Salomon says she recalls seeing Cabezas and Troilo Sanchez at a San Jose, Costa Rica hotel in 1981. However, she denies having any personal knowledge that either of them provided Zavala with cocaine. Salomon also denies ever discussing drug trafficking with Cabezas or Sanchez.

279. Salomon says that Zavala never told her he had received money from Aviles and she says that she has no knowledge that Zavala ever transported anything to Costa Rica for the Contras. Salomon says she recalls Cabezas boasting--probably in 1981--that he "knew people in the Contras." Thus, she believes it is possible that Cabezas could have had a relationship with the Contras. However, Salomon comments that "Cabezas is a liar to me."

280. As to how Zavala obtained the two letters that linked the cash seized from his home at the time of his arrest to the Contra cause, Salomon recalls that her husband contacted her by telephone or letter from the jail in San Francisco sometime after his arrest. According to Salomon, Zavala asked her to contact a person named "Francisco" in San Jose, Costa Rica and advise him of what happened. She says this was Aviles. Salomon does not recall if Zavala told her whether the cash belonged to Aviles personally or to an organization Aviles represented. Salomon claims to have no recollection of what Aviles' reaction was or what he may have said when Salomon informed him that the money had been seized.

281. According to Salomon, Zavala only asked her to inform Aviles about the seizure of the money. She has no recollection of Zavala instructing her to have Aviles write any letters on Zavala's behalf. She assumes that Aviles took it upon himself to write the letters, or wrote the letters based upon a pre-existing arrangement with Zavala. In any event, Salomon says she is aware that Aviles prepared one or more letters for her husband and that the letters were sent to the Federal District Court in San Francisco. She says Aviles may have even shown her a copy of at least one of the letters at some point. Salomon contends she did not pay Aviles for the letters.

282. Salomon says she has never met Vicente Rappaccioli and does not know why Rappaccioli signed his name to one of the two letters on behalf of Zavala. She speculates that Rappaccioli probably did so at Aviles' request.

283. Individual Statements: Aviles. Francisco Aviles, a resident of Léon, Nicaragua, denies the March 1986 San Francisco Examiner report that he gave Zavala $45,000 to purchase weapons and equipment for the Contras. "I never gave Zavala one cent. We did not have any money to give," Aviles claims. Aviles does, however, admit that he told the San Francisco Examiner he gave Zavala $35,000. He says he did this with the intent to try to create some sense of indebtedness by Zavala toward Aviles' Contra political organization.

284. Aviles explains that, while he was living in Costa Rica in late 1981 or early 1982 and associated with the PCNE, he received a telephone call from Zavala or someone associated with Zavala with an offer of financial help for the Contras. Aviles says he and Rappaccioli attempted to check Zavala out and did not learn anything derogatory. Accordingly, Aviles says he met with Zavala and Rappaccioli in Costa Rica. Aviles says that Zavala claimed he could get contributions for the Contras from Nicaraguans living in the United States. Aviles claims that this meeting was the only time he ever met Zavala personally. Aviles says he provided a letter--signed by Aviles and Rappaccioli--that "authorized Zavala to fund-raise for the Contras."

285. Aviles says he received a call from Doris Salomon about 18 months after his meeting with Zavala and Rappaccioli. Salomon informed Aviles that Zavala had been arrested and was in a U.S. prison because of a "problem with his passport." Salomon, according to Aviles, made no mention that the arrest was on drug-related charges. Aviles recalls being told by Salomon that Zavala needed a letter to establish that the money seized at his home had represented "funds raised for the Contra Movement." Aviles recalls that he prepared such a letter, addressed it either to "the judge" or "to whom it may concern," and sent the letter to either the U.S. Embassy, San Jose or a person at the U.S. Embassy whose name he cannot recall.

286. Aviles says that he only learned later through press reports that the money in question represented drug profits, and not funds donated by other Nicaraguans for the Contra cause. Aviles contends, "We would never have [written the letter requested by Salomon] had we known the money was from drugs."

287. Aviles acknowledges providing at least one additional letter to Zavala. Sometime in 1985, Aviles says he received a telephone call from Zavala, who Aviles only subsequently learned was calling from a U.S. prison. Aviles claims that Zavala continued to claim that his legal problems related to his passport and asked Aviles for a "reference letter" to be used with the Federal District Court to show that Zavala was a member of the Contras. Aviles says he wrote a short letter to this effect that he then sent to Salomon.

288. Sometime later, though possibly still in 1985, Aviles says he received a check from either the FBI or the Court for about $30,000.recalls being concerned at the time that the money might have been derived from Zavala's drug trafficking. He says that by then he believed he was dealing with the "Mafia" or drug cartels and began to be concerned about his safety. He recalls returning the check uncashed to either Doris Salomon or her mother, along with a power of attorney so that they could cash it, as a way of protecting himself.

289. Aviles claims he returned the check "because it was blood money, and we wanted nothing to do with it." Aviles denies that either he or Rappaccioli received any compensation from Zavala for writing the letter that authorized him to raise funds for the Contras. Aviles also denies that he received compensation for the "reference letter" that he sent to Salomon in response to Zavala's telephone call from a U.S. prison, or for returning the check-- uncashed and with a power of attorney--to Doris Salomon or her mother.

290. Individual Statements: Others. Joseph Russoniello was the United States Attorney for the Northern District of California when The Frogman Case was prosecuted. He recalls no link among Zavala, Cabezas, the seized funds, and the Contras other than the subsequent statements of Zavala and Cabezas. He is also not aware of any information indicating any link between the defendants and CIA.

291. Mark Zanides was the Assistant United States Attorney (AUSA) who prosecuted Zavala in The Frogman Case. He recalls that law enforcement wiretaps that were in place during the months preceding the arrests revealed that Zavala spent most of his time "drunk" and trying to figure out how to pay his drug suppliers. Based on his knowledge of Zavala's activities, Zanides calls it "inconceivable" that Zavala could have donated $500,000 to the Contras as was reported by the San Francisco Examiner in 1986. Additionally, Zanides says he was "surprised" to learn that Zavala even had $36,000 in his home at the time of the raid. Nevertheless, Zanides says, "I don't think [Zavala] made much money selling dope, [but] moved a fair amount of it." Zanides does not recall any information from the wiretaps that indicated any connection between Zavala's drug trafficking activity and the Contras.

292. Judd Iversen, the attorney who defended Zavala in The Frogman Case, recalls that Zavala told him at the time that Doris Salomon was a Contra fund raiser. It was through this connection, Iversen believes, that Zavala became involved in Contra activities. Zavala did not impress Iversen as a person who was interested in politics, and Iversen states that Zavala "just went along with the [Contra] fund raising because he liked Doris." Iversen expresses extreme skepticism regarding Zavala's reported statement to the San Francisco Examiner that he sent $500,000 to the Contras.

293. The FBI Special Agent who was the lead FBI agent in the investigation relating to The Frogman Case says he has no recollection of any information indicating that Zavala was involved with the Contras. He also states he "never felt, from what [he] could see, that the Contras were involved." Moreover, he says he does not remember any information indicating that Zavala was operating two trafficking organizations, one of which was for the benefit of the Contras.

