Tran­scripts from Gary Webb’s orig­i­nal San Jose Mer­cury News series.

August 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 Blandón 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 Blandón was no ordi­nary drug dealer.

Shortly before Blandón — 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.

Blandón, 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.

Blandón, 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 Blandón tes­ti­fied that “what­ever we were run­ning in L.A., the profit was going for the con­tra revolution.”

At the time of that tes­ti­mony, Blandón 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 Blandón 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 Blandón’s judge in a plea for the trafficker’s release in 1994. Though O’Neale once described Blandón to a grand jury as “the biggest Nicaraguan cocaine dealer in the United States,” the pros­e­cu­tor would not dis­cuss him with the Mer­cury News.

Blandón’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?’ ”

Blandón 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 Octo­ber 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 Blandón’s cocaine oper­a­tion. Blandón 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 Blandón’s involve­ment with cocaine and the CIA’s army nearly 10 years ago.

“Danilo Blandón 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 Blandón’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 Blandón some­how knew that he was under police surveillance.

FBI records show that soon after the raids, Blandón’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.

Blandón 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 Blandón would pro­vide the Mer­cury News with any infor­ma­tion about them, despite Free­dom of Infor­ma­tion Act requests.

Blandón’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 Blandón 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.