USDOJ/OIG Special Report


(December, 1997)



Epilogue (July 1998)

Executive Summary

  1. Introduction

  2. Oscar Danilo Blandon

  3. Norwin Meneses

  4. OIG Analysis of Allegations Regarding Blandon's and Meneses' Relationship with the Contras and the CIA

  5. Ronald Lister

  6. Ricky Ross

  7. Enrique Miranda-Jaime

  8. Julio Zavala

  9. Carlos Cabezas

  10. Celerino Castillo

  11. DEA's Response to Information about Contra Drug Trafficking and Miscellaneous Cases

  12. Conclusions


Chapter I:  Introduction

  1. The San Jose Mercury News Articles

  2. The Contra Story

  3. Reaction from the Journalism Community

  4. What Did the San Jose Mercury News Articles Allege?

  5. Previous Investigations Concerning Allegations of Contra Drug Trafficking

  6. Scope of the OIG Investigation

  7. OIG Investigative Procedures

  8. Structure of the OIG Report


Chapter II: Oscar Danilo Blandon

  1. Background of Blandon

  2. DEA Investigation of Blandon

  3. FBI Investigation of Blandon

  4. DEA and FBI Cooperation in the Blandon Investigation

  5. Los Angeles Sheriff's Department Investigation of Blandon

    1. Los Angeles Sheriff's Department Affidavit in Support of the Search Warrants

    2. Execution of the Search Warrants

      1. Search of Blandon's Residence

      2. Search of Ronald Lister's residences

      3. Search of Roberto Aguilar's residence

    3. Issues Regarding the Search

      1. Allegation that federal authorities impeded the LASD investigation

      2. Allegation that Blandon was tipped off about the warrants

      3. Allegation that drugs were planted and money stolen during the search of Blandon's residence

      4. Allegation concerning CIA interference in the Los Angeles Sheriff's Department investigation

        1. Lister's statements

        2. Statements by Blandon's attorney

      5. Allegation that evidence obtained during the searches was taken by federal authorities from the Los Angeles Sheriff's Department

      6. Allegation concerning dismissal of drug possession charges against Blandon and his wife

  6. The Initiation of the Federal OCDETF Case

    1. Background to the OCDETF case

    2. Meeting with Assistant District Attorney Susan Bryant-Deason

    3. Approval of the OCDETF Case

  7. The 1987 Los Angeles OCDETF Investigation

    1. Investigative Steps

    2. Confidential Informants

      1. FBI Informants

      2. Norwin Meneses

        1. Meneses agrees to cooperate with DEA

        2. Meneses and DEA Informant in California

        3. Reaction from other law enforcement authorities concerning the use of Meneses

        4. Agreement concerning Meneses

        5. Attempts to get Meneses and DEA informant back to California

  8. Closure of the OCDETF Case

  9. Transfer of the Case

  10. Assessment of the OCDETF Investigation

  11. Allegation that Blandon received special treatment in the 1992 San Diego prosecution of him

    1. Background

    2. Initial Phase of the Investigation

    3. Allegations Regarding Blandon's ties to the Contras and the CIA in the San Diego OCDETF Investigation

    4. Blandon's Arrest at the Border

    5. Blandon's 1991 Arrest in Los Angeles

    6. The Indictment

      8. Blandon's Drug Trafficking Information

    7. Blandon's Post-Cooperation Statements Regarding the Contras and the CIA

    8. The Written Plea Agreement

    9. Blandon's Sentencing

    10. The Rule 35 Motion

    11. Disposition of Charges Against Blandon's Co-Defendants

    12. OIG Conclusions on the Allegation that Blandon Received Special Treatment Because of Alleged Ties to the CIA and the Contras

