America's 'crack' plague has roots in Nicaragua war - Gary Webb

Originally hosted here.

Part 1 of the 3 part series. Parts 2 and 3 are included in this article, and indicated where they start.

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 weapons.

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 Angeles.

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 Donnell Ross. 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 bargain-basement prices. 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 revolution.''
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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 records show.

"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 Department.
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 FBI.

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 -- finding 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 FDN.

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 was taken.

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 States.

"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 pretrial hearing.
"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 as well.
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 around?'.''

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 Nicaragua.''

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 Contra army.
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 David Hall.

"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 them.

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.

Shadowy origins of 'crack' epidemic
Part 2 of the 3 part series.

IF THEY'D BEEN IN a more respectable line of work, Norwin Meneses, Danilo Blandon and ''Freeway Rick'' Ross would have been hailed as geniuses of marketing.

This odd trio -- a smuggler, a bureaucrat and a driven ghetto teen-ager -- made fortunes creating the first mass market in America for a product so hellishly desirable that consumers will literally kill to get it: ''crack'' cocaine.

Federal lawmen will tell you plenty about Rick Ross, mostly about the evils he visited upon black neighborhoods by spreading the crack plague in Los Angeles and cities as far east as Cincinnati. On Aug. 23, they hope, Freeway Rick will be sentenced to life in prison without the possibility of parole.

But those same officials won't say a word about the two men who turned Rick Ross into L.A's first king of crack, the men who, for at least five years, supplied him with enough Colombian cocaine to help spawn crack markets in major cities nationwide. Their critical role in the country's crack explosion, a Mercury News investigation found, has been a strictly guarded secret -- until now.

To understand how crack came to curse black America, you have to go into the volcanic hills overlooking Managua, the capital of the Republic of Nicaragua.

During June 1979, those hills teemed with triumphant guerrillas called Sandinistas -- Cuban- assisted revolutionaries who had just pulled off one of the biggest military upsets in Central American history. In a bloody civil war, they'd destroyed the U.S.-trained army of Nicaragua's dictator, Anastasio Somoza. The final assault on Somoza's downtown bunker was expected any day.
In the dictator's doomed capital, a minor member of Somoza's government decided to skip the war's obvious ending. On June 19, Oscar Danilo Blandon Reyes gathered his wife and young daughter, slipped through the encircling rebels and flew into exile in California.

Blandon, the then 29-year-old son of a wealthy slumlord, left a life of privilege and luxury behind. Educated at the finest private schools in Latin America, he had earned a master's degree in marketing and had become the head of a $27 million program financed by the U.S. government. As Nicaragua's director of wholesale markets, it had been his job to create an American-style agricultural system.

Today, Danilo Blandon is a well-paid and highly trusted operative for the U.S. Drug Enforcement Administration. Federal officials say he is one of the DEA's top informants in Latin America, collecting intelligence on Colombian and Mexican drug lords and setting up stings.
In March, he was the DEA's star witness at a drug trial in San Diego, where, for the first time, he testified publicly about his strange interlude between government jobs -- the years he sold cocaine to the street gangs of black Los Angeles.

Dealer says patriotism for Nicaragua was motive

A stocky man with salt-and-pepper hair, a trim mustache and a distinguished bearing, Blandon swore that he didn't plan on becoming a dope dealer when he landed in the United States with $100 in his pocket, seeking political asylum. He did it, he insisted, out of patriotism.
When duty called in late 1981, he was working as a car salesman in East Los Angeles. In his spare time, he said, he and a few fellow exiles were working to rebuild Somoza's defeated army, the Nicaraguan national guard, in hopes of one day returning to Managua in triumph.

Like his friends, Blandon nursed a keen hatred of the Sandinistas, who had confiscated the Blandon family's cattle ranches and sprawling urban slums. His wife's politically prominent family -- the Murillos, whose patriarch was Managua's mayor in the 1960s -- lost its immense fortune as well.

