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

1. Inconsistencies in Cabezas' Allegations Over Time

Cabezas related the details of his alleged participation in trafficking "Contra cocaine" in two interviews with two separate federal law enforcement agencies -- with the FBI in 1987 and with the OIG in 1997. Despite the similarity of the "general claim" in both of his interviews, there are a number of conflicting details provided by Cabezas in the two interviews. The most glaring inconsistency is the fact that Cabezas apparently told the FBI nothing about his allegation that a CIA agent named Ivan Gomez participated in the Contra cocaine enterprise. Moreover, Cabezas told the FBI that Pereira and Sanchez had wanted him personally to handle the transportation, distribution, and collection for "Contra cocaine" because "they did not trust Julio Zavala." Cabezas said that Zavala did not receive any Contra cocaine, nor was he the recipient of any Contra sales, except those "that came through [Cabezas]." When Cabezas talked to the OIG, Zavala was the "main dealer" who was responsible for receiving all the baskets, distributing all the cocaine, and collecting all the money; Cabezas was paid to simply retrieve the cocaine from the basket reeds and turn it over to Zavala, and then transport the money back to Costa Rica. There are other inconsistencies in Cabezas' two accounts as well, relating, for example, to how much Zavala paid him, and how much "Contra cocaine" the enterprise imported.

It appears that Cabezas' claims may have been embellished over time. At Zavala's trial in 1984, Cabezas testified only that Pereira had told him that he was helping the Contra Revolution. In his 1987 interview with the FBI, Cabezas claimed that Sanchez and Pereira had asked him to handle "Contra Cocaine" and that his old high school friend, Joaquin Vega, had "assured" him that the money from the drugs would be used to help the Contras. In 1997, Cabezas told the OIG that he had personally witnessed Pereira disburse drug money Cabezas had given him to Vega. The OIG was unable to locate Joaquin Vega.

2. Other Concerns Regarding Cabezas' Allegations

When asked to identify Ivan Gomez from an array of sixteen photographs of males of Latino descent, some of whom were persons known or thought to have been associated with the CIA in the Central American region during the period of the Contra conflict, Cabezas became visibly shaken but reluctantly agreed to participate. Cabezas chose two photographs as "possibilities," stating that one was "closer" than the other, and that the other photographs were not possibilities. The two photographs Cabezas chose were not "Ivan Gomez."

The CIA OIG verified to the OIG that there was a CIA officer who used the alias "Ivan Gomez" working in Costa Rica during the time Cabezas claimed that the "Contra Cocaine" enterprise was formed and that two photographs of Gomez were included in the photo array -- one of which was of Gomez in "operational disguise." The asset's picture was not one of the two "possibilities" chosen by Cabezas.

We also found it unusual that Cabezas could not name the Contra group for whose benefit he had run the "Contra cocaine" enterprise for over a year, and for whom he allegedly transported "one to one and one-half million dollars" back to Costa Rica and Honduras. He was able to identify the group only as "the Contra group which was the former National Guard under Somoza, not Eden Pastora's group."

3. Cabezas' Drug Ledger

Cabezas told the FBI in 1987 that he had kept records that would reflect the payments and distribution of the money in the "Contra Cocaine" enterprise. In 1997 he made two different claims to the OIG: First, Cabezas said he had kept a ledger with separate entries of all transactions for both the private and "Contra cocaine" enterprises; then he changed his account, and said he had kept separate ledgers for the two enterprises. One ledger was in fact seized by the FBI at the time of Cabezas' arrest. That ledger appears to have separate sections for each person involved in the distribution network, but does not differentiate between the two separate organizations or the two different suppliers.

Cabezas made a number of claims about the "Contra Cocaine" enterprise and transactions that occurred, which he said were reflected in his ledger. Examination of the ledger does not appear to substantiate these claim. Among a number of inconsistencies and contradictions to his statements are:

-- Cabezas claimed at different times that the enterprise began importing "Contra Cocaine" somewhere between November 1981 and January 1982. His drug ledger begins in August 1982.

-- Cabezas claimed in court testimony, to the FBI, and to the OIG, respectively, that the enterprise imported "10 or 11," "18 or 19," and "25 to 30" kilos of cocaine during the period of operation. The ledger appears to indicate the importation of only a total of seven or eight kilos.

-- Cabezas told the OIG that he personally made over twenty trips carrying money to Honduras and Costa Rica, that he transported between $1 million and $1.5 million, and that the largest amount he carried in one trip was $250,000. The ledger does not substantiate any of these claims.

-- Cabezas told the OIG that he had removed the cocaine from the first basket taken to the United States, had given it to Charlene Rizzo who sold it all in one day, and that he had then returned to Honduras with about $100,000 to pay Pereira for the first two kilos of Contra cocaine. The ledger has no entries showing anyone carrying $100,000. There was one entry stating "Envio con CC 56.000 = 100882". This appears to indicate that Cabezas made a payment of $56,000 to someone, leaving him with a balance owed for cocaine of $100,882.