  12. Blandon's Improper Receipt of a Green Card

    1. Background

    2. Blandon Obtains his Green Card

    3. Tellez's Motivations in Securing Blandon's Green Card

  13. The Receipt of Green Cards by Blandon's Wife and Daughter

  14. DEA Payments to Blandon


Chapter III: Norwin Meneses

  1. Introduction

  2. Background of Meneses

  3. First reports on Meneses

  4. DEA Investigations of Meneses, 1980-1986

    1. Smith's investigations

    2. Allegation that Smith's investigations of Meneses were inexplicably halted

    3. More DEA investigations of the Meneses organization

  5. The FBI and United States Attorney's Office Investigation of Meneses

  6. Allegations About the Investigations

    1. "David Morrison"

    2. Alleged DEA Corruption

  7. DEA's use of Meneses as an informant

    1. Meneses' offer to cooperate and the 1987 Los Angeles OCDETF investigation

    2. Continued use of Meneses by the Costa Rica DEA

  8. Indictment of Meneses in 1989

  9. Post-Indictment Activities

    1. DEA's use of Meneses as an informant in 1989

    2. FBI Efforts to Locate Meneses

    3. Costa Rica DEA reactivates Meneses

    4. Continued investigations of Meneses

      1. San Francisco Case

      2. Guatemala Case

    5. Meneses' contact with Costa Rica DEA in 1991

  10. Meneses' 1991 Arrest in Nicaragua

  11. Allegation that DEA Attempted to Use Meneses Against the Sandinistas

  12. Status of 1989 indictment

  13. Meneses' entries into the United States

  14. Conclusions Regarding Investigation of Meneses


Chapter IV: OIG Analysis of Allegations Regarding Blandon's and Meneses' Relationship with the Contras and the CIA

