Gary Webb’s Incendiary 1996 SJ Mercury News Exposé

Aug 22, 1996

Cocaine pipeline financed rebels
Evidence points to CIA knowing of high-volume drug network

by Gary Webb
San Jose Mercury News

For the better part of a decade, a San Francisco Bay Area drug ring sold tons of cocaine to the Crips and Bloods street gangs of Los Angeles and funneled millions in drug profits to an arm of the contra guerrillas of Nicaragua run by the Central Intelligence Agency, the San Jose Mercury News has found.

This drug network opened the first pipeline between Colombia’s cocaine cartels and the black neighborhoods of Los Angeles, a city now known as the “crack” capital of the world. The cocaine that flooded in helped spark a crack explosion in urban America - and provided the cash and connections needed for L.A.’s gangs to buy weapons.

It is one of the most bizarre alliances in modern history: the union of a U.S.-backed army attempting to overthrow a revolutionary socialist government and the “gangstas” of Compton and South-Central Los Angeles.

The army’s financiers - who met with CIA agents before and during the time they were selling the drugs in L.A. - delivered cut-rate cocaine to the gangs through a young South-Central crack dealer named Ricky Donnell Ross.

Unaware of his suppliers’ military and political connections, “Freeway Rick” turned the cocaine powder into crack and wholesaled it to gangs across the country.

Drug cash for the contras

Court records show the cash was then used to buy equipment for a guerrilla army named the Fuerza Democratica Nicaraguense (Nicaraguan Democratic Force) or FDN, the largest of several anti-communist groups commonly called the contras.

While the FDN’s war is barely a memory today, black America is still dealing with its poisonous side effects. Urban neighborhoods are grappling with legions of homeless crack addicts. Thousands of young black men are serving long prison sentences for selling cocaine - a drug that was virtually unobtainable in black neighborhoods before members of the CIA’s army brought it into South-Central in the 1980s at bargain-basement prices.

And the L.A. gangs, which used their enormous cocaine profits to arm themselves and spread crack across the country, are still thriving.

“There is a saying that the ends justify the means,” former FDN leader and drug dealer Oscar Danilo Blandon Reyes testified during a recent cocaine-trafficking trial in San Diego. “And that’s what Mr. Bermudez (the CIA agent who commanded the FDN) told us in Honduras, OK? So we started raising money for the contra revolution.”

Recently declassified reports, federal court testimony, undercover tapes, court records here and abroad and hundreds of hours of interviews over the past 12 months leave no doubt that Blandon was no ordinary drug dealer.

Shortly before Blandon - who had been the drug ring’s Southern California distributor - took the stand in San Diego as a witness for the U.S. Department of Justice, federal prosecutors obtained a court order preventing defense lawyers from delving into his ties to the CIA.

Blandon, one of the FDN’s founders in California, “will admit that he was a large-scale dealer in cocaine, and there is no additional benefit to any defendant to inquire as to the Central Intelligence Agency,” Assistant U.S. Attorney L.J. O’Neale argued in his motion shortly before Ross’ trial on cocaine-trafficking charges in March.

The 5,000-man FDN, records show, was created in mid-1981 when the CIA combined several existing groups of anti-communist exiles into a unified force it hoped would topple the new socialist government of Nicaragua.

Waged a losing war

From 1982 to 1988, the FDN - run by both American and Nicaraguan CIA agents - waged a losing war against Nicaragua’s Sandinista government, the Cuban-supported socialists who’d overthrown U.S.-backed dictator Anastasio Somoza in 1979.

Blandon, who began working for the FDN’s drug operation in late 1981, testified that the drug ring sold almost a ton of cocaine in the United States that year - $54 million worth at prevailing wholesale prices. It was not clear how much of the money found its way back to the CIA’s army, but Blandon testified that “whatever we were running in L.A., the profit was going for the contra revolution.”

At the time of that testimony, Blandon was a full-time informant for the Drug Enforcement Administration, a job the U.S. Department of Justice got him after releasing him from prison in 1994.

Though Blandon admitted to crimes that have sent others away for life, the Justice Department turned him loose on unsupervised probation after only 28 months behind bars and has paid him more than $166,000 since, court records show.

“He has been extraordinarily helpful,” federal prosecutor O’Neale told Blandon’s judge in a plea for the trafficker’s release in 1994. Though O’Neale once described Blandon to a grand jury as “the biggest Nicaraguan cocaine dealer in the United States,” the prosecutor would not discuss him with the Mercury News.

Blandon’s boss in the FDN’s cocaine operation, Juan Norwin Meneses Cantarero, has never spent a day in a U.S. prison, even though the federal government has been aware of his cocaine dealings since at least 1974, records show.