''Because of the horror stories and persecution suffered by his family and countrymen, Blandon said he decided to assist his countrymen in fighting the tyranny of the (Sandinista) regime,'' stated a 1992 report from the U.S. Probation and Parole Department. ''He decided that because he was an adept businessman, he could assist his countrymen through monetary means.''
But the rallies and cocktail parties the exiles hosted raised little money. ''At this point, he became committed to raising money for humanitarian and political reasons via illegal activity (cocaine trafficking for profit),'' said the heavily censored report, which surfaced during the March trial.

That venture began, Blandon testified, with a phone call from a wealthy friend in Miami named Donald Barrios, an old college classmate. Corporate records show Barrios was a business partner of one of the ex-dictator's top military aides: Maj. Gen. Gustavo ''The Tiger'' Medina, a steely eyed counterinsurgency expert and the former supply boss of Somoza's army.
Blandon said his college chum, who also was working in the resistance movement, dispatched him to Los Angeles International Airport to pick up another exile, Juan Norwin Meneses Cantarero. Though their families were related, Blandon said, he'd never met Meneses -- a wiry, excitable man with a bad toupee -- until that day.

''I picked him up, and he started telling me that we had to (raise) some money and to send to Honduras,'' Blandon testified. He said he flew with Meneses to a camp there and met one of his new companion's old friends, Col. Enrique Bermudez.

Bermudez -- who'd been Somoza's Washington liaison to the American military -- was hired by the Central Intelligence Agency in mid-1980 to pull together the remnants of Somoza's vanquished national guard, records show. In August 1981, Bermudez's efforts were unveiled at a news conference as the Fuerza Democratica Nicaraguense (FDN) -- in English, the Nicaraguan Democratic Force. It was the largest and best-organized of the handful of guerrilla groups Americans would know as the Contras.
Bermudez was the FDN's military chief and, according to congressional records and newspaper reports, received regular CIA paychecks for a decade, payments that stopped shortly before his still-unsolved slaying in Managua in 1991.

Reagan's secret order not enough to fund Contras

White House records show that shortly before Blandon's meeting with Bermudez, President Reagan had given the CIA the green light to begin covert paramilitary operations against the Sandinista government. But Reagan's secret Dec. 1, 1981, order permitted the spy agency to spend only $19.9 million on the project, an amount CIA officials acknowledged was not nearly enough to field a credible fighting force.
After meeting with Bermudez, Blandon testified, he and Meneses ''started raising money for the Contra revolution.'' ''There is a saying that the ends justify the means,'' Blandon testified. ''And that's what Mr. Bermudez told us in Honduras, OK?''

While Blandon says Bermudez didn't know cocaine would be the fund-raising device they used, the presence of the mysterious Mr. Meneses strongly suggests otherwise.

Norwin Meneses, known in Nicaraguan newspapers as ''Rey de la Droga'' (King of Drugs), was then under active investigation by the DEA and the FBI for smuggling cocaine into the United States, records show.

And Bermudez was very familiar with the influential Meneses family. He had served under two Meneses brothers, Fermin and Edmundo, who were generals in Somoza's army. Somoza himself spoke at the 1978 funeral of Edmundo Meneses, who was slain by leftists shortly after his appointment as Nicaragua's ambassador to Guatemala, hailing him as an anti-communist martyr.

A violent death -- someone else's -- had also made brother Norwin famous in his homeland. In 1977 he was accused of ordering the assassination of Nicaragua's chief of Customs, who was gunned down in the midst of an investigation into an international stolen car ring allegedly run by Norwin Meneses.

Though the customs boss accused Meneses on his deathbed of hiring his killer, Nicaraguan newspapers reported that the Managua police, then commanded by Edmundo Meneses, cleared Norwin of any involvement.

Despite that incident and a stack of law enforcement reports describing him as a major drug trafficker, Norwin Meneses was welcomed into the United States in July 1979 as a political refugee and given a visa and a work permit. He settled in the San Francisco Bay Area, and for the next six years supervised the importation of thousands of kilos of cocaine into California.

It arrived in all kinds of containers: false-bottomed shoes, Colombian freighters, cars with hidden compartments, luggage from Miami. Once here, it disappeared into a series of houses and nondescript storefront businesses scattered from Hayward to San Jose, Pacifica to Burlingame, Daly City to Oakland.

