C. Allegation that the Return of the Seized Money to Zavala Was Caused by Intervention from the CIA
1. CIA Documents
CIA documents we reviewed indicate that the notification of the proposed travel to Costa Rica to depose Aviles and Rappaccioli was brought to the attention of the CIA Station in Costa Rica by the State Department. In a cable dated July 30, 1984, the CIA Costa Rica Station alerted CIA Headquarters that an AUSA for the Northern District of California and an FBI agent had requested permission to travel to Costa Rica to interview two "anti-Sandinistas" in connection with a cocaine case. The cable identified one of the interviewees as Aviles, but referred to Rappaccioli by a code name and indicated the Station's belief that Rappaccioli was a former CIA asset. The Station requested that Headquarters run traces -- searches of CIA records for any mention of an individual -- on both individuals, gather information on Zavala and the case against him, and attempt to discern the connection between the two witnesses and the criminal case. The cable concluded: "Station is concerned that this kind of uncoordinated activity could have serious implications for anti-Sandinista activities in Costa Rica and elsewhere."
As it turns out, the CIA mistakenly believed that the second individual who was going to be deposed, Rappaccioli, was a former CIA asset. Rappaccioli was not an asset, but the CIA Station thought the deposition was scheduled for someone else who was a former CIA asset, not Rappaccioli.
On August 1, 1984, CIA Headquarters informed the Costa Rica Station that Aviles was the Secretary of the Nicaraguan Democratic Conservative Party (PCD) and was involved in the Nicaraguan Committee for the Defense of Democracy in Nicaragua, which was engaging in activities in Costa Rica in support of groups and individuals opposed to the Sandinista regime. The cable stated that CIA Headquarters had no traces on Julio Zavala and had been unable to determine the connection among Zavala, Aviles, and the person the Station believed to be a former CIA asset.
A memorandum dated August 2, 1984, from an employee in CIA Headquarters, who we will call Ms. Jones,(69) to the CIA's Central American Task Force reported that the two witnesses were being called as defense witnesses regarding the source of the $30,000 seized during Zavala's arrest. The memorandum stated that the AUSA was going to meet with someone from the CIA Office of General Counsel (CIA OGC) and Ms. Jones on August 7. It noted: "Once the AUSA has filled us in on the details of the case, we can then determine whether our equities will be affected."
Soon thereafter, CIA Headquarters informed the Costa Rica Station in a cable that the court had ordered the government not to interfere or discourage compliance with the scheduled depositions. The cable stated: "To avoid giving defense a possible issue, suggest no Station contact with [either witness]." The cable explained to the Station that the witnesses were to testify about the source of the money that had been seized from Zavala. It added: "No reason at this juncture to believe that defense is aware of [the person believed to be the former asset] past connection with [the CIA]. FYI. Present schedule for depositions is 16 August but this may be avoided if planned legal action is successful."
On August 17, 1984, the Costa Rica Station notified CIA Headquarters by cable that the "[U.S.] Consul" had said that the visit by the AUSA had been "cancelled by 'the funny farm.'" The cable further stated that "Consul said it was his understanding this was a reference to CIA." The Station noted that it had no interest in the case and wanted to alert CIA Headquarters so that it could correct any misunderstanding. The cable stated: "Please advise any action taken on this so we may reassure the Consul that [the CIA] had no hand in cancellation of trip."
On August 22, 1984, CIA OGC Attorney Lee Strickland forwarded a draft cable to Ms. Jones discussing the Zavala matter. He wrote in the forwarding document that while certain of the sections in the draft cable were
rather strong, I believe the station must be made aware of the potential for disaster. While the allegations might be entirely false, there are sufficient factual details which would cause certain damage to our image and program in Central America.
On August 24, 1984, a cable virtually identical to Strickland's draft was sent from CIA Headquarters to the Costa Rica Station. The cable stated:
Following discreet approach to senior Department of Justice official, [the CIA OGC] personally contacted the Chief of Criminal Division and Chief of Drug Task Force in U.S. Attorney's Office in San Francisco to ascertain details of the subject prosecution and to avoid inquiry into activities or other [CIA] interests.