294. The FBI Special Agent also does not recall any information indicating that Cabezas had any relation to the Contras or that his trafficking in drugs was a means of funding the Contras. He says, "I don't remember Cabezas saying he was selling drugs for the Contras. I wouldn't have believed him." If there was such a connection with the Contras, "that would have been a great defense for them."

295. The FBI Special Agent says he has no recollection that any information relating to the Contras was discovered during the course of the investigation, although he adds that the investigation necessarily would not have confirmed to whom Zavala might have sent money derived from his drug trafficking. This FBI Special Agent also says he has no recollection that any information linking the cocaine to the Contras was derived from the U.S. Government wiretaps of Zavala and Cabezas. However, he recalls roughly 10,000 conversations were recorded, and he cannot recall any references on the wiretaps to the Contras. Had there been such a reference, the FBI Special Agent says he believes he would have made note of it. The FBI Special Agent also comments that it is possible that the linguists responsible for translating the recorded conversations may not have considered a comment relating to the Contras to warrant its inclusion into the written summary of the conversation.

296. Another FBI Special Agent who dealt with Cabezas following his conviction in 1984 and his later release from prison in 1992 says that, although Cabezas did tell him in 1987 that he sold cocaine for the Contras, Cabezas provided few details regarding that claim or how much of the proceeds might have been provided to the Contras.

297. With respect to Zavala, this FBI Special Agent states that "Zavala was only in it for the money." Additionally, the FBI Special Agent recalls talking to Zavala and that Zavala "never talked about the Contras."

298. A third FBI Special Agent arrested Zavala during the raid on Zavala's home. He recalls that when $30,000 to $40,000 was discovered in the night stand at Zavala's home, Zavala made no statement or claims as to the ownership of the money. This FBI Special Agent says he has no recollection of Zavala, Cabezas, or any of the other defendants in the case claiming that their drug trafficking activities were for the benefit of the Contras.

299. The FBI Special Agent who arrested Zavala also recalls no information relating to the Contras being derived from any of the wiretaps. As best he recalls, none of the logs that described each taped telephone call, and none of the transcripts or translations of those telephone calls, mentioned the Contras.

300. Norwin Meneses says he was never part of the Zavala organization although he acknowledges that he knew Zavala and Cabezas. Although individuals implicated in The Frogman Case also admit that they knew Norwin Meneses, no information has been found to indicate that they worked together to traffic in drugs on behalf of the Contras. Zavala says he met Meneses only one or two times. These meetings, says Zavala, did not involve the sale of drugs. According to Zavala, an associate of his may have purchased drugs from Meneses when the associate and Meneses were living in Managua.

301. Salomon says she met Norwin Meneses and his nephews "many years ago." Salomon states that she did not know Meneses well because their political views differed. Salomon says it is her understanding that Meneses was a drug trafficker even before the Sandinista Revolution.

302. Cabezas claims he knows Norwin Meneses and that Meneses was a drug dealer. According to Cabezas, Meneses had no connection to the Zavala organization. Cabezas says he does not believe that Meneses was affiliated with any Contra organization or that Meneses made any donations to the Contras.

303. Troilo Sanchez says he believes Meneses was a drug trafficker for the Contras, but can provide no information to support this belief. He says Meneses used other people and organizations as cover but was only interested in benefiting himself. Sanchez claims he met Meneses through Horacio Pereira. Pereira and Meneses, according to Cabezas, worked together as drug traffickers even as far back as the Somoza regime in the 1970s.

304. CIA Records. According to CIA records, Aristides and Fernando Sanchez were active in the Contra movement. No indication has been found that Aristides or Fernando had contact with Cabezas.

     CONCLUSION

305. Did any of the individuals who were arrested in "The Frogman Case" have any relationship with CIA? Were the drug trafficking activities of any of those individuals linked to the Contras? No information has been found to indicate that CIA or individuals acting on behalf of CIA had any relationship with Julio Zavala, Carlos Cabezas, or others who were arrested or charged in connection with the 1983 Frogman Case, though a relative of one of them did have a relationship with CIA until mid-1982.

306. No information has been found to indicate that Julio Zavala, Carlos Cabezas or other Frogman Case defendants were connected to the Contras or that the Contras benefited from their drug trafficking activities. No information has been found to support Cabezas' claim that he provided financial assistance to the Contras from his drug trafficking activities. While two individuals who were active in the Contra movement wrote letters indicating that the money seized money from Zavala belonged to the Contras, it appears this was done through Zavala's wife's connections to old family friends and not because Zavala was active in the Contra movement.

     Was CIA involved in the investigation of The Frogman Case?

307. As mentioned earlier, a relative of one of those arrested or charged in the 1983 Frogman Case did have a relationship with CIA until mid-1982. That relationship began in the late 1970s based upon the individual's access to information concerning Nicaraguan Sandinista activities. By 1982, the Agency had decided that the asset was not "worth the considerable expenditure of resources involved," and terminated the relationship. No information has been found to indicate the former asset engaged in any activities that were contrary to U.S. law or that interfered with the investigation of The Frogman Case or The Frogman Case arrests that occurred in January and February 1983.

     CONCLUSION

308. Was CIA involved in the investigation of The Frogman Case? No information has been found to indicate that CIA or anyone acting on behalf of CIA was involved in the criminal investigation of Julio Zavala and his associates, though a relative of one of those arrested or charged did have a relationship with CIA until mid-1982.

To what extent, and why, did CIA become involved in the prosecution of The Frogman Case? What was the effect of CIA involvement in the prosecution?

309. CIA Records. CIA records indicate that the Agency first learned of The Frogman Case on July 30, 1984 when a cable from an LA Division Station informed Headquarters that the local representative of a U.S. law enforcement entity had brought a DoS telegram to its attention. The DoS telegram indicated that an AUSA for the Northern District of California and an FBI Special Agent were requesting permission to travel to San Jose to question two "anti-Sandinistas" in connection with the prosecution of a cocaine trafficking case identified as U.S. v Zavala.
310. Although the AUSA and the FBI Special Agent were not identified by name in the LA Division cable, the DoS telegram did identify them. Further the DoS telegram stated that AUSA Zanides and the FBI Special Agent would be attending "court-ordered depositions on Francisco Aviles Saenz and Vincente [sic] Rappaccioli Marquis."
311. Vicente Rappaccioli Marquis, who was proposed to be deposed, is identified in CIA records as having been a member of the board of directors of the PCNE. No information has been found to indicate that CIA ever had any relationship with this individual. However, CIA personnel in the LA Division Station apparently misidentified him as a former Agency asset.
312. In its July 30, 1984 cable informing Headquarters of the planned depositions in San Jose, the LA Division Station identified Francisco Aviles Saenz by name. However, the LA Division Station cable did not provide Headquarters with the name of the second individual. Instead, the Station cable referred to this second individual by a CIA cryptonym that had been assigned in 1980 to the misidentified former asset. According to the Station cable, the misidentified former asset had also been associated with the Contra movement.
313. The Station also reported that both Francisco Aviles and the misidentified former asset had been members of a Nicaraguan exile group. Although that group is not further discussed in the Station cable, Agency records indicate that the group unwittingly received CIA support.
314. The July 30, 1984 cable from the LA Division Station also asked Headquarters and several other field stations for any additional information that might be available in their files concerning Aviles and the misidentified former asset. The cable also asked for information regarding who Zavala was, the charges against him and whether there was any connection between Zavala, Aviles and the misidentified former asset. In closing, the LA Division Station noted that it was "concerned that this kind of uncoordinated activity [i.e., the AUSA and FBI visit and depositions] could have serious implications for anti-Sandinista activities in Costa Rica and elsewhere."
315. Agency records indicate that Vicente Rappaccioli Marquis--who was to be deposed and with whom the Agency had no relationship--was born on July 15, 1928. The misidentified former Agency asset differed in age from Rappaccioli by more than 10 years. By mid-1981, regular CIA contact with the misidentified former asset had ceased, and all contact appears to have ended sometime in 1982.

