Includes supporting documentation and testimony.
America's 'crack' plague
has roots in Nicaragua war
Colombia-San Francisco Bay Area drug pipeline
helped finance CIA-backed Contras
Published: Aug. 18, 1996
BY GARY WEBB
Mercury News Staff Writer
FOR THE BETTER PART of a decade, a San Francisco Bay
Area drug ring sold tons of cocaine to the Crips and
Bloods street gangs of Los Angeles and funneled millions
in drug profits to a Latin American guerrilla army run
by the U.S. Central Intelligence Agency, a Mercury News
investigation has found.
This drug network opened the first pipeline between
Colombia's cocaine cartels and the black neighborhoods
of Los Angeles, a city now known as the "crack'' capital
of the world. The cocaine that flooded in helped spark a
crack explosion in urban America _ and provided the cash
and connections needed for L.A.'s gangs to buy automatic
It is one of the most bizarre alliances in modern
history: the union of a U.S.-backed army attempting to
overthrow a revolutionary socialist government and the
Uzi-toting "gangstas'' of Compton and South-Central Los
The army's financiers -- who met with CIA agents both
before and during the time they were selling the drugs
in L.A. -- delivered cut-rate cocaine to the gangs
through a young South-Central crack dealer named Ricky
Unaware of his suppliers' military and
political connections, "Freeway Rick" -- a dope
dealer of mythic proportions in the L.A. drug
world -- turned the cocaine powder into crack and
wholesaled it to gangs across the country.
The cash Ross paid for the cocaine, court records show,
was then used to buy weapons and equipment for a
guerrilla army named the Fuerza Democratica Nicaraguense
(Nicaraguan Democratic Force) or FDN, the largest of
several anti-communist commonly called the Contras.
While the FDN's war is barely a memory today, black
America is still dealing with its poisonous side
effects. Urban neighborhoods are grappling with legions
of homeless crack addicts. Thousands of young black men
are serving long prison sentences for selling cocaine --
a drug that was virtually unobtainable in black
neighborhoods before members of the CIA's army started
bringing it into South-Central in the 1980s at
And the L.A. gangs, which used their enormous cocaine
profits to arm themselves and spread crack across the
country, are still thriving, turning entire blocks of
major cities into occasional war zones.
"There is a saying that the ends justify the
means,'' former FDN leader and drug dealer
Oscar Danilo Blandon Reyes testified during a
recent cocaine trafficking trial in San Diego. "And
that's what Mr. Bermudez (the CIA agent who commanded
the FDN) told us in Honduras, OK? So we started raising
money for the Contra revolution.''
Recently declassified reports, federal court testimony,
undercover tapes, court records here and abroad and
hundreds of hours of interviews over the past 12 months
leave no doubt that Blandon was no ordinary drug dealer.
Shortly before Blandon -- who had been the drug ring's
Southern California distributor -- took the stand in San
Diego as a witness for the U.S. Department of Justice,
federal prosecutors obtained a court order preventing
defense lawyers from delving into his ties to the CIA.
Blandon, one of the FDN's founders in California, "will
admit that he was a large-scale dealer in cocaine, and
there is no additional benefit to any defendant to
inquire as to the Central Intelligence Agency,''
Assistant U.S. Attorney L.J. O'Neale argued in his
motion shortly before Ross' trial on cocaine trafficking
charges in March.
The most Blandon would say in court about who called the
shots when he sold cocaine for the FDN was that "we
received orders from the -- from other people.''
The 5,000-man FDN, records show, was created in mid-1981
when the CIA combined several existing groups of
anti-communist exiles into a unified force it hoped
would topple the new socialist government of Nicaragua.
From 1982 to 1988, the FDN -- run by both American and
Nicaraguan CIA agents -- waged a losing war against
Nicaragua's Sandinista government, the Cuban-supported
socialists who'd overthrown U.S.-backed dictator
Anastasio Somoza in 1979.
