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 Testimony links U.S.
 to drugs-guns trade

 Dealers got their 'own little arsenal'

 Published: Aug. 18, 1996                                   

 BY GARY WEBB                                              
 Mercury News Staff Writer                                 
                                                             
 DANILO BLANDON WAS a full- service drug dealer. In          
 addition to the tons of inexpensive cocaine he provided     
 his clients, he also sold them assault weapons and          
 sophisticated communications gear, including hidden         
 microphone detectors to sniff out undercover cops.          
                                                             
 "We had our own little arsenal,'' recalled Rick Ross, who       
 was Los Angeles' biggest "crack'' cocaine dealer in the     
 mid-1980s. "Once he tried to sell (my partner) a grenade 
 launcher. I said, "Man, what ... do we need with a            
 grenade launcher?'.''                                       
                                                             

 Blandon testified in March that his source for such
 accouterments -- which included Uzi submachine guns and
 Colt AR-15 assault rifles … was an ex-Laguna Beach
 burglary detective named Ronald J. Lister. Lister and his
 partners sometimes showed up at meetings of Contra
 supporters in Los Angeles to demonstrate machine guns,
 Blandon said.

 Lister, 50, claimed he worked for the Central
 Intelligence Agency, according to federal officials and
 FBI documents. He later worked as an informant for the
 DEA and the FBI, records and interviews revealed.

 In late 1986, as part of Special Prosecutor Lawrence                       
 Walsh's Iran-Contra investigation, FBI agents                 
 investigating the Iran-Contra scandal interviewed          
 Lister's former real estate agent, who told of Lister's      
 paying cash for a $340,000 house in Mission Viejo. When                 
 the Realtor asked Lister where the money came from,             
 Lister replied that he was raising funds for the Contras,    
 an activity he described as "CIA-approved.''                         

 Christopher Moore, an L.A. attorney who once worked as an
 office assistant for Lister's company, Mundy Security
 Group, said Lister sent him to El Salvador in June 1982
 to "baby-sit'' a U.S. government contract the company had
 to install a security system for a Salvadoran air force
 base.

 Spoke of CIA protection

 Lister often spoke of "being protected by the CIA,''
 Moore said in an interview. "I didn't know whether to
 believe him or not.''

 One thing is certain: There is considerable evidence that
 El Salvador's air force was deeply involved with cocaine
 flights, the Contras and Blandon's cocaine supplier,
 Norwin Meneses.

 Pilot admits role                                          
                                                                          
 Meneses said one of his oldest friends is a former Contra               
 pilot named Marcos Aguado, a Nicaraguan who works for the              
 Salvadoran air force high command.                                    

 Aguado was identified in 1987 congressional testimony as                   
 a CIA agent who helped the Contras get weapons, airplanes               
 and money from a major Colombian drug trafficker named                
 George Morales. Aguado admitted his role in that deal in                 
 a videotaped deposition taken by a U.S. Senate                         
 subcommittee that year.
                                                                            
 His name also turned up in a deposition taken by the                    
 congressional Iran-Contra committees that same year.                   
 Robert W. Owen, a courier for Lt. Col. Oliver North,                     
 testified he knew Aguado as a Contra pilot and said there               
 was "concern'' about his being involved with drug                       
 trafficking.

 While flying for the Contras, Aguado was stationed at
 Ilopango Air Base near El Salvador's capital of San
 Salvador.

 Agent's reports ignored

 In 1985, the DEA agent assigned to El Salvador --
 Celerino Castillo III -- began picking up reports that
 cocaine was being flown to the United States out of
 hangars 4 and 5 at Ilopango as part of a Contra-related
 covert operation. Castillo said he soon confirmed what
 his informants were telling him.

 Starting in January 1986, Castillo began documenting the
 cocaine flights -- listing pilot names, tail numbers,
 dates and flight plans -- and sent them to DEA
 headquarters.

 The only response he got, Castillo wrote in his 1994
 memoirs, was an internal DEA investigation of him. He
 took a disability retirement from the agency in 1991.

 "Basically, the bottom line is it was a covert operation
 and they (DEA officials) were covering it up,'' Castillo
 said in an interview. "You can't get any simpler than
 that. It was a coverup.'' DEA officials would not respond
 to those statements. A Freedom of Information Act request
 for Castillo's reports is still pending. Lister, who
 pleaded guilty to federal cocaine charges in 1991 and is
 serving a prison sentence in Phoenix, did not respond to
 several requests for an interview. Aguado could not be
 reached for comment.

 MONDAY: How the drug ring worked, and how crack was
 "born" in the 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.

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