316. A Headquarters desk officer assigned to the DO/Central America Task Force (CATF) preliminarily responded to the LA Division Station in an August 1, 1984 cable. The CATF cable cited a 1983 media report that identified Zavala as a 39-year-old illegal alien from South San Francisco named Julio C. Zavala Moreno. The cable also reported that CIA had no information in its records concerning Zavala.

317. With respect to Aviles, the August 1, 1984 CATF cable stated that CIA records indicated that Aviles, a member of the Nicaraguan Democratic Conservative Party (PCN), had attended an August 1982 conference in Miami in which senior members of the PCN had created a faction of the party in exile--the PCNE. At that conference, according to CIA records, Aviles had been elected to be the secretary of the PCNE's board of directors. The August 1, 1984 cable also stated that the Agency had no information to indicate any connection between Aviles, Zavala and the misidentified former asset. Finally, the cable stated that the Agency was contacting the FBI for information regarding Zavala.

318. CIA records also show that the CATF desk officer sent a brief note and a copy of the July 30, 1983 LA Division Station cable to the Freedom, Privacy and Litigation Group (FPLG) of the DO's Information Management Staff (IMS). At that time, FPLG was the DO's focal point for matters relating to litigation that involved DO information.

319. An August 2, 1984 memorandum from FPLG to the CATF desk officer in CIA records indicated that the Agency's Office of General Counsel (OGC) had been made aware of the case, probably by FPLG, by that date. The memorandum stated that the proposed depositions of Aviles and the misidentified former asset would relate to whether approximately $30,000 that was seized from Zavala at the time of his arrest was acquired through business transactions, rather than cocaine trafficking. Further, the memorandum indicated that FPLG and OGC representatives were planning to meet with "the AUSA" on August 7, 1984, following which "the AUSA" would go to Costa Rica to take the depositions later in August. The FPLG memorandum did not specify the identities of the Agency's representatives or the location of the planned meeting with the AUSA.

320. The August 2, 1984 FPLG memorandum also asked that the CATF desk officer provide a "summary" of the activities of Aviles and the misidentified former asset in preparation for the FPLG and OGC meeting with the AUSA. Finally, the FPLG memorandum indicated that, once "the AUSA" provided further details, the Agency could "determine whether our equities will be affected." No information has been found to indicate any CATF response to this memorandum's commentary or request for a summary of the activities of Aviles and the misidentified former asset.

321. On August 3, 1984, Headquarters advised the LA Division Station of what had been learned about the Zavala case. The cable, originated by FPLG, indicated that the depositions that were scheduled for August 16, 1984 in Costa Rica were in response to a motion by Zavala's attorney and are "subject to court order that [the U.S.] Government not interfere or discourage compliance." The genesis for this statement may have been a recently unsealed transcript of a June 12, 1984 in camera proceeding relating to a motion by Zavala's attorney under Rule 15 of the Federal Criminal Code and Rules which pertains to depositions. The transcript of that proceeding indicated that the late Robert Peckham, the presiding U.S. District Court Judge, stated at that time, in part:

     Now, there is a serious problem, though, that perhaps we should mention now, and perhaps even address first, and that is, that in the papers Mr. Zavala, through his counsel, indicates that the deponent's identify [sic] must remain secret to prevent the CIA from coercing the witnesses and to altering their proffered testimony.

322. The August 3, 1984 Headquarters cable to the LA Division Station also indicated that testimony in the Zavala case would concern the "source of money confiscated in cocaine raid in San Francisco." The Station was advised that--to avoid giving Zavala's defense attorneys a "possible issue"--the Station should make no effort to contact the two individuals who were to be deposed. Further, Headquarters advised the LA Division Station that there was no reason to believe that Zavala's attorneys were aware that the misidentified former asset had any association with CIA. The Headquarters cable also stated, without further explanation, that the depositions "may be avoided if planned legal action is successful." Finally, the Station was informed that FPLG and OGC representatives "will meet 7 August with Assistant U.S. Attorney to draft [a] course of action."

323. On August 3, another LA Division Station responded to the request for information about Aviles and informed Headquarters that Aviles was not well regarded. The Station further reported that Aviles had been asked to leave a Contra support group in Costa Rica around August 1983 when questions were raised regarding his handling of the group's funds.

324. The exact date of the FPLG and OGC meeting with the AUSA has not been determined although, as indicated earlier, the meeting was scheduled for August 7, 1984. On August 16, 1984, the U.S. Embassy in San Jose informed the LA Division Station that the planned visit of AUSA Zanides and an FBI Special Agent had been canceled. The Station informed Headquarters of this development on August 17, 1984 and indicated that an Embassy official had said that the visit of the "U.S. Attorney" had been canceled by the "Funny Farm," a term that the LA Division Station took to mean CIA. The LA Division Station went on to say that it had told the Embassy official that CIA had no interest in the case following receipt of the August 1, 1984 cable from the CATF branch. The Station also suggested that Headquarters might "wish [to] ascertain if [the "Funny Farm"] reference was indeed to [CIA] and, if so, correct the misunderstanding." Additionally, Headquarters was asked to inform the LA Division Station of any actions it had taken in regard to the depositions so that "we may reassure the [Embassy official] that [CIA] had no hand in cancellation of trip."

325. On August 14, 1984, a memorandum to FPLG from another IMS entity provided additional information concerning the results of the review of CIA records for any information regarding Zavala. The memorandum stated that there was no indication that Zavala was in the United States illegally or that he had he ever been the subject of any request for CIA records under the Privacy Act or Freedom of Information Act. On September 28, 1984, Chief/FPLG forwarded the memorandum to OGC for information.

326. On August 24, 1984, Headquarters sent a cable to three LA Division Stations informing them that CIA had indeed been a factor in the decision of the San Francisco United States Attorney's Office to return the money to Zavala and cancel the deposition trip to Costa Rica. This cable stated:

1. Following discreet approach to senior Department of Justice official, [OGC] personally contacted the Chief of Criminal Division and Chief of Drug Task Force in U.S. Attorney's Office in San Francisco to ascertain details of the subject prosecution and to avoid inquiry into activities or other [CIA] interests.