* * *
With a general briefing concerning the background of and relationship between [the person believed to be the former CIA asset], Aviles, and [CIA] interests, it was agreed by all that any litigation concerning the currency seizure would be fruitless. In essence the United States Attorney could never disprove the defendant's allegation that [this] was [CIA] money, especially in light of the roles which [the person believed to be a former CIA asset] and Aviles have played in the anti-Sandinista community. Accordingly, at [CIA OGC] request, the U.S. Attorney has agreed to return the money to Zavala and to make no use of it during trial of Zavala on the CCE charge.
It was for this reason that the scheduled depositions in San Jose have been canceled. Notably, [CIA OGC] also learned that both [the person believed to be a former CIA asset] and Aviles were volunteer witnesses for the defendant and planned to testify at their deposition as to the source of the money in question. We can only guess as to what other testimony may have been forthcoming. As matter now stands, [CIA] equities are fully protected, but [CIA OGC] will continue to monitor the prosecution closely so that any further disclosures or allegations by defendant or his confidants can be deflected.
While this particular aspect was successfully resolved, the possibility of the potential damage to [CIA] interests was not lost on the U.S. Attorney or HQS. By virtue of [the person believed to be a former CIA asset's] relationship as [a former] asset and [member of a Contra support group] in exile, Aviles' role as director of the [Contra support] office in San Jose, and their formal claim of drug-tainted money, case could be made that [CIA] funds are being diverted by [CIA] assets into the drug trade. Indeed, close relationship between Zavala, a convicted drug dealer, and [the person believed to be a former CIA asset] and Aviles could prove most damaging especially if any relationship, no matter how indirect, were to continue. As long as [the person believed to be a former CIA asset] and Aviles continue to play any role in the anti-Sandinista movement, any public disclosure of the foregoing would have as a certain element the fact that they were "linked to" or "assets of" [the CIA].
While the United States Attorney was most deferential to our interests, it was strongly suggested that we take every measure possible to ascertain any involvement by [the person believed to be a former CIA asset] or Aviles in narcotics trade and/or the possibility as to whether [CIA] funds given to [Contra groups] might arguably have been diverted. . . .(70)
On October 30, 1984, Ernest Mayerfield, then counsel to the Directorate of Operations, forwarded to the CIA OGC a weekly report to the Deputy Director for Operations that contained a synopsis of the Frogman case. Mayerfield included a memorandum that stated in part:
This is an item taken from [a] weekly news sheet put out by Stan Sporkin [former General Counsel to the CIA]. This one covers last week's events. I don't know whether you had heard about this case -- I had not. I talked to the lawyer that is handling this case, who tells me that the greymail aspects of this case are quite routine and he has every reason to believe that he can avoid, with the excellent cooperation of the San Francisco prosecutor, any public disclosure of our involvement. I do not think this is a big flap and ought not to be made into one.
2. Interviews of CIA Personnel
Retired CIA employee Ms. Jones told the OIG that in 1984 she was assigned to the CIA's Policy Coordination Staff, dealing with criminal and civil litigation that affected the Directorate of Operations. Ms. Jones explained that the primary concern of her office was handling matters concerning CIA assets and "equities" of the CIA's Directorate of Operations (DO). When CIA assets or the equities of the CIA were implicated in a court case, it was the responsibility of her office to: (1) find out if any allegations involving the asset were true; (2) determine who or what the CIA equities were;(3) determine what protection of the CIA's equities was necessary; and (4) contact DOJ or the USAO to discuss potential courses of action for handling the case.
Ms. Jones had no independent, specific recall of the Zavala case. She was not able to recall specifically with whom she dealt on the Zavala matter, but stated that it would have been an AUSA, a CIA OGC attorney, or a CIA Congressional Affairs person. Ms. Jones said she did recall, however, that she did not travel to San Francisco in conjunction with the Zavala case.
Ms. Jones stated, after reviewing several documents, that the "burning issue" in the case, and the reason that this matter was brought to her attention, was the potential for the allegation that a CIA asset was diverting CIA funds into the drug trade and the risk of bad publicity from any such allegation. She noted that the information would be "explosive" and opined, "What would make better headlines?" She also stated that her office was concerned because there were "sources and methods involved."
When asked if it was unusual for the CIA OGC to ask an AUSA for "a favor," Ms. Jones replied that all intelligence organizations have the same problem with assets that must be protected. She added that when it is determined that an asset needs to be protected, a decision must be made as to how that protection can best be accomplished. Ms. Jones stated that similar discussions occur routinely when intelligence issues are involved.
