I. Castillo's Recent List of Relevant Files

In October 1996, Castillo appeared at the DEA Headquarters in Alexandria, Virginia in an effort to gain attention for his allegations of CIA involvement in Contra drug trafficking. He had with him a list of cases that he asserted would support his allegation that the DEA turned a deaf ear to drug investigations that linked the CIA and the Contras to trafficking. He provided this list to the DEA, who provided it to us. We requested from the DEA the case files contained on Castillo's list, but few of them mentioned the Contras:(78)

1. DEA case #TG-87-0003: This was a case that Castillo opened on October 27, 1986 on Walter Grasheim, discussed above.

2. DEA case #GFTF-86-9999: This file, entitled "Air Intelligence," documented various incidents involving light aircraft in Ilopango and elsewhere suspected of involvement in trafficking. Such items as tail numbers, colors and marking of planes are reflected in the file. A DEA cable dated March 20, 1986, discussed above, related informant information indicating that Carlos Amador was smuggling cocaine into the United States. Another unrelated cable in this file, dated April 24, 1986, reported that the Costa Rica DEA office had been contacted by Costa Rica's National Security Agency, seeking information on a plane that might have transported Nicaraguan Contra leader Adolfo Jose Chamarro Cesar, who the Costa Rican authorities suspected might have been involved in smuggling narcotics to the United States. The DEA El Paso Intelligence Center reported the next day that a check of its indices found no information on Chamarro Cesar.

3. DEA case #GFTG-86-9999: This general file, also entitled "Air Intelligence," contained various reports of aircraft seizures, crashes, and sales. One of the cables in this file was Castillo's June 23, 1986 report regarding Amador, which we discussed above.

4. DEA case #GFTG-85-9999: This general case file documented various incidents involving light aircraft suspected of involvement in drug trafficking at Ilopango and elsewhere. The file makes no mention of the Contras or of any CIA involvement with drug trafficking.

5. DEA case #GFTG-86-9152: This file, entitled "Guatemala," appeared to have been a catch-all file for many unrelated, one-time events that took place in Guatemala. The file makes no mention of the Contras or of any CIA involvement with drug trafficking.

6. DEA case #GFTF-86-4003: This file was entitled "Fruveticos," the name of a company that exported frozen fruit and vegetables from Costa Rica. In this file, it was reported that the company was buying products at above market rates, then disposing of the perishable products in Miami. In one shipment of frozen yucca, American agents had found over 400 pounds of cocaine. This file also contained several documents discussed above, concerning Amador, including the August 27, 1985, debriefing report by Sandalio Gonzalez of an informant who provided information about Amador's alleged plan to fly aircraft to Colombia for use in drug smuggling, and the March 20, 1986 cable discussing Amador's alleged plan to smuggle cocaine into the United States. Another cable in this file, dated February 4, 1986, mentioned that the DEA Costa Rica office was investigating Gerardo Duran and Jorge Morales for shipping cocaine through Costa Rica. (Information about Duran and Morales is discussed in Chapter XI of this report.)

7. DEA case #TG-86-0001: This file detailed the activities of the Pozo-Aparicio organization, said to have transported hundreds of kilograms of cocaine from Colombia to Los Angeles in 1984 and 1986. The cocaine was usually smuggled in stolen vehicles in which hidden compartments had been installed. The head of this organization, a Colombian, had said that he shipped cocaine to a person in El Salvador, and that the cocaine was delivered to a Colombian national who resided in Los Angeles. This case was closed on September 21, 1987, after 20 people were arrested and 92 kilograms of cocaine seized. The file makes no mention of the Contras or of any CIA involvement with drug trafficking.

8. DEA case #TG-87-0001: This file details trafficking activity by Jaime Bermudez Botero and others in Guatemala and Mexico, but contains no mention of Contra or CIA involvement in drug trafficking.

9. DEA case #GFTG-83-4010: This file relates to alleged trafficking by Carlos Enriquez Ordonez, who, according to an informant, was smuggling cocaine from Guatemala to Los Angeles. On December 12, 1985, Castillo met Ordonez in an undercover capacity, and Ordonez told of making several trips a month as a cocaine and money courier. Ordonez also informed Castillo that he had some United States Customs officials on his payroll in Los Angeles. There is no mention of Contras or any CIA involvement with drug trafficking in this file.

10. DEA Case #GFTG-86-999: This file could not be located by the DEA. However, it appears to be a general air intelligence file from Mazatlan, Mexico.