  1. OIG Review of Sources of Allegations

    1. Defense Arguments in Los Angeles Big Spender Case

    2. OIG Review of Records Seized During 1986 Search of Blandon's Residence

    3. Allegation that Blandon Alluded to CIA Involvement in 1994 Grand Jury Testimony in San Francisco

    4. Information Recorded by Law Enforcement Authorities

      1. Claims by Ivan Torres

      2. DEA Suspicion of Meneses' Ties to CIA

      3. FBI Suspicion of Meneses' Ties to CIA

    5. Allegations from Other Sources

      1. Allegations by OIG Source-1 and Rafael Cornejo

      2. Allegations by "David Morrison"

      3. Allegations by Michael Ruppert

  2. OIG Investigation Regarding Support of the Contras by Blandon and Meneses

    1. Blandon's Version

    2. Meneses' Version

    3. Contra Leaders

    4. Blandon's Associates

      1. FBI Los Angeles Informant

      2. Ivan Torres

      3. Carlos Rocha

    5. Meneses' Associates

      1. DEA Informant

      2. Renato Pena

      3. Jairo Meneses

      4. Tony Navarro

      5. Enrique Miranda-Jaime

    6. Other DEA Informants

    7. Conclusions


Chapter V: Ronald Lister

  1. Background of Lister

  2. Lister's Dealings with Blandon, Meneses, and the Contras

  3. Reports of Lister's CIA Affiliation in Connection with the 1986 LASD Search Warrants

    1. Lister's Alleged Foreknowledge of the LASD Warrants

    2. Lister's Claims of a CIA Connection

  4. Documents Seized by the LASD

  5. Lister's Claims of CIA Affiliation Gathered by the FBI in 1986-1987

  6. Lister's Guilty Plea to Tax Charges

  7. Orange County Prosecution of Lister

  8. The 1990 San Diego Prosecution

  9. Claims of CIA Affiliation While Lister Was Cooperating

  10. More Allegations by Lister Regarding the CIA at the Time of His Sentencing

  11. Lister's Appeal of His Sentence and Release

  12. David Scott Weekly

    1. OIG interview of Weekly

    2. Federal Investigative Files on Weekly

  13. Timothy LaFrance

  14. Conclusions


Chapter VI: Ricky Ross

  1. Ross' Criminal History

  2. Ross' Statements about his Drug Empire to the Media and OIG

  3. The Roles of Ross and Blandon in the Spread of Crack

    1. When Did Blandon Begin Selling Cocaine to Ross?

    2. How much cocaine Did Blandon Sell to Ross?

    3. Availability of Cocaine in South Central Los Angeles

    4. Was Ross the first Los Angeles drug dealer with a Colombian supplier?

    5. Were Ross and Blandon Responsible for the Spread of Crack Cocaine in Los Angeles?

    6. Did Ross and Blandon Spread Crack Across the Country?

  4. Law Enforcement Investigations of Ross

    1. The Freeway Ricky Task Force

    2. Ross in Cincinnati

    3. Other Investigative Files and Cases on Ross

    4. Ross' Arrest on Federal Charges in Cincinnati

      1. Background of Investigation

      2. Ross' Guilty Plea in Cincinnati

      3. Ross' Cooperation in Los Angeles Corruption Trials

    5. The Texas Case

  5. Media Attention After Ross' Release from Prison

  6. The 1996 Case against Ross in San Diego

    1. Background

      1. Indictment and Information

      2. Government Disclosures to Defense Counsel

    2. The Government Case

    3. The Defense Case

    4. Conviction and Sentence

  7. OIG Analysis of Ross' Allegations

    1. Allegation that Ross Was Improperly Targeted Before He was Released From Prison Because of His Prior Testimony Against Corrupt Police Officers or Because of Racism

