F. Allegations About the Investigations
1. "David Morrison"
The San Jose Mercury News articles stated that an economist who lived in San Francisco in the 1980s, whom the articles gave the pseudonym "David Morrison," had reported information to the FBI in the mid-1980s about the Contras and Norwin Meneses. According to the article, Morrison had learned that Meneses, who was contributing to a Contra group called United Support Against Communism, "wasn't just smuggling cocaine for himself. He was doing it for the FDN, and he was selling them weapons as well, with the knowledge of the FDN's military commander and, it appeared, the tacit approval of the U.S. government." The article stated that Morrison reported to FBI agents that Meneses would have been arrested in a major drug case in 1983 or 1984 except that he had been warned of the case by a corrupt law enforcement officer, and that the FBI had no interest in Morrison's information on Meneses.
In FBI files we found the report from two San Francisco FBI agents who, on January 21, 1987, interviewed the person the San Jose Mercury News called "David Morrison." The FBI report had been sent to FBI Headquarters and turned over to the Iran-Contra special prosecutor. According to the FBI report, Morrison described himself as a self-employed real estate investor who coordinated fund raising trips to San Francisco by Contra leader Adolfo Calero. According to the report, Morrison heard "word" in the Nicaraguan community that the FDN was "probably" engaged in cocaine smuggling.
The FBI report contained some information on Norwin Meneses. It stated that Calero had come to San Francisco in June 1984, and Morrison sponsored a party for him at the St. Francis Yacht Club, attended by sixty people, including several Republican Party leaders and businessmen. After the party, Calero and approximately twenty people went to a restaurant, where Meneses picked up the tab for the entire dinner party. In addition, the report stated that in September 1985, Renato Pena suggested to Morrison that the FDN was involved in drug smuggling with the aid of Norwin Meneses. Morrison also heard from a reporter that Meneses owned a ranch in Costa Rica that the FDN was using to refuel planes flying in from Colombia with cocaine. The report stated that a U.S. Customs Service undercover officer investigating the Nicaraguan role in a narcotics ring had complained that "national security interests" had interfered in his investigation. The Customs officer allegedly told Morrison that "Norwin Meneses would have been arrested in a major drug case in 1983 or 1984 except that he had been warned by a corrupt Drug Enforcement Administration (DEA) officer. Renaydo [sic] Pena may have been present when the DEA Agent warned Meneses."
The OIG interviewed "David Morrison" about this information. Morrison described how he became involved with the FDN in the fall of 1983 and began to meet exiled Nicaraguans. Morrison said that Adolfo Calero met with him and other business leaders in San Francisco but Morrison said he was never involved in fund raising for the Contras.
Morrison said he had no first hand information about drug smuggling by the Contras. He said that some FDN troops told him that cocaine was coming back to the United States on planes flown by Americans in connection with the supply network for the Contras, but Morrison stated that this was "just hearsay information." Morrison said that "Commander Aureleano" told him that he would get more information about drug shipments but Aureleano was murdered in Honduras.
Morrison told the OIG that in the summer of 1985, he began to hear that money and supplies were not reaching the Contras. Morrison became concerned about what was being done through the supply network and speculated with a friend that the planes "may not be coming back empty." When questioned about what "supply network" Morrison was talking about, he could not say who was running the network, what type of aircraft was being used, or who the pilots were. Morrison stated that because Americans were flying the planes, he assumed that the CIA was involved, although he provided no facts to support this assumption. Morrison also said that Contra troops told him that they had no involvement in drugs but that "something fishy" might be going on at a ranch in Costa Rica owned by John Hull.
Morrison said he only met Meneses once, in the spring of 1984, at the dinner with Adolfo Calero. Morrison also recalled that in the summer of 1985, FDN members told him that Meneses had made a $40,000 donation in 1981 to the Contras to purchase camping equipment and radios. Morrison remembered hearing that Meneses was "playing both sides" because he was trading weapons for cocaine paste from the Sandinistas. Morrison stated that in his opinion it was "business, not politics" with Meneses and that the San Jose Mercury News articles "got it wrong" because Meneses was just a drug dealer who had no real connection with the Contras and did not give them any money after the 1981 contribution. Morrison stated that he had heard rumors that Meneses was close to Enrique Bermudez and that Bermudez was involved with drugs, but Morrison said that this was all "hearsay" and that he was not sure if the rumors concerned small drug deals by the Contras or the Contras' allowing drug planes to refuel in areas they controlled.