The OIG also reviewed the files of the informants who Castillo included on the list that he gave to the DEA:

1. DEA CI file #STG-86-0005: This informant was a restricted use source informant because of his felony convictions. He was activated on May 17, 1986 and deactivated on October 30, 1987. The file contains no mention of Contra or CIA involvement with drug trafficking. It does mention an allegation from the informant that the government of Nicaragua, or factions of it, were involved in the transport of cocaine to the United States in 1987.

2. DEA CI file #STG-86-0006: This informant was established on June 6, 1986, and was Castillo's main source in the Grasheim case. In addition to the references to the Grasheim and Amador cases, the file also includes information relating to alleged drug trafficking by pilots at Ilopango that is not specifically tied to the Contras. The use of this informant is discussed more fully above.

3. DEA CI file #STG-86-0002: This informant was established on February 10, 1986, and deactivated in November 1989. The file makes no mention of any involvement with the Contras or the CIA.

4. DEA CI file #STG-81-0013: This informant, a Guatemalan citizen, is referred to above in the Grasheim case. He was originally activated in 1974 by the DEA's San Francisco Field Division, but was deactivated for refusing to testify in a case. He was reestablished as an informant in 1975, but was soon deactivated again, this time for using his cooperation with the DEA to cover up his own drug activities. When he was indicted on federal charges in 1979, he fled from the United States. Because he was a Guatemala citizen, the Guatemalan government would not extradite him to the United States.

In September 1981, the DEA's Guatemala office reestablished him as an informant yet again, after making clear that no deals would be made regarding the pending charges, but that any cooperation would be made known to United States authorities. Ultimately, this informant proved valuable to the Guatemala office, which later asked that the charges against him in the United States be dismissed. The file does not indicate whether the charges were actually dismissed. However, the informant was used on and off throughout the 1980s and 1990s by the Guatemala DEA office.

This informant was one of the two mentioned by Castillo in his October 27, 1986 case opening report on Grasheim. As noted above, this informant provided the information about Grasheim that led to the September 1, 1986 search of his house.

On June 20, 1997, in the letter to the OIG in which he declined to be interviewed, Castillo also suggested "leads" that the OIG could follow. These leads included the DEA file on Grasheim; documents held by the National Archives from the "Iran-Contra file" on Grasheim; the DEA investigative and informant files that Castillo had referred to in the list he gave to the DEA in 1996; and various United States Embassy and other personnel in El Salvador who Castillo alleged knew of Contra-CIA drug trafficking.

The OIG attempted to interview all of the DOJ personnel on Castillo's list, as well as many of the others. None of them verified Castillo's broad claims about CIA involvement in Contra drug trafficking. In addition to many of the individuals whose accounts have already been discussed above, DEA SA Jack O'Conner, the DEA's Desk Officer for Latin America from 1985 until 1988, was on Castillo's list. O'Conner was responsible for monitoring drug activities in Colombia, Peru, Bolivia, and Panama. O'Conner told us that he knew of Castillo's allegations through the media, but said he had no personal knowledge relating to them. Indeed, O'Conner recalled little more about Castillo than the fact that he had seen Castillo's name on a DEA roster.

Frank Torillo, Associate Special Agent in Charge, DEA Miami, told the OIG that Castillo was wrong to suggest that Torillo had information concerning drug activity by the Contras or the CIA. Torillo worked at DEA Headquarters between 1984 and 1990, but never worked on a foreign desk. Torillo noted that he had been an Assistant Special Agent in Charge in the New York Field Division when Castillo was there in 1984, and recalled Castillo as a good agent. But he had not spoken with Castillo since 1985.

J. Allegation that the DEA Retaliated Against Castillo

In December 1991, the DEA formally moved to remove Castillo from his position as a DEA criminal investigator. The letter cited six violations allegedly committed by Castillo. The charges were as follows:

1. Misappropriation of the Property of Others. A DEA source reported that Castillo had asked for $25,000 to give to the special forces in Guatemala. The source said he gave Castillo the $25,000, but Castillo later said that the source had given him only $10,000. After an investigation, the DEA Office of Professional Responsibility found that Castillo failed to follow the requirements for processing money, delayed in reporting the surrendered money (approximately five months), failed to report the surrender of the money in the proper file (the informant file rather than subject file), and failed to fully advise his immediate supervisor of the circumstances surrounding the acquisition of the funds, which supported the source's allegation that Castillo had misappropriated $15,000.

2. Misappropriation of Government Property. This charge alleged that Castillo had tried to sell a DEA radio for $15,000 to the same source as mentioned in the first charge.