CIA OGC attorney Lee Strickland confirmed to the OIG that his handwriting appears on a document contained in the CIA OGC Zavala case file, with the name of AUSA Mark Zanides, and his phone number, as well as the names and phone numbers of various hotels and airlines. The document has the name, address and phone numbers of the Chief of the Organized Crime Drug Enforcement Task Force (OCDETF) for San Francisco USAO James Lassart, and the Chief of the Criminal Division for the San Francisco USAO, John Gibbons, typed at the top of the page. Other notes in the file are also in his handwriting. He also confirmed that the document which appears to "close" the CIA OGC matter regarding the proposed depositions in Costa Rica was signed by him.
Despite the existence of these documents, Strickland did not specifically recall having spoken with anyone from Main Justice or the San Francisco United States Attorney's Office, or having traveled to San Francisco to meet with anyone from the United States Attorney's Office regarding this matter. In fact, Strickland did not recall having been involved in the Zavala matter at all, but admitted that it was clear from looking at the case file that he was.
Strickland stated that although he had no distinct recollection of having done so, it "makes sense" that, because a suspected CIA link might have potentially been exposed in the case, someone from the CIA would have gone to San Francisco to discuss the matter with the AUSA. He stated that based on the amount of work his section was doing in late 1984 and the relative "thinness" of the file, what probably happened was that he went to San Francisco, met with an AUSA, and the matter was put to rest. He believed that the CIA document which reported that the money was to be returned was probably the "after action" report.
Strickland stated that the "discreet approach" mentioned in the cable sent to the CIA Station on August 24 was probably a phone call to DAAG Mark Richard to request a meeting with the AUSA in San Francisco. He stated that he assumed from the cable that somebody at least called the OCDETF Chief and the Chief of the Criminal Division in the USAO San Francisco, although he did not remember doing so.
3. Interviews of Department of Justice Personnel
This section recounts the recollections of Department of Justice personnel involved in the decision to return the money to Zavala.
Assistant U.S. Attorney Zanides told the OIG that, when the materials were unsealed and he read the statements of the alleged Contra leaders, he believed it was possible that the persons involved were "government assets." Since no one involved in the case had any information about Aviles or Rappaccioli or what they might say, Zanides felt that the situation had to be handled with "an abundance of caution." Zanides stated that he and, he believed, Russoniello, had decided to ask the court to reseal the documents until "they could sort it all out and figure out what exactly they were dealing with." Zanides said he did not contact the CIA before he sought to have the materials resealed.
Similarly, Russoniello told the OIG that, at some point, a decision was made by his office to seal the filings until the matter "could be sorted out." When asked why he believed it was necessary to seal the records, he explained that, to the best of his recollection, there was a reference to "the cooperation between somebody and the CIA," and that, at that time, the government had a "high sensitivity" to any references to the CIA in any document, and looked upon such references as issues of national security. His office felt compelled to protect the information in accordance with the Classified Information Procedures Act (CIPA) "until they could figure out exactly what they were dealing with."
According to an FBI cable, on August 14, 1984, FBI SA Alba notified the FBI office in Panama that he and Zanides would not be traveling to Costa Rica as scheduled. By then, a tentative decision appears to have been made among the government personnel involved in the case to return the $36,000.
Although Assistant U.S. Attorney Zanides explained to us that he never considered Zavala's claims about the seized money to be true, he contacted the CIA by telephone to have it run a name check on the parties involved. Zanides told the OIG that he contacted the CIA in case the parties involved were CIA assets and to request any information the CIA was willing to provide regarding either individual Zanides was to depose. Zanides said that some time after Iversen's motion for depositions in June 1984, Zanides was visited in his office by an attorney from the CIA. When interviewed by the DOJ OIG and CIA OIG, Zanides could not recall the attorney's name, but he identified former CIA Office of General Counsel attorney Lee Strickland from an array of photographs put together by the CIA OIG. Zanides recalled that Strickland was reluctant to give his name and his government affiliation when Strickland met with him.