Morrison said that in the summer of 1985, he was told by Nicaraguan friends that Meneses was "protected" and that Meneses had an informant in DEA on his payroll. Morrison said he did not know if this referred to a DEA informant or a DEA agent. Morrison said that Renato Pena told him that Meneses had been tipped off by "Willie" that Meneses was to be arrested by the FBI and that Meneses paid "Willie" $1,000. Morrison said that when he gave his information to the FBI agents who had interviewed him, they started screaming at him, "How dare you accuse Mr. Meneses of anything. There are no files against Mr. Meneses in any government agency. Who the hell are you?"
Morrison told the OIG that he had talked to a Customs agent about the drug problem in San Francisco and that the agent told him that the Customs budget had been cut by about 75 percent and that there were not enough agents to handle the cases. Morrison denied that the Customs agent ever told him that "national security interests" were interfering with Customs investigations, as reported in the FBI account of his interview. Morrison also told the OIG that he had asked the Customs agent about Norwin Meneses and that the agent told Morrison that there was a Customs file on Meneses but that it would be a "career-breaker" to do any work on it. Morrison claimed the agent said it was all right to file reports, but that any substantial work on the matter would result in a transfer to a dismal outpost or other retaliatory action, and that Customs agents "just knew by bureaucratic pressure" not to work on certain cases. Morrison denied that the Customs agent ever told him that the case was not to be touched because of national security interests or because of CIA influence. Morrison also denied statements attributed to him that the Customs agent was transferred as a result of his investigation into the FDN.
The OIG attempted to talk with the Customs agent with whom Morrison spoke, but he is retired and he refused to talk with us.
We interviewed the two FBI agents who took the report from Morrison in 1987. One stated that he was asked to provide some leads in San Francisco for the FBI "Front Door" case, which later became the Iran-Contra Independent Counsel's case. He said that after Morrison had contacted the FBI, he and another San Francisco FBI agent were assigned to interview Morrison. The FBI agents were instructed to do the interview and pass the information to FBI Headquarters for transmittal to the Iran-Contra special prosecutor. The FBI agent said that he remembered that Morrison saw conspiracies everywhere. The FBI agent said that, as instructed, he interviewed Morrison, wrote a report containing the information that Morrison reported, did not evaluate it or investigate it, and sent the report to FBI Headquarters for transmittal to the special prosecutor. The FBI agent did not remember receiving any response from Headquarters about it.
Both FBI agents denied having any confrontation with Morrison about Meneses. They said they had not heard of Meneses prior to the interview and denied chastising Morrison for raising any allegations about him.
In sum, Morrison's statements as reported in the San Jose Mercury News articles and FBI report and his statements to us differed in several respects. He denied to us that he had first hand knowledge of much of the information in the report and he claimed not to have said certain things that were included in the FBI report and Mercury News articles. We find it unlikely that the FBI agents screamed at him for reporting information about Meneses, as he claimed to us. They credibly claimed that they had not known about Meneses before the interview and they included Morrison's comments about Meneses in their report and passed the information along.
2. Alleged DEA Corruption
Morrison's information about a corrupt DEA officer refers to an allegation that was investigated in 1985 by the DEA Office of Professional Responsibility (DEA OPR). DEA OPR files show that in June 1985, DEA OPR opened a case based on an allegation from the defense attorney for Jairo Meneses that a DEA agent had accepted money from Norwin Meneses for investigative information.
On June 20, 1985, DEA OPR investigators interviewed Jairo Meneses about his lawyer's allegation. Jairo Meneses stated that in 1981, a drug dealer whom he named (referred to here as "the source") had told his uncle, Norwin Meneses, that he could provide information and protection from his "connection" in DEA. "The source" named his contact in DEA. According to Jairo Meneses, in the summer of 1982, Norwin Meneses tried to give the agent $5,000 in cash in a bowling alley in Dale City, California. The agent told Norwin Meneses to give the money to Jairo Meneses, who gave the money to the agent outside the bowling alley.
On June 26, 1985, the DEA polygraphed Jairo Meneses, asking him whether he lied about giving the agent $5,000. The polygraph examiner determined that Jairo was deceptive when he denied lying. Jairo Meneses nevertheless continued to maintain that he had in fact given the money to the agent.