Meneses - who ran the drug ring from his homes in the Bay Area - is listed in the DEA’s computers as a major international drug smuggler and was implicated in 45 separate federal investigations. Yet he and his cocaine-dealing relatives lived quite openly in the Bay Area for years, buying homes, bars, restaurants, car lots and factories.

“I even drove my own cars, registered in my name,” Meneses said during a recent interview in Nicaragua.

Meneses’ organization was “the target of unsuccessful investigative attempts for many years,” O’Neale acknowledged in a 1994 affidavit. But records and interviews revealed that a number of those probes were stymied not by the elusive Meneses but by agencies of the U.S. government.

CIA hampered probes

Agents from four organizations - the DEA, U.S. Customs, the Los Angeles County Sheriff’s Department and the California Bureau of Narcotic Enforcement - have complained that investigations were hampered by the CIA or unnamed “national-security” interests.

One 1988 investigation by a U.S. Senate subcommittee ran into a wall of official secrecy at the Justice Department.

In that case, congressional records show, Senate investigators were trying to determine why the U.S. attorney in San Francisco, Joseph Russoniello, had given $36,000 back to a Nicaraguan cocaine dealer arrested by the FBI.

The money was returned, court records show, after two contra leaders sent letters to the court swearing that the drug dealer had been given the cash to buy weapons for guerrillas.

After Nicaraguan police arrested Meneses on cocaine charges in Managua in 1991, his judge expressed astonishment that the infamous smuggler went unmolested by American drug agents during his years in the United States.

His seeming invulnerability amazed American authorities as well.

A Customs agent who investigated Meneses in 1980 before transferring elsewhere said he was reassigned to San Francisco seven years later “and I was sitting in some meetings and here’s Meneses’ name again. And I can remember thinking, `Holy cow, is this guy still around?’ ”

Blandon led an equally charmed life. For at least five years he brokered massive amounts of cocaine to the black gangs of Los Angeles without being arrested. But his luck changed overnight.

On Oct. 27, 1986, agents from the FBI, the IRS, local police and the Los Angeles County sheriff fanned out across Southern California and raided more than a dozen locations connected to Blandon’s cocaine operation. Blandon and his wife, along with numerous Nicaraguan associates, were arrested on drug and weapons charges.

The search-warrant affidavit reveals that local drug agents knew plenty about Blandon’s involvement with cocaine and the CIA’s army nearly 10 years ago.

“Danilo Blandon is in charge of a sophisticated cocaine smuggling and distribution organization operating in Southern California,” L.A. County sheriff’s Sgt. Tom Gordon said in the 1986 affidavit. “The monies gained from the sales of cocaine are transported to Florida and laundered through Orlando Murillo, who is a high-ranking officer of a chain of banks in Florida named Government Securities Corporation. From this bank the monies are filtered to the contra rebels to buy arms in the war in Nicaragua.”

Raids a spectacular failure

Despite their intimate knowledge of Blandon’s operations, the police raids were a spectacular failure. Every location had been cleaned of anything remotely incriminating. No one was ever prosecuted.

Ron Spear, a spokesman for Los Angeles County Sheriff Sherman Block, said Blandon somehow knew that he was under police surveillance.

FBI records show that soon after the raids, Blandon’s defense attorney, Bradley Brunon, called the sheriff’s department to suggest that his client’s troubles stemmed from a most unlikely source: a recent congressional vote authorizing $100 million in military aid to the contras.

According to a December 1986 FBI teletype, Brunon told the officers that the “CIA winked at this sort of thing. . . . (Brunon) indicated that now that U.S. Congress had voted funds for the Nicaraguan contra movement, U.S. government now appears to be turning against organizations like this.”

That FBI report, part of the files of former Iran-contra special prosecutor Lawrence Walsh, was made public only last year, when it was released by the National Archives at the San Jose Mercury News’ request.

Blandon has also implied that his cocaine sales were, for a time, CIA-approved. He told a San Francisco federal grand jury in 1994 that once the FDN began receiving American taxpayer dollars, the CIA no longer needed his kind of help.

None of the government agencies known to have been involved with Meneses and Blandon would provide the Mercury News with any information about them, despite Freedom of Information Act requests.

Blandon’s lawyer, Brunon, said in an interview that his client never told him directly that he was selling cocaine for the CIA, but the prominent Los Angeles defense attorney drew his own conclusions from the “atmosphere of CIA and clandestine activities” that surrounded Blandon and his Nicaraguan friends.

“Was he involved with the CIA? Probably. Was he involved with drugs? Most definitely,” Brunon said. “Were those two things involved with each other? They’ve never said that, obviously. They’ve never admitted that. But I don’t know where these guys get these big aircraft.”