2. We were advised that Zavala had been arrested on 13 February 1983 in San Francisco and subsequently indicted on charges of "possession with intent to distribute" and "continuing criminal enterprise (CCE)." At the time of his arrest, a substantial quantity of cocaine was seized in addition to approximately $36,000 in U.S. currency. Although Zavala has pleaded guilty to "possession," he will require the U.S. to go to trial on the CCE charge which carries a minimum sentence of 80 months. Prior to Zavala's arrest, he had been the subject of a wiretap for some four months. During this period he and certain family members had inexplicably traveled to San Jose.

3. On the day of the [OGC] visit to San Francisco, the U.S. Attorney learned that one Francisco Aviles Saenz had executed an affidavit in San Jose which claimed that the money seized from Zavala belonged to [a Contra support group], that it had been collected from supporters of the party, and that these supporters included certain unnamed but official United States "organs." The copy which we saw, but could not retain pending authorization from the Court, was an official English translation and appeared to be one of many that had been made by defendant or his attorneys.

4. With a general briefing concerning the background of and relationship between [the misidentified former asset], Aviles and [CIA] interests, it was agreed by all that any litigation concerning the currency seizure would be fruitless. In essence the United States Attorney could never disprove the defendant's allegation that his was [a Contra support group] or [CIA] money, especially in light of the roles which [the misidentified former asset] and Aviles have played in the anti-Sandinista community. Accordingly, at [OGC's] request the U.S. Attorney has agreed to return the money to Zavala and to make no use of it during the trial of Zavala on the CCE charge.

5. It was for this reason that the scheduled depositions in San Jose have been canceled. Notably, [OGC] also learned that both [the misidentified former asset] and Aviles were volunteer witnesses for the defendant and planned to testify at their deposition as to the source of the money in question. We can only guess at what other testimony may have been forthcoming. As matter now stands, [CIA] equities are fully protected, but [OGC] will continue to monitor the prosecution closely so that any further disclosures or allegations by defendant or his confidants can be deflected.

6. While this particular aspect was successfully resolved, the possibility of potential damage to [CIA] interests was not lost on the U.S. Attorney or [Headquarters]. By virtue of [the misidentified former asset's] relationship as former [covert action] asset and member of board of directors of [a Contra organization], Aviles role as director of the [Contra support group] office in San Jose, and their formal claim of drug-tainted money, case could be made that [CIA] funds are being diverted by [CIA] assets into the drug trade. Indeed, close relationship between Zavala, a convicted drug dealer, and [the misidentified former asset] and Aviles could prove most damaging especially if any relationship, no matter how indirect, were to continue. As long as [the misidentified former asset] and Aviles continue to play any role in the anti-Sandinista movement, any public disclosure of the foregoing would have as a certain element the fact that they were "linked to" or "assets of" [CIA].

7. While the United States Attorney was most deferential to our interests, it was strongly suggested that we take every measure possible to ascertain any involvement by [the misidentified former asset] or Aviles in narcotics trade and/or the possibility as to whether [CIA] funds given to [a Contra support group] might arguably have been diverted. No action other than discreet inquiries should be undertaken without [Headquarters] approval and no discussion of U.S. vs. Zavala issue with Aviles or [the misidentified former asset] may take place without U.S. Attorney approval. We would appreciate any information [twoLA Division Stations] can provide to clarify these issues.

   8. . . .

   9. . . .

   10. . . .

   (Emphasis added.)

No further information has been found in CIA files regarding the precise nature of the "discreet approach" to DoJ that was referred to in the first sentence of this cable. It also has not been possible to identify with any degree of certainty the senior DoJ official who reportedly discussed the Zavala case with an OGC attorney. A number of former OGC officials believe that Criminal Division Deputy Assistant Attorney General Mark Richard was the person most likely to have represented DoJ in such a discussion, but he has no recollection of the matter.

327. Information in the OGC file regarding the Zavala case appears to indicate that the majority of the text of the August 24, 1984 cable was originally written by OGC, although the Chief of the CATF branch concerned was indicated as the originator of the cable. The OGC file contains eight documents, including handwritten notes. One of the documents is a draft of the August 24, 1984 cable to the three LA Division Stations. With the exception of minor revisions and the addition of operational information in paragraphs 8, 9 and 10, the text of the cable sent to the three LA Division Stations on August 24, 1984 is the same as that contained in draft form in the OGC file.

328. An August 22, 1984 OGC cover note to FPLG, subject "United States v. Zavales [sic]" and signed by OGC Assistant General Counsel Lee S. Strickland, stated:

     Please find attached a proposed draft cable for [the LA Division] station concerning the subject prosecution. While paragraphs 6 and 7 are rather strong, I believe the station must be made aware of the potential for disaster. While the allegations might be entirely false, there are sufficient factual details which would cause certain damage to our image and program in Central America.

329. OGC travel records for the period have been destroyed in accordance with routine U.S. Government records management schedules. A surviving abstract summary of those records is of insufficient detail to establish whether it was in fact Strickland who traveled to San Francisco on behalf of OGC during the relevant time period. Entries in the abstract summary indicate that a number of OGC personnel traveled during the general time period but the name of the traveler, the specific dates of such travel and the destination are, in many cases, not specified. Several entries in the abstract summary list San Francisco as one such destination, but the name of the traveler is not specified.

330. The LA Division Station, in a September 8, 1984 response to the August 24, 1984 Headquarters cable, reported that it had additional information pertaining to the misidentified former asset. According to the report, the misidentified former asset had last been seen about March 1982 in Managua, Nicaragua. Since that contact, the misidentified former asset had reportedly married and was currently living somewhere in a foreign country. According to the report, the misidentified former asset was a "good man."

331. An OGC weekly report regularly prepared by General Counsel Stanley Sporkin for senior CIA officials made reference to the Zavala case. The October 26, 1984 report contained several factual errors, including mischaracterizing Aviles as a CIA assettating his position with the Contra support group. The relevant portion of the weekly report, which closely approximated the wording of the August 24, 1984 Headquarters cable to the LA Division Station in many respects, stated:

     U.S. v. Zavala: During our quarterly review of Agency litigations, we decided to provide summaries of cases which the Director might find interesting. This is such a case. Several months ago, the [the LA Division] station queried Headquarters concerning a proposed visit by two U.S. Attorneys from San Francisco to interview two individuals who were assets--one [the misidentified former asset] and one the Chairman of the Board of Directors of a [Contra support group] funding mechanism (Francisco Aviles). Following a discreet approach to a senior Department of Justice official, we contacted the Chief of Criminal Division and Chief of Drug Task Force in U.S. Attorney's Office in San Francisco to ascertain details of the subject prosecution.

     We were advised that Zavala had been arrested on 13 February 1983 in San Francisco and subsequently indicted on charges of "possession with intent to distribute" and "continuing criminal enterprise" (CCE). At the time of his arrest, a substantial quantity of cocaine was seized in addition to approximately $36,000 in U.S. currency. Although Zavala has pleaded guilty to "possession," he will require the U.S. to go to trial on the CCE charge which carries a minimum sentence of 80 months. Prior to Zavala's arrest, he had been the subject of a wiretap for some four months. During this period, he and certain family members had inexplicably traveled to San Jose.