DEA OPR also interviewed Renato Pena in 1985. Pena claimed that sometime around the summer of 1983 he heard Jairo Meneses tell Norwin Meneses that the reason the "DEA agent" did not take the money was because Norwin had "thrown" the money at the agent, so the agent had made Jairo hand him the money. Pena knew only the agent's first name. Pena said he was present during conversations when the Meneseses discussed getting information from "the source." Pena believed the source's information came from a DEA agent. Pena could provide no further information concerning the agent. Pena was not polygraphed by the DEA.
In July 1985, "the source" was interviewed by DEA OPR. "The source" said he had worked for the DEA as a confidential informant since 1978 and worked with the agent until late 1982 or early 1983. "The source" said he sometimes represented himself as a "crooked" DEA agent who worked with other "crooked" DEA agents. He recalled using this approach with Norwin and Jairo Meneses and said he may also have identified the agent as crooked as part of the ruse. "The source" denied having any illegal or improper dealings with the agent or any other DEA agent. "The source" said his business partner was present during some conversations with the Meneseses.
DEA OPR also interviewed "the source's" business partner, who said that "the source" often told people that he worked for DEA and that he and several DEA agents were corrupt. The business partner said "the source" did this to initiate drug cases for DEA and to introduce DEA agents undercover. The business partner added that he had heard Meneses brag about having connections in the United States government, including the CIA and politicians in San Francisco. The business partner never heard Meneses talk about any corrupt DEA agents, and the business partner had no knowledge of any.
On August 22, 1985, DEA OPR interviewed the agent and took a sworn statement from him. He denied ever receiving any illegal payments from the Meneseses or supplying them with any DEA information. The agent said he had tried to get Jairo Meneses to cooperate with DEA after his arrest in 1981 in the case investigated by Sandra Smith (see section above). Jairo had refused because he feared for his safety, but had said he would try to get Norwin Meneses to cooperate. In late 1981 or early 1982 the agent received a phone call from Norwin Meneses, who said that he had spoken with Jairo and would attempt to assist Jairo by supplying information about drug trafficking. Norwin said he was living in Los Angeles and traveling frequently to Central America, "where he was involved in the revolution to overthrow the Nicaraguan government."
The agent said that in 1982, when he stopped by "the source's" office, he saw Norwin and Jairo Meneses there. The agent was introduced to Norwin Meneses, who said that he was "a revolutionary and not interested in drug trafficking; however he wanted to help Jairo and knew others who were involved in cocaine smuggling." Norwin Meneses said that if he received information about drug transactions, he would pass it on to the agent. The agent denied having any other meetings with Norwin and denied that any bribe was ever offered or discussed.
DEA OPR issued a report on October 7, 1985, concluding that the allegations were not substantiated. On February 3, 1986, it issued a letter of clearance to the agent.
Later, in July 1986, the FBI polygraphed both Jairo Meneses and Renato Pena concerning the alleged bribe to the agent. The FBI polygrapher concluded that they were deceptive when they denied lying about their allegations.
In 1987, after Norwin Meneses offered to cooperate with the DEA's Costa Rica office, he again raised the allegation about the agent to Sandalio Gonzalez, the DEA agent in Costa Rica who debriefed him. According to a memorandum from Gonzalez, during a debriefing session on February 10, 1987, Meneses said that "he had personally paid the sum of $5,000 on numerous occasions to the agent, allegedly for protection. This took place in the San Francisco area approximately 3-4 years ago." Meneses added that the agent " was working in concert with some corrupt San Francisco police officials." Gonzalez reported in the memorandum that he did not get a detailed debriefing on this subject but was sending it to DEA Headquarters in compliance with DEA policy. The memorandum noted that there was a possibility that Norwin Meneses would meet with DEA inspectors concerning his allegations, and Gonzalez asked for instructions from DEA Headquarters on how to proceed.
According to a handwritten note in the DEA OPR file dated March 16, 1987, a DEA OPR official advised Gonzalez by telephone that the allegation about the agent had been made in June 1985, was investigated by DEA OPR then, and was found to be false. No further action was requested or taken concerning Meneses' claim.