And, like Blandon, Meneses went to work for the CIA's army.

At the meeting with Bermudez, Meneses said in a recent interview, the Contra commander put him in charge of ''intelligence and security'' for the FDN in California.

''Nobody (from California) would join the Contra forces down there without my knowledge and approval,'' he said proudly. Blandon, he said, was assigned to raise money in Los Angeles.
Blandon testified that Meneses took him back to San Francisco and, over two days, schooled him in the cocaine trade.

Meneses declined to discuss any cocaine dealings he may have had, other than to deny that he ever ''transferred benefits from my business to the FDN. Business is business.''

Lessons over, Blandon said, Meneses gave him two kilograms of cocaine (roughly 4 pounds), the names of two customers and a one-way ticket to Los Angeles.

''Meneses was pushing me every week,'' he testified. ''It took me about three months, four months to sell those two keys because I didn't know what to do. ... In those days, two keys was too heavy.''

At the time, cocaine was so costly that few besides rock stars and studio executives could afford it. One study of actual cocaine prices paid by DEA agents put it at $5,200 an ounce.

But Blandon wasn't peddling the FDN's cocaine in Beverly Hills or Malibu. To find customers, he and several other Nicaraguan exiles working with him headed for the vast, untapped markets of L.A.'s black ghettos.

Uncanny timing made marketing strategy work

Blandon's marketing strategy, selling the world's most expensive street drug in some of California's poorest neighborhoods, might seem baffling, but in retrospect, his timing was uncanny. He and his compatriots arrived in South-Central L.A. right when street-level drug users were figuring out how to make cocaine affordable: by changing the pricey white powder into powerful little nuggets that could be smoked -- crack.
Crack turned the cocaine world on its head. Cocaine smokers got an explosive high unmatched by 10 times as much snorted powder. And since only a tiny amount was needed for that rush, cocaine no longer had to be sold in large, expensive quantities. Anyone with $20 could get wasted.

It was a ''substance that is tailor-made to addict people,'' Dr. Robert Byck, a Yale University cocaine expert, said during congressional testimony in 1986. ''It is as though (McDonald's founder) Ray Kroc had invented the opium den.''
Crack's Kroc was a disillusioned 19-year-old named Ricky Donnell Ross, who, at the dawn of the 1980s, found himself adrift on the streets of South-Central Los Angeles.

A talented tennis player for Dorsey High School, Ross had recently seen his dream of a college scholarship evaporate when his coach discovered he could neither read nor write.

At the end of tennis season, Ross quit high school and wound up at Los Angeles Trade-Technical College, a vocational community college where, ironically, he learned to bind books. But a bookbinding career was the last thing Ross had in mind. L.A. Trade-Tech had a tennis team, and Ross was still hoping his skills with the racquet would get his dreams back on track.

''He was a very good player,'' recalled Pete Brown, his former coach at L.A. Trade-Tech. ''I'd say he was probably my No. 3 guy on the team at the time.''
To pay his bills, however, Ross picked up a different racket: stolen car parts. In late 1979, he was arrested for stealing a car and had to quit the trade while the charges were pending.

'Freeway Rick' hears about popularity of jet-set drug

During this forced hiatus, Ross said, a friend home on Christmas break from San Jose State University told him about the soaring popularity of a jet-set drug called cocaine, which Ross had only vaguely heard about. In the impoverished neighborhoods of South-Central, it was virtually non-existent. Most street cops, in fact, had never seen any because cocaine was then a parlor drug of the wealthy and the trendy.
Ross' friend -- a college football player -- told him ''cocaine was going to be the new thing, that everybody was doing it.'' Intrigued, Ross set off to find out more.

Through a cocaine-using auto upholstery teacher Ross knew, he met a Nicaraguan named Henry Corrales, who began selling Ross and his best friend, Ollie ''Big Loc'' Newell, small amounts of remarkably inexpensive cocaine.

Thanks to a network of friends in South-Central and Compton, including many members of various Crips gangs, Ross and Newell steadily built up clientele. With each sale, Ross reinvested his hefty profits in more cocaine.

Eventually, Corrales introduced Ross and Newell to his supplier, Danilo Blandon. And then business really picked up.