     Contemporary with our visit to San Francisco, the U.S. Attorney learned that Aviles, one of our assets,uted an affidavit in San Jose which claimed that the money seized from Zavala belonged to [a] political exile party . . . , that it had been collected from supporters of the party, and that these supporters included certain unnamed but official United States "organ[ization]s." The copy which we saw was an official English translation and appeared to be one of many that had been made by defendant or his attorneys.

     This matter raises obvious questions concerning the people we are supporting in Central America and we are continuing our inquiry into this matter internally in conjunction with all concerned components.

332. Then-Counsel to the DO Ernest Mayerfeld forwarded the OGC weekly report to the Deputy Director for Operations with a brief memorandum on October 30, 1984. Mayerfeld's memorandum suggested the Zavala case was not as serious as portrayed in OGC's weekly report:

     This is an item taken from weekly news sheet put out by Stan Sporkin. This one covers last week's events. I don't know whether you had heard about this case - I had not. I talked to the lawyer that is handling this case, who tells me that the graymail aspects of this case are quite routine and he has every reason to believe that he can avoid, with the excellent cooperation of the San Francisco prosecutor, any public disclosure of our involvement. I do not think this is a big flap and ought not to be made into one. On the basis of what I know so far, I feel the final paragraph of the attached [weekly report] overstates things.

333. On November 2, 1984, Headquarters sent a cable to two LA Division Stations asking for information regarding Aviles and his role in Contra support groups. The Stations both responded on November 5, and one of them suggested that Headquarters contact a CIA officer who had formerly been assigned to that Station and might possess relevant background information. On November 7, 1984, Headquarters sent a cable to that officer explaining that certain information was needed by Headquarters "to prepare a report regarding the involvement of . . . Francisco Aviles in U.S. v. Zavala case now in litigation in San Francisco." In a November 8 response to Headquarters, the CIA officer said he had no information to offer.

334. U.S. District Court/U.S. Attorney's Office Records. During the prosecution of Zavala, the defense attorneys filed a motion in June 1984 to place under seal the Aviles and Rappaccioli letters and other related documents that claimed that the money seized from Zavala's home belonged to the Contras. The motion was granted by the Court. On August 8, 1984, the U.S. Attorney's Office's motion to remove the documents from under seal was granted by the Court. However, the next day, the Court vacated the unsealing order. AUSA Zanides recalls that, upon learning of the contents of the letters when they were unsealed, the U.S. Attorney immediately moved to re-seal the materials pending a further review. This was done because the U.S. Attorney did not know whether the persons named in the letters were assets of CIA.

335. The documents that had been sealed have now been removed from seal by the U.S. District Court for the Northern District of California after CIA and DoJ asked the U.S. Attorney's Office to file a motion requesting that this be done. The documents that were formerly under seal include:

• Document number 639--a Supplemental Declaration of Judd C. Iversen in Support of Deposition that was filed with the Court on June 18, 1984;
• Document number 730--a transcript of a June 12, 1984 in camera proceeding involving arguments by the defense and the prosecution relating to the Rule 15 motion;
• Document number 745--a Declaration of Judd C. Iversen in Support of Motion for Order Granting Leave to Take Deposition dated June 4, 1984 and filed with the Court on August 28, 1984. This document included as attachments:
1. An unsigned receipt for $45,000 in Spanish on PCNE letterhead that is dated January 24, 1983 and with an English translation of the Spanish text typed above the PCNE letterhead. A forensic analysis requested by CIA/OIG from DoJ's INS Forensic Document Laboratory indicates that the receipt is a composite document, i.e., it is a photocopy of two documents butted together;

2. A photocopied document--in Spanish--titled TESORERIA ("Treasury"), signed by Vicente Rappaccioli, on PCNE letterhead. In the document, Zavala is identified as having been named "ASISTENTE DE ESTA TESORERIA GENERAL DEL PARTIDO CONSERVADOR, AUTHORIZADO PARA COLECTAR DENTRO DE LOS ESTADOS UNIDOS DINERO PARA LA LIBERACION DE NICARAGUA DEL COMUNISMO INTERNACIONAL." ("Assistant to the General Treasury of the Conservative Party, authorized to collect within the United States money for the liberalization [sic] of Nicaragua from international communism.");

3. An unsigned photocopy of an English translation of document (b) but with different type face and on plain bond paper;

4. A photocopied document--in Spanish--addressed A QUIEN CONCIERNE ("To Whom It May Concern") on PCNE letterhead. The document is signed by Aviles as the "SECRETARIO POLITICO" ("Political Secretary") and by Rappaccioli as the "TESORERO" ("Treasurer"). Following a brief description of the PCNE's goals and objectives, the document continues that Zavala:

   ". . . . ES MIEMBRO DEL PARTIDO CONSERVADOR COMO ASISTENTE DE TESORERIA Y SE ENCUENTRA EN LOS ESTADOS UNIDOS DE NORTE AMERICA PROMOVIENDO LA REINSTAURACION DE LA DEMOCRACIA EN NICARAGUA, PARA DICHA MISION LE FUE ENTREGADA LA CANTIDAD DE CUARENTA Y CINCO MIL DOLARES EN EFECTIVO, EN LA ULTIMA SEMANA DE ENERO DE MIL NOVECIENTOS OCHENTA Y TRES EN SAN JOSE, COSTA RICA. LA RETENCION DE ESTE DINERO PERJUDICANDO EL PROCESO DE LIBERACION, CON SUS CONSECUENCIAS NATURALES. (". . . is a member of the Conservative Party as assistant treasurer and is located in the United States of America promoting the reinstatement of democracy in Nicaragua, for which mission he received forty five thousand dollars in cash, on the last week of January, 1983 in San Jose, Costa Rica. The retention of this money is prejudicing the progress of liberation, with natural consequences.")

   ROGAMOSLE MUY ENGARECIDAMENTE A LAS AUTORIDADES CORRESPONDIENTES DEVOLVERNOS DICHO DINERO." ("We dearly implore that the corresponding authorities return said money.");

5. An unsigned photocopy of an English translation of document (d) on plain bond paper;

6. Several photocopies of newspaper clippings. One of the clippings was of a front page article from the July 14, 1983 edition of the San Francisco Examiner titled "CIA Buildup in Nicaragua." The other article was from an unidentified Spanish-language newspaper pertaining to The Frogman Case and was titled "Somocistas en Trafico de Drogas." ("[Counterrevolutionary] Drug Trafficking");

• Document 684--a notarized letter in Spanish, signed by Aviles, on UDN letterhead. It appears to be an original and is dated May 15, 1984. In addition, it has attached to it a separate English language "official translation" notarized on May 29, 1984 by an officer of the U. S. Embassy in San Jose. Following a brief introductory paragraph regarding the goals and objectives of the UDN, the letter--and its "official translation"--includes the following statements by Aviles:
  1. "Qué el señor Julio Cesar Zavala Moreno es miembro de esta organización desde hace varios anos." ("That Mrs. Julio Cesar Zavala Moreno [sic] is a member of this organization since several years ago.")

  2. "Antes de la última semana de enero de 1983 hizo varios viajes a Costa Rica trabajando para ésta organización." ("That before the last week of January, 1983 he made several trips to Costa Rica, working for this organization.")

