross said. "Even if you had the money, you just couldn't get it."
But now that he was riding on top, Ross had no shortage of offers from other cocaine importers, major traffickers who dreamed of finding a customer the size of Freeway Rick.
Blandón once told an associate that the beauty of dealing with "the black people" was that they sold cocaine so rapidly there were no costs or security risks to be incurred by warehousing the dope and parceling it out over a week or two. They would take as much as you could sell them and it was gone in a day, he crowed; "The black people, you know, buy everything."
Ross said the other "players" who came around usually couldn't match Blandón's prices. Couldn't even come close, most of the time. "When everybody else in town was spending forty-five thousand for a key, we was getting them for thirty-eight. And we knew, with him, he like never ran out."
Blandón confirmed that the prices he charged Ross were lower than anything he charged his other customers; Ross sold so much, he said, he could "get good prices from my suppliers."
Still, price and supply were just part of the reason Ross had confined his cocaine purchases to Blandón. With someone else, who knew what kind of troubles you were buying into? A new supplier could turn out to be a head case, or a fly-by-night. A low price could simply be a snitch's offer.
Danilo, on the other hand, was his friend, his protector. Rick trusted him implicitly, and for good reason. Danilo had guided him, advised him, kept him out of trouble. And he genuinely seemed to like Ross. "All I knew was like, back in L.A., he would always tell me when they was going to raid my houses. The police always thought I had somebody working for the police," Ross said. "And he was always giving me tips like, 'Man, don't go back over to that house no more,' or 'Don't go to this house over here.'" The cops invariably raided the locations within a couple days.
Ross, realizing that he owed much of his phenomenal success to Danilo, felt almost superstitious about tampering with a winning formula. "I can't say I never would have found out about it, but before I met him, the chances of me being a big dope dealer were slim to none." But when Blandón wouldn't get his ass up off the couch, Ross decided to look seriously for other sources, people who would be there when Danilo didn't feel like making money. He also used the opportunity to teach his teacher a little lesson about complacency.
One of the offers Ross had gotten came from the towering Torres brothers, known to Ross and his crew as "the Greens." He'd met them through Blandón and assumed from their size that they were his bodyguards. They also delivered cocaine and picked up money for Blandón occasionally. One day—as most of Blandón's assistants eventually did—they slipped Ross their phone number, in case he ever needed something extra.
If Danilo trusted the Greens enough to work for him, Ross figured, that was a pretty good recommendation, and one particularly busy day he called the brothers up and said he was willing to talk some business. Their prices were about the same as Blandón's, he said, but Ross didn't intend to pay either supplier's price for very long. Once the Torres brothers started selling to him, Ross used them to whipsaw Blandón on his prices, pointing out that his "other suppliers" were offering him a much lower price than his good friend Danilo. And he'd play the same game with the Torreses.
Blandón acknowledged that Ross began getting cocaine from "another two suppliers. . .they were my friends. . .. He got the coke from me, from Torres, from—see, not only from me. I got a piece of the apple." And he confirmed that Ross started driving his kilo prices down even further. But the new relationship had a bit of a rocky start. Jacinto Torres quickly got into trouble with the police.
He and his wife Margarita had quarreled, and he'd moved out, renting a room at his friend Robert Joseph Andreas's new four-bedroom house in Burbank. On April 6, 1984, shortly before 9:00 P.M., a team of Burbank narcotics detectives acting on an anonymous tip came crashing in through the kitchen door. They found a number of Nicaraguan women sitting around the kitchen table.
Jacinto Torres was stretched out on the bed in his room. In his dresser the police found a half-ounce of cocaine, a .38-caliber pistol, $3,700 in cash, and "large men's clothing." He and Andreas were thrown into the back of a prowl car and whisked off to jail. In Spanish, Torres and Andreas cursed their predicament, unaware that the cruiser was equipped with a secret taping system that was recording their every word.
"Stupid," Torres spat. "My money, my ledger, my clients, all the names. They are going to find a house I have got rented and if they get there, the whores, I don't want to think about it. Great God."
He turned to Andreas and said, "Rick is the one who fingered us."
"No, I have known him for a long time."
"They came looking for him," Torres replied. "Don't say nothing."
"It's nothing," Andreas assured him. "It's just half an ounce, almost nothing. They can't do nothing. I don't know if they found the house. I don't believe they did."
Court records show the police later searched a house in Northridge they thought belonged to Torres, an address that shows up on Blandón's NADDIS report as being one of his residences. But no drugs were found.
During the preliminary hearing, one of the arresting officers was asked about the search he'd conducted of Jacinto Torres's Mercedes Benz, and a very odd conversation ensued.
"Did you find any contraband in the Mercedes?" Torres's attorney, Joseph Vodnoy, asked Burbank police officer James Bonar.
"No contraband," Bonar answered. "Just some property of the United States Customs. No contraband."
"Wait a minute. . ." the judge said.
"I move to strike that answer!" Vodnoy shouted.
"Just a minute," the judge said. "What is it now you want to strike?"
"I asked him did he find any contraband? The answer was no. Then he went on to say something about United States Customs," Vodnoy complained.
"Property belonging to U.S. Customs?" the judge asked Bonar.
"It was not contraband. No no," Bonar replied.
"It will go out," the judge decided.
What U.S. Customs property the police found in Torres's car is not known, as all the police files from that case were destroyed. The charges against Torres were quickly disposed of. Four months later he pleaded guilty to a lesser charge of cocaine possession; he was fined $500 and given no jail time.
That outcome didn't please Jacinto Torres's probation officer, who referred to him as "that big guy who always comes in here in short pants." He told Torres's attorney, "You know your client's guilty. All we want is for him to serve some time. . .. This guy was a troublemaker as far back as 1970."
But even though Torres would violate his probation several times, no action would ever be taken against him. He went right back to cocaine trafficking.
Ross eventually turned Blandón and the Torres brothers against each other, a situation that would have dire consequences for Blandón in later years. The longtime friends became bitter rivals, fighting each other for Ross's business. One night, Ross said, he realized just how heated the rivalry had become.
While Ross was twitting a drunken Blandón about how low the brothers' cocaine prices had fallen, Blandón looked at him blearily, announced that "Chepita was fucking one of them," and said he wasn't going to take such an insult sitting down. He had a little plan he wanted to discuss with Ross to even things up.
"Danilo wanted to kill him," Ross said.
Blandón suggested that Ross set up a cocaine buy with the adulterous brother and "'tell that motherfucker to bring it at such-and-such a place, and I'm going to have some guys there waiting and you keep the dope. I'm going to take care of that fucking guy.'"
Ross said he laughed off the idea, figuring it was the liquor talking.
But the Torres brothers confirmed the story and took it one step further. In an interview with police, they "explained that Danilo Blandón's wife told him she had an affair with one of the [brothers] in a fit of anger. Blandón became enraged and hired a former military officer of the Nicaraguan army to kill him."
The brothers said Blandón "apparently realized his wife had lied to him about the affair and called off the hit man." Blandón said he never knew just how much cocaine the Torreses were selling to Ross, but he estimated that their volume rose to a level comparable to his own. He saw them "getting rich," he said. "If I sell a week to him, a hundred, maybe they go buy 50 or something like that. If I didn't sell him 100, they will sell him like, like 100 to him, you know? It was all the competition."
The brothers admitted to the police that they were selling "large amounts of cocaine to Ross on some occasions."
If Ricky Ross was going through 150 kilos of cocaine every week—and Ross says the figure is a reasonable average—it means he was selling enough to put a staggering 3,000,000 doses of crack on L.A.'s streets every seven days. It also means Blandón and the Torres brothers were sometimes sharing about $5.7 million a week in cash from the prolific young dealer. "Sometimes, we'd spend $4 million or $5 million a week with that guy, in our hell days," Ross said, speaking of Blandón.
Blandón said Ross was using an apartment in South Central as a counting house, where the money from the drug sales was brought, sorted, and wrapped. He would pick up his payments there. "When he [Danilo] came over we'd be counting the money and he said, 'Man, I'm gonna have to get you a money machine.' Because you know, our problem had got to be counting the money. You know, I started telling him, 'Man, my fingers hurt!' We got to the point where it was like, 'Man, we don't want to count no more money.'"
Blandón agreed that Ross was being deluged with cash. "Those times, they were using two or three machines, counting machines, and they were counting day and night."
To hide it all, Ross followed Blandón's advice and started investing in real estate, buying houses, apartment buildings, an auto parts store, and a hotel near the Harbor Freeway called the Freeway Motor Inn. In addition to giving Ricky Ross his nickname, "Freeway Rick," the motel served as a secure meeting place for dealers and couriers.
There was so much cash and so much crack flying around South Central that even the mainstream media had started to notice. On November 25, 1984, one day before the DEA arrested Jairo Meneses and Renato Pena Cabrera in San Francisco, the first story about crack to appear in the national press was published by the Los Angeles Times. It was written by Andy Furillo, a freckle faced police beat reporter who'd been hired away from the smaller Los Angeles Herald-Examiner.
When he talked to some of the officers at the South Central stations, Furillo said, several of them mentioned this flood of cocaine they were seeing in the ghettos. He hit the streets, knocked on some doors, and confirmed what the officers told him—and then some. There was, he discovered, a gigantic, wide-open cocaine market flourishing in the poorest section of Los Angeles—and no one except the neighborhood newspapers had written a single word about it. It was a hell of a story, he thought.
Headlined "South Central Cocaine Sales Explode into $25 Rocks," Furillo's scoop began: "Police say hundreds, perhaps thousands, of young men, most of them gang members, are getting rich off the cocaine trafficking that has swept through L.A.'s black community in the past 18 months." Furillo described the rock house phenomenon and the multitude of street-corner dealers. He quoted police as saying that there were several hundred rock houses in South Central at that time. And his story accurately predicted that crack was a threat that could "destroy South Central Los Angeles for years to come."
Naturally, the Times buried the story inside the paper. But it was enough to prompt an embarrassed LAPD to launch raids on several dozen rock houses shortly afterward, with tragic results. On December 13, a diversionary explosion the cops set off during a raid on a West Sixtieth Street rock house killed a woman who happened to be walking by at the wrong time.
The crack phenomenon, Furillo said, fascinated him, and he pressed to do more stories on it, but his editors at the Times showed little interest in having him pursue the topic. Furillo eventually quit the paper in disgust and returned to the Herald-Examiner, where he continued producing gritty, ground-breaking stories on crack's impact on L.A.'s inner city residents.
Furillo's piece in the Times also caught the eye of the Washington Post's L.A. bureau chief, Jay Matthews, who did a follow-up in December 1984. That story described rock cocaine as "a marketing breakthrough that furnishes this middle-class drug to the city's poorest neighborhoods" and said rock houses—described as "steel-door dispensaries"—were "growing like a new fast-food chain." But as rapidly as the drug was spreading, the Post reported, it was still only an L.A. fad, and the story quoted unnamed "narcotics experts" as saying that "the hard little pellets of cocaine powder, selling for as little as $25, have not been found in significant numbers outside Los Angeles."
Bobby Sheppard, intelligence unit supervisor for the U.S. Drug Enforcement Administration in L.A., told the newspaper that he "saw no sign of rock cocaine spreading to the rest of the country, 'but I've got to believe that if it isn't there yet, it probably will be in the future.'" The story ended somewhat strangely by comparing crack to the clove cigarette fad of middle-class white teenagers.