''At first, we was just going to do it until we made $5,000,'' Ross said. ''We made that so fast we said, no, we'll quit when we make $20,000. Then we was going to quit when we saved enough to buy a house ...''

Ross would eventually own millions of dollars' worth of real estate across Southern California, including houses, motels, a theater and several other businesses. (His nickname, ''Freeway Rick,'' came from the fact that he owned properties near the Harbor Freeway in Los Angeles.)

Within a year, Ross' drug operation grew to dominate inner-city Los Angeles, and many of the biggest dealers in town were his customers. When crack hit L.A.'s streets hard in late 1983, Ross already had the infrastructure in place to corner a huge chunk of the burgeoning market.

$2 million worth of crack moved in a single day

It was not uncommon, he said, to move $2 million or $3 million worth of crack in one day.
''Our biggest problem had got to be counting the money,'' Ross said. ''We got to the point where it was like, man, we don't want to count no more money.''

Nicaraguan cocaine dealer Jacinto Torres, another former supplier of Ross and a sometime- partner of Blandon, told drug agents in a 1992 interview that after a slow start, ''Blandon's cocaine business dramatically increased. ... Norwin Meneses, Blandon's supplier as of 1983 and 1984, routinely flew quantities of 200 to 400 kilograms from Miami to the West Coast.''
Leroy ''Chico'' Brown, an ex-crack dealer from Compton who dealt with Ross, told the Mercury News of visiting one of Ross' five cookhouses, where Blandon's powder was turned into crack, and finding huge steel vats of cocaine bubbling atop restaurant-size gas ranges.

''They were stirring these big pots with those things you use in canoes,'' Brown said with amazement. ''You know -- oars.''
Blandon told the DEA last year that he was selling Ross up to 100 kilos of cocaine a week, which was then ''rocked up'' and distributed ''to the major gangs in the area, specifically the "Crips' and the "Bloods,''' the DEA report said.
At wholesale prices, that's roughly $65 million to $130 million worth of cocaine every year, depending on the going price of a kilo.

"He was one of the main distributors down here," said former Los Angeles Police Department narcotics detective Steve Polak, who was part of the Freeway Rick Task Force, which was set up in 1987 to put Ross out of business. "And his poison, there's no telling how many tens of thousands of people he touched. He's responsible for a major cancer that still hasn't stopped spreading."

But Ross is the first to admit that being in the right place at the right time had almost nothing to do with his amazing success. Other L.A. dealers, he noted, were selling crack long before he started.
What he had, and they didn't, was Danilo Blandon, a friend with a seemingly inexhaustible supply of high-grade cocaine and an expert's knowledge of how to market it.
''I'm not saying I wouldn't have been a dope dealer without Danilo,'' Ross stressed. ''But I wouldn't have been Freeway Rick.''

The secret to his success, Ross said, was Blandon's cocaine prices. ''It was unreal. We were just wiping out everybody.''

That alone, Ross said, allowed him to sew up the Los Angeles market and move on. In city after city, local dealers either bought from Ross or got left behind.
''It didn't make no difference to Rick what anyone else was selling it for. Rick would just go in and undercut him $10,000 a key,'' Chico Brown said. ''Say some dude was selling for 30. Boom -- Rick would go in and sell it for 20. If he was selling for 20, Rick would sell for 10. Sometimes, he be giving (it) away.''

Before long, Blandon was giving Ross hundreds of kilos of cocaine on consignment -- sell now, pay later -- a strategy that dramatically accelerated the expansion of Ross' crack empire, even beyond California's borders.

Ross said he never discovered how Blandon was able to get cocaine so cheaply. ''I just figured he knew the people, you know what I'm saying? He was plugged.''

But Freeway Rick had no idea just how ''plugged'' his erudite cocaine broker was. He didn't know about Norwin Meneses, or the CIA, or the Salvadoran air force planes that allegedly were flying the cocaine into an air base in Texas.

And he wouldn't find out about it for another 10 years.

War on drugs has unequal impact on black Americans
Part 3 of the 3 part series.