Zanides said that he and Strickland had had a very "opaque conversation," in which Strickland stated that an "uncomfortable situation" would result if the depositions were taken in Costa Rica and that the CIA would be "immensely grateful" if plans to take the depositions were dropped. Zanides said Strickland was not very specific about any details. Zanides did not infer from his conversation with Strickland that the witnesses in Costa Rica were affiliated with the CIA, but rather, that taking the depositions would create an awkwardness that the CIA did not want. Zanides did not recall exactly what he told Strickland, but recalls generally that he informed Strickland that it was "not his call" as to whether the depositions could be dropped and that Strickland should talk to Zanides' "superiors."
Zanides did not know if Strickland ever met with USA Russoniello, OCDETF Chief Assistant U.S. Attorney Lassart, or Criminal Chief Gibbons. Zanides recalled that Russoniello later told him that Zavala's money was going to be returned, and that the decision was made based on the cost of taking the depositions in Costa Rica. Zanides told the OIG that he had informed Russoniello of his contact with the CIA. Zanides made only very brief, cursory notes about the CIA contact, which he "stuck somewhere in the file." Russoniello told him to "hang on to everything" because the matter could "kick up" again. However, Zanides was unable to locate these notes. He stated that, in retrospect, he probably should have done a lengthy memorandum of his role in this matter. The only record located in the U.S. Attorney's file was a memorandum of a conversation between Zanides and Strickland. According to the memorandum, Strickland reported to Zanides that traces for information on Zavala at the CIA had all come back negative and Strickland requested a copy of the documents filed under seal by Zavala.
Zanides told the OIG that he had not been concerned about the decision to return the money. He recalled thinking that it would have cost a lot to take the depositions in Costa Rica and that he was very busy. Zanides noted that the government would have had to pay for his travel, the FBI agent's travel, an interpreter, both defense attorneys' travel, and possibly the travel of Deputy U.S. Marshals for protection. He said he would have felt differently about the decision to return the money if it would have jeopardized the criminal case, but the return of the money did not.
The OIG interviewed John Gibbons, the Chief of the Criminal Division in the San Francisco U.S. Attorney's Office in 1984. He told the OIG that, because the "frogman case" was an OCDETF case and not a Criminal Division case, he did not supervise or otherwise monitor the case, and he had no involvement in, and never even knew about, the decision to return the seized money to Zavala. Gibbons stated that he never met with anyone from the CIA about this matter.
Jim Lassart, the OCDETF Chief in 1984, recalled that there was a question in the U.S. Attorney's Office about whether "it was worth" chasing witnesses in Central America in the attempt to have the money forfeited. He believed that, in the end, it was decided that litigating the matter would not be cost effective. Although Lassart was not certain who made the decision, he said that no one could have made it without the participation and concurrence of U.S. Attorney Russoniello. Lassart had no recollection of being involved at all in the dealings surrounding the return of the money. He did not specifically recall discussing the issue with either Russoniello or Zanides, but stated that, had he been involved in the matter, he would have discussed it with both. Lassart did not recall meeting or talking with anyone from the CIA about the matter, or hearing from either Zanides or Russoniello of a meeting with anyone from the CIA. He did not recognize the name Lee Strickland. He noted that any attempt by the CIA to intervene in a case would have had to be addressed at the very least with Russoniello, and would more likely have been handled at a higher (Main Justice) level.
Former United States Attorney Joseph Russoniello told the OIG that he had been aware that the motion to take depositions in Costa Rica had been filed by Zavala's attorney and that the motion had been both granted and sealed by Judge Peckham. Russoniello did not recall having had any specific meetings with anyone concerning the depositions or the considerations that went into the final decision to return the money. He recalled only that he had not thought it cost effective to go to Costa Rica, and that he had decided that the money should be returned to Zavala. Russoniello said he never was contacted by anyone from the CIA about the seized money, and he had no knowledge of anyone else in his office having been contacted by the CIA. He noted that his 1984 appointment calendar did not contain any annotations recording a meeting with anyone from the CIA during the month of August 1984, although it did show telephone calls from Deputy Assistant Attorney General (DAAG) in the DOJ Criminal Division, Mark Richard, and a reporter, Seth Rosenfeld (who, as discussed below, wrote an article about the Frogman case and Zavala). The subject of these calls was not indicated on Russoniello's calendar, and he did not recall what they discussed or whether he had, in fact, even returned the calls.