It would be another year before other East Coast papers would begin reporting on crack; this timing coincided with the drug's belated arrival in New York City. "Crack first came to the attention of the New York Field Office Division of the Drug Enforcement Administration in the fall of 1985. The New York Joint Drug Enforcement Task Force made the first significant seizure of crack on October 25, 1985," said Robert Stutman, the head of the DEA's New York office, in 1986 congressional testimony. "A form of cocaine similar to crack but known as 'rock' has been available in Los Angeles for the last five years." According to then NYPD commissioner Benjamin Ward, "In January of 1985, of all cocaine arrests made by the Narcotics Division, there were fewer than fifteen arrests for crack."
Furillo's story also prompted the first scientific look at the early L.A. crack market, done by USC sociologists Malcolm Klein and Cheryl Maxson in early 1985. Their preliminary findings, published in a small social research journal, noted that "throughout the Black residential areas of Los Angeles County, there has been a recent, dramatic increase in cocaine dealing. . .in large part from the proliferation of cocaine 'rocks' and fortified 'rock houses' which, with certain refinements, constitute a new technology and organization for cocaine distribution. An increasing trend in the distribution system is the use of street gang members in various dealing roles."
The study said that "estimates on the number of [rock houses] in South Los Angeles, a Black area where the phenomenon is concentrated, range from one to two hundred at a time to as many as a thousand."
Some rock houses were even being franchised, they found, and said "gang involvement is a connected part of a very rapid process by which this system has been institutionalized." The distribution system "yields ready access to inexpensive cocaine in a very large Black community in Los Angeles."
One thing they were unable to explain was why crack was found only in L.A.'s black neighborhoods. The drug, the sociologists wrote, "at least currently seems to be ethnically specific. Cocaine is found widely in the Black community in Los Angeles, but is almost totally absent from the Hispanic areas."
The explanation for that seems obvious once the Danilo Blandón-Rick Ross partnership is factored into the equation. "There was no market until we created it," Ross said matter-of-factly. "We started in our neighborhood and we stayed in our neighborhood. We almost never went outside it. If people wanted dope, they came to us."
The USC sociologists' predictions for the future were frightening and, as history has shown, dead-on accurate. "The distribution system seems custom-made for other Black gang centers (Philadelphia, New York, Washington, Chicago, etc.)," they wrote. "There is absolutely nothing inherent in this distribution technology, nor in the Los Angeles context of its development, that would prevent its exportation to many other urban areas. Indeed, exportability seems very high. . .. All this makes for an intelligent, well organized system that is maximally effective—in short, it works efficiently, is very impressive and could easily explode across the nation."
And that is essentially what happened.
While the Washington Post story made no mention of the L.A. street gangs, Andy Furillo's story tagged them as the prime beneficiaries of the new crack trade. He presciently predicted that crack would dramatically alter the power structure on the city's streets, by providing the gangs with the one thing they had previously lacked: money. "Tom Garrison, director of field operations for the Community Youth Gang Services Project, said the utilization of the gang structure by drug dealers represents 'a whole new challenge for us,'" Furillo wrote. "'They've always had the numbers and the firepower, but now they've got the economic power too.'"
Klein and Maxson later came to believe that the police were exaggerating the role of gang involvement in the crack trade, but two later studies by the California Department of Justice refuted that idea and said the gangs were an even bigger force behind its spread from L.A. than previously thought. "We think that law enforcement perceptions of gang involvement in the drug trade are sharper than the Klein and Maxson statistical study suggest," UC-Berkeley sociologist Jerome Skolnick wrote in 1988. "In fact, it appears difficult to overstate the penetration of Blood and Crip members into other states."
The U.S. General Accounting Office (GAO), in a 1989 report, echoed Skolnick's conclusions: "In the early 1980s the gangs began selling crack cocaine. Within a matter of years, the lucrative crack market changed the black gangs from traditional neighborhood street gangs to extremely violent criminal groups operating from coast to coast. The lure of profits coupled with increased pressure from local police have prompted the Los Angeles gangs to extend their territories far beyond their neighborhoods. Within the past three to four years, members of the Crips and the Bloods have been identified selling or distributing crack in Washington, Oregon, Kansas, Oklahoma, Colorado, Missouri, North Carolina, Arizona, Virginia, Maryland and elsewhere."
The GAO report noted that a Washington, D.C., crack ring in 1989 was distributing 440 pounds of cocaine there every week, which "illustrates the nationwide impact of the Los Angeles street gangs. Much of the cocaine distributed by the gang was allegedly purchased from the Crips and the Bloods, who had purchased their cocaine from the Colombians."
The report included a map of the United States showing ominous black arrows emanating from L.A. and streaking northward and eastward across the country. The map was pockmarked with black dots—all the cities where crack had been found. Miami for some reason wasn't among them, although by 1985 the Jamaican posses from Liberty City had reportedly started their trek westward. They also began bringing crack to some African-American neighborhoods, but their primary markets were in areas populated by Caribbean immigrants. One drug researcher, Nick Kozel of the National Institute on Drug Abuse (NIDA), went to Miami specifically looking for crack after reading Furillo's article and, according to one account, "came up empty-handed."
Ross said that while he did not sell exclusively to Crips gang members, they initially formed a large part of his customer base simply because he and Ollie were from a Crip neighborhood. But that only mattered in the beginning, he said. By 1984 and 1985, they were so far removed from that level of dealing that gang colors or the 'hoods their buyers hailed from were trivialities.
Freeway Rick was the dealers' dealer. What his customers did with their cocaine, who they sold it to, and what they fought about afterward made no difference to him. One customer was just as good as another, as long as they paid. All that other stuff just got in the way of making money. "By the time the market exploded in 1984, Ross already was dealing directly with the Colombian cartels, who supplied him with 50 to 100 kilos a day," the Los Angeles Times stated in 1994. "With that, Ross was able to operate dozens of rock houses, catering to thousands of addicts across Los Angeles. He had another three 'ounce houses,' servicing 100 to 200 mid-level dealers. Finally, he had his own private list of V.I.P. customers, maybe 30 to 50 big-time dealers, who dropped tens of thousands of dollars at a time."
As the South Central crack market became saturated, Ross's gang customers started traveling to other cities in California to make their fortunes, setting up new crack markets and using their connections with Ross to supply them. It was the start of an unprecedented cross-country migration by the Crips, and later the Bloods, which would spread crack from South Central to other black neighborhoods across the United States.
And it was the start of Ross's expansion from a large regional drug trafficking network to what the L.A. Times would later call "a coast-to-coast conglomerate that sold more than 500,000 nuggets of the drug every day." One L.A. narcotics detective would describe it as "a cartel."
South Central—ground zero of the crack explosion— would never be the same again.
Like night follows day, crack brought a host of attendant plagues: a flood of automatic weapons, rock houses, motorized police battering rams, drive-by shootings, and pitched gun battles. At the same time, the Reagan administration began snipping away at the fragile social support services that had made life in the inner cities livable, if not luxurious.
A commission examining the causes of the 1992 riots in South Central named crack as one of the contributing factors. The drug was the beginning of the end for many struggling inner-city neighborhoods in the 1980s. They changed from places where generations had raised families in relative safety to free-fire zones where children could be mown down as easily as if they were walking the streets of Beirut.
"With rocks hitting the streets hard, and the money that was generated. . .about '84 or '85, guns hit the streets hard. Around '86, '87, it was on. You name it, you could get it," Leibo, an East Side Crip, told authors Yusuf Jah and Sister Shah'Keyah. "You didn't hear that much about 9- millimeters, M-16's, M-14's and AKs unless you were hooked up and was high on the echelon, but after 1986 they were available to anybody."
Here again, Danilo Blandón was a trendsetter.
Blandón began selling high-powered weapons to Ross and his friends in 1984, courtesy of his spooky associate, Ronald J. Lister, the ex-cop. "We started handling more and more money and then the first gun that I ever had, Danilo gave it to me for free," Ross said. "He just came by the house and said, 'I've got a present for you.' It was a .22 pistol. I think it was a 15-shot, with a silencer on it. . .. He started selling us guns after that. Everybody that worked with me—everybody—bought a gun from him."
Blandón had access to every imaginable firearm, he said. "I mean, he sold what is called a Streetsweeper, the Thompsons, he sold those. I think he sold those for like $3,000 apiece. It's a fully automatic that you see like in the movies, you know, in the old gangster movies," Ross said. "He sold Uzi's, he sold pistols, brand new pistols, .38, .357, any kind of pistol that you wanted. . .any kind of gun that you wanted, he got it for you."
Ross, who bought a silver-plated Uzi submachine gun, said his partner, Ollie Newell, became one of Blandón's biggest arms customers and soon had enough firepower to equip a platoon. One of his prize possessions was a tripod-mounted .50-caliber machine gun, which can down small planes.
"Like, I started buying houses, right? Well, Ollie started buying guns. He'd buy anything Danilo would walk through the door with. We had our own little arsenal. One time, he tells me Danilo was gonna get him a grenade launcher. I said, 'Man, what the fuck do we need with a grenade launcher?'"
He and his fellow dealers, Ross said, bought more than a hundred guns from Blandón. He sold so many to other dealers and friends that, by 1987, the L.A. police would list "weapons sales" as among Ross's various enterprises. Blandón denies selling Ross that many weapons, but he did admit selling him a .22 pistol, an Uzi machine pistol, and an Armalite AR-15 assault rifle, the civilian version of the military's M-16. The AR-15 was a weapon the Contras bought by the thousands. Blandón owned one himself.
Blandón described his weapons sales as nothing more than a convenience for Ross and insisted he was no arms dealer: "I don't sell guns, okay? I sold that gun because he ordered [them from] me—because I knew the people who sell the guns." He said he never used weapons in his business and tried to pass that practice along to Ross.
So how was it that Danilo Blandón, a drug dealer, knew arms merchants?
"Because I was in the Contra revolution," he replied.
The guns sold to the crack dealers, Blandón explained, came from Ron Lister and his associate William Lee Downing, through their "security business" in high-class Laguna Beach. Lister admitted to the CIA that he began acquiring weapons for Blandón between 1982 and 1983, "some of which Blandón claimed were going to 'my friends down South.'" Lister said he sold Blandón one or two guns a week: "Assorted handguns, semiautomatic Uzi machine pistols, KG 99 Tec Nine machine pistols, and possibly semi-automatic AK47's." He also admitted "purchasing a small number of commercially available, off-the-shelf night vision devices for Blandón. Lister says he does not know what Blandón did with the devices."
Blandón told CIA inspectors that Lister had access to such a wide variety of weapons that, in 1983 or 1984, he arranged for him to give a sales presentation to the leadership of the Contras. "Blandón recalls that, in addition to the usual attendees, several top Contra leaders were also in attendance, including Eden Pastora, Adolfo Chamorro and Mariano Montealegre. Blandón also says Ivan Torres was present," the CIA report stated. Mariano Montealegre, a CIA-trained Contra pilot, was implicated in a scheme to haul drugs for the Contras but never charged. Ivan Torres was a drug-dealing subordinate of Blandón, identified in DEA records as having "political connections to the FDN."