That very topic arose during the sensational 1992 cocaine-trafficking trial of Meneses after he was arrested in Nicaragua in connection with a staggering 750-kilo shipment of cocaine. His chief accuser was his friend Enrique Miranda, a relative and former Nicaraguan military intelligence officer who had been Meneses’ emissary to the cocaine cartel of Bogota, Colombia. Miranda pleaded guilty to drug charges and agreed to cooperate in exchange for a seven-year sentence.

In a long, handwritten statement he read to Meneses’ jury, Miranda revealed the deepest secrets of the Meneses drug ring, earning his old boss a 30-year prison sentence in the process.

“He (Norwin) and his brother Luis Enrique had financed the contra revolution with the benefits of the cocaine they sold,” Miranda wrote. “This operation, as Norwin told me, was executed with the collaboration of high-ranking Salvadoran military personnel. They met with officials of the Salvadoran air force, who flew (planes) to Colombia and then left for the U.S., bound for an Air Force base in Texas, as he told me.”

Meneses - who has close personal and business ties to a Salvadoran air-force commander and former CIA agent named Marcos Aguado - declined to discuss Miranda’s statements during an interview at a prison outside Managua in January. He is scheduled to be paroled this summer, after nearly five years in custody.

U.S. General Accounting Office records confirm that El Salvador’s air force was supplying the CIA’s Nicaraguan guerrillas with aircraft and flight support services throughout the mid-1980s.

The same day the Mercury News requested official permission to interview Miranda, he disappeared.

While out on a routine weekend furlough, Miranda failed to return to the Nicaraguan jail where he’d been living since 1992. Though his jailers, who described him as a model prisoner, claimed Miranda had escaped, they didn’t call the police until a Mercury News correspondent showed up and discovered he was gone.

He has not been seen in nearly a year.

Aug 22, 1996

Salvador air force linked to cocaine flights, Nicaraguan contras, drug dealer’s supplier

by Gary Webb
San Jose Mercury News

One thing is certain: There is considerable evidence that El Salvador’s air force was deeply involved with cocaine flights, the contras and drug dealer Oscar Danilo Blandon Reyes’ cocaine supplier, Norwin Meneses.

Meneses said one of his oldest friends is a former contra pilot named Marcos Aguado, a Nicaraguan who works for the Salvadoran air-force high command.

Aguado was identified in 1987 congressional testimony as a CIA agent who helped the contras get weapons, airplanes and money from a major Colombian drug trafficker named George Morales. Aguado admitted his role in that deal in a videotaped deposition taken by a U.S. Senate subcommittee that year.

His name also turned up in a deposition taken by the congressional Iran-contra committees that same year. Robert Owen, a courier for Lt. Col. Oliver North, testified he knew Aguado as a contra pilot and said there was “concern” about his being involved with drug trafficking.

While flying for the contras, Aguado was stationed at Ilopango Air Base near El Salvador’s capital.

In 1985, the DEA agent assigned to El Salvador - Celerino Castillo III - began picking up reports that cocaine was being flown to the United States out of hangars 4 and 5 at Ilopango as part of a contra-related covert operation. Castillo said he soon confirmed what his informants were telling him.

Starting in January 1986, Castillo began documenting the cocaine flights - listing pilot names, tail numbers, dates and flight plans - and sent them to DEA headquarters.

The only response he got, Castillo wrote in his 1994 memoirs, was an internal DEA investigation of him. He took a disability retirement from the agency in 1991.

“Basically, the bottom line is it was a covert operation and they (DEA officials) were covering it up,” Castillo said in an interview. “You can’t get any simpler than that. It was a cover-up.”

Aug 22, 1996

Trio created mass market in U.S. for crack cocaine

by Gary Webb
San Jose Mercury News

If they’d been in a more respectable line of work, Norwin Meneses, Oscar Danilo Blandon Reyes and “Freeway Rick” Ross would have been hailed as geniuses of marketing.

This odd trio - a smuggler, a bureaucrat and a ghetto teenager - made fortunes creating the first mass market in America for a product so hellishly desirable that consumers will literally kill to get it: “crack” cocaine.

Federal lawmen will tell you plenty about Rick Ross, mostly about the evils he visited upon black neighborhoods by spreading the crack plague in Los Angeles and cities as far east as Cincinnati. Tomorrow, they hope, Freeway Rick will be sentenced to life in prison without the possibility of parole.

But those same officials won’t say a word about the two men who turned Rick Ross into L.A.’s first king of crack, the men who, for at least five years, supplied him with enough Colombian cocaine to help spawn crack markets in major cities nationwide. Their critical role in the country’s crack explosion has been a strictly guarded secret.

To understand how crack came to curse black America, you have to go into the volcanic hills overlooking Managua, the capital of the Republic of Nicaragua.

Biggest military upset

During June 1979, those hills teemed with triumphant guerrillas called Sandinistas - Cuban-assisted revolutionaries who had just pulled off one of the biggest military upsets in Central American history. In a bloody civil war, they’d destroyed the U.S.-trained army of Nicaragua’s dictator, Anastasio Somoza.