The OIG also attempted to determine who, if anyone, in the upper levels of the Justice Department might have been contacted by the CIA regarding the case. As noted above, CIA attorney Lee Strickland and CIA employee Ms. Jones, who often coordinated with DOJ on matters of mutual concern, were both involved in handling the Zavala matter on behalf of the CIA. Both told the OIG that they dealt primarily with Mark Richard in DOJ on these kinds of matters.
Richard told the OIG that he recalled the Zavala case but not the details. Richard did not recall that the issue in the case concerned return of seized money. He also did not recall ever meeting with anyone from the CIA about the matter, or any discussions with the San Francisco U.S. Attorney or anyone else in that office. A review of Richard's files revealed a file on the Zavala matter from the time of the Senate Foreign Relations Subcommittee's 1987 inquiry about the case, but the OIG did not locate any files on this matter from 1984, the time that the decision to return the money was made.
The FBI case agent on the Frogman case, David E. Alba, is currently the FBI Special Agent in Charge of the El Paso office. He told the OIG that he was not involved in the decision to return the seized money to Zavala. Alba did not recall attending any meetings with the CIA, about the Frogman or any other case. He said there may have been a meeting held "behind his back," but Alba stressed that this was "pure speculation" on his part, and he had no actual knowledge if such a meeting took place. Alba heard from one of the prosecutors on the case that some of the seized money was being given back, but he was not given a reason for the return. He had the "impression" that the CIA had "interfered in the return of the $36,000 to Zavala," and that "Zavala or someone he was working with was involved with the CIA." Alba was not able to provide a factual basis for his "impression" of CIA interference.
4. Interview of Zavala's Defense Counsel
Zavala's defense counsel, Judd Iversen, stated that he was informed, just prior to the scheduled depositions in Costa Rica, that the seized money would be returned. He said that Russoniello told him that it was not worth it to go to Costa Rica for such "small potatoes." Iversen believed that Russoniello was candid in citing this reason for returning the money because any other motivation would have likely shown up in the criminal case in the way in which the U.S. Attorney's Office handled discovery issues -- either filing motions in limine or raising CIPA issues -- or dismissing the case entirely to protect CIA sources and methods.
D. Allegations in 1986 Newspaper Article Regarding the Return of the Money
1. The San Francisco Examiner Article
On March 16, 1986, the San Francisco Examiner published a front page story by Seth Rosenfeld entitled "Big Bay Area cocaine ring tied to contras," which suggested a "link" between Zavala, Cabezas, and the other defendants in the 1983 Frogman case, and groups associated with the Contra revolution. Rosenfeld began: "A major Bay Area cocaine ring helped to finance the contra rebels in Nicaragua, according to federal court testimony and interviews with the convicted smugglers." He quoted Cabezas as claiming that proceeds from his cocaine trade "belonged to ... the contra-revolution," and Zavala as claiming to have delivered $500,000, the "majority" of which came from cocaine sales, to the treasury of two Costa Rica-based Contra groups.
Rosenfeld wrote that "the Government returned to Zavala $36,020 seized as drug money after he submitted letters from Contra leaders saying it was really political money for the reinstatement of democracy in Nicaragua." Although the court files remained sealed on this issue, Rosenfeld described in great detail Zavala's attorney's request to travel to Costa Rica to interview the Contra leaders, the attorney's sealed declaration alleging CIA involvement with the Contras and possible government sanctioning of drug trafficking activities, and information and statements contained in the letters of the Contra leaders. He reported that the very day the records had been unsealed by the court, the San Francisco U.S. Attorney's Office moved for them to be resealed pursuant to the Classified Information Procedures Act (CIPA). Rosenfeld reported that U.S. Attorney Russoniello had refused to answer any questions concerning the classified information, and had claimed the money was returned to Zavala "for economic reasons" because it would have cost the government too much to go to Costa Rica and fight over "nickles and dimes."
2. U.S. Attorney Russoniello's letter to the editor
On March 19, 1986, in response to Rosenfeld's article, U.S. Attorney Russoniello wrote a letter to the editor of the San Francisco Examiner expressing his outrage at the paper's insinuation that his office had played any role in the suggested "link" between a Bay Area cocaine ring and the Nicaraguan Contras. In his letter, Russoniello stated that the paper, through the article, gave readers "the clear impression ... that Julio Zavala had been given preferential treatment by the U.S. Attorney's Office because of his association with the contras and that we covered up the proof of this treatment and the truth of the matter of his contra connection." Russoniello went on to state that both impressions were wrong and that the paper was "outfitted with enough of the facts to dispel this impression but did not print them, for whatever reason. . ."