"Blandón said the attendees showed no interest in Lister's offer and Blandón received the impression that the military arms of the Contras was already being supplied by CIA or another U.S. government agency," the CIA reported.
During a 1996 court case, Blandón was asked if he went to Lister's security company and bought weapons "off the rack."
"No, he brought them to me."
"Brought them to you?"
"Uh huh."
"Where?"
"To my house."
"What did you do—call him up and order some?"
"No sir. He'd shown me that, and he told me that. And I offered them like a salesman, you know? He [Ross] ordered and I sold it."
"So you were doing another one of your brokerage things?"
"Yes."
"Sir, this business that you were in is not like selling paper to offices, is it?"
"Excuse me," Blandón huffed. "In those times you can buy a gun from the gun shop and you can sell it to anybody, okay?"
"But you sold Uzis!"
"Those guns," Blandón said calmly, "they weren't stolen."
The "security business" that provided Blandón the weapons was Mundy Security Group Inc., which Lister incorporated in Laguna Beach in mid-1983. Lister, an attorney named Maurice Green, another attorney named Gary Shapiro, and his reserve police officer buddy, Christopher W. Moore, were named as directors and officers. A business card found in a drug raid three years later identified Blandón as a vice president of that company.
Moore said the goings-on at Mundy Security Group's offices were enough to scare anyone. Director Maurice Green, he said, was a self-proclaimed legal genius with a severe drug and alcohol problem. He had a special wall constructed behind his desk that was hollow, Moore said, so he could kick through the paneling and run out of the building in case he needed to beat a hasty retreat. "I walked by his office one day and he was sitting at his desk looking down the barrel of a gun," Moore recalled. "I went into Ron's office and said, 'Hey Ron, you know Maurice is sitting in there playing with a gun?' He just laughed about it." Once, director Gary Shapiro said, the office was besieged by a mob of angry doctors who "were screaming and yelling about how Maurice had screwed up with their money." Lister was so wary of Green that he secretly videotaped him,
Shapiro said. Green was prosecuted and disbarred in 1987 for forging prescriptions to obtain narcotics. In 1992 he was sentenced to two years in prison for grand theft and practicing law without a license.
Aside from a few burglar alarm installations, Moore said, the only other business that he knew Mundy Security Group was involved in was an attempt to market a laser sighting device for AR-15 assault rifles. Lister's partner, Bill Downing, was designing that gizmo, which used a tiny laser beam to put a small red dot on the target—perfect for killing people at night.
According to a 1996 report from the U.S. Customs Service, Mundy Security Group was licensed with the U.S. State Department in 1983 to export U.S. Munitions List items to other countries. "This firm received three DSP-73s [temporary export licenses] to export laser components and spare parts to 'various countries,'" the Customs report stated. "Unfortunately, the data base here at the Department of State does not contain abundant information on registrations/licenses that old, so I am unable to provide. . .more specifics on the types of equipment and countries exported to." [CIA cutout DC]
Blandón also did a brisk business selling electronics equipment to other cocaine dealers, he said. He sold walkie-talkies to Ross and his crew, who used them to keep in touch during cocaine and money pickups. He sold pagers, police scanners, voice scramblers, cellular phones, and anti-eavesdropping equipment to the dopers. "I could sell to all the people that was in the coke business," he said. Again, Ronald Lister procured that equipment for him. Blandón said Ross "used to live in an apartment beside the freeway, you see, in San Pedro, San Pedro Freeway in L.A. It was an apartment by Florence, if I remember, by the freeway. So I get him [Ross] a scanner, telephone security, you know, when you put the thing in the telephone and you can get on another phone and talk to him and nobody will listen."
Ross said his crew carried the police scanners in their cars while out on drug deliveries, eavesdropping on the conversations between the patrol cars in the neighborhood. They also used one in the counting house when there were large sums of money on hand. During one 1987 raid, some of their equipment fell into the hands of the L.A. County Sheriff's Office, and the cops were suitably impressed. "They've got electronic police-detection systems, sophisticated weapons—better equipment than we have," Sergeant Robert Sobel complained to a reporter.
Sobel and his team had raided Ross's "Big Palace of Wheels"—a well-stocked but curiously customer-free auto parts store that was one of his many front corporations— and they also hit an apartment belonging to one of Ross's dealers. At the store, Sobel said, "We found hand-held, programmable 800 megahertz radios which are better than our radios, which they use in their counter-surveillance thing, when they communicated with one another when they transported cocaine."
The apartment coughed up "several sophisticated firearms, including an Israeli .357 automatic pistol with a laser-type sighting device, which facilitates its use during darkness," according to the affidavit of one of Sobel's partners. The search also found Teflon-coated bullets, commonly known as "cop killers" because they can easily pierce an officer's bulletproof vest.
In an L.A. Police Department summary of searches at locations associated with Ross, Deputy Chief Glenn Levant wrote that "numerous 9-mm Uzies [sic] were seized, along with an AK-47 assault rifle, a fully automatic Mac-11 machine gun, a fully automatic machine gun complete with silencer, and state-of-the-art handguns, rifles and shotguns."
Eventually Ronald Lister's skills in procuring such high tech marvels brought him to the attention of the FBI. On April 3, 1985, two FBI agents, Richard Smith and David Cook, came knocking on the door of Lister's well-tended home in Mission Viejo. They had a grand jury subpoena to deliver and a statement to take. They "hammered on who I might know in East block countries. See's a spy situation," Lister wrote after they left.
He confirmed to police in 1996 that he had been the subject of a "grand jury investigation on my relationship with Soviet agents. Crazy, huh?" Lister "went on to say that he had sold an FBI 'scrambler system' to somebody overseas and the FBI had investigated only to find out that the equipment was declassified and available on the open market."
But FBI agent Smith, now retired, remembered things a little differently. He told the police that "he had received information that Lister was attempting to sell classified electronic equipment to Soviet KGB agents. They conducted an investigation, which included a sting operation in which FBI agents posed as KGB agents. [He] said Lister was attempting activities which were completely illegal and clearly in violation of United States national security."
Lister's former chief, Neil Purcell, confirmed that the FBI had Lister under investigation but recalled that the gear involved high-tech camera equipment. "They came down to see me. They were absolutely convinced he was selling this stuff to the Russians and tried to get background on the guy and after I listened to them, I said, 'Pardon me for laughing, but he's taking you guys for a ride, believe me.' And they said, 'We've got photographs!' and [they] showed me photographs of him meeting in San Francisco and New York with the Russians and at the Embassy in Washington —on and on."
Purcell said the FBI discovered that Lister was "bullshitting the Russians, charging them four and five times what he paid for it. The kind of thing that's really laughable about this is the Russians think they've really got something and they could have gone to the camera store themselves and bought it."
Former agent Smith claimed that Lister was never prosecuted because he turned out to be "full of hot air" and was "determined to be incapable of producing the equipment which he was attempting to sell to the KGB. Lister's lack of 'present capability' to commit the crime made prosecution impractical." But Smith acknowledged that "the Assistant U.S. Attorney who handled the case felt, however, that Lister's activities were serious enough to warrant a grand jury hearing."
Lister admitted to L.A. police that he had been called before the grand jury and questioned about his activities. When the police asked him about the nature of the equipment involved, he said, "I can't get into that stuff with you guys." Lister was never indicted and told police he was unclear as to the outcome of the grand jury investigation. "That's all classified, incidentally," Lister told them. When the detectives asked him why the information would be classified, Lister said, "I can't answer that for you." [Like I said...Criminally Insane Association cutout/asset DC]
If the L.A. detectives were as skeptical of Lister's cloak and-dagger work as ex-FBI agent Smith and former chief Purcell seemed to be, they must have gotten quite a jolt when they called the FBI to ask for a copy of their old files on the Lister investigation. "Special Agent Tim Bezick. . .stated that the FBI reports and the transcripts of Lister's grand jury testimony were protected by the National Security Act," Detective Axel Anderson wrote on November 20, 1996. "At Bezick's suggestion I called Joel Levin, chief of the Criminal Division of the San Francisco office of the United States Attorney. Mr. Levin researched the issue and confirmed the necessity of a court order."
They got similar reactions when they checked on Lister's background with the Maywood Police Department and the Laguna Beach Police Department, his old employers. "The personnel jacket for Ronald J. Lister has been sealed by the City of Maywood," they reported in November 1996. In Laguna Beach they learned that "the actual personnel files related to Ronald Lister no longer existed. . .all the information and documents in the Lister file had been purged, with the exception of the original employment application."
The FBI never turned over the documents, and the L.A. detectives were unable to determine why the files of a decade-old investigation of a dope dealing arms merchant with an allegedly overactive imagination would still be a matter of national security.
A significant clue, however, can be found in some documents seized during a 1986 narcotics raid on Lister's house. One of the many curious items the police carted away that day was a ten-page, handwritten document that details weapons and equipment deals by Lister. Lister admitted to the police that he had written the document in preparation for his 1985 grand jury appearance. The notes chronicled a series of meetings with a customer named "Ivan" at the Fairmont Hotel in San Jose, California. Ivan was uninterested in Lister's scramblers, the notes said, but asked Lister to procure some "Varo night vision equipment." The notes also told of Lister visiting the Russian embassy in Washington, D.C.
After jotting down a description of the April 1985 visit from FBI agents Smith and Cook, Lister wrote down a list of seven names. "Lister said he gave the above names to the FBI agents Rich Smith and Dave Cook," the police detectives wrote in their 1996 report. "He said the names 'came up in his business' for some reason and he wanted to have the names in writing when he went before the grand jury. . .. Lister said the people listed were only 'business people.'" The last two names on the list were Roberto D'Aubuisson, the right-wing Salvadoran death squad leader whom the CIA later acknowledged to be a drug and weapons trafficker, and Ray Prendes, the former head of the Salvadoran Christian Democratic party, which received substantial CIA financial assistance during the 1980s.
The detectives didn't ask why Lister would be having business dealings with CIA-linked Salvadoran politicians, or what the nature of that business was.
But the most intriguing name on Lister's list was at the very top of it: Bill Nelson. "Lister said that Bill Nelson was an A.S.I.S. member, which he said stands for the American Society of Industrial Security. Lister said that Nelson was the security director for the Fleur [sic] Corporation," the detectives' report said. William Earl Nelson was far more than that, but Lister didn't elaborate, and the detectives didn't push him. Had they done so, they might have gotten a better idea about why the FBI's files on Lister would still be classified eleven years later.
Before becoming Fluor Corporation's vice president for security and administration, Bill Nelson had been the CIA's deputy director of operations—the head spook—the man in charge of all CIA covert operations around the world from 1973 to 1976. A Fluor spokeswoman initially denied to journalist Nick Schou that Nelson had been affiliated with Fluor until Schou confronted her with documentary evidence of his employment there. Only then did she admit it, saying Nelson had worked at Fluor from 1977 to 1985.
A former CIA officer, John Vandewerker, confirmed to Schou that Nelson and Lister knew each other. Apparently, when Lister was running out to Fluor's headquarters in 1982 and 1983, it was Bill Nelson with whom he was meeting—"Ron's big CIA contact," as Lister's former office director, Chris Moore, described him.