3. Receiving/Soliciting Gifts. This charge alleged that Castillo had improperly accepted a fully automatic MAC-10 machine gun from a confidential source, and had disregarded his supervisor's order to get rid of it.

4. Violations of Regulations relating to the Export and Sale of Firearms. Federal law and applicable regulations forbid the export of military firearms overseas without a license, except for items intended for official use by federal agencies or furnished to foreign governments. Castillo was alleged to have sold a .45 caliber pistol and a Mossberg 12-gauge shotgun to an informant, for $3,000 and $5,000, respectively.

5. Failure to Follow Written Instructions. This charge alleged that Castillo had possessed and maintained two fully automatic weapons, an AR-15 and MAC-10, contrary to DEA regulations.

6. Making a false statement. This charge was based on Castillo's claim to the DEA that he had not known that the purchaser of the .45 caliber weapon was an informant.

Castillo denied the charges, claimed that they were only administrative in nature, and alleged they were brought in retaliation for his investigations of alleged Contra and CIA drug trafficking. The charges were not finally resolved, however, because in 1992, in lieu of the removal from his position that had been proposed by the DEA based on its assessment of the evidence in support of the charges, Castillo accepted a disability retirement from the DEA because of a stress-related disorder. It was beyond the scope of our review to determine the validity of these charges or whether Castillo's claims of retaliation had any merit.

K. Castillo and the Office of Independent Counsel

As noted above, Castillo refused to be interviewed by the OIG except under certain unacceptable conditions, and his refusal made it difficult to assess his claims fully. However, Castillo was interviewed by the FBI Special agent Michael Foster in 1991, in connection with the Iran-Contra Office of Independent Counsel investigation. That interview did not focus directly on all of the issues discussed above, but did provide some important details as to Castillo's claims.

According to Foster's report of the interview, Castillo said that shortly after arriving in Guatemala he received a cable from the DEA's Costa Rica office requesting that he check on the private supply hangars at Ilopango for drugs. Castillo started running the names of the pilots who were supplying the Contras with supplies through the DEA computer and found that they were listed as suspected drug traffickers. Castillo went to Ilopango and did "some checking around." While he did not find any drugs there, he suspected that there was drug activity taking place among the resupply personnel. Castillo said he had informants who were supplying him with information about drug activity at Ilopango.

Castillo also told Foster that he believed that Oliver North and the resupply operation at Ilopango were running drugs to raise money for the Contras.

Regarding Grasheim, Castillo said that he heard reports from the DEA and others that Grasheim was involved in the drug activity at Ilopango. Castillo, who had trained the narcotics unit of the Salvadoran National Police, stated that he heard from that unit that it had targeted Grasheim "for a bust." Castillo told several officials at the U.S. Embassy about the proposed bust of Grasheim, including the CIA Chief of Station in El Salvador, but they said they did not know him. The only one who knew Grasheim was the Commander of U.S. Milgroup in El Salvador, James Steele, who said that he knew Grasheim but they had "had a falling out." No further details about this falling out were provided in the report.

Castillo stated that he then went to Ambassador Corr to inform him about the proposed bust of Grasheim and the suspected drug activity at the "CIA Hangar at Ilopango." According to Foster's report, Castillo did not make any distinction between the private resupply hangar and the CIA hangar. Corr told Castillo there was a covert operation at Ilopango concerning the Contras. But Castillo told Foster that neither Corr nor any of the United States Government officials with whom Castillo spoke objected to the bust or tried to influence Castillo about it.

Castillo said he called the Salvadoran narcotics unit and told them to go forward. Castillo was not present at the raid of Grasheim's house, but the next day saw the items that were seized, including large caches of weapons, explosives, and about a pound of marijuana. Castillo also had several of Grasheim's identification cards that were seized during the raid, including Grasheim's U.S. Embassy identification, which he showed to Foster.

Castillo told Foster that after the raid, Castillo met with Corr several times and kept him informed of the investigation of Grasheim. Corr told Castillo that Grasheim had come to Corr and said he wanted all the items back that had been seized from his house. According to Castillo, Grasheim also told Corr that "If I go down, half your Mil Group will go down with me." Castillo believed that Grasheim "was talking about Contra resupply activity by the Mil Group." Castillo claimed that he said to Corr that this was going to happen, "that there were big problems at Ilopango." Corr responded, according to Castillo, "Let the chips fall where they may."

Castillo added that the narcotics unit of the Salvadoran police tried to "bust" the houses where the resupply pilots lived, but the houses had "already been cleaned out." Castillo told Foster, "Everyone thought that the CIA had cleaned out the houses."