FOR THE LAST YEAR and a half, the U.S. Department of Justice has been trying to explain why nearly everyone convicted in California's federal courts of ''crack'' cocaine trafficking is black.

Critics, who include some federal court judges, say it looks like the Justice Department is targeting crack dealers by race, which would be a violation of the U.S. Constitution.

Federal prosecutors, however, say there's a simple, if unpleasant, reason for the lopsided statistics: Most crack dealers are black.

''Socio-economic factors led certain ethnic and racial groups to be particularly involved with the distribution of certain drugs,'' the Justice Department argued in a case in Los Angeles last year, ''and blacks were particularly involved in the Los Angeles area crack trade.''

But why -- of all the ethnic and racial groups in California to pick from -- crack planted its deadly roots in L.A.'s black neighborhoods is something only Oscar Danilo Blandon Reyes can say for sure.
Danilo Blandon, a yearlong Mercury News investigation found, is the Johnny Appleseed of crack in California -- the Crips' and Bloods' first direct-connect to the cocaine cartels of Colombia. The tons of cut-rate cocaine he brought into black L.A. during the 1980s and early 1990s became millions of rocks of crack, which spawned new crack markets wherever they landed.

On a tape made by the Drug Enforcement Administration in July 1990, Blandon casually explained the flood of cocaine that coursed through the streets of South-Central Los Angeles during the previous decade.

''These people have been working with me 10 years,'' Blandon said. ''I've sold them about 2,000 or 4,000 (kilos). I don't know. I don't remember how many.''
''It ain't that Japanese guy you were talking about, is it?'' asked DEA informant John Arman, who was wearing a hidden transmitter.

''No, it's not him,'' Blandon insisted. ''These ... these are the black people.''

Arman gasped. ''Black?!''

''Yeah,'' Blandon said. ''They control L.A. The people (black cocaine dealers) that control L.A.''

U.S. has paid Blandon more than $166,000

But unlike the thousands of young blacks now serving long federal prison sentences for selling mere handfuls of the drug, Blandon is a free man today. He has a spacious new home in Nicaragua and a business exporting precious woods, courtesy of the U.S. government, which has paid him more than $166,000 over the past 18 months, records show -- for his help in the war on drugs.
That turn of events both amuses and angers ''Freeway Rick'' Ross, L.A.'s premier crack wholesaler during much of the 1980s and Danilo Blandon's biggest customer.

''They say I sold dope everywhere but, man, I know he done sold 10 times more dope than me,'' Ross said with a laugh during a recent interview.

Nothing epitomizes the drug war's uneven impact on black Americans more clearly than the intertwined lives of Ricky Donnell Ross, a high school dropout, and his suave cocaine supplier, Danilo Blandon, who has a master's degree in marketing and was one of the top civilian leaders in California of an anti-communist guerrilla army formed by the U.S. Central Intelligence Agency. Called the Fuerza Democratica Nicaraguense (FDN), it became known to most Americans as the Contras.

In recent court testimony, Blandon, who began dealing cocaine in South-Central L.A. in 1982, swore that the first kilo of cocaine he sold in California was to raise money for the CIA's army, which was trying on a shoestring to unseat Nicaragua's new socialist Sandinista government.

After Blandon crossed paths with Ross, a South-Central teen-ager who had the gang connections and street smarts necessary to move the army's cocaine, a veritable blizzard engulfed the ghettos.

Former Los Angeles Police narcotics detective Stephen W. Polak said he was working the streets of South-Central in the mid-1980s when he and his partners began seeing more cocaine than ever before.

''A lot of detectives, a lot of cops, were saying, hey, these blacks, no longer are we just seeing gram dealers. These guys are doing ounces; they were doing keys,'' Polak recalled. But he said the reports were pooh-poohed by higher-ups who couldn't believe black neighborhoods could afford the amount of cocaine the street cops claimed to be seeing.
''Major Violators (the LAPD's elite anti-drug unit) was saying, basically, ahh, South-Central, how much could they be dealing?'' said Polak, a 21-year LAPD veteran. ''Well, they (black dealers) went virtually untouched for a long time.''

