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.