Castillo said that he did not have much access to Ilopango because General Bustillo, the CIA, and the resupply people all knew he was nosing around and investigating their activities, and they did not cooperate with him.

Castillo said that an informant had provided information to him. When the local CIA office found out that Castillo was using this person as an informant, the CIA allegedly took him over and would not let him use this person anymore.

When we interviewed him, Foster told us that, although many people who had worked or were somehow involved with the Ilopango Airport were interviewed during the investigation by the Office of Independent Counsel (OIC), no one other than Castillo had alleged drug involvement by the CIA or the Contras at Ilopango. Foster emphasized, however, that in his judgement a full investigation of that issue was not conducted by the OIC.

But Foster said that he did not think that Castillo was a credible witness because, after setting out his own limited direct knowledge, he would proceed to make generalizations that people "had to have known" that other people had drug involvement.

This assessment by Foster to us was consistent with his evaluation of Castillo at the time of the 1991 interview. Foster wrote then, after the interview, that in his view Castillo made snap judgments which often were not substantiated. Foster explained in his report:

For example, everyone he sees in El Salvador and can't explain is automatically lumped into a group of covert operatives involved in every kind of secretive or illegal activity. He claims everyone knows everything, but he can't articulate it. He makes general accusations, but when I try to pin him down, he can't provide specific information that would support his conclusions.

L. OIG's Evaluation of Castillo's Allegations

It is difficult to evaluate Castillo's allegations completely and with confidence because of the general nature of many of them, because of the passage of time since the events in question, and because of his and others' refusal to be interviewed by us.

From our review of the files and our interviews, it appears that some of his allegations have a kernel of factual truth to them. For example, it is clear that there were sensitive covert operations being conducted at Ilopango Airport, and we have no doubt that the CIA and the U.S. Embassy were not anxious for the DEA to pursue its investigation at the airport. The DEA's investigation of drug trafficking activities at Ilopango was closed in 1986, perhaps with the intervention of the U.S. Embassy. Moreover, as reflected in the CIA's cables in the Amador case, the CIA requested that the DEA not investigate its operations at Ilopango, and the CIA vouched that they were legitimate CIA-suppported operations.

It is also clear that there was intelligence, although not hard evidence, that some Contra resupply pilots were trafficking in drugs, and that Castillo made that information available to the DEA, as he states.

But the conclusions that Castillo draws from these facts, and his broad claims about a conspiracy to smuggle drugs by the CIA and the Contras and to obstruct his investigation are not supported. The DEA did not have any hard evidence to substantiate the charges at Ilopango, and the search warrant on Grasheim's house did not find evidence of drug trafficking activities. Moreover, as reflected in Castillo's own report, Ambassador Corr said the DEA could investigate Castillo's claims about drug trafficking at Ilopango, but Corr requested that it be discreet. In addition, we did not find proof that the CIA or the Embassy wanted the DEA to stay away from Ilopango because the CIA was involved in, or knew about, drug trafficking there, as opposed to the CIA not wanting the DEA involved in any investigation that would expose sensitive, covert operations.

Castillo was also correct that the DEA was asked by the CIA to stop using an informant, STG6. But there is no evidence that the CIA made this request for any reason other than that it wanted to use the informant. After the informant's use by the CIA, he was reactivated by the DEA.

Nor do we find substantiation for Castillo's allegation that the CIA employee told Castillo that the only way the Contras could fund their operation was to sell drugs and asked him to stop investigating Ilopango. The CIA employee flatly denied this claim.

Our view of Castillo's allegations was much in line with what Foster wrote after he interviewed Castillo in 1991: that Castillo was quick to jump to conclusions based on limited knowledge and little hard evidence, and the evidence Castillo did advance did not corroborate his broad assertions. Castillo's list of relevant files did not support his broad claims of Contra and CIA ties to drug trafficking, and the individuals we contacted about him, including his colleagues in Guatemala, also did not corroborate his claims. Several of his colleagues confirmed that Castillo has a tendency to make allegations without adequate evidence; some have stated that they did not find him to be trustworthy in his claims.

But our conclusions about Castillo's allegations do not rely upon general impressions about his credibility. Rather, although some of his claims have a seed of truth behind them, the inferences he draws, and his core claims about CIA support for Contra drug trafficking, were not substantiated by our review.

78. We located no reports in the files mentioning the Contras specifically, other than the ones we have discussed above. Although some others mention aircraft and pilots using Ilopango, it is difficult without an interview of Castillo to pin down precisely what he alleges happened in these cases or how they relate specifically to his claims about CIA and Contra drug trafficking.