They didn't get much bigger than Nelson, a protege of former CIA director William Colby. A native of New York, Nelson had been a CIA officer since 1948, serving under a variety of military and State Department covers, mostly in the Far East. Japanese newspapers exposed him as CIA after they learned he was asking travelers to the Soviet Union to literally dig up dirt around Russian missile bases.
As head of covert operations, Nelson oversaw the CIA's controversial destabilization program in Chile, which resulted in the overthrow and murder of Chile's elected president, socialist Salvador Allende. Later, Nelson commanded 'Operation Feature,' a covert plan to place a "friendly" group in power in Angola after the former African colony was granted independence from Portugal in 1975. He was named as a defendant in a civil suit filed by the widow of an American mercenary the CIA recruited to fight in Angola in 1976. The widow claimed the CIA misled her husband about the hopelessness of his mission and then engaged in a smear campaign to distance itself from him when he turned up dead. The suit was eventually dismissed.
Nelson's Operation Feature bore many similarities to the Contra project, particularly in terms of how the CIA's proxy army received its weapons. That could explain why Lister— who has admitted dealing arms in Latin America—was meeting with Nelson. In both operations, arms and equipment for the CIA's secret armies were laundered through the armies of neighboring countries friendly to the United States in order to disguise their origins and preserve deniability for the CIA. In the Angolan conflict, the countries of Zaire and South Africa were used. Guatemala, Honduras, and El Salvador fronted arms shipments for the Contras. In both cases the CIA turned to the People's Republic of China to supply additional weaponry and missiles to its chosen fighters
Evidence of Lister's involvement in sophisticated international arms transactions was found in the notes Lister made, naming Nelson and the Salvadoran politicians. Lister had drawn a flow chart containing boxes labeled "Swiss Bank," "U.S. State Department," "H.K.," "X Country," and "Factory USA." Strange acronyms and abbreviations were jotted alongside each box.
When the L.A. County Sheriff's Office sent Lister's flow chart to the U.S. Customs Service for analysis in 1996, Customs said it appeared to diagram a scheme to illegally divert American-made weapons to a third party, using fraudulent end-user certifications (EUCs) from another country to conceal the true identity of the weapons' recipients. EUCs are sworn declarations in which the government buying the weapons certifies that it really did order them. It is supposed to provide the U.S. government with some assurance that American-made weapons aren't ending up in the hands of terrorists or Communist guerrillas. When Oliver North began supplying arms for the Contras after the CIA funding cutoff, he frequently used phony EUCs from the Guatemalan and Honduran governments to divert weapons to the Contras, records show.
"The Contras can't buy weapons on the international arms market. Only countries can buy weapons, and certain countries can't buy weapons if they're embargoed or if they're embroiled in a political confrontation," explained former CIA official Alan Fiers, who ran the Contra program for several years. "So what happens is an arms broker will get an intermediary country to issue false end-user certificates. There is generally some consideration involved and the end-user certificate is issued, but the arms are either not shipped to the country that issued the certificate or are trans-shipped through that country on to a disguised end user, in this case, the Contras."
That was precisely what the flow chart seized from Lister's house illustrated, according to the U.S. Customs Service arms expert who analyzed the document. "Were this transaction taking place today," Senior Special Agent James P. McShane wrote, "I would assume that there was to be a [weapons] diversion to either Iran or the People's Republic of China, neither of which can get licenses for exported munitions."
Just what the CIA's former boss of covert operations, who by most accounts was an upright individual, could possibly have had to discuss with an admitted cocaine trafficker, drug addict, and gun runner like Ronald Lister is hard to fathom, and the exact nature of their relationship is likely never to be known. In April 1995, wracked with pneumonia, Nelson died of respiratory failure in an Orange County convalescent hospital at the age of seventy-four. But it is conceivable that their connection had something to do with the Contras and weapons. At the same time that he was reportedly meeting with Nelson, Lister was also advising the Contras on security matters and peddling arms.
Other documents seized from Lister in the 1986 raid lend support to this idea. According to the Justice Department, Lister's monthly calendars for 1985 contained "frequent references to the Contras," notations reading "SF Contras," "LA Contras," "D-Contra" and at least one reference to the Defense Intelligence Agency, which was known to be involved in supplying military hardware to the Nicaraguan rebels. Agents seized two long lists of weapons with the names of pastries next to them, which Lister explained were code sheets he and Blandón used when they "discussed weaponry over the phone." They also found a handwritten note bearing the names of several CIA operatives working with Eden Pastora ARDE Contra group in Costa Rica.
"The documents seized from Lister in 1986 largely corroborate his account of his relationship with Blandón and the Contras," the Justice Department concluded in 1997.
next
"They were looking in the other direction"
It prohibited the CIA, the Defense Department, or any other agency of the U.S. government from giving any money or aid to anyone for the support of the Contras. The money spigot had been officially turned off; the loopholes were sewn shut.
The CIA and Defense Department began withdrawing their trainers, advisers, administrators, tacticians, and logisticians from Central America, and by the end of the year the Contras were alone and in disarray. Thousands of rebel fighters began retreating from Nicaragua for the safety of Honduras. Money was scarce; weapons and ammo were in even shorter supply.
In early 1985, as the Contras spent their last batch of CIA money, another mini-scandal erupted. Allegations of Contra battlefield atrocities surfaced in reports from human rights groups, spotlighting murders, tortures, assassinations, and "the deliberate use of terror" by some Contra field commanders, putting the lie to Reagan's characterization of them as "freedom fighters," showing instead their connection to Somoza's hated National Guard.
Even the FDN's normally optimistic handlers in Washington began to despair. Reagan's national security adviser, Robert McFarlane, told FDN leader Adolfo Calero in January 1985 that maybe it was time to start thinking about "cutting both our losses and theirs." The administration's prestige was riding on the Contras; Reagan had gone so far during a speech as to compare them to the founding fathers of the American Revolution. The FDN's only ray of hope was to withdraw from battle and lie low until the spring, when Congress agreed to let the administration come back and make one more pitch for money.
Had Norwin Meneses popped up then with a federal cocaine trafficking indictment around his neck—after all the meetings he'd had with FDN directors Adolfo Calero, Enrique Bermúdez, Edgar Chamorro, and Frank Arana— the resultant scandal would likely have wiped out what little support the Contras had left in Washington. It would have also again tarred the CIA, which was reeling from the exposure over the harbor minings and assassination manuals. Even if nothing could have been proven conclusively about the CIA's involvement in the Contra drug ring, the agency was supposed to be the nation's primary intelligence-gathering arm—and its responsibilities specifically included monitoring the international narcotics trade. A plea of ignorance about dope dealing by its own paramilitary forces would have looked as bad as proof of complicity.
And that was assuming Meneses kept his mouth shut. If he started naming names, dates, and places, the scandal could well have spread into the CIA itself, as it would eleven years later. Former assistant U.S. attorney Eric Swenson, who was familiar with the investigations into Meneses, said the drug lord's activities with the Contras were well known to the Justice Department because he had personally reported it. And Justice wasn't the only agency that knew about it.
"The CIA knows about this guy," Swenson said in an interview. "I'm sure they do. I'm sure they do. The CIA knows a lot of crooks. I mean, the CIA knows." As it turned out, Swenson was right. A 1998 CIA Inspector General's report confirmed that, as early as 1984, the agency had information tying Meneses to a drug and arms network in Costa Rica, in partnership with top Contra official Sebastian "Guachan" Gonzalez.
Against that backdrop, and given the cozy relationship that existed between the CIA and San Francisco's U.S. attorney, Joseph Russoniello, it is hardly surprising that Norwin Meneses was not charged with drug trafficking in the spring of 1985. Even though one of his top lieutenants had pleaded guilty to cocaine charges and publicly implicated him as a major trafficker, allowing Meneses take the witness stand was out of the question. The drug lord simply knew too much. Not only was he in a position to expose the FDN's long involvement with drug merchants, but he could have led the police and the press to Danilo Blandón's booming enterprise in South Central Los Angeles.
And what a fine picture that would have presented.
Blandón was dumping a small mountain of cocaine into L.A.'s black neighborhoods every week, as well as providing South Central's crack dealers with assault rifles, submachine guns, and sophisticated telecommunications and eavesdropping gear.
Blandón was having the time of his life. As far as he and Ricky Ross were concerned, 1984 had been a terrific year. And 1985 was only going to be better. For one thing, Blandón was now an official guest of the U.S. government. The State Department, after two earlier rejections, had suddenly changed its mind in 1984 and decided to approve his application for political asylum. Now he could stay in America indefinitely and no longer had to worry about being summarily tossed out of the country. Had that fact been made public, all the propagandists and spin doctors in Washington would have been hard pressed to explain why the "Just Say No" administration had allowed South Central's biggest cocaine trafficker to call the United States his home.
Though the administration could have claimed ignorance, there were easily obtainable records proving that the DEA was fully aware of what Blandón was doing. Further, it is State Department policy to check with the DEA before approving applications for political asylum.
Records showed the drug agency had opened a NADDIS file on Blandón on May 24, 1983, after getting a tip from a confidential informant that he was a member of a cocaine trafficking organization. His attorney, Bradley Brunon, said in court in 1992 that the DEA's voluminous knowledge of Blandón's dope dealing stretched back even further than that. "I have some 300 DEA-6 reports regarding Mr. Blandón, and the reports relate to activities between approximately 1981 and May 1992," Brunon told a San Diego federal judge.
In early 1984, while Blandón's asylum application was under review at the State Department, the DEA learned from an informant that Blandón was "the head" of his own cocaine distribution organization based in Los Angeles, information that, as history shows, was accurate.
The same odd sequence of events happened with Blandón's wife, Chepita. First the DEA learned she was a drug dealer, then the State Department gave her political asylum. In early 1985 she was reported to the DEA as a "member of a cocaine distribution organization," and on March 15, 1985, the agency dutifully opened a NADDIS file on her. Later that same year she was granted political asylum.
Immigration experts agree that, normally, even the slightest hint of drug involvement by an alien results in deportation. "I've had clients deported because anonymous sources, people who were never even identified to us, allegedly told the DEA they were involved in drugs," said one California immigration lawyer. "One of my clients, he was a college professor from Thailand, was denied entry because he'd been arrested for smoking marijuana when he was a teenager, for Christ's sake. When it comes to drugs, it's an almost automatic no." In an interview, a State Department official confirmed there was a blanket zero tolerance policy for immigrant narcotics suspects.
Why those same standards didn't apply to Blandón and his wife is not known, nor is it likely to be. When the Justice Department's Inspector General looked at the Blandóns' immigration records, he found them "in disarray."
During 1984 and 1985, Ross and Blandón have admitted, their cocaine trafficking empire was at its zenith. Ross was selling dope so fast he didn't have time to turn it into crack anymore. He would just take Blandón's kilos, put a hit on them, and pass them along to smaller crack manufacturers, who more and more frequently were members of various Crips "sets" from across Los Angeles.
"It continued growing, growing, growing, until sometime he buy from me 100 a week," Blandón said. Ross was driving him nuts with his constant telephone orders for more kilos. "I was getting crazy because you have to move—I was the, the man that made the delivery every day, so he was calling me every day, two or three times. Sometimes we deliver at 2 o'clock, sometimes we deliver at 4 o'clock, and anytime—one o'clock, two o'clock, one A.M."
