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H. Closure of the OCDETF Case
In July 1987, DEA CI-1 came to California without Meneses, apparently through the efforts of Assistant U.S. Attorney Andersen. DEA CI-1 was debriefed by Aukland and Schrettner on July 10 and 13. According to a later memorandum from Aukland, DEA CI-1 refused to testify in court, although he was still willing to contact drug traffickers. It also appears that DEA CI-1 did not appreciably add to the information he had already given. He did note having heard from Blandon that, during the October 27 search of Blandon's house, the deputies had failed to locate $850,000 hidden in a safe in the bottom of the swimming pool at Blandon's residence.(22) And Ivan Torres was said to claim that he spoke regularly with FBI agents regarding his FDN activities and that he was kept aware of any police investigations against Blandon and himself. A report by DEA SA Schrettner stated that the FBI "disclaims any association with Torres."
Shortly after Aukland's debriefing of DEA CI-1, the Los Angeles OCDETF case was declined for prosecution and closed. Aukland wrote a closing memorandum on September 16, 1987, which stated that on July 17, 1987, Assistant U.S. Attorney Crossan Andersen had declined prosecution of the OCDETF case "based upon the inability of investigative techniques to adequately prove criminal allegations." Aukland sent the memorandum to several FBI offices, including Miami and San Francisco, and noted that Blandon had moved to Miami and was living in a home purchased by Murillo.
Aukland's frustration with the OCDETF case and the problems coordinating the use of Meneses was evident in his closing memorandum. He related in the memorandum how the informants' efforts to infiltrate Blandon's organization had not been coordinated with the Los Angeles OCDETF task force, and how, although DEA CI-1 had returned to Los Angeles in July 1987, he had "quickly made it clear that he would not testify, even though he would be agreeable to contact appropriate subjects and associates. This was not agreeable to the case agent [Aukland] and AUSA Andersen." The memorandum also noted that Aukland learned in July 1987 that the DEA was making efforts to have Meneses return to San Francisco to work as an informant, without adequately notifying the FBI or the U.S. Attorney's Office. The memorandum ended: "In conclusion, it appears that this case may have been viable with the assistance of DEA. However, without that assistance, further efforts will not be worthwhile."(23)
Despite the refusal by DEA Headquarters to guarantee the protection of Meneses' identity, which was said to be a condition of his cooperation, on July 24, 1987, Gonzalez nevertheless established Meneses as an informant, proposing that he travel in 1987 to Miami, San Francisco, Venezuela, Colombia, and elsewhere to meet with drug traffickers. As we describe in the chapter on Meneses, he worked as a DEA informant from 1987 to 1990, traveling to the United States and elsewhere several times on behalf of the DEA.
When we interviewed Aukland, he described the problems of the case "in a nutshell": He was not getting sufficient help from the FBI in Los Angeles, Miami, or elsewhere with the case; the Los Angeles FBI was busy with other cases; Aukland could not penetrate the Blandon organization with informants; he did not think he was getting cooperation from the DEA in Costa Rica; and Blandon had left Los Angeles for Miami. Aukland said he sent all the pertinent information to the Miami FBI and forwarded to Miami his closing memorandum. Aukland said that when he did so, he was so frustrated with the case that he was glad to get rid of it. Aukland said, however, that no one from the CIA contacted or pressured him, or anyone else, concerning the conduct of his investigation or the decision to close the case.
Schrettner also wrote a closing memorandum in the case. Dated August 17, 1987, it noted that Blandon was relocating to Miami and closing his auto sales business. The memorandum stated that, according to Torres, the Blandon organization had never completely relaxed after the LASD searches, and Blandon continued to distance himself from the distribution of cocaine. Schrettner reported that attempts by informants to purchase cocaine from the Blandon organization had proven unsuccessful. He wrote that analysis of pen register and telephone toll records also were inconclusive, and the amount of narcotics-related telephone conversations was far short of that required to obtain authorization for a wiretap. He pointed out that the lead investigative agency, the FBI, had withdrawn from the OCDETF investigation and was not taking further action. He noted that the IRS was planning to pursue a tax investigation into Blandon, Murillo, and Lister, but that the tax investigation, by its nature, had to be overt. Schrettner concluded that in light of those facts, the withdrawal of the FBI, the lack of investigative leads, and the slim chances of success, the case was being closed by the DEA.
When we interviewed Schrettner, he gave much the same explanation for the closure of the case. He recalled that the lack of success in the case was disappointing, especially for Aukland, because it was one of the first drug cases worked by the FBI's Riverside Office. Schrettner said that he had agreed with the way Aukland handled the case, but, in retrospect, it was simply a matter of bad timing because the Blandon organization was shutting down after the search warrants were executed. Schrettner said they had not considered trying to make a historical conspiracy case against Blandon, because there was no seizure of any drugs, and no corroboration about specific incidents of drug dealing. Schrettner acknowledged that Aukland had wanted more DEA help on the case, but Schrettner explained that, at the time, he was working numerous heroin cases in Los Angeles -- more than he could handle -- and did not have a significant amount of time to work on the Blandon case.
Schrettner did not recall any friction regarding the use of Meneses or DEA CI-1, and did not recall Aukland's being upset with the DEA. But Schrettner reiterated that he had been somewhat removed from the Blandon investigation, because of his other commitments. Schrettner said, however, that he did not agree that the DEA impeded the investigation, and pointed out that the DEA in San Diego later made the case against Blandon. Like Aukland, Schrettner made clear that he had never perceived any effort by anyone in the CIA or any other agency to obstruct the case.