-- Cabezas told the OIG that on two or three occasions he carried $40,000 to $50,000 from California to Aristides Sanchez' office in Miami. Cabezas' drug ledger does not substantiate this claim.

4. Assessments of Cabezas' Credibility

Assistant U.S. Attorney Lassart, who supervised the Frogman investigation, stated that Carlos Cabezas is a "jolly BS-er" who is prone to exaggeration and embellishment and is not to be believed. He referred to Cabezas as "Mr. Hyperbole." AUSA Zanides concurred that Cabezas is capable of fabricating a story he believed was in his self-interest. FBI agent Alba told the OIG that Cabezas is a "BS-er" who would make up good stories to cover himself, especially on the telephone intercepts. Doris Salomon opined that Cabezas "is not honest" and that he "believes his own lies."

FBI SA Fresques, however, said Cabezas "had a conscience" as a trafficker. Fresques believed that Cabezas dealt with only a couple of kilos of cocaine and that part of the money was supposed to go back to the Contras. Fresques said that he respected Cabezas and did not believe that Cabezas would make up stories.

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

First, we found no evidence that Cabezas mentioned the Contra cocaine connection to law enforcement officers before testifying at Zavala's trial. All law enforcement officers interviewed were consistent on this point. Nor is there any evidence that Source 1 ever reported the alleged Contra cocaine connection to the FBI or any other DOJ component. Source 1 himself could not recall if he told anyone -- initially stating that he had not told anyone because "they didn't ask," then saying that he had told someone but could not recall who, and still later stating that he may not have told anyone because he separated the political from the drug portion of the investigation. Source 1's almost daily debriefing records do not reflect any mention of this scheme, despite a careful record of information given regarding how drug proceeds left the country.

The prosecution of Zavala, Cabezas, and their co-defendants was aggressive. Indeed, the U.S. Attorney's Office prosecuted Zavala on CCE charges even after his guilty plea to lesser charges, despite protests by the trial judge about how much the subsequent trial was costing the taxpayers. The only reason Horacio Pereira and Troilo Sanchez were not prosecuted was because the evidence against them was insufficient, not because of any alleged link to the Contras. The accounts of FBI SA Alba and Assistant U.S. Attorney Lassart on this score are corroborated by an FBI San Francisco teletype to the Director of the FBI, dated November 8, 1982, (prior to the Frogman arrests), which identified Troilo Sanchez, Fernando Sanchez, and Horacio Pereira as Zavala's sources of cocaine but noted:

Previous DEA investigations have characterized Pereira as the major source of cocaine smuggling from Costa Rica to the United States. DEA further indicated that to date they have not been able to penetrate his operation, due to the fact that it is "an extremely closely knit organization."

Second, as to Cabezas' underlying claims that he trafficked in "Contra cocaine" for the benefit of the Contras with the knowledge and consent of the CIA, we found no documentary, physical, or credible testimonial evidence to substantiate this claim. We recognize that over 15 years have passed since the alleged events and our main evidence comes from interviews of some of the alleged participants. But these interviews lead us to conclude that it is unlikely that the "Contra Cocaine" enterprise operated, as described by Cabezas. It is quite clear that both Cabezas and Zavala were drug dealers who trafficked in cocaine in the San Francisco area and traveled, by their own admission, to Costa Rica. It appears likely that Cabezas and Zavala may have obtained some of the cocaine they distributed from Pereira and Sanchez, as they claimed. However, we did not find clear or sufficient evidence to conclude that the importation and distribution of that cocaine was done with the knowledge of the Contras, at the behest of the Contras, or with the express purpose of financing the Contras.

In finding that it is unlikely that such a Contra cocaine connection existed, we considered the following factors: Cabezas was the only person we found who claims to have participated in the "Contra Cocaine" enterprise, and even his own accounts, provided at various times to various agencies over the years, contain an enormous number of inconsistencies and discrepancies. Although Source 1 stated that Cabezas had claimed that he was trafficking in cocaine to benefit the Contras, Source 1 had no direct personal knowledge of the alleged scheme. His knowledge was based on what "members" of the enterprise claimed to him that they were doing. Source 1 knew few details of the enterprise, and many of those he did provide are quite different from those provided by Cabezas. It is also noteworthy that Source 1 never reported this information prior to his OIG interviews and the recent media coverage. All of the other persons whom Cabezas named as his co-conspirators in the "Contra Cocaine" enterprise denied the existence of the organization or any participation in such a conspiracy. None of the government agents and attorneys who worked the case recalled seeing any indications of Contra involvement during the investigation, or even hearing allegations of Contra involvement prior to 1984, when Zavala claimed the money seized from him belonged to the Contras.

We also did not find sufficient evidence to support Cabezas' claim of any CIA involvement with his drug trafficking operation. The first mention of this claim came during Cabezas' OIG interview, and he could not even pick out a photograph of his CIA contact from a photographic array. Neither Zavala nor Source 1 had any knowledge of CIA involvement with drug trafficking. And we found nothing in DOJ files supporting this claim.