      1. Allegation of Improper Targeting of Ross Before Release from Prison

      2. Allegation that Blandon targeted Ross because of racism

    2. Allegation that the Government Prevented Ross from Raising the CIA Issue at Trial

    3. Allegation that Ross was Not Guilty Because of Blandon's Affiliation with the Contras and the CIA

    4. Allegations of Brady Violations

    5. Two additional post-trial matters

    6. Allegation that Ross was just a "little fish"


Chapter VII: Enrique Miranda-Jaime

  1. Background

  2. Miranda's Drug Trafficking for the Sandinistas

  3. Miranda's First Contact with United States Government

  4. Allegations of Contra Drug Trafficking

    1. Miranda's Version

    2. Documentary Evidence

    3. OIG Conclusions as to Miranda's Credibility

  5. Miranda's 1991 Arrest

  6. Miranda Escapes From Prison and Obtains a Visa

  7. Miranda's Entry into the United States and Return to Nicaragua

  8. Conclusions


Chapter VIII: Julio Zavala

  1. Background to the Frogman Case

    1. The Investigation

    2. The Arrest of Zavala and Seizure of $36,000

    3. Disposition of Charges Against Zavala

  2. Allegations of Zavala's Connections to the Contras and the CIA

    1. First Mention of the Contras in the Zavala Case

    2. Defense Motion to Conduct Depositions in Costa Rica

    3. Authenticity of Aviles and Rappaccioli Documents

    4. Ruling on Defense Motion

    5. Allegations in Declaration Regarding CIA

    6. Preparations to Take the Depositions in Costa Rica

    7. Unsealing of Defense Motion

  3. Allegation that the Return of the Seized Money to Zavala Was Caused by Intervention from the CIA

    1. CIA Documents

    2. Interviews of CIA Personnel

    3. Interviews of Department of Justice Personnel

    4. Interview of Zavala's Defense Counsel

  4. Allegations in 1986 Newspaper Article Regarding the Return of the Money

    1. The San Francisco Examiner Article

    2. U.S. Attorney Russoniello's letter to the editor

  5. OIG Conclusions Regarding the Return of the Money

  6. The Return of the Money

    1. Zavala's Version

    2. Salomon's Version

    3. Aviles' Version

    4. Zavala's Mother-in-law's Version

  7. Did the Money Belong to the Contras?


Chapter IX: Carlos Cabezas

  1. Cabezas' Allegations Concerning the "Contra Cocaine Connection"

  2. Cabezas' Allegation Concerning the CIA

  3. Cabezas' Earlier Claims

  4. FBI Investigation of Cabezas' Claim About a "Contra Cocaine Connection"

  5. OIG Investigation of Cabezas

    1. Source 1

    2. FBI Special Agent David Alba

    3. Assistant U.S. Attorney Mark Zanides

    4. Other Government Personnel

    5. Julio Zavala

    6. Troilo Sanchez

    7. Fernando Sanchez

    8. Doris Salomon

    9. Horacio Pereira

  6. Assessment of Cabezas' "Contra Cocaine Connection" Allegations

    1. Inconsistencies in Cabezas' Allegations Over Time

    2. Other Concerns Regarding Cabezas' Allegations

    3. Cabezas' Drug Ledger

    4. Assessments of Cabezas' Credibility

  7. OIG Conclusions on the "Contra Cocaine Connection" Allegations


Chapter X: Celerino Castillo

  1. Background

  2. Castillo's Allegations

  3. Castillo's Allegation Concerning Ilopango Airport

    1. Investigation of Walter Grasheim

      1. DEA Reports on Grasheim

      2. OIG Interviews related to the Grasheim case

        1. Felix Rodriguez

        2. Edwin Corr

        3. Abraham Azzam

        4. Robert Stia

        5. Richard Rivera

        6. Walter Grasheim

      3. Closing of the Grasheim case

    2. Investigation of Carlos Amador

      1. CIA information

      2. DEA Information

  4. DEA Headquarters' Review of Allegations of Contra Drug Trafficking

  5. Castillo's Later Interaction with Salvadoran Personnel

  6. OIG Interviews of other DEA and Embassy Personnel

  7. Castillo's Allegation regarding a CIA employee

  8. Castillo's Allegation Regarding the CIA's use of informant STG6

  9. Castillo's Recent List of Relevant Files

  10. Allegation that the DEA Retaliated Against Castillo

  11. Castillo and the Office of Independent Counsel

  12. OIG's Evaluation of Castillo's Allegations


Chapter XI: DEA's Response to Information About Contra Drug Trafficking And Miscellaneous Case

  1. Introduction

  2. General Relationship between DEA and CIA During the Period of the Contra Revolution

    1. Headquarters Level

    2. The 1982 Memorandum of Understanding Between the CIA and the Department of Justice Regarding Crimes Reporting

  3. DEA/CIA Interaction in Costa Rica

    1. Information the CIA Gave DEA in Costa Rica

    2. Conclusions

  4. Classified Memoranda from CIA to DEA on Drug Trafficking by the "Southern Front" Contras

  5. Other CIA Information

  6. Information Passed By CIA Regarding Jorge Morales, Adolfo "Popo" Chamarro, and Roberto "Tito" Chamarro

    1. Fiers' Memorandum

    2. DEA's Response

    3. DEA Intelligence Section's Debriefing of Morales

    4. quot;Follow-Up" by DEA Field Offices

    5. Other Actions by DEA

    6. OIG Conclusions

  7. DEA's Investigation of Information It Received About Contras or Contra Sympathizers

    1. Information about Contras in General

    2. Informant Information Received by the DEA

    3. OIG Conclusions

  8. John Hull

    1. Allegations Reviewed

    2. DEA Investigation of Drug Smuggling Allegations

    3. Investigation of Allegations that Hull Defrauded the Overseas Private Investment Company

    4. Allegation that a DEA Agent helped Hull Flee Costa Rica

    5. The Justice Department's Actions Regarding the Costa Rican Extradition Request

  9. Jose Orlando Bolanos


Chapter XII: Conclusions


Appendix A: Background on United States Funding of the Contras


Appendix B: Production of Cocaine Hydrochloride and Cocaine Base


Appendix C: History of Cocaine


Appendix D: Enrique Miranda's Entry Into the United States and Return to Nicaragua.


Appendix E: Timelines for Blandon, Meneses, Lister, Ross, Miranda, Zavala/Cabezas, Castillo


Appendix F: Glossary