It wasn't until January 1987 -- when crack markets were popping up in major cities all over the U.S. -- that law enforcement brass decided to confront L.A.'s crack problem head-on. They formed the Freeway Rick Task Force, a cadre of veteran drug agents whose sole mission was to put Rick Ross out of business. Polak was a charter member.

''We just dedicated seven days a week to him. We were just on him at every move,'' Polak said.

Ross, as usual, was quick to spot a trend. He moved to Cincinnati and quietly settled into a home in the woodsy Republican suburbs on the east side of town.

''I called it cooling out, trying to back away from the game,'' Ross said. ''I had enough money.''

His longtime supplier, Blandon, reached an identical conclusion around the same time. A massive police raid on his cocaine operation in late 1986 nearly gave his wife a nervous breakdown, he testified recently, and by the summer of 1987 he was safely ensconced in Miami, with $1.6 million in cash.

Some of his drug profits, records show, were invested in a string of rental car and export businesses in Miami, often in partnership with an exiled Nicaraguan judge named Jose Macario Estrada. Like Blandon, the judge also worked for the CIA's army, helping FDN soldiers and their families obtain visas and work papers in the United States. Estrada said he knew nothing of Blandon's drug dealings at the time.

Blandon invested in four-star steak house

Blandon also bought into a swank steak-and-lobster restaurant called La Parrilla, which became a popular hangout for FDN leaders and supporters. The Miami Herald called it the ''best Nicaraguan restaurant in Dade County'' and gave it a four-star rating, its highest.
But neither Ross nor Blandon stayed ''retired'' for long.

A manic deal-maker, Ross found Cincinnati's virgin crack market too seductive to ignore. When he left Los Angeles, the price of a kilo was around $12,000. In the Queen City, Ross chuckled, ''keys was selling for $50,000. It was like when I first started.''

Plunging back in, the crack tycoon cornered the Cincinnati market using the same low-price, high-volume strategy -- and the same Nicaraguan drug connections -- he'd used in L.A. Soon, he was selling crack as far away as Cleveland, Indianapolis, Dayton and St. Louis.
''There's no doubt in my mind crack in Cincinnati can be traced to Ross,'' police officer Robert Enoch told a Cincinnati newspaper three years ago.

But Ross' reign in the Midwest was short-lived. In 1988, one of his loads ran into a drug-sniffing dog at a New Mexico bus station and drug agents eventually connected it to Ross. He pleaded guilty to crack trafficking charges and received a mandatory 10-year prison sentence, which he began serving in 1990.

In sunny Miami, Blandon's retirement plans also had gone awry. His 24-city rental car business collapsed in 1989 and later went into bankruptcy. To make money, he testified, he came to the Bay Area and began brokering cocaine again, buying and selling from the same Nicaraguan dealers he'd known from his days with the FDN. In 1990 and 1991, he testified, he sold about 425 kilos of cocaine in Northern California -- $10.5 million worth at wholesale prices.

But unlike before, when he was selling cocaine for the Contras, Blandon was constantly dogged by the police.

Twice in six months he was detained, first by Customs agents while taking $117,000 in money orders to Tijuana to pay a supplier, and then by the LAPD in the act of paying one of his Colombian suppliers more than $350,000.

The second time, after police found $14,000 in cash and a small quantity of cocaine in his pocket, he was arrested. But the U.S. Justice Department -- saying a prosecution would disrupt an active investigation -- persuaded the cops to drop their money laundering case.

Soon after that, Blandon and his wife, Chepita, were called down to the U.S. Immigration and Naturalization Service office in San Diego on a pretense and scooped up by DEA agents, on charges of conspiracy to distribute cocaine. They were jailed without bond as dangers to the community and several other Nicaraguans were also arrested.

Blandon's prosecutor, L.J. O'Neale, told a federal judge that Blandon had sold so much cocaine in the United States his mandatory prison sentence was ''off the scale.''

Then Blandon ''just vanished,'' said Juanita Brooks, a San Diego attorney who represented one of Blandon's co-defendants. ''All of a sudden his wife was out of jail and he was out of the case.''

The reasons were contained in a secret Justice Department memorandum filed in San Diego federal court in late 1993.