  3. "En su último viaje se le entrego la suma de cuarenta y cinco mil dólares en efectivo para compras propias de nuestra actividad." ("That on his last trip the amount of forty-five thousand dollars in cash was given to him for purchases characteristic to this organization.")

  4. "Dicho dinero fué recaudado entre nuestros coloboradores aquí en Costa Rica." ("That said money was collected amongst our collaborators, here in Costa Rica.")

  5. "El Organismo del Gobierno Americano, varias veces nos ha prestado ayuda para la lucha anticomunista que se realiza en Nicaragua." ("That the American Government Organism [sic] has assisted us many times in the anticommunist fight which is taken [sic] place in Nicaragua.")

  6. "La retención de dicho dinero esta perjudicandonos el proceso de liberación que ya estamos en la etapa final." ("That the retention of said money is damaging the freeding [sic] process which is in its last stage.")

  "El suscrito firmante esta dispuesto de ofrecer testimonio de lo anteriormente relacionado ante la Embajada Americana en San José, Costa Rica, si fuese necesario." ("That the undersigned is willing to offer evidence with regard to what has been stated above before the American Embassy in San Jose, Costa Rica, if necessary.")

  Other documents relating to the Rule 15 motion found in U.S. Attorney's Office records may have been subject to the original sealing order. However, the documents described above are the totality of documents that the U.S. District Clerk's Office identified as removed from seal by virtue of the August 6, 1997 U.S. District Court order.

336. A September 25, 1984 memorandum from OGC Attorney Strickland to FPLG indicated that the U.S. Attorney's Office consulted with CIA on September 24 regarding the sealing of documents relating to the letters. In discussing a declaration in which defense attorney Iversen alleged, among other things, "that the CIA has engaged in the cocaine trade," the Strickland memorandum stated:
     The U.S. Attorney, as he did in the previous instances, asked if there was any reason to seal this declaration. For the same reasons as with the Avilies [sic] affidavit, I indicated there were none but that I would check with the Directorate of Operations.

     Please advise me by telephone if you agree with our assessment.

     No information has been found to indicate that FPLG responded--by telephone or otherwise--to Strickland's memorandum.

337. The declaration that Strickland referred to in his September 25, 1984 memorandum may be document number 745--Declaration of Judd C. Iversen in Support of Motion for Order Granting Leave to Take Deposition. That declaration by defense attorney Iversen stated, in part:

     . . . .

14. Based on the information I have received, I am informed and believe that agents of the United States government were intricately involved in the alleged conspiracy and either sanctioned the use of cocaine trafficking to raise funds for contra revolutionary activity and/or entrapped Defendant into participating under the belief that such activity was sanctioned.

15. I am informed and believe that the depositions of the Secretary and Treasurer of the Conservative Party of Nicaraguans (Francisco Avilessanez [sic], Esq. and Vicente Rappaccioli Marquis) are necessary testimony to present the defense of entrapment and/or outrageous Government conduct on behalf of Defendant Zavala.

16. I am informed and believe that the CIA engaged in drug trafficking during the Viet Nam War [sic] as a means to fund covert operations.

. . . .

338. The Zavala case files in the U.S. Attorney's Office include an August 6, 1984 memorandum concerning an August 3 telephone conversation between AUSA Zanides and Marvin Cahn, one of Zavala's two defense attorneys. This conversation occurred at least four days prior to any visit by OGC attorney Strickland with Zanides. The memorandum indicated that the seized money and proposed depositions in Costa Rica were among several matters that were discussed. It noted that Zanides told Cahn that "Washington was having fits with the money situation with regard to the trip to Costa Rica."

339. According to the memorandum, Zanides asked Cahn "what it was that [the Zavala defense attorneys] really wanted from the depositions and if an explanation of the source of the money" was the main issue. Cahn was noted to have said that the money was the major issue, and Zanides wrote that he then asked "Would it be necessary to go to Costa Rica if I decided to forget the money." According to Zanides' memorandum, Cahn "thought that would be okay, but he would have to talk to Judd Iversen and get back to [Zanides]."

340. The Zavala case files in the U.S. Attorney's Office also contain an August 27, 1984 memorandum concerning an August 20 telephone conversation between Zanides and OGC attorney Strickland regarding information in CIA files pertaining to Zavala.rd to this information, this memorandum noted that:

     On August 20, 1984, I returned the call of Strickland . . . .

     In sum, Strickland advised that all traces with respect to Julio Zavala had come back totally negative. Strickland advised that he had not merely requested the so-called 201 trace, but a trace for any information whatsoever. It was all negative.

     He asked whether or not he could get a copy of the documents currently under seal, and I told him the Court would have to remove the seal before we could obtain any copies.

341. Subsequently, the U.S. Attorney's Office and Zavala's attorneys agreed in an October 1984 "Stipulation Regarding Disposition of Funds" that:

• The U.S. would not introduce the "sum of $36,800" it seized from Zavala's home as evidence; and
• A cashier's check for $36,800 would be made payable to Zavala and Aviles "and presented to Julio Zavala through his undersigned counsel in San Francisco."

Relevant U.S. District Court records indicate that the Stipulation was signed by Zavala's defense attorneys Judd Iversen and Marvin Cahn on October 1, by AUSA Mark Zanides on October 2, and by Zavala on October 4, 1984.

342. Records of the U.S. Attorney's Office indicate that a cashier's check for $36,800, dated September 27, 1984 and identifying Aviles and Zavala as the payees, was hand delivered to defense attorney Iversen in early October 1984. Records of the U.S. Attorney's Office also indicate that AUSA Zanides signed for the check from the FBI on September 27, 1984. A letter transmitting the check from Zanides to defense attorney Iversen is dated October 2, 1984.

343. The cashier's check was for a total of $36,800, not the $36,020 amount that was reportedly seized from Zavala at the time of his arrest. Although the reason for the discrepancy is unclear, one possible explanation is that the additional $780 represents interest accrued while the money was in the possession of the U.S. Government.

344. Individual Statements: Aviles. Aviles initially questioned whether the letters he had provided the Court and that had been placed under seal in 1984 had been altered. Aviles examined a photocopy of the May 15, 1984 letter he had sent and questioned whether various paragraphs had been "cut and pasted." Subsequently, Aviles conceded that his earlier statements were not correct and that the letter appeared to be genuine. A forensic analysis of the original letter conducted by the DoJ's INS Forensic Document Laboratory at the request of CIA/OIG found no apparent evidence of tampering.

345. Individual Statements: Zavala. Zavala recalls that, after the Aviles and Rappaccioli letters arrived from Costa Rica claiming that the money belonged to the Contras, defense attorney Iversen wanted to go to Costa Rica and get depositions from Aviles and Rappaccioli. Zavala also recalls that AUSA Zanides made clear that he did not want to go to Costa Rica to take the depositions, but did not explain why. In any event, Zavala says that Zanides approached Zavala or Iversen with an offer to forego introducing the seized money into evidence if the defense request for the depositions was dropped. Zavala says the money was not his to begin with and that he insisted the money be returned to its rightful owner. Zanides agreed to return the money several days later, according to Zavala.