Blandon, who began working for the FDN's drug operation
in late 1981, testified that the drug ring sold almost a
ton of cocaine in the United States that year -- $54
million worth at prevailing wholesale prices. It was not
clear how much of the money found its way back to the
CIA's army, but Blandon testified that "whatever we were
running in L.A., the profit was going to the Contra
At the time of that testimony, Blandon was a full-time
informant for the Drug Enforcement Administration, a job
the U.S. Department of Justice got him after releasing
him from prison in 1994.
Though Blandon admitted to crimes that have sent others
away for life, the Justice Department turned him loose
on unsupervised probation after only 28 months behind
bars and has paid him more than $166,000 since, court
"He has been extraordinarily helpful,'' federal
prosecutor O'Neale told Blandon's judge in a plea for
the trafficker's release in 1994. Though O'Neale once
described Blandon to a grand jury as "the biggest
Nicaraguan cocaine dealer in the United States,'' the
prosecutor would not discuss him with the Mercury News.
A known dealer since '74 has stayed out of U.S. jails
Blandon's boss in the FDN's cocaine operation,
Juan Norwin Meneses Cantarero, has never spent
a day in a U.S. prison, even though the federal
government has been aware of his cocaine dealings since
at least 1974, records show.
Meneses -- who ran the drug ring from his homes in the
San Francisco Bay Area -- is listed in the DEA's
computers as a major international drug smuggler and was
implicated in 45 separate federal investigations. Yet he
and his cocaine-dealing relatives lived quite openly in
the Bay Area for years, buying homes in Pacifica and
Burlingame, along with bars, restaurants, car lots and
factories in San Francisco, Hayward and Oakland.
"I even drove my own cars, registered in my name,''
Meneses said during a recent interview in Nicaragua.
Meneses' organization was "the target of unsuccessful
investigative attempts for many years,'' prosecutor
O'Neale acknowledged in a 1994 affidavit. But records
and interviews revealed that a number of those probes
were stymied not by the elusive Meneses but by agencies
of the U.S. government.
Agents from four organizations -- the DEA, U.S. Customs,
the Los Angeles County Sheriff's Department and the
California Bureau of Narcotic Enforcement -- have
complained that investigations were hampered by the CIA
or unnamed "national security'' interests.
1988 investigation hit a wall of secrecy
One 1988 investigation by a U.S. Senate subcommittee ran
into a wall of official secrecy at the Justice
In that case, congressional records show, Senate
investigators were trying to determine why the U.S.
attorney in San Francisco, Joseph Russoniello, had given
$36,000 back to a Nicaraguan cocaine dealer arrested by
The money was returned, court records show, after two
Contra leaders sent letters to the court swearing that
the drug dealer had been given the cash to buy weapons
for guerrillas. Russoniello said it was cheaper to give
the money back than to disprove that claim.
"The Justice Department flipped out to prevent us from
getting access to people, records -- inding anything out
about it,'' recalled Jack Blum, former chief counsel to
the Senate subcommittee that investigated allegations of
Contra cocaine trafficking. "It was one of the most
frustrating exercises that I can ever recall.''
It wasn't until 1989, a few months after the
Contra-Sandinista war ended and five years after Meneses
moved from the Peninsula to a ranch in Costa Rica, that
the U.S. government took action against him -- sort of.
Federal prosecutors in San Francisco charged Meneses
with conspiracy to distribute one kilo of cocaine in
1984, a year in which he was working publicly with the
In San Francisco photo, Meneses seen with CIA operative
Meneses' work was so public, in fact, that he posed for
a picture in June 1984 in a kitchen of a San Francisco
home with the FDN's political boss, Adolfo Calero, a
longtime CIA operative who became the public face of the
Contras in the United States.
According to the indictment, Meneses was in the midst of
his alleged cocaine conspiracy at the time the picture
But the indictment was quickly locked away in the vaults
of the San Francisco federal courthouse, where it
remains today _ inexplicably secret for more than seven
years. Meneses was never arrested.