Prosecutor found Blandon 'extraordinarily valuable'

Blandon, prosecutor O'Neale wrote, had become ''extraordinarily valuable in major DEA investigations of Class I drug traffickers.'' And even though probation officers were recommending a life sentence and a $4 million fine, O'Neale said the government would be satisfied if Blandon got 48 months and no fine. Motion granted.

Less than a year later, records show, O'Neale was back with another idea: Why not just let Blandon go? After all, he wrote the judge, Blandon had a federal job waiting.
O'Neale, saying that Blandon ''has almost unlimited potential to assist the United States,'' said the government wanted ''to enlist Mr. Blandon as a full-time, paid informant after his release from prison.''

And since it would be hard to do that job with parole officers snooping around, O'Neale added, the government wanted him turned loose without any supervision. Motion granted. O'Neale declined to comment.

After only 28 months in custody, most of it spent with federal agents who debriefed him for ''hundreds of hours,'' he said, Blandon walked out of the Metropolitan Correctional Center in San Diego, was given a green card and began working on his first assignment: setting up his old friend ''Freeway Rick'' for a sting operation.

Targeted for a sting while sitting in prison

Records show Ross was still behind bars, awaiting parole, when San Diego DEA agents targeted him for a ''reverse'' sting -- one in which government agents provide the drugs and the target provides the cash. The sting's author, DEA agent Chuck Jones, has testified that he had no evidence Ross was dealing drugs from his prison cell, where he'd spent the past four years.
But during his incarceration Ross did something that, in the end, may have been even more foolhardy: He testified against Los Angeles police officers, as a witness for the U.S. government.

Soon after Ross went to prison for the Cincinnati bust, federal prosecutors from Los Angeles came to see him, dangling a tantalizing offer. A massive scandal was sweeping the L.A. County sheriff's elite narcotics squads, and among the dozens of detectives fired or indicted for allegedly beating suspects, stealing drug money and planting evidence were members of the old Freeway Rick Task Force.

If Ross would testify about his experiences, he was told, it could help him get out of jail.
In 1991, he took the stand against his old nemesis, LAPD detective Steve Polak, who eventually pleaded guilty to a misdemeanor charge of excessive use of force and retired. But the deal Ross got from federal prosecutors for testifying -- five years off his sentence and an agreement that his remaining drug profits would not be seized -- galled many.

''Ross will fall again someday,'' Polak bitterly told a Los Angeles Times reporter in late 1994.

By then, the trip wires were already strung.

Within days of Ross' parole in October 1994, he and Blandon were back in touch and their conversation quickly turned to cocaine. It was almost like old times, except that Ross was now hauling trash for a living. He was also behind on his mortgage payments for an old theater he owned in South-Central, which he was trying to turn into a youth academy.

According to tapes Blandon made of some of their discussions, Ross repeatedly told Blandon that he was broke and couldn't afford to finance a drug deal. But Ross did agree to help his old mentor, who was also pleading poverty, find someone else to buy the 100 kilos of cocaine Blandon claimed he had.

Drug-laden vehicle was a trap for Ross

On March 2, 1995, in a shopping center parking lot in National City, near San Diego, Ross poked his head inside a cocaine-laden Chevy Blazer and the place exploded with police.

Ross jumped into a friend's pickup and zoomed off ''looking for a wall that I could crash myself into,'' he said. ''I just wanted to die.'' He was captured after the truck careened into a hedgerow and has been held in jail without bond since then.
Ross' arrest netted Blandon $45,500 in government rewards and expenses, records show. On the strength of Blandon's testimony, Ross and two other men were convicted of cocaine conspiracy charges in San Diego last March -- conspiring to sell the DEA's cocaine. Sentencing is set for Aug. 23. Ross is facing a life sentence without the possibility of parole. The other men are looking at 10- to 20- year sentences.

Acquaintances say Blandon, who refused repeated interview requests, is a common sight these days in Managua's better restaurants, drinking with friends and telling of his ''escape'' from U.S. authorities.
According to his Miami lawyer, Blandon spends most of his time shuttling between San Diego and Managua, trying to recover Nicaraguan properties he left behind in 1979, when the socialists seized power and sent him running to the United States.