We interviewed several of the persons involved with this allegation. Renato Pena told us that Norwin Meneses was bribing a DEA agent, but Pena refused to identify the agent to us. Pena said he was told by Jairo Meneses that this agent went to Jairo's house in Dale City in 1981 and showed interest in making contact with Norwin Meneses. Pena said that in about 1983 at a bowling alley in San Francisco, he saw Norwin Meneses give the agent an envelope containing several thousand dollars. Pena claimed this DEA agent called Norwin a few weeks before Julio Zavala and Carlos Cabezas were arrested, and warned Meneses about their impending arrests. (This refers to arrests in the San Francisco "Frogman case," described in Chapter VIII below. These arrests occurred on February 15, 1983.)
Retired FBI agent Manuel Hinojosa told us that Pena had told him in 1984 about a San Francisco police officer whom Pena said Norwin Meneses was "paying off," but Pena never told Hinojosa that he had seen any money exchanged. According to Hinojosa, Pena never said anything about any federal agents being paid off or about any payoff in a bowling alley.
When we interviewed Norwin Meneses in Nicaraguan prison, he denied that anyone in DEA provided him with any information about any investigations. We were unable to locate Jairo Meneses.
We also interviewed the agent about this allegation. Consistent with his previous statement to DEA OPR, he denied receiving any bribe from Meneses or providing Meneses with any information. The agent said that after the arrest of Jairo Meneses in 1981, he had tried to get Jairo to "roll over" on Norwin but Jairo had refused. However, Jairo thought that Norwin Meneses would work with the DEA. The agent said he met with Norwin, who denied being a drug trafficker and said he was only interested in "getting his country back." Norwin eventually returned to Nicaragua and later contacted DEA agent Gonzalez in Costa Rica.
The agent said he did not recall specifically the conversation with Norwin Meneses about what he was doing for the Nicaraguan revolution. The agent said that Meneses was "pretty cryptic." The agent said he had the "impression" that Norwin was moving guns for the Contras. The agent said he also suspected CIA involvement with Meneses because of his claimed ties to the Contras. The agent said he contacted CIA in San Francisco and asked if the CIA was involved with Norwin and the CIA denied it.
In short, the allegations about the DEA agent's corruption were previously raised, investigated, and found to be unsubstantiated by DEA OPR. Pena and Jairo Meneses gave conflicting stories about the alleged bribe, and they failed polygraphs conducted by the DEA and the FBI. Moreover, an FBI agent said that Pena had told him about corrupt police officers but never mentioned anything about a corrupt DEA official. Our review found no information to undermine the credibility of DEA OPR's conclusions.
G. DEA's use of Meneses as an informant
1. Meneses' offer to cooperate and the 1987 Los Angeles OCDETF investigation
In Chapter II, section G, of this report, we described in detail how Norwin Meneses became a source of information for the DEA Costa Rica office in 1986 and the unsuccessful 1986-87 Los Angeles OCDETF investigation involving him. Rather than repeat that discussion in detail here, we will briefly summarize it before discussing the continued use of Meneses as an informant by the Costa Rica DEA after the Los Angeles OCDETF investigation was closed in 1987.
In July 1986, Norwin Meneses approached the Costa Rica DEA office unsolicited and offered to provide information on drug traffickers. The DEA agent in Costa Rica, Sandalio Gonzalez, debriefed Meneses, who provided the names of numerous drug traffickers inside and outside the United States. After checking DEA databases and finding no arrest warrants for Meneses, Gonzalez proposed using Meneses to introduce an experienced DEA confidential informant (DEA CI-1) to drug traffickers in Central America, South America, and elsewhere.
In December 1986, under Gonzalez's direction, Meneses and DEA CI-1 traveled to Los Angeles and in January 1987 met with Danilo Blandon, Ivan Torres, and members of Blandon's organization. The FBI and the U.S. Attorney's Office in San Francisco were surprised to learn about this use of Meneses. The lead FBI agent on the Los Angeles OCDETF case, Doug Aukland, was also upset that he did not get a chance to interview Meneses before he returned to Costa Rica in January 1987.
In February 1987, discussions among various agencies conducting the investigations of Blandon and Meneses in Los Angeles and San Francisco, including the DEA, FBI and United States Attorney's Offices, resulted in an agreement that Meneses could be used as a source of information in the Los Angeles OCDETF case against Blandon but that Meneses would have to plead guilty to a cocaine-related charge based on his drug trafficking activities in San Francisco. The FBI in San Francisco opened a case on Meneses, but placed it in an inactive status while the Los Angeles OCDETF investigation proceeded.