Reporters found a copy of the secret indictment in
Nicaragua, along with a federal arrest warrant issued
Feb. 8, 1989. Records show the no-bail warrant was never
entered into the national law enforcement database
called NCIC, which police use to track down fugitives.
The former federal prosecutor who indicted him, Eric
Swenson, declined to be interviewed.
After Nicaraguan police arrested Meneses on cocaine
charges in Managua in 1991, his judge expressed
astonishment that the infamous smuggler went unmolested
by American drug agents during his years in the United
"How do you explain the fact that Norwin Meneses,
implicated since 1974 in the trafficking of drugs ...
has not been detained in the United States, a country in
which he has lived, entered and departed many times
since 1974?'' Judge Martha Quezada asked during a
"Well, that question needs to be asked to the
authorities of the United States,'' replied Roger
Mayorga, then chief of Nicaragua's anti-drug agency.
U.S. officials amazed Meneses remained free
His seeming invulnerability amazed American authorities
A Customs agent who investigated Meneses in 1980 before
transferring elsewhere said he was reassigned to San
Francisco seven years later "and I was sitting in some
meetings and here's Meneses' name again. And I can
remember thinking, "Holy cow, is this guy still
Blandon led an equally charmed life. For at least five
years he brokered massive amounts of cocaine to the
black gangs of Los Angeles without being arrested. But
his luck changed overnight.
On Oct. 27, 1986, agents from the FBI, the IRS, local
police and the Los Angeles County sheriff fanned out
across Southern California and raided more than a dozen
locations connected to Blandon's cocaine operation.
Blandon and his wife, along with numerous Nicaraguan
associates, were arrested on drug and weapons charges.
The search warrant affidavit reveals that local drug
agents knew plenty about Blandon's involvement with
cocaine and the CIA's army nearly 10 years ago.
"Danilo Blandon is in charge of a sophisticated cocaine
smuggling and distribution organization operating in
Southern California,'' L.A. County sheriff's Sgt. Tom
Gordon said in the 1986 affidavit. "The monies gained
from the sales of cocaine are transported to Florida and
laundered through Orlando Murillo, who is a high-ranking
officer of a chain of banks in Florida named Government
Securities Corporation. From this bank the monies are
filtered to the Contra rebels to buy arms in the war in
Corporate records show that Murillo -- a Nicaraguan
banker and relative of Blandon's wife -- was a
vice-president of Government Securities Corporation in
Coral Gables, a large brokerage firm that collapsed in
1987 amid allegations of fraud. Murillo did not respond
to an interview request.
Despite their intimate knowledge of Blandon's
operations, the police raids were a spectacular failure.
Every location had been cleaned of anything remotely
incriminating. No one was ever prosecuted.
Ron Spear, a spokesman for Los Angeles County Sheriff
Sherman Block, said Blandon somehow knew that he was
under police surveillance. Others thought so, too.
"The cops always believed that investigation had been
compromised by the CIA,'' Los Angeles federal public
defender Barbara O'Connor said in a recent interview.
O'Connor knew of the raids because she later defended
the raids' leader, Sgt. Gordon, against federal charges
of police corruption. Gordon, convicted of tax evasion,
declined to be interviewed.
Lawyer suggests aid was at root of problem
FBI records show that soon after the raids, Blandon's
defense attorney, Bradley Brunon, called the sheriff's
department to suggest that his client's troubles stemmed
from a most unlikely source: a recent congressional vote
authorizing $100 million in military aid to the CIA's
According to a December 1986 FBI Teletype, Brunon told
the officers that the "CIA winked at this sort of thing.
... (Brunon) indicated that now that U.S. Congress had
voted funds for the Nicaraguan Contra movement, U.S.
government now appears to be turning against
organizations like this.''
That FBI report, part of the files of former Iran-Contra
Special Prosecutor Lawrence Walsh, was made public only
last year, when it was released by the National Archives
at the Mercury News' request.
Blandon has also implied that his cocaine sales were,
for a time, CIA-approved. He told a San Francisco
federal grand jury in 1994 that once the FDN began
receiving American taxpayer dollars, the CIA no longer
needed his kind of help.