346. Zavala recalls that two checks were actually issued. The first was made out to both him and Aviles and was given to defense attorney Iversen by Zanides. Iversen then reportedly turned the check over to Zavala's mother-in-law who had been given limited power of attorney by both Zavala and Aviles. Zavala's mother-in-law's name is the same as that of her daughter, Doris Salomon. Zavala says that his mother-in-law told him that, when she tried to cash the check, the FBI was notified and--apparently believing that Zavala's fugitive wife Salomon was attempting to cash the check--raced to the bank, confiscated the cashier's check and temporarily detained his mother-in-law.

347. Zavala says he became quite angry at what he perceived to be the U.S. Government's reneging on the agreement to return the money. Zavala says he was also angry that Aviles was made a co-payee on the check. Zavala argues that, since the money was seized from him, the check should have been made out to him exclusively. Zavala claims that, following further negotiations between his attorneys and the U.S. Attorney's Office, a second check was made out to him exclusively. It was cashed at a local savings and loan by his mother-in-law, using the limited power of attorney she had received from Zavala. Zavala recalls that some of the money was returned to Aviles by Zavala's mother-in-law, but does not know the exact amount Aviles received.

348. Individual Statements: U.S. Attorney's Office Personnel. Joseph Russoniello, the former U.S. Attorney in San Francisco during whose tenure The Frogman Case was prosecuted, says that he was not much involved in The Frogman Case and does not recall many details. Russoniello says that he has no recollection of ever discussing the case with a CIA representative and has no knowledge of anyone in his office being contacted by CIA concerning the Zavala case. Regarding the proposed depositions in Costa Rica, Russoniello recalls that, when he heard that the amount of money in dispute was about $36,000, his "first and last reaction" was that it would cost a great deal to take the depositions and that "it wasn't worth it."

349. In a March 19, 1986 letter that he wrote in response to the March 16, 1986 article in the San Francisco Examiner, Russoniello took issue with the newspaper's inference that Zavala and other defendants in The Frogman Case may have been given preferential treatment by his office because of their association with the Contras. The text of Russoniello's letter is as follows:

Gentlemen:

I was at first surprised and then mildly amused as I read your Sunday, March 16, front page story "linking" a Bay Area cocaine ring with the Nicaraguan contras. My amusement turned to outrage, however, when I reflected on what the story said or intimated about the role the U.S. Attorney's office played in this drama.

The story gave the clear impression to those who read it, including at least three Congresspersons whose views you reported as front page "news" the following day, that Julio Zavala had been given preferential treatment by the U.S. Attorney's office because of his association with the contras and that we had covered up the proof of this treatment and the truth of the matter of his contra connection. Both impressions are wrong and you were outfitted with enough of the facts to dispel this impression but did not print them, for whatever reason . . . . the least of which must have been space constraints since you did find room to print a five column photograph taken perhaps as long as 24 hours after the pre-dawn arrests and seizures of January 17, 1983.

Zavala was not given special treatment, unless you consider "special treatment" to be our best efforts to get him sentenced to fifteen years in prison rather than the ten years the Court imposed. He pleaded guilty to one Conspiracy and one Possession with Intent to Distribute Cocaine count which left the charge of conducting a Continuing Criminal Enterprise carrying a minimum of ten years and life top [sic] sentence unresolved. Despite pressure from the Court to dismiss the charge (a page from the Court transcript is enclosed for your perusal) we insisted and got a trial at which Zavala had the right to present whatever evidence he chose in mitigation or explanation of his conduct. He was convicted. We recommended fifteen years. As is its prerogative in the federal system, the Court sentenced him to serve a mandatory minimum ten years. Zavala offered no evidence of U.S. Government complicity or CIA sponsorship at trial and no evidence of humanitarian purpose or patriotic overzealousness at sentencing.

We did no favors for Zavala's then-girlfriend, now his wife, Doris Salomon. Whatever may have been her past political interests, she was convicted on drug trafficking in 1981 and fled from the United States. We did not oblige her efforts to hide in Costa Rica but extradited her to San Francisco where she was sentenced to three years in prison on March 5, 1985. We had recommended a substantial prison term because of her "lack of contrition and continuing deceitful conduct."

We did return $36,020 to Zavala. It had nothing to do with any claim that the funds came from the contras or belonged to the contras. It had to do with the fact that it would have cost the taxpayers who were expected by the Court to pay for all travel by all counsel at least that much to fund the excursion to Costa Rica to take the necessary depositions for the problematical result we might be permitted to keep the seized funds. It made no economic sense to me to do this. No "higher ups" were involved, as Congresswoman Boxer wrongfully surmises. The U.S. Attorney had the authority then to compromise claims up to a $100,000 ceiling and I exercised that authority. The authority has since been increased to $200,000. While $36,000 may seem like a significant sum and people might disagree with our decision to return it, against the background that the cocaine seized had a value of $100 million and that we have millions of dollars in property and currency subject to forfeiture in this district at any given time ($20 million at present) and that little was to be gained from expending valuable agent and attorney time in further quest of what were by comparison "nickels and dimes," the decision was reasonable, justifiable and I make no apology for having made it.

Regarding the alleged coverup, it must be borne in mind that most of the information concerning the Court-approved wiretaps, the Cabezas trial testimony and the like is in the public record of the Court and has been for at least one year. Only the declarations of certain persons who made claim to the money were sealed at the government's request and then, not because of the truth of what was stated but because the mere allegations, true or not, related to national security as that term is defined by the Classified Information Procedures Act. We were duty bound, not by fiat but by an Act of Congress, to protect that information from unauthorized disclosure and we did. There is no more to it.

As to the contention that defendants Zavala and Cabejas' [sic] drug dealings were tied to the contras and inspired or supported, perhaps by the CIA, while the accusation is scintillating, I remind you that there is absolutely no evidence of CIA involvement and there is absolutely no evidence to warrant the insinuation the defendants were connected to the contras except that their own statements they offered after the fact of arrest and in a futile attempt to explain away their own conduct claim so. Such alibiing is not uncommon among the criminally accused and its validity is usually suspect for that reason. Even if some inference could have been drawn from their own statement that might have otherwise raised a suspicion of "contra" connection, going to print eighteen months after the events reported (the declarations were unsealed August 8, 1984) but coincident with the President's well publicized speech to the Nation in which he sought support for aid to the contras removed any doubt but that this story was one of the most blatant attempts at contrived news-making we have witnessed in recent years.

We examined 11,000 intercepted telephone calls covering the period August 22, 1982 to February 26, 1983 and have reviewed them again to be certain of the facts. There is no reference to any contra activity; no known contra leaders are identified by name or by inference. Given that wiretaps disclosed the most intimate details of drug trafficking, one would have expected some reference to the contras . . . . there was none.

What is really shameful about this story, though, is that it has taken the hint of scandal to arouse certain members of Congress to the issue of drug trafficking and its impact on the Bay Area. Were it not for the opportunity your story provided we might never have heard them speak out on the subject at all. I hope they'll be as quick to apologize when they have all the facts as they were to condemn when they had read only a part of the full story.

Moreover, lost in the shuffle is the fact that literally dozens of federal agents from several agencies worked together tirelessly to develop and successfully prosecute the cases that led to the conviction of thirty-two members of a sophisticated, well-established international drug smuggling ring. It does a disservice to them to permit the hint of scandal to linger

. . . .