In the dictator’s doomed capital, a minor member of Somoza’s government decided to skip the war’s obvious ending. On June 19, Oscar Danilo Blandon Reyes gathered his wife and young daughter and flew into exile in California.

Today, Blandon is a well-paid and highly trusted operative for the U.S. Drug Enforcement Administration. Federal officials say he is one of the DEA’s top informants in Latin America, collecting intelligence on Colombian and Mexican drug lords and setting up stings.

In March, he was the DEA’s star witness at a drug trial in San Diego, where, for the first time, he testified publicly about his strange interlude between government jobs: the years he sold cocaine to the street gangs of black Los Angeles.

Blandon swore that he didn’t plan on becoming a dope dealer when he landed in the United States with $100 in his pocket, seeking political asylum. He did it, he insisted, out of patriotism.

When duty called in late 1981, he was working as a car salesman in East Los Angeles. In his spare time, he said, he and a few fellow exiles were working to rebuild Somoza’s defeated army, the Nicaraguan national guard, in hopes of one day returning to Managua in triumph.

But the rallies and cocktail parties the exiles hosted raised little money. “At this point, he became committed to raising money for humanitarian and political reasons via illegal activity (cocaine trafficking for profit),” said a heavily censored parole report, which surfaced during the March trial.

That venture began, Blandon testified, with a phone call from a wealthy college friend in Miami.

Blandon said his college chum, who also was working in the resistance movement, dispatched him to Los Angeles International Airport to pick up another exile, Juan Norwin Meneses Cantarero. Though their families were related, Blandon said, he’d never met Meneses until that day.

“I picked him up, and he started telling me that we had to (raise) some money and to send to Honduras,” Blandon testified. He said he flew with Meneses to a camp there and met one of his new companion’s old friends, Col. Enrique Bermudez.

Bermudez - who’d been Somoza’s Washington liaison to the American military - was hired by the Central Intelligence Agency in mid-1980 to pull together the remnants of Somoza’s vanquished national guard, records show. In August 1981, Bermudez’s efforts were unveiled at a news conference as the Fuerza Democratica Nicaraguense (FDN) - in English, the Nicaraguan Democratic Force. It was the largest and best-organized of the handful of guerrilla groups known as the contras.

Bermudez was the FDN’s military chief and, according to congressional records and newspaper reports, received regular CIA paychecks for a decade, payments that stopped shortly before his still-unsolved slaying in Managua in 1991.

Reagan OKs covert operations

White House records show that shortly before Blandon’s meeting with Bermudez, President Reagan had given the CIA the green light to begin covert paramilitary operations against the Sandinista government. But Reagan’s secret Dec. 1, 1981, order permitted the spy agency to spend only $19.9 million on the project, an amount CIA officials acknowledged was not nearly enough to field a credible fighting force.

After meeting with Bermudez, Blandon testified, he and Meneses “started raising money for the contra revolution.”

While Blandon says Bermudez didn’t know cocaine would be the fund-raising device they used, the presence of the mysterious Mr. Meneses strongly suggests otherwise.

Norwin Meneses, known in Nicaraguan newspapers as “Rey de la Droga” (King of Drugs), was then under active investigation by the DEA and the FBI for smuggling cocaine into the United States, records show.

And Bermudez was very familiar with the influential Meneses family. He had served under two Meneses brothers, Fermin and Edmundo, who were generals in Somoza’s army.

Despite a stack of law-enforcement reports describing him as a major drug trafficker, Norwin Meneses was welcomed into the United States in July 1979 as a political refugee and given a visa and a work permit. He settled in the San Francisco Bay Area, and for the next six years supervised the importation of thousands of kilos of cocaine into California.

At the meeting with Bermudez, Meneses said in a recent interview, the contra commander put him in charge of “intelligence and security” for the FDN in California.

Blandon, he said, was assigned to raise money in Los Angeles.

Blandon said Meneses gave him two kilograms of cocaine (roughly 4 1/2 pounds) and sent him to Los Angeles.

“Meneses was pushing me every week,” he testified. “It took me about three months, four months to sell those two keys because I didn’t know what to do. . . .”

To find customers, Blandon and several other Nicaraguan exiles working with him headed for the vast, untapped markets of L.A.’s black ghettos.

Blandon’s marketing strategy, selling the world’s most expensive street drug in some of California’s poorest neighborhoods, might seem baffling, but in retrospect, his timing was uncanny. He and his compatriots arrived in South-Central L.A. right when street-level drug users were figuring out how to make cocaine affordable: by changing the pricey white powder into powerful little nuggets that could be smoked - crack.

Emergence of crack

Crack turned the cocaine world on its head. Cocaine smokers got an explosi