Russoniello noted that the only "special treatment" Zavala got was the U.S. Attorney's Office's "best efforts to get him sentenced to fifteen years in prison rather than the ten years the Court imposed." Russoniello also stated that no favors were done for Zavala's wife, Doris Salomon, who had fled the United States to Costa Rica shortly after being convicted on a drug trafficking charge in 1981. At the request of the San Francisco U.S. Attorney's Office, she was extradited back to the United States in 1985, and was subsequently sentenced to, and served, three years in prison. The U.S. Attorney's Office recommended a substantial prison term for Salomon in that case because of Salomon's "lack of contrition and continuing deceitful conduct."
In his letter to the San Francisco Examiner, Russoniello also noted:
We did return $36,020 to Zavala. It had nothing to do with any claim that the funds came from the contras or belonged to the contras. It had to do with the fact that it would have cost the taxpayers who were expected by the court to pay for all travel by all counsel at least that much to fund the excursion to Costa Rica to take the necessary depositions for the problematical [sic] result we might be permitted to keep the seized funds. It made no economic sense to me to do this.
Russoniello denied that any "higher ups" were involved in the decision to return the money, and he explained that he had the authority to compromise claims up to $100,000 at that time. Russoniello then concluded:
While $36,000 may seem like a significant sum and people might disagree with our decision to return it, against the background that the cocaine seized had a value of $100 million and that we have millions of dollars in property and currency subject to forfeiture in this district at any given time ($20 million at present) and that little was to be gained from expending valuable agent and attorney time in further quest of what were by comparison "nickels and dimes," the decision was reasonable, justifiable and I make no apology for having made it.
In his letter to the newspaper, Russoniello also addressed the paper's insinuation that his office had covered up an alleged connection between the drug dealers and the Contras by pointing out that most of the information concerning the wiretaps and the trial testimony had been in the public record for at least a year. He explained that the declarations of several people who made claim to the money had been sealed, not because they were true, but because the allegations "related to national security as that term is defined by the Classified Information Procedures Act. We were duty bound, not by fiat but by an Act of Congress, to protect that information from unauthorized disclosure and we did. There is no more to it." Russoniello noted the lack of any evidence to support allegations of CIA involvement with or connection of the defendants to the Contras and the frequency with which criminal defendants engage in "alibiing." He related that none of the 11,000 intercepted telephone calls reviewed in the Frogman case contained any reference to Contra activity. He then opined that the story constituted "one of the most blatant attempts at contrived news-making we have witnessed in recent years."
Russoniello told the OIG that he believed that he wrote the letter to the editor himself, but stated that he probably consulted with Mark Zanides in drafting it. Zanides told the OIG that he learned of the letter after it had been sent.
E. OIG Conclusions Regarding the Return of the Money
The OIG found conflicting information about the decision to return the money to Zavala. CIA documents state that the money was returned to Zavala, and not used in the trial, at the request of the CIA. In contrast, the former U.S. Attorney and his deputies contend that the money was returned for purely economic reasons and that they had no contact with the CIA. Only AUSA Mark Zanides remembers any contact with the CIA on this matter.
The following facts are clear. The CIA had a belief, albeit a mistaken one, that one of its former assets was about to be deposed in the Zavala case. The CIA decided that it was not in its interest to have the former asset deposed, partly for fear of public disclosure of allegations that CIA-provided money was being diverted into, or that CIA assets were involved in, the drug trade.
It is also clear that there was contact between the CIA and AUSA Mark Zanides. What is not clear is whether Lee Strickland or anyone else from the CIA made contact with Zanides' supervisors or senior DOJ officials. The CIA cable stated that someone from the CIA OGC "personally contacted" the Chief of the Criminal Division and the Chief of the Drug Task Force in the San Francisco USAO. The two men who occupied these positions deny any such contact. The cable also indicates contact with a senior DOJ official. Mark Richard -- the official most likely to have been contacted -- cannot recall any such contact and has no files to indicate his involvement in this issue in 1984. Former CIA OGC attorney Strickland and former CIA employee Ms. Jones cannot resolve this question, since they claimed to have no recollection of this matter.