"When Mr. Reagan get in the power, we start receiving a
lot of money,'' Blandon testified. "And the people that
was in charge, it was the CIA, so they didn't want to
raise any (drug) money because they have, they had the
money that they wanted.''
"From the government?" asked Assistant U.S. Attorney
"Yes," for the Contra revolution," Blandon said. "So we
started -- you know, the ambitious person -- we started
doing business by ourselves."
Asked about that, prosecutor Hall said, "I don't know
what to tell you. The CIA won't tell me anything."
None of the government agencies known to have been
involved with Meneses and Blandon over the years would
provide the Mercury News with any information about
A Freedom of Information Act request filed with the CIA
was denied on national security grounds. FOIA requests
filed with the DEA were denied on privacy grounds.
Requests filed months ago with the FBI, the State
Department and the Immigration and Naturalization
Service have produced nothing so far.
None of the DEA officials known to have worked with the
two men would talk to a reporter. Questions submitted to
the DEA's public affairs office in Washington were never
answered, despite repeated requests.
Blandon's lawyer, Brunon, said in an interview that his
client never told him directly that he was selling
cocaine for the CIA, but the prominent Los Angeles
defense attorney drew his own conclusions from the
"atmosphere of CIA and clandestine activities'' that
surrounded Blandon and his Nicaraguan friends.
"Was he involved with the CIA? Probably. Was he involved
with drugs? Most definitely,'' Brunon said. "Were those
two things involved with each other? They've never said
that, obviously. They've never admitted that. But I
don't know where these guys get these big aircraft ...''
That very topic arose during the sensational 1992
cocaine trafficking trial of Meneses after Meneses was
arrested in Nicaragua in connection with a staggering
750-kilo shipment of cocaine. His chief accuser was his
friend Enrique Miranda, a relative and former Nicaraguan
military intelligence officer who had been Meneses'
emissary to the cocaine cartel of Bogota, Colombia.
Miranda pleaded guilty to drug charges and agreed to
cooperate in exchange for a seven-year sentence.
In a long, handwritten statement he read to Meneses'
jury, Miranda revealed the deepest secrets of the
Meneses drug ring, earning his old boss a 30-year prison
sentence in the process.
"He (Norwin) and his brother Luis Enrique had financed
the Contra revolution with the benefits of the cocaine
they sold,'' Miranda wrote. "This operation, as Norwin
told me, was executed with the collaboration of
high-ranking Salvadoran military personnel. They met
with officials of the Salvadoran air force, who flew
(planes) to Colombia and then left for the U.S., bound
for an Air Force base in Texas, as he told me.''
Meneses -- who has close personal and business ties to a
Salvadoran air force commander and former CIA agent
named Marcos Aguado -- declined to discuss Miranda's
statements during an interview at a prison outside
Managua in January. He is scheduled to be paroled this
summer, after nearly five years in custody.
U.S. General Accounting Office records confirm that El
Salvador's air force was supplying the CIA's Nicaraguan
guerrillas with aircraft and flight support services
throughout the mid-1980s.
Miranda did not name the Air Force base in Texas where
the FDN's cocaine was purportedly flown. The same day
the Mercury News requested official permission to
interview Miranda, he disappeared.
While out on a routine weekend furlough, Miranda failed
to return to the Nicaraguan jail where he'd been living
since 1992. Though his jailers, who described him as a
model prisoner, claimed Miranda had escaped, they didn't
call the police until a Mercury News correspondent
showed up and discovered he was gone.
He has not been seen in nearly a year.
MONDAY: How the drug ring worked, and how crack was
"born" in the San Francisco Bay Area. Plus, the story of
how the U.S. government gave back $36,000 seized from a
drug dealer after he claimed the money belonged to the
Additional reporting for this series in Nicaragua and
Costa Rica was done by Managua journalist Georg Hodel.
Research assistance at the Nicaraguan Supreme Court in
Managua was done by journalist Leonore Delgado.
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