In the spring and summer of 1987, attempts to get Meneses to return to the United States were unsuccessful. In response to requests to get Meneses to cooperate in the OCDETF case, DEA agent Gonzalez reported from Costa Rica that Meneses was not willing to testify in court, that Meneses would speak only with certain DEA agents, and that Meneses wanted assurances that he could live in the United States. DEA Headquarters refused to agree to protect Meneses' identity. In July 1987, prosecution was declined in the OCDETF investigation, and the case was closed, partly because of Meneses' unwillingness to cooperate.
2. Continued use of Meneses by the Costa Rica DEA
Despite Meneses' reluctance to testify in court or cooperate with the Los Angeles OCDETF investigation, on July 24, 1987, the DEA in Costa Rica formally established him as a confidential informant. The Costa Rica DEA office wrote that Meneses, who had been a major trafficker, was prepared to assist the DEA and travel for the DEA in furtherance of major drug trafficking investigations in the United States, Central America, and South America. The DEA report noted that among the groups that might be targeted were some Nicaraguan government officials. In the DEA paperwork that activated him as an informant, the DEA Costa Rica wrote under the heading Prior Criminal Record, "no pending charges known at this time."
In September 1987, at the request of the Costa Rica DEA, Meneses received a 45 day visa to travel to the United States to assist in DEA investigations. On September 19, 1987, Meneses and DEA CI-1 went to Miami and made contact with a significant number of drug traffickers, one of whom was Blandon. DEA CI-1 reported that when he and Meneses met Blandon, they broached the subject of money laundering. Blandon said he was laundering money on a small scale for narcotics traffickers but that he expected this business to grow.
From Miami, Meneses traveled to San Francisco. On October 3, 1987, an FBI informant told FBI Special Agent Donald Hale that Meneses was in San Francisco. This informant later advised Hale that Meneses was telling his associates that he was an informant for the CIA and that was why he had not been arrested for drug trafficking.
We found no mention of Meneses' visit to San Francisco in the Costa Rica DEA files. But a later debriefing of DEA CI-1 by DEA agents in Los Angeles, found in a DEA general file entitled "Cocaine," stated that DEA CI-1 said that DEA CI-1 and Meneses went to San Francisco to work on a DEA operation there. The report stated that Meneses met with a pilot to arrange for the smuggling of 10,000 kilos of cocaine into the United States but no agreement was reached.
Meneses returned to Costa Rica where he was debriefed by Gonzalez about his activities in the United States on behalf of the DEA. He continued to work on other cases for the DEA Costa Rica office, including a major investigation of Colombian drug traffickers.
On November 23, 1987, the DEA Costa Rica office requested another 45-day single entry visa for Meneses to enter the United States. In November and December 1987, Meneses and DEA CI-1 returned to the United States and traveled to Miami, Los Angeles, and San Francisco to meet with drug traffickers on behalf of the DEA. As a result of Meneses' cooperation, several DEA cases were initiated, including a case against Aparicio Moreno.
In January 1988, DEA agent Gonzalez was transferred from Costa Rica to the DEA office in Mexico City, and his cases and confidential informants were reassigned to other agents. DEA Special Agent James Rivera continued to work with Meneses after Gonzalez left Costa Rica. In 1988 and 1989, Rivera initiated several cases on drug traffickers in Central and South America based on information and assistance from Meneses that resulted in the arrest of several persons and the seizure of cocaine intended for shipment from Panama through Costa Rica to the United States.
On December 23, 1989, the DEA Costa Rica office deactivated Meneses as an informant. The deactivation form stated that although Meneses attempted to generate activity in investigations in which he was involved, none of them "appears to have any chance of fruition" and that given DEA guidelines concerning informant utility, he had to be deactivated.
According to DEA records, between the time Meneses was established as an informant in July 1987 until he was deactivated in December 1989, the DEA paid him $6,877, much of it to cover expenses Meneses incurred during his travels for the DEA. As we describe below in section I, the Costa Rica DEA activated him again in May 1990 for a short time, paid him $500, and deactivated him several months later. All told, Meneses received a total of $7,377.50 spread over 13 payments from the DEA.