AUSA Zanides told the OIG that he believed that he would have told his superiors about being contacted by the CIA, but that he cannot specifically recall doing so. The OIG concludes that Zanides likely passed on this information, as it is unlikely that a line assistant would not notify his superiors of contact by an attorney from the CIA. This would be a significant event in any case and one which we believe would have been discussed with the line attorney's supervisors. However, Lassart, Gibbons, and Russoniello all deny having any knowledge that the CIA had contacted Zanides.
Because of failed memories and a failure by the USAO to document events contemporaneously, this matter cannot be fully resolved by the OIG. The CIA clearly believed that it had an interest in preventing the depositions, because of its confusion that one of the witnesses to be deposed was a former asset. The CIA therefore contacted the U.S. Attorney's Office, and the money was returned. The exact details of how this came about, and whether the reason was because of the cost of the deposition or the CIA's intervention, remain uncertain.
The OIG found it disturbing, however, that the CIA proceeded on such thin information and, because they did not thoroughly research the individuals involved, made a substantial error.
It was also of concern to the OIG that the CIA considered the potential press coverage of a Contra-drug link to be a sufficient reason to attempt to influence the decision to return the money to Zavala. The OIG will leave it to the CIA OIG and to a broader Congressional and public audience to assess the propriety of intervening in this law enforcement matter based, at least partly, on a desire to protect the public image of the Contras or the CIA.
F. The Return of the Money
The San Francisco United States Attorney's Office, defense counsel, and Zavala signed a stipulation in September 1984 providing that the money would be disbursed in the form of a cashier's check in the amount of $36,800 made payable to Zavala and Aviles. The check was issued on September 27, 1984, and delivered to Iversen on October 2, 1984 for release to Zavala.
1. Zavala's Version
Zavala told the OIG that he was unhappy when he learned that the government's check would be made out to both him and Aviles because it was "his case and everything was supposed to be in his name." Nonetheless, Zavala said his mother-in-law was able to cash the check by herself. Initially in the interview with the OIG, he claimed she had a power of attorney for both him and Aviles, but later indicated that he might have gotten a second check from Zanides, made out to him alone. Zavala said that the FBI had tried to arrest his mother-in-law when she went to cash the check because the FBI mistook her for his wife, who was a fugitive. The matter was later cleared up. Zavala did not remember any specific details about how it was resolved. He said he retained some of the proceeds from the check, and sent some back to the Contras. He could not recall how much of the money went to the Contras, or to whom it had been sent.
2. Salomon's Version
Zavala's wife, Doris Salomon, said she had nothing at all to do with the receipt, transfer, or cashing of the check returning the seized money to Zavala. She recalled hearing from someone that there had been some confusion over how or to whom the check had been made out. She believed that it had to be issued twice. Salomon was not sure of the amount of money involved, but believed that it was about $40,000. Salomon recalled that the check was cashed by her mother and, because they have the same name and because Salomon was a fugitive from charges in the United States, her mother was mistakenly arrested. Salomon did not know what happened to the money.
3. Aviles' Version
Aviles, who is currently employed as a Judicial Advisor and lawyer for the Nicaraguan Ministry of Government in Managua, told the OIG that, in late 1985, a judge from the United States had sent him a check for "about $30,000" to refund the money which had been seized from Zavala. Aviles stated that the check had been made out in his name, and possibly one other name, but he was not certain. Aviles returned the check to Zavala's wife's mother, along with a power of attorney allowing her to endorse it. Aviles said that he and the other PCNE leaders did not want the money, considering it "blood money" or dirty money, because by then they realized that it was money from drug trafficking. According to Aviles, the PCNE leadership believed they were dealing with some form of mafia or drug cartel and were afraid of what the drug dealers might do. The leadership decided the best way to distance themselves from the situation was to simply return the money to Zavala and have nothing more to do with it. Aviles said that neither he nor Rappaccioli ever received any of the money returned to Zavala.
