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Day 1


  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
  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.''

  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.

  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.

    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.

  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.

  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
  Contras.

  ----------------------------------------------------------
  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.


   DAY 2

 Shadowy origins
 of 'crack' epidemic

 Role of CIA-linked agents
 a well-protected secret until now

 Published: Aug. 19, 1996
 BY GARY WEBB
 Mercury News Staff Writer

 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.                                                     superiors
                                                              took her off
 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.
                                                                Blandon's
 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     Blandon's
 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.
                                                                  about
 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