Blandón finally worked out an arrangement with his Colombian suppliers to give Ross large amounts of cocaine for little or no money up front—sell now, pay later. "I spoke with the Colombian and I told him, 'Hey, let's go and give some credit to this guy because he pays. He's a good payer.' I give 20, the first 25 keys on credit and tell him, 'Hey, don't bother me until you got the money.'" That initial advance by itself was worth about $1 million, wholesale.
There was a reason Blandón wanted Ross out of his hair for a while. The Blandón family had moved from Northridge, a suburb near downtown L.A., to neighboring San Bernardino County, settling into a sprawling Spanish-style home in the city of Rialto, some thirty miles outside Los Angeles. He'd withdrawn $175,000 in cash from his bank account in Panama and given it to Orlando Murillo, the former Somoza banker, who bought the house under his name to keep Danilo's name off the property rolls. From his hot tub on the terraced hillside behind his new house, Blandón could gaze out at the bucolic, rolling hills and towering pines of a country-club golf course.
In one sense, Blandón had a right to be proud of his accomplishments. He was the epitome of Reagan-era success, along with brigand financiers Ivan Boesky and Michael Milken. In only three years he'd gone from working in a car wash to running a multimillion-dollar-a-week operation, employing, directly and indirectly, hundreds of people, many of them inner-city residents who would have otherwise had little or no income. Thanks to Blandón, they were making thousands or tens of thousands of dollars a week.
He was the chief supplier to the largest minority-owned business in an area so forbidding that the government was offering to pay companies just for moving there. Blandón's "company" moved in and began producing high-paying jobs without ever once asking for a handout. Unlike many legitimate industries that merely pay lip service to the concept, the cocaine industry is a fervent believer in the get-government-off-our-backs philosophy of commerce.
The fact that Blandón's activities happened to be illegal —as were Boesky and Milken's, for that matter—was a technicality. After all, it wasn't his idea to start selling drugs; he'd done it to help the Contras. He was furthering official U.S. foreign policy in a very unofficial way.
As his longtime attorney Brad Brunon said, with a slight laugh: "You teach a man a craft and he's liable to practice it."
Blandón had practiced his craft well, and he was now enjoying the fruits of his labors. He hired a live-in maid and nanny for Chepita and his daughters, opened a restaurant —the Nicamex—and bought a car lot in nearby Fontana with an old college buddy, Sergio Guerra, a Mexican millionaire whose family owned major automobile franchises in Guadalajara. Guerra had the distinction of owning the last parking lot on the California side of the Mexican border in San Ysidro, which is like having a license to print money. The government valued its worth at around $29 million in the early 1990's.
Blandón's businesses were merely fronts through which to launder his drug money and provide a respectable explanation for his wealth and lifestyle. The used car lot—a favorite ploy among Nicaraguan traffickers—was especially handy. It was a cash-heavy business; lots of different vehicles were moving in and out all the time and their trunks were perfect places to store cocaine overnight, providing a plausible denial in case of accidental discovery. Cars that were sold for $2,000 were declared as being sold for $4,000. The car lot paid taxes on $4,000—at a rate cheaper than any money launderer would charge—and suddenly, $2,000 in drug profits had a legitimate pedigree.
Now that Danilo was a suburbanite with businesses to run, Ricky Ross certainly couldn't expect him to hop in his Mercedes and come running down to South Central every time Ross began getting low on blow. Blandón started asking Ross to drive out to Rialto to meet him, or he would bring the cocaine only halfway into town, leaving it in a load car at a shopping center parking lot.
Ross didn't mind the trips to Rialto, at first. Danilo and Chepita were fun to be around, he said, and he grew close to the couple and their daughters. "It would be just like any other wife if one of the employees come by the house," Ross said. "She'd cook dinner for us. 'Here, this is your room where you'll sleep at tonight. Here's your towels.' Know what I'm saying? So, she was playing along with the whole thing." Ross said she also knew the kind of business her husband was in. Once, he said, he found kilos of cocaine stored in their freezer, nestled in among the steaks and ice cubes.
At other times Blandón would take Ross and Ollie Newell out to dinner, question them closely about their business dealings, and then offer advice on how to improve their operations and safeguard themselves against both the police and other dealers. One of the best pointers he ever got from Blandón, Ross said, was "not to flash. Don't buy a lot of jewelry. Don't dress too fancy. That was the way he was. Always had on a nice suit and tie. Drove a nice car, but not too nice, know what I'm saying? No way you would look at him and say he was a dope dealer. Told us to buy some businesses, invest our money, so you can explain that you got a job. He taught us a lot."
The Torres brothers, in an interview with police in 1996, confirmed that "Blandón became very close to Ricky Ross. . .. Ross looked up to Blandón as a 'father figure.'"
But Ross noticed a change in his mentor's demeanor after he joined the country-club set in Rialto. "Danilo started getting relaxed. He didn't want to leave the house. 'I'm at home, man, I drinking.' Fuck that shit, man," Ross said.
Blandón was getting drunk frequently and snorting a lot of cocaine. "He would use so much his nose got red and he kept trying to get me to use it. 'Here, just take a little.' I didn't want no part of that shit," Ross said. "And I ain't never had a drink in my life."
Blandón's habits would leave him soft and bloated. The other Nicaraguan dealers began calling him Chanchin, "the fat pig." Ironically, that disparaging nickname turned up as an alias in Blandón's DEA files.
It all made Ross a little nervous. The way he saw it, people who got lazy got sloppy, and sloppy people made stupid mistakes. This was a business where you couldn't afford even one mistake. It had taken Ross two years to perfect his delivery and distribution system—using nondescript decoy cars and load cars, walkie-talkies, stash houses, cash houses, and safe houses—and everything was running smoothly. He'd never had any troubles with the cops. Nearly every big crack dealer in town was getting cocaine from him, and he'd done it without resorting to attention-getting violence.
The dollar was a powerful persuader, he discovered. There was no limit to the average cocaine dealer's greed. You could buy your way into anything, or out of any disagreement. But deep inside, Ross was gnawed by the fear that his cocaine empire could vanish as suddenly as his tennis career had, leaving him in jail, dead, or back out on the streets, running at cars again.
When he looked closely at his operation, he saw a glaring weakness: his exclusive relationship with Danilo Blandón. It didn't make sense to have his entire life resting in the hands of one person, Ross concluded. At first he'd had no choice. He was tied to Blandón by circumstance. "If Danilo had disappeared, we wouldn't have been getting no ounces, no nothing, you know what I'm saying? When we got started, if we wouldn't have had him, we wouldn't have been able to have found it nowhere else," Ross said. "Even if you had the money, you just couldn't get it."
But now that he was riding on top, Ross had no shortage of offers from other cocaine importers, major traffickers who dreamed of finding a customer the size of Freeway Rick.
Blandón once told an associate that the beauty of dealing with "the black people" was that they sold cocaine so rapidly there were no costs or security risks to be incurred by warehousing the dope and parceling it out over a week or two. They would take as much as you could sell them and it was gone in a day, he crowed; "The black people, you know, buy everything."
Ross said the other "players" who came around usually couldn't match Blandón's prices. Couldn't even come close, most of the time. "When everybody else in town was spending forty-five thousand for a key, we was getting them for thirty-eight. And we knew, with him, he like never ran out."
Blandón confirmed that the prices he charged Ross were lower than anything he charged his other customers; Ross sold so much, he said, he could "get good prices from my suppliers."
Still, price and supply were just part of the reason Ross had confined his cocaine purchases to Blandón. With someone else, who knew what kind of troubles you were buying into? A new supplier could turn out to be a head case, or a fly-by-night. A low price could simply be a snitch's offer.
Danilo, on the other hand, was his friend, his protector. Rick trusted him implicitly, and for good reason. Danilo had guided him, advised him, kept him out of trouble. And he genuinely seemed to like Ross. "All I knew was like, back in L.A., he would always tell me when they was going to raid my houses. The police always thought I had somebody working for the police," Ross said. "And he was always giving me tips like, 'Man, don't go back over to that house no more,' or 'Don't go to this house over here.'" The cops invariably raided the locations within a couple days.
Ross, realizing that he owed much of his phenomenal success to Danilo, felt almost superstitious about tampering with a winning formula. "I can't say I never would have found out about it, but before I met him, the chances of me being a big dope dealer were slim to none." But when Blandón wouldn't get his ass up off the couch, Ross decided to look seriously for other sources, people who would be there when Danilo didn't feel like making money. He also used the opportunity to teach his teacher a little lesson about complacency.
One of the offers Ross had gotten came from the towering Torres brothers, known to Ross and his crew as "the Greens." He'd met them through Blandón and assumed from their size that they were his bodyguards. They also delivered cocaine and picked up money for Blandón occasionally. One day—as most of Blandón's assistants eventually did—they slipped Ross their phone number, in case he ever needed something extra.
If Danilo trusted the Greens enough to work for him, Ross figured, that was a pretty good recommendation, and one particularly busy day he called the brothers up and said he was willing to talk some business. Their prices were about the same as Blandón's, he said, but Ross didn't intend to pay either supplier's price for very long. Once the Torres brothers started selling to him, Ross used them to whipsaw Blandón on his prices, pointing out that his "other suppliers" were offering him a much lower price than his good friend Danilo. And he'd play the same game with the Torreses.
Blandón acknowledged that Ross began getting cocaine from "another two suppliers. . .they were my friends. . .. He got the coke from me, from Torres, from—see, not only from me. I got a piece of the apple." And he confirmed that Ross started driving his kilo prices down even further. But the new relationship had a bit of a rocky start. Jacinto Torres quickly got into trouble with the police.
He and his wife Margarita had quarreled, and he'd moved out, renting a room at his friend Robert Joseph Andreas's new four-bedroom house in Burbank. On April 6, 1984, shortly before 9:00 P.M., a team of Burbank narcotics detectives acting on an anonymous tip came crashing in through the kitchen door. They found a number of Nicaraguan women sitting around the kitchen table.
Jacinto Torres was stretched out on the bed in his room. In his dresser the police found a half-ounce of cocaine, a .38-caliber pistol, $3,700 in cash, and "large men's clothing." He and Andreas were thrown into the back of a prowl car and whisked off to jail. In Spanish, Torres and Andreas cursed their predicament, unaware that the cruiser was equipped with a secret taping system that was recording their every word.
"Stupid," Torres spat. "My money, my ledger, my clients, all the names. They are going to find a house I have got rented and if they get there, the whores, I don't want to think about it. Great God."
He turned to Andreas and said, "Rick is the one who fingered us."
"No, I have known him for a long time."
"They came looking for him," Torres replied. "Don't say nothing."
"It's nothing," Andreas assured him. "It's just half an ounce, almost nothing. They can't do nothing. I don't know if they found the house. I don't believe they did."
Court records show the police later searched a house in Northridge they thought belonged to Torres, an address that shows up on Blandón's NADDIS report as being one of his residences. But no drugs were found.
During the preliminary hearing, one of the arresting officers was asked about the search he'd conducted of Jacinto Torres's Mercedes Benz, and a very odd conversation ensued.