Gonzalez told us that he recalled being informed by someone (he cannot recall by whom) that the FBI San Francisco was upset with the way DEA had handled Meneses' travel to the United States and return to Costa Rica. Gonzalez said his response was that if the FBI wanted to have Meneses arrested, it should have obtained an arrest warrant, and DEA Costa Rica would have been happy to execute it, since it would have given DEA a "hammer" over Meneses. But Gonzalez did not recall receiving any complaints from Riverside or Los Angeles DEA or FBI agents about his handling of Meneses. Gonzalez said that he believes that the source of any unhappiness was the FBI's preference to control Meneses and DEA CI-1 itself.
I. Transfer of the Case
Although the Los Angeles U.S. Attorney's Office was unable to find an OCDETF case closing form, a memorandum from Andersen in August 1987 indicates that the tax portion of the Blandon case was going to be reassigned to another Assistant U.S. Attorney. A later handwritten note concerning this transfer was found in U.S. Attorney's Office files. The note, written on May 10, 1988, was from Jim Walsh, the chief of the Narcotics Section, to Gordon Greenburg, the Assistant U.S. Attorney in charge of the Financial Investigations Unit of the Narcotics Section. It stated:
Would you please re-assign this OCDETF case to someone in your unit? The case used to be known as Danilo Blandon LACAC078 when [Andersen] had it; now the only remaining vital aspect is a tax investigation against a subject named Lister. Let me know who you select.
According to Los Angeles U.S. Attorney's Office records, a formal reassignment was not made until February 23, 1989, when Mark Byrne, an attorney in the Financial Investigation Unit of the Narcotics Section, was given the IRS portion of the case, which targeted only Lister. When interviewed, neither Walsh, Andersen, or Byrne recalled why the tax case was pursued against Lister alone. Laura Hillhouse, the IRS agent who handled the tax case, told us that evidence against Blandon was "thin" as far as a prosecution for financial violations. She recalled that Blandon had one inexpensive house in the San Bernardino area, that he did not own the land where his business was located, and he did not seem to own a lot of other assets. Hillhouse said that Lister, on the other hand, paid cash for his house, had extensive remodeling done on his home, and had left a good paper trail on which to base a financial investigation.
J. Assessment of the OCDETF Investigation
Although the 1987 OCDETF investigation of the Blandon organization was unsuccessful, we did not find that its failure was caused by interference from the CIA or from any other government entity. We found no evidence that anyone from the CIA, or any officials in Washington, interceded in the case or caused the Los Angeles investigators or prosecutors to change their investigation in any way.
The reasons why the case failed appear to have nothing to do with the Contras or the CIA. First, there were insufficient resources assigned to the case. Aukland was the only person working on it full-time, and he did not receive much investigative support from within or outside the FBI, despite the designation as an OCDETF case. This designation does not guarantee adequate resources or that the various agencies in OCDETF will devote sufficient attention to a matter. In the Blandon OCDETF case, Aukland appears to have worked it energetically, but he had little help.
Second, Blandon had stopped dealing drugs openly and had moved from Los Angeles to Miami in the wake of the unsuccessful LASD searches in October 1986. As a result, efforts to make cocaine purchases from him or his organization were unsuccessful.
Third, as Aukland noted and our review found, there were problems of coordination among the various federal law enforcement entities, particularly regarding the use of Meneses. Meneses' travel to Los Angeles was not adequately coordinated among all federal law enforcement offices. There were inadequate consultations between the FBI and the DEA on the issue of whether it was better to consider Meneses a target or a source of information. Aukland did not even know Meneses was in Los Angeles until after Meneses had made contact with Blandon, and Aukland never had a chance to debrief Meneses. Aukland's contact with DEA CI-1 was fleeting. We also found that the DEA did not adequately inform the FBI in Los Angeles or San Francisco, or the U.S. Attorney's Office in San Francisco, all of which were investigating Meneses, about his use as informant. Then, after Meneses returned to Costa Rica, he made unacceptable requests for various guarantees before he continued to cooperate, and DEA CI-1 refused to testify in any case, reducing their usefulness in the investigation. After the case was declined for prosecution, however, Meneses was established as an informant and traveled to the United States on behalf of the DEA.
In March 1990, the General Accounting Office (GAO) issued a report entitled "Justice Department: Coordination between DEA and the FBI," which discussed the relationship of the FBI and DEA in investigating drug trafficking. The GAO reviewed several cases for its report, including the Blandon case. The report did not detail what the GAO found regarding any individual case. But the GAO concluded that the DEA and the FBI for the most part operated independently, an assessment which had validity in this case.
In sum, we found clear evidence of problems in the conduct and coordination of this investigation, but these appeared unrelated to the allegations of improper interference by officials from the CIA or other federal entities.
22. Blandon later told us that this was not true. He said he hid a safe in a swimming pool in another house that was searched, not his house, but that there was no money in that safe.
23. We found no FBI records indicating that the Miami FBI office conducted any additional investigation of Blandon after receiving Aukland's closing memorandum.
22. Blandon later told us that this was not true. He said he hid a safe in a swimming pool in another house that was searched, not his house, but that there was no money in that safe.
23. We found no FBI records indicating that the Miami FBI office conducted any additional investigation of Blandon after receiving Aukland's closing memorandum.
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