4. Zavala's Mother-in-law's Version
Zavala's mother-in-law, Doris Salomon (whose name is the same as her daughter's), told the OIG in a brief telephone conversation that she had cashed the government check which returned the seized money to Zavala. Mrs. Salomon claimed that she did not recall what exactly had become of the money, and she refused to discuss the issue any further. Mrs. Salomon would not agree to be further interviewed, either in person, or by telephone, because she said it had been too long, her memory was bad, and she had been through too much already relative to the case.
G. Did the Money Belong to the Contras?
When interviewed by the OIG, Aviles did not admit to having written any documents stating that the money seized from Zavala was Contra money and denied giving Zavala any money. He did admit to having written at least one letter, at the request of Doris Salomon, asserting that the money seized from Zavala had been raised by Zavala to benefit the Contras. Aviles also admitted telling the San Francisco Examiner for a March 16, 1986 article, that he had given Zavala "about $35,000," but he claimed that the statement was not true. Aviles stated that he made the statement to the paper because he was "scared." He explained that the PCNE leadership had given Zavala the authority to engage in "fundraising" for the group, and only later became aware that Zavala was a drug dealer and had claimed to have given them $500,000. Aviles said that when he made his statement to the San Francisco Examiner, the PCNE leadership still hoped that, despite Zavala's arrest, Zavala had actually collected some "clean" money for them, and that he was still going to give it to them.
Zavala told the OIG that the seized money was money that had been given to him in Costa Rica in January 1983 by Aviles and the Costa Rican Contras. According to Zavala, Aviles gave him $45,000 to purchase communications equipment and arms for the Contras. Zavala could not recall exactly what he was supposed to purchase with the $45,000, or how his purchases would be transported to Costa Rica. Zavala did not declare the $45,000 when he brought it into the United States. He did not know how the money had been raised by the Contras, but he did not believe that Aviles and his organization were involved in drug trafficking. Zavala was unsure of the name of the organization with whom Aviles worked, even though, according to the documentation submitted by Zavala's attorney to the court, Zavala himself was supposed to have been a long-standing member of that organization. Zavala first called the organization the Partido Liberal Cristiano (Christian Liberal Party), then later referred to it as the Partido Liberal Catholico (Catholic Liberal Party). Zavala stated that he had no association with the PCNE or UDN-FARN, the two groups Aviles actually worked for. Zavala further stated that he was unsure of who the leaders of these organizations were or where the organizations were based. He said he did not know Vicente Rappaccioli.
Doris Salomon (Zavala's wife) believed the money seized from Zavala was either Contra money or Aviles' money, but only because that is what she had been told by Zavala. She had no direct knowledge of how the money was raised, where it came from, what Zavala and Aviles were going to do with it, or how it was passed between them. She did not recall Zavala telling her that Aviles or anyone else in the Contras gave him any money. She also did not recall Zavala ever claiming that he had procured equipment or weapons for the Contras. She recalled that on one occasion, Zavala did take several large boxes to Costa Rica, which she believed might have been a computer, but she did not know who the boxes were for. According to Salomon, Zavala and Aviles met on several occasions prior to Zavala's arrest, and had dealings with each other, but she was not sure of the nature of those dealings.
Carlos Cabezas, Zavala's co-defendant and former brother-in-law, told the OIG that the money seized from Zavala's bedroom was not Contra money, but the proceeds of a drug transaction. According to Cabezas, the money had been received by Ernesto Linsig-Caballero from a customer, Tom Benson, in a drug transaction the night before the arrest. Linsig, one of Zavala's distributors and also Zavala's housemate, and Benson were both co-defendants in the case. Cabezas opined that Salomon had obtained the letters from Aviles in an attempt to "minimize" Zavala's crimes.
Based upon the available, albeit conflicting, evidence, we believe that either Zavala or persons acting on his behalf fabricated the claim that the seized money belonged to the Contras. Zavala's ignorance about the groups with whom he claimed an affiliation was remarkable. Aviles' account of the submission of the affidavit in the case was plausible, and we do not believe that either Aviles nor the Contras ever received any of the returned money, despite Zavala's claim that some of the money was returned by him to the Contras. We believe that the credible evidence suggests that the claim that the money seized from Zavala belonged to the Contras was no more than a ploy by a drug trafficker to salvage some of his drug profits. The strategy succeeded.
69. The CIA requested that we not identify this employee.
70. As noted above, the CIA erroneously believed that the former CIA asset was to be deposed, not Rappaccioli.