"Did you find any contraband in the Mercedes?" Torres's attorney, Joseph Vodnoy, asked Burbank police officer James Bonar.
"No contraband," Bonar answered. "Just some property of the United States Customs. No contraband."
"Wait a minute. . ." the judge said.
"I move to strike that answer!" Vodnoy shouted.
"Just a minute," the judge said. "What is it now you want to strike?"
"I asked him did he find any contraband? The answer was no. Then he went on to say something about United States Customs," Vodnoy complained.
"Property belonging to U.S. Customs?" the judge asked Bonar.
"It was not contraband. No no," Bonar replied.
"It will go out," the judge decided.
What U.S. Customs property the police found in Torres's car is not known, as all the police files from that case were destroyed. The charges against Torres were quickly disposed of. Four months later he pleaded guilty to a lesser charge of cocaine possession; he was fined $500 and given no jail time.
That outcome didn't please Jacinto Torres's probation officer, who referred to him as "that big guy who always comes in here in short pants." He told Torres's attorney, "You know your client's guilty. All we want is for him to serve some time. . .. This guy was a troublemaker as far back as 1970."
But even though Torres would violate his probation several times, no action would ever be taken against him. He went right back to cocaine trafficking.
Ross eventually turned Blandón and the Torres brothers against each other, a situation that would have dire consequences for Blandón in later years. The longtime friends became bitter rivals, fighting each other for Ross's business. One night, Ross said, he realized just how heated the rivalry had become.
While Ross was twitting a drunken Blandón about how low the brothers' cocaine prices had fallen, Blandón looked at him blearily, announced that "Chepita was fucking one of them," and said he wasn't going to take such an insult sitting down. He had a little plan he wanted to discuss with Ross to even things up.
"Danilo wanted to kill him," Ross said.
Blandón suggested that Ross set up a cocaine buy with the adulterous brother and "'tell that motherfucker to bring it at such-and-such a place, and I'm going to have some guys there waiting and you keep the dope. I'm going to take care of that fucking guy.'"
Ross said he laughed off the idea, figuring it was the liquor talking.
But the Torres brothers confirmed the story and took it one step further. In an interview with police, they "explained that Danilo Blandón's wife told him she had an affair with one of the [brothers] in a fit of anger. Blandón became enraged and hired a former military officer of the Nicaraguan army to kill him."
The brothers said Blandón "apparently realized his wife had lied to him about the affair and called off the hit man." Blandón said he never knew just how much cocaine the Torreses were selling to Ross, but he estimated that their volume rose to a level comparable to his own. He saw them "getting rich," he said. "If I sell a week to him, a hundred, maybe they go buy 50 or something like that. If I didn't sell him 100, they will sell him like, like 100 to him, you know? It was all the competition."
The brothers admitted to the police that they were selling "large amounts of cocaine to Ross on some occasions."
If Ricky Ross was going through 150 kilos of cocaine every week—and Ross says the figure is a reasonable average—it means he was selling enough to put a staggering 3,000,000 doses of crack on L.A.'s streets every seven days. It also means Blandón and the Torres brothers were sometimes sharing about $5.7 million a week in cash from the prolific young dealer. "Sometimes, we'd spend $4 million or $5 million a week with that guy, in our hell days," Ross said, speaking of Blandón.
Blandón said Ross was using an apartment in South Central as a counting house, where the money from the drug sales was brought, sorted, and wrapped. He would pick up his payments there. "When he [Danilo] came over we'd be counting the money and he said, 'Man, I'm gonna have to get you a money machine.' Because you know, our problem had got to be counting the money. You know, I started telling him, 'Man, my fingers hurt!' We got to the point where it was like, 'Man, we don't want to count no more money.'"
Blandón agreed that Ross was being deluged with cash. "Those times, they were using two or three machines, counting machines, and they were counting day and night."
To hide it all, Ross followed Blandón's advice and started investing in real estate, buying houses, apartment buildings, an auto parts store, and a hotel near the Harbor Freeway called the Freeway Motor Inn. In addition to giving Ricky Ross his nickname, "Freeway Rick," the motel served as a secure meeting place for dealers and couriers.
There was so much cash and so much crack flying around South Central that even the mainstream media had started to notice. On November 25, 1984, one day before the DEA arrested Jairo Meneses and Renato Pena Cabrera in San Francisco, the first story about crack to appear in the national press was published by the Los Angeles Times. It was written by Andy Furillo, a freckle faced police beat reporter who'd been hired away from the smaller Los Angeles Herald-Examiner.
When he talked to some of the officers at the South Central stations, Furillo said, several of them mentioned this flood of cocaine they were seeing in the ghettos. He hit the streets, knocked on some doors, and confirmed what the officers told him—and then some. There was, he discovered, a gigantic, wide-open cocaine market flourishing in the poorest section of Los Angeles—and no one except the neighborhood newspapers had written a single word about it. It was a hell of a story, he thought.
Headlined "South Central Cocaine Sales Explode into $25 Rocks," Furillo's scoop began: "Police say hundreds, perhaps thousands, of young men, most of them gang members, are getting rich off the cocaine trafficking that has swept through L.A.'s black community in the past 18 months." Furillo described the rock house phenomenon and the multitude of street-corner dealers. He quoted police as saying that there were several hundred rock houses in South Central at that time. And his story accurately predicted that crack was a threat that could "destroy South Central Los Angeles for years to come."
Naturally, the Times buried the story inside the paper. But it was enough to prompt an embarrassed LAPD to launch raids on several dozen rock houses shortly afterward, with tragic results. On December 13, a diversionary explosion the cops set off during a raid on a West Sixtieth Street rock house killed a woman who happened to be walking by at the wrong time.
The crack phenomenon, Furillo said, fascinated him, and he pressed to do more stories on it, but his editors at the Times showed little interest in having him pursue the topic. Furillo eventually quit the paper in disgust and returned to the Herald-Examiner, where he continued producing gritty, ground-breaking stories on crack's impact on L.A.'s inner city residents.
Furillo's piece in the Times also caught the eye of the Washington Post's L.A. bureau chief, Jay Matthews, who did a follow-up in December 1984. That story described rock cocaine as "a marketing breakthrough that furnishes this middle-class drug to the city's poorest neighborhoods" and said rock houses—described as "steel-door dispensaries"—were "growing like a new fast-food chain." But as rapidly as the drug was spreading, the Post reported, it was still only an L.A. fad, and the story quoted unnamed "narcotics experts" as saying that "the hard little pellets of cocaine powder, selling for as little as $25, have not been found in significant numbers outside Los Angeles."
Bobby Sheppard, intelligence unit supervisor for the U.S. Drug Enforcement Administration in L.A., told the newspaper that he "saw no sign of rock cocaine spreading to the rest of the country, 'but I've got to believe that if it isn't there yet, it probably will be in the future.'" The story ended somewhat strangely by comparing crack to the clove cigarette fad of middle-class white teenagers.
It would be another year before other East Coast papers would begin reporting on crack; this timing coincided with the drug's belated arrival in New York City. "Crack first came to the attention of the New York Field Office Division of the Drug Enforcement Administration in the fall of 1985. The New York Joint Drug Enforcement Task Force made the first significant seizure of crack on October 25, 1985," said Robert Stutman, the head of the DEA's New York office, in 1986 congressional testimony. "A form of cocaine similar to crack but known as 'rock' has been available in Los Angeles for the last five years." According to then NYPD commissioner Benjamin Ward, "In January of 1985, of all cocaine arrests made by the Narcotics Division, there were fewer than fifteen arrests for crack."
Furillo's story also prompted the first scientific look at the early L.A. crack market, done by USC sociologists Malcolm Klein and Cheryl Maxson in early 1985. Their preliminary findings, published in a small social research journal, noted that "throughout the Black residential areas of Los Angeles County, there has been a recent, dramatic increase in cocaine dealing. . .in large part from the proliferation of cocaine 'rocks' and fortified 'rock houses' which, with certain refinements, constitute a new technology and organization for cocaine distribution. An increasing trend in the distribution system is the use of street gang members in various dealing roles."
The study said that "estimates on the number of [rock houses] in South Los Angeles, a Black area where the phenomenon is concentrated, range from one to two hundred at a time to as many as a thousand."
Some rock houses were even being franchised, they found, and said "gang involvement is a connected part of a very rapid process by which this system has been institutionalized." The distribution system "yields ready access to inexpensive cocaine in a very large Black community in Los Angeles."
One thing they were unable to explain was why crack was found only in L.A.'s black neighborhoods. The drug, the sociologists wrote, "at least currently seems to be ethnically specific. Cocaine is found widely in the Black community in Los Angeles, but is almost totally absent from the Hispanic areas."
The explanation for that seems obvious once the Danilo Blandón-Rick Ross partnership is factored into the equation. "There was no market until we created it," Ross said matter-of-factly. "We started in our neighborhood and we stayed in our neighborhood. We almost never went outside it. If people wanted dope, they came to us."
The USC sociologists' predictions for the future were frightening and, as history has shown, dead-on accurate. "The distribution system seems custom-made for other Black gang centers (Philadelphia, New York, Washington, Chicago, etc.)," they wrote. "There is absolutely nothing inherent in this distribution technology, nor in the Los Angeles context of its development, that would prevent its exportation to many other urban areas. Indeed, exportability seems very high. . .. All this makes for an intelligent, well organized system that is maximally effective—in short, it works efficiently, is very impressive and could easily explode across the nation."
And that is essentially what happened.
While the Washington Post story made no mention of the L.A. street gangs, Andy Furillo's story tagged them as the prime beneficiaries of the new crack trade. He presciently predicted that crack would dramatically alter the power structure on the city's streets, by providing the gangs with the one thing they had previously lacked: money. "Tom Garrison, director of field operations for the Community Youth Gang Services Project, said the utilization of the gang structure by drug dealers represents 'a whole new challenge for us,'" Furillo wrote. "'They've always had the numbers and the firepower, but now they've got the economic power too.'"
Klein and Maxson later came to believe that the police were exaggerating the role of gang involvement in the crack trade, but two later studies by the California Department of Justice refuted that idea and said the gangs were an even bigger force behind its spread from L.A. than previously thought. "We think that law enforcement perceptions of gang involvement in the drug trade are sharper than the Klein and Maxson statistical study suggest," UC-Berkeley sociologist Jerome Skolnick wrote in 1988. "In fact, it appears difficult to overstate the penetration of Blood and Crip members into other states."
The U.S. General Accounting Office (GAO), in a 1989 report, echoed Skolnick's conclusions: "In the early 1980s the gangs began selling crack cocaine. Within a matter of years, the lucrative crack market changed the black gangs from traditional neighborhood street gangs to extremely violent criminal groups operating from coast to coast. The lure of profits coupled with increased pressure from local police have prompted the Los Angeles gangs to extend their territories far beyond their neighborhoods. Within the past three to four years, members of the Crips and the Bloods have been identified selling or distributing crack in Washington, Oregon, Kansas, Oklahoma, Colorado, Missouri, North Carolina, Arizona, Virginia, Maryland and elsewhere."
The GAO report noted that a Washington, D.C., crack ring in 1989 was distributing 440 pounds of cocaine there every week, which "illustrates the nationwide impact of the Los Angeles street gangs. Much of the cocaine distributed by the gang was allegedly purchased from the Crips and the Bloods, who had purchased their cocaine from the Colombians."
The report included a map of the United States showing ominous black arrows emanating from L.A. and streaking northward and eastward across the country. The map was pockmarked with black dots—all the cities where crack had been found. Miami for some reason wasn't among them, although by 1985 the Jamaican posses from Liberty City had reportedly started their trek westward. They also began bringing crack to some African-American neighborhoods, but their primary markets were in areas populated by Caribbean immigrants. One drug researcher, Nick Kozel of the National Institute on Drug Abuse (NIDA), went to Miami specifically looking for crack after reading Furillo's article and, according to one account, "came up empty-handed."
Ross said that while he did not sell exclusively to Crips gang members, they initially formed a large part of his customer base simply because he and Ollie were from a Crip neighborhood. But that only mattered in the beginning, he said. By 1984 and 1985, they were so far removed from that level of dealing that gang colors or the 'hoods their buyers hailed from were trivialities.
Freeway Rick was the dealers' dealer. What his customers did with their cocaine, who they sold it to, and what they fought about afterward made no difference to him. One customer was just as good as another, as long as they paid. All that other stuff just got in the way of making money. "By the time the market exploded in 1984, Ross already was dealing directly with the Colombian cartels, who supplied him with 50 to 100 kilos a day," the Los Angeles Times stated in 1994. "With that, Ross was able to operate dozens of rock houses, catering to thousands of addicts across Los Angeles. He had another three 'ounce houses,' servicing 100 to 200 mid-level dealers. Finally, he had his own private list of V.I.P. customers, maybe 30 to 50 big-time dealers, who dropped tens of thousands of dollars at a time."
As the South Central crack market became saturated, Ross's gang customers started traveling to other cities in California to make their fortunes, setting up new crack markets and using their connections with Ross to supply them. It was the start of an unprecedented cross-country migration by the Crips, and later the Bloods, which would spread crack from South Central to other black neighborhoods across the United States.
And it was the start of Ross's expansion from a large regional drug trafficking network to what the L.A. Times would later call "a coast-to-coast conglomerate that sold more than 500,000 nuggets of the drug every day." One L.A. narcotics detective would describe it as "a cartel."
South Central—ground zero of the crack explosion— would never be the same again.
Like night follows day, crack brought a host of attendant plagues: a flood of automatic weapons, rock houses, motorized police battering rams, drive-by shootings, and pitched gun battles. At the same time, the Reagan administration began snipping away at the fragile social support services that had made life in the inner cities livable, if not luxurious.
A commission examining the causes of the 1992 riots in South Central named crack as one of the contributing factors. The drug was the beginning of the end for many struggling inner-city neighborhoods in the 1980s. They changed from places where generations had raised families in relative safety to free-fire zones where children could be mown down as easily as if they were walking the streets of Beirut.
"With rocks hitting the streets hard, and the money that was generated. . .about '84 or '85, guns hit the streets hard. Around '86, '87, it was on. You name it, you could get it," Leibo, an East Side Crip, told authors Yusuf Jah and Sister Shah'Keyah. "You didn't hear that much about 9- millimeters, M-16's, M-14's and AKs unless you were hooked up and was high on the echelon, but after 1986 they were available to anybody."
Here again, Danilo Blandón was a trendsetter.
Blandón began selling high-powered weapons to Ross and his friends in 1984, courtesy of his spooky associate, Ronald J. Lister, the ex-cop. "We started handling more and more money and then the first gun that I ever had, Danilo gave it to me for free," Ross said. "He just came by the house and said, 'I've got a present for you.' It was a .22 pistol. I think it was a 15-shot, with a silencer on it. . .. He started selling us guns after that. Everybody that worked with me—everybody—bought a gun from him."
Blandón had access to every imaginable firearm, he said. "I mean, he sold what is called a Streetsweeper, the Thompsons, he sold those. I think he sold those for like $3,000 apiece. It's a fully automatic that you see like in the movies, you know, in the old gangster movies," Ross said. "He sold Uzi's, he sold pistols, brand new pistols, .38, .357, any kind of pistol that you wanted. . .any kind of gun that you wanted, he got it for you."
Ross, who bought a silver-plated Uzi submachine gun, said his partner, Ollie Newell, became one of Blandón's biggest arms customers and soon had enough firepower to equip a platoon. One of his prize possessions was a tripod-mounted .50-caliber machine gun, which can down small planes.
"Like, I started buying houses, right? Well, Ollie started buying guns. He'd buy anything Danilo would walk through the door with. We had our own little arsenal. One time, he tells me Danilo was gonna get him a grenade launcher. I said, 'Man, what the fuck do we need with a grenade launcher?'"
He and his fellow dealers, Ross said, bought more than a hundred guns from Blandón. He sold so many to other dealers and friends that, by 1987, the L.A. police would list "weapons sales" as among Ross's various enterprises. Blandón denies selling Ross that many weapons, but he did admit selling him a .22 pistol, an Uzi machine pistol, and an Armalite AR-15 assault rifle, the civilian version of the military's M-16. The AR-15 was a weapon the Contras bought by the thousands. Blandón owned one himself.
Blandón described his weapons sales as nothing more than a convenience for Ross and insisted he was no arms dealer: "I don't sell guns, okay? I sold that gun because he ordered [them from] me—because I knew the people who sell the guns." He said he never used weapons in his business and tried to pass that practice along to Ross.
So how was it that Danilo Blandón, a drug dealer, knew arms merchants?
"Because I was in the Contra revolution," he replied.
The guns sold to the crack dealers, Blandón explained, came from Ron Lister and his associate William Lee Downing, through their "security business" in high-class Laguna Beach. Lister admitted to the CIA that he began acquiring weapons for Blandón between 1982 and 1983, "some of which Blandón claimed were going to 'my friends down South.'" Lister said he sold Blandón one or two guns a week: "Assorted handguns, semiautomatic Uzi machine pistols, KG 99 Tec Nine machine pistols, and possibly semi-automatic AK47's." He also admitted "purchasing a small number of commercially available, off-the-shelf night vision devices for Blandón. Lister says he does not know what Blandón did with the devices."
Blandón told CIA inspectors that Lister had access to such a wide variety of weapons that, in 1983 or 1984, he arranged for him to give a sales presentation to the leadership of the Contras. "Blandón recalls that, in addition to the usual attendees, several top Contra leaders were also in attendance, including Eden Pastora, Adolfo Chamorro and Mariano Montealegre. Blandón also says Ivan Torres was present," the CIA report stated. Mariano Montealegre, a CIA-trained Contra pilot, was implicated in a scheme to haul drugs for the Contras but never charged. Ivan Torres was a drug-dealing subordinate of Blandón, identified in DEA records as having "political connections to the FDN."
"Blandón said the attendees showed no interest in Lister's offer and Blandón received the impression that the military arms of the Contras was already being supplied by CIA or another U.S. government agency," the CIA reported.
During a 1996 court case, Blandón was asked if he went to Lister's security company and bought weapons "off the rack."
"No, he brought them to me."
"Brought them to you?"
"Uh huh."
"Where?"
"To my house."
"What did you do—call him up and order some?"
"No sir. He'd shown me that, and he told me that. And I offered them like a salesman, you know? He [Ross] ordered and I sold it."
"So you were doing another one of your brokerage things?"
"Yes."
"Sir, this business that you were in is not like selling paper to offices, is it?"
"Excuse me," Blandón huffed. "In those times you can buy a gun from the gun shop and you can sell it to anybody, okay?"
"But you sold Uzis!"
"Those guns," Blandón said calmly, "they weren't stolen."
The "security business" that provided Blandón the weapons was Mundy Security Group Inc., which Lister incorporated in Laguna Beach in mid-1983. Lister, an attorney named Maurice Green, another attorney named Gary Shapiro, and his reserve police officer buddy, Christopher W. Moore, were named as directors and officers. A business card found in a drug raid three years later identified Blandón as a vice president of that company.
Moore said the goings-on at Mundy Security Group's offices were enough to scare anyone. Director Maurice Green, he said, was a self-proclaimed legal genius with a severe drug and alcohol problem. He had a special wall constructed behind his desk that was hollow, Moore said, so he could kick through the paneling and run out of the building in case he needed to beat a hasty retreat. "I walked by his office one day and he was sitting at his desk looking down the barrel of a gun," Moore recalled. "I went into Ron's office and said, 'Hey Ron, you know Maurice is sitting in there playing with a gun?' He just laughed about it." Once, director Gary Shapiro said, the office was besieged by a mob of angry doctors who "were screaming and yelling about how Maurice had screwed up with their money." Lister was so wary of Green that he secretly videotaped him,
Shapiro said. Green was prosecuted and disbarred in 1987 for forging prescriptions to obtain narcotics. In 1992 he was sentenced to two years in prison for grand theft and practicing law without a license.
Aside from a few burglar alarm installations, Moore said, the only other business that he knew Mundy Security Group was involved in was an attempt to market a laser sighting device for AR-15 assault rifles. Lister's partner, Bill Downing, was designing that gizmo, which used a tiny laser beam to put a small red dot on the target—perfect for killing people at night.
According to a 1996 report from the U.S. Customs Service, Mundy Security Group was licensed with the U.S. State Department in 1983 to export U.S. Munitions List items to other countries. "This firm received three DSP-73s [temporary export licenses] to export laser components and spare parts to 'various countries,'" the Customs report stated. "Unfortunately, the data base here at the Department of State does not contain abundant information on registrations/licenses that old, so I am unable to provide. . .more specifics on the types of equipment and countries exported to." [CIA cutout DC]
Blandón also did a brisk business selling electronics equipment to other cocaine dealers, he said. He sold walkie-talkies to Ross and his crew, who used them to keep in touch during cocaine and money pickups. He sold pagers, police scanners, voice scramblers, cellular phones, and anti-eavesdropping equipment to the dopers. "I could sell to all the people that was in the coke business," he said. Again, Ronald Lister procured that equipment for him. Blandón said Ross "used to live in an apartment beside the freeway, you see, in San Pedro, San Pedro Freeway in L.A. It was an apartment by Florence, if I remember, by the freeway. So I get him [Ross] a scanner, telephone security, you know, when you put the thing in the telephone and you can get on another phone and talk to him and nobody will listen."
Ross said his crew carried the police scanners in their cars while out on drug deliveries, eavesdropping on the conversations between the patrol cars in the neighborhood. They also used one in the counting house when there were large sums of money on hand. During one 1987 raid, some of their equipment fell into the hands of the L.A. County Sheriff's Office, and the cops were suitably impressed. "They've got electronic police-detection systems, sophisticated weapons—better equipment than we have," Sergeant Robert Sobel complained to a reporter.
Sobel and his team had raided Ross's "Big Palace of Wheels"—a well-stocked but curiously customer-free auto parts store that was one of his many front corporations— and they also hit an apartment belonging to one of Ross's dealers. At the store, Sobel said, "We found hand-held, programmable 800 megahertz radios which are better than our radios, which they use in their counter-surveillance thing, when they communicated with one another when they transported cocaine."
The apartment coughed up "several sophisticated firearms, including an Israeli .357 automatic pistol with a laser-type sighting device, which facilitates its use during darkness," according to the affidavit of one of Sobel's partners. The search also found Teflon-coated bullets, commonly known as "cop killers" because they can easily pierce an officer's bulletproof vest.
In an L.A. Police Department summary of searches at locations associated with Ross, Deputy Chief Glenn Levant wrote that "numerous 9-mm Uzies [sic] were seized, along with an AK-47 assault rifle, a fully automatic Mac-11 machine gun, a fully automatic machine gun complete with silencer, and state-of-the-art handguns, rifles and shotguns."
Eventually Ronald Lister's skills in procuring such high tech marvels brought him to the attention of the FBI. On April 3, 1985, two FBI agents, Richard Smith and David Cook, came knocking on the door of Lister's well-tended home in Mission Viejo. They had a grand jury subpoena to deliver and a statement to take. They "hammered on who I might know in East block countries. See's a spy situation," Lister wrote after they left.
He confirmed to police in 1996 that he had been the subject of a "grand jury investigation on my relationship with Soviet agents. Crazy, huh?" Lister "went on to say that he had sold an FBI 'scrambler system' to somebody overseas and the FBI had investigated only to find out that the equipment was declassified and available on the open market."
But FBI agent Smith, now retired, remembered things a little differently. He told the police that "he had received information that Lister was attempting to sell classified electronic equipment to Soviet KGB agents. They conducted an investigation, which included a sting operation in which FBI agents posed as KGB agents. [He] said Lister was attempting activities which were completely illegal and clearly in violation of United States national security."
Lister's former chief, Neil Purcell, confirmed that the FBI had Lister under investigation but recalled that the gear involved high-tech camera equipment. "They came down to see me. They were absolutely convinced he was selling this stuff to the Russians and tried to get background on the guy and after I listened to them, I said, 'Pardon me for laughing, but he's taking you guys for a ride, believe me.' And they said, 'We've got photographs!' and [they] showed me photographs of him meeting in San Francisco and New York with the Russians and at the Embassy in Washington —on and on."
Purcell said the FBI discovered that Lister was "bullshitting the Russians, charging them four and five times what he paid for it. The kind of thing that's really laughable about this is the Russians think they've really got something and they could have gone to the camera store themselves and bought it."
Former agent Smith claimed that Lister was never prosecuted because he turned out to be "full of hot air" and was "determined to be incapable of producing the equipment which he was attempting to sell to the KGB. Lister's lack of 'present capability' to commit the crime made prosecution impractical." But Smith acknowledged that "the Assistant U.S. Attorney who handled the case felt, however, that Lister's activities were serious enough to warrant a grand jury hearing."
Lister admitted to L.A. police that he had been called before the grand jury and questioned about his activities. When the police asked him about the nature of the equipment involved, he said, "I can't get into that stuff with you guys." Lister was never indicted and told police he was unclear as to the outcome of the grand jury investigation. "That's all classified, incidentally," Lister told them. When the detectives asked him why the information would be classified, Lister said, "I can't answer that for you." [Like I said...Criminally Insane Association cutout/asset DC]
If the L.A. detectives were as skeptical of Lister's cloak and-dagger work as ex-FBI agent Smith and former chief Purcell seemed to be, they must have gotten quite a jolt when they called the FBI to ask for a copy of their old files on the Lister investigation. "Special Agent Tim Bezick. . .stated that the FBI reports and the transcripts of Lister's grand jury testimony were protected by the National Security Act," Detective Axel Anderson wrote on November 20, 1996. "At Bezick's suggestion I called Joel Levin, chief of the Criminal Division of the San Francisco office of the United States Attorney. Mr. Levin researched the issue and confirmed the necessity of a court order."
They got similar reactions when they checked on Lister's background with the Maywood Police Department and the Laguna Beach Police Department, his old employers. "The personnel jacket for Ronald J. Lister has been sealed by the City of Maywood," they reported in November 1996. In Laguna Beach they learned that "the actual personnel files related to Ronald Lister no longer existed. . .all the information and documents in the Lister file had been purged, with the exception of the original employment application."
The FBI never turned over the documents, and the L.A. detectives were unable to determine why the files of a decade-old investigation of a dope dealing arms merchant with an allegedly overactive imagination would still be a matter of national security.
A significant clue, however, can be found in some documents seized during a 1986 narcotics raid on Lister's house. One of the many curious items the police carted away that day was a ten-page, handwritten document that details weapons and equipment deals by Lister. Lister admitted to the police that he had written the document in preparation for his 1985 grand jury appearance. The notes chronicled a series of meetings with a customer named "Ivan" at the Fairmont Hotel in San Jose, California. Ivan was uninterested in Lister's scramblers, the notes said, but asked Lister to procure some "Varo night vision equipment." The notes also told of Lister visiting the Russian embassy in Washington, D.C.
After jotting down a description of the April 1985 visit from FBI agents Smith and Cook, Lister wrote down a list of seven names. "Lister said he gave the above names to the FBI agents Rich Smith and Dave Cook," the police detectives wrote in their 1996 report. "He said the names 'came up in his business' for some reason and he wanted to have the names in writing when he went before the grand jury. . .. Lister said the people listed were only 'business people.'" The last two names on the list were Roberto D'Aubuisson, the right-wing Salvadoran death squad leader whom the CIA later acknowledged to be a drug and weapons trafficker, and Ray Prendes, the former head of the Salvadoran Christian Democratic party, which received substantial CIA financial assistance during the 1980s.
The detectives didn't ask why Lister would be having business dealings with CIA-linked Salvadoran politicians, or what the nature of that business was.
But the most intriguing name on Lister's list was at the very top of it: Bill Nelson. "Lister said that Bill Nelson was an A.S.I.S. member, which he said stands for the American Society of Industrial Security. Lister said that Nelson was the security director for the Fleur [sic] Corporation," the detectives' report said. William Earl Nelson was far more than that, but Lister didn't elaborate, and the detectives didn't push him. Had they done so, they might have gotten a better idea about why the FBI's files on Lister would still be classified eleven years later.
Before becoming Fluor Corporation's vice president for security and administration, Bill Nelson had been the CIA's deputy director of operations—the head spook—the man in charge of all CIA covert operations around the world from 1973 to 1976. A Fluor spokeswoman initially denied to journalist Nick Schou that Nelson had been affiliated with Fluor until Schou confronted her with documentary evidence of his employment there. Only then did she admit it, saying Nelson had worked at Fluor from 1977 to 1985.
A former CIA officer, John Vandewerker, confirmed to Schou that Nelson and Lister knew each other. Apparently, when Lister was running out to Fluor's headquarters in 1982 and 1983, it was Bill Nelson with whom he was meeting—"Ron's big CIA contact," as Lister's former office director, Chris Moore, described him.
They didn't get much bigger than Nelson, a protege of former CIA director William Colby. A native of New York, Nelson had been a CIA officer since 1948, serving under a variety of military and State Department covers, mostly in the Far East. Japanese newspapers exposed him as CIA after they learned he was asking travelers to the Soviet Union to literally dig up dirt around Russian missile bases.
As head of covert operations, Nelson oversaw the CIA's controversial destabilization program in Chile, which resulted in the overthrow and murder of Chile's elected president, socialist Salvador Allende. Later, Nelson commanded 'Operation Feature,' a covert plan to place a "friendly" group in power in Angola after the former African colony was granted independence from Portugal in 1975. He was named as a defendant in a civil suit filed by the widow of an American mercenary the CIA recruited to fight in Angola in 1976. The widow claimed the CIA misled her husband about the hopelessness of his mission and then engaged in a smear campaign to distance itself from him when he turned up dead. The suit was eventually dismissed.
Nelson's Operation Feature bore many similarities to the Contra project, particularly in terms of how the CIA's proxy army received its weapons. That could explain why Lister— who has admitted dealing arms in Latin America—was meeting with Nelson. In both operations, arms and equipment for the CIA's secret armies were laundered through the armies of neighboring countries friendly to the United States in order to disguise their origins and preserve deniability for the CIA. In the Angolan conflict, the countries of Zaire and South Africa were used. Guatemala, Honduras, and El Salvador fronted arms shipments for the Contras. In both cases the CIA turned to the People's Republic of China to supply additional weaponry and missiles to its chosen fighters
Evidence of Lister's involvement in sophisticated international arms transactions was found in the notes Lister made, naming Nelson and the Salvadoran politicians. Lister had drawn a flow chart containing boxes labeled "Swiss Bank," "U.S. State Department," "H.K.," "X Country," and "Factory USA." Strange acronyms and abbreviations were jotted alongside each box.
When the L.A. County Sheriff's Office sent Lister's flow chart to the U.S. Customs Service for analysis in 1996, Customs said it appeared to diagram a scheme to illegally divert American-made weapons to a third party, using fraudulent end-user certifications (EUCs) from another country to conceal the true identity of the weapons' recipients. EUCs are sworn declarations in which the government buying the weapons certifies that it really did order them. It is supposed to provide the U.S. government with some assurance that American-made weapons aren't ending up in the hands of terrorists or Communist guerrillas. When Oliver North began supplying arms for the Contras after the CIA funding cutoff, he frequently used phony EUCs from the Guatemalan and Honduran governments to divert weapons to the Contras, records show.
"The Contras can't buy weapons on the international arms market. Only countries can buy weapons, and certain countries can't buy weapons if they're embargoed or if they're embroiled in a political confrontation," explained former CIA official Alan Fiers, who ran the Contra program for several years. "So what happens is an arms broker will get an intermediary country to issue false end-user certificates. There is generally some consideration involved and the end-user certificate is issued, but the arms are either not shipped to the country that issued the certificate or are trans-shipped through that country on to a disguised end user, in this case, the Contras."
That was precisely what the flow chart seized from Lister's house illustrated, according to the U.S. Customs Service arms expert who analyzed the document. "Were this transaction taking place today," Senior Special Agent James P. McShane wrote, "I would assume that there was to be a [weapons] diversion to either Iran or the People's Republic of China, neither of which can get licenses for exported munitions."
Just what the CIA's former boss of covert operations, who by most accounts was an upright individual, could possibly have had to discuss with an admitted cocaine trafficker, drug addict, and gun runner like Ronald Lister is hard to fathom, and the exact nature of their relationship is likely never to be known. In April 1995, wracked with pneumonia, Nelson died of respiratory failure in an Orange County convalescent hospital at the age of seventy-four. But it is conceivable that their connection had something to do with the Contras and weapons. At the same time that he was reportedly meeting with Nelson, Lister was also advising the Contras on security matters and peddling arms.
Other documents seized from Lister in the 1986 raid lend support to this idea. According to the Justice Department, Lister's monthly calendars for 1985 contained "frequent references to the Contras," notations reading "SF Contras," "LA Contras," "D-Contra" and at least one reference to the Defense Intelligence Agency, which was known to be involved in supplying military hardware to the Nicaraguan rebels. Agents seized two long lists of weapons with the names of pastries next to them, which Lister explained were code sheets he and Blandón used when they "discussed weaponry over the phone." They also found a handwritten note bearing the names of several CIA operatives working with Eden Pastora ARDE Contra group in Costa Rica.
"The documents seized from Lister in 1986 largely corroborate his account of his relationship with Blandón and the Contras," the Justice Department concluded in 1997.
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"They were looking in the other direction"
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