(Emphasis added.)

350. AUSA Zanides says he was assigned as lead attorney in the Zavala case on the day the arrest warrant regarding Zavala was executed. This was probably, he recalls, on or about February 15, 1983. Zanides recalls that Zavala's indictment did not identify any specific amount of cash to be forfeited because it was not known with any certainty at the time of the indictment that Zavala had large amounts of cash in his residence. According to Zanides, any cash seized was forfeitable if it constituted proceeds from criminal activity.

351. Although the August 24, 1984 cable from Headquarters to the three LA Division Stations indicated that OGC initiated contact with the United States Attorney's Office, Zanides recalls that it was he who first "reached out" to advise CIA of the Zavala matter and to determine what information CIA could provide. CIA, according to Zanides, reported back to him that it had found no information in its files pertaining to Zavala. In any event, Zanides says he received a visit from a CIA attorney to discuss the Zavala case. Zanides says he does not recall the name of the CIA attorney who visited him at the time. After examining eight photographs, Zanides selected a photograph of Lee Strickland as closely resembling the CIA attorney with whom he met. Zanides says he is not sure of the timing of the visit, but estimates that it was the summer of 1984.

352. Zanides says that he and the CIA attorney engaged in an "opaque conversation" and that the CIA attorney provided little or no explanation regarding what the CIA's interests were in the case. Nevertheless, Zanides recalls the CIA attorney stressing to him that the CIA would be "immensely grateful if these depositions did not go forward." He says he cannot recall whether the CIA attorney told him that CIA had any connection with the two individuals who were to be deposed, but he "did not infer they were CIA assets." Zanides recalls, however, that the CIA attorney was "very concerned about the public identification" of the individuals who were to be deposed.

353. Zanides' recollection of the meeting is that the CIA attorney was only interested in the persons who were to be deposed and that the CIA attorney did not indicate to him that there was any CIA interest in Zavala or the seized money. Zanides also says that CIA "never asked for special favor [in the case], no one from CIA asked me to give the money back to Zavala in so many words."

354. Zanides says he recalls making handwritten notes at the time of his meeting with the CIA attorney. However, no such notes could be located in the files of the U.S. Attorney's Office. Zanides is also confident that he advised James Lassart, then-Chief of the Organized Crime Drug Enforcement Task Force in the U.S. Attorney's Office in San Francisco, and possibly even Russoniello, of the meeting with the CIA lawyer.

355. Zanides states that "we did not need the money [as evidence] for the case." Zanides is adamant that the money would have been introduced as evidence and not given back to Zavala had there been any question regarding the need to use the money in the case against Zavala. As Zanides recalls, the seized money did not become an issue until June 1984, long after Zavala's arrest, when defense attorney Judd Iversen unexpectedly submitted a Rule 15 motion to the court.

356. Zanides says he has no recollection of being directly involved in the preparations to go to Costa Rica to take the depositions, although he does recall that he may have had concerns regarding where the depositions were to be conducted. Zanides says his preference was to use the U.S. Embassy in San Jose. In any event, Zanides is confident that Russoniello made the decision to return the money to Zavala, thus negating the need to take any depositions in Costa Rica.

357. Zanides recalls that Russoniello believed that the trip to Costa Rica was too expensive. In explaining why the trip would have been so expensive, Zanides says that the traveling party had expanded to include himself, an FBI Special Agent, a court reporter, Zavala's two defense attorneys, and possibly a translator. Zanides says he was not disappointed that the trip was canceled since it would have entailed another week of trial preparation. In any event, Zanides says that the trip to Costa Rica "was never on as far as I was concerned."

358. Zanides recalls believing at the time that Zavala's defense attorneys wanted to accompany the prosecuting attorneys to Costa Rica so they could use the opportunity to try to impeach a confidential informant. As recalled by Zanides, defense attorney Iversen wanted the Zavala defense team to go to Costa Rica "so they could mess with" this confidential informant.

359. James Lassart, then-Chief of the Organized Crime Drug Enforcement Task Force in the San Francisco United States Attorney's Office, recalls some sort of civil action involving the forfeiture of the seized money in the Zavala case and that the government faced a choice between chasing witnesses in Central America or giving the money back. Lassart says a decision of that nature would have been made--if not by Russoniello personally--at least with direct participation of Russoniello. He recalls that Russoniello made the decision--based on cost effectiveness--not to take the depositions in Costa Rica. Thus, the matter was "resolved." Lassart says he does not recall why the depositions were needed in the first place. Lassart says, "It would have had to be the idea of the defense attorney. We would have had to be driven down there kicking and screaming."

360. John Gibbons, then-Chief of the Criminal Division for the San Francisco United States Attorney's Office, is identified by name in notes found in OGC's Zavala case file. However, Gibbons says he does not recall discussing the Zavala case with a CIA attorney, and he is not able to offer any insights into the trip to Costa Rica or the return of the seized money to Zavala.

361. Individual Statements: CIA Personnel. The now-retired FPLG representative says that she has no specific recollection of the events relating to the Zavala case. The CATF desk officer says he also has no recollection of his interactions with the FPLG representative or of the August 1, 1984 cable to an LA Division Station that identified him as the originator and stated that the Agency had no information relating to Zavala. The CATF desk officer says his responsibilities included file searches, preparing cables and other correspondence. He recalls that inquiries to the FBI were invariably via cable, and not in person.

362. Former OGC attorney Strickland says he has no recollection of the Zavala case. He recalls traveling to San Francisco on behalf of CIA on several occasions, but does not recall whether these trips were related to the Zavala prosecution. After reviewing relevant documents, Strickland says he has no doubt that he did go to San Francisco to meet with representatives of the U.S. Attorney's Office in connection with the Zavala case.

363. Strickland says he has no recollection of the circumstances under which he became involved, but observes that the small number of documents in the OGC file regarding the Zavala case suggests that the case was "not a big deal" at the time. The Zavala case file is marked with the handwritten notation "closed-confirmed by [telephone conversation] with AUSA-LSS 1-5-86." Strickland recognizes the handwriting and the "LSS" initials as his own and speculates he probably contacted AUSA Zanides to determine the final resolution of the case. Strickland says the meeting referred to in the August 24, 1984 Headquarters cable between OGC and the chiefs of the Criminal Division and Drug Task Force indicates to him that CIA had "gone in at the top" in its contacts with the San Francisco U.S. Attorney's Office regarding the case.

364. Strickland says his duties in OGC were in the Litigation Division and focused primarily on civil cases. A criminal case such as the Zavala prosecution that possibly involved CIA assets or operations would more typically have been handled by OGC's Operational Support Division, or possibly by the OGC Counsel for the DO. Strickland says that he recalls working on about a half dozen criminal cases at most while he was in OGC. To place this number in perspective, Strickland says that he carried a case load that could have been as high as 200 cases at any particular time. Strickland's 1984 Performance Appraisal Report (PAR) notes that the majority of his work was on matters unrelated to criminal prosecutions and says that Strickland "carries one of the heaviest workloads in the Office."

365. Strickland states that the sentence in the August 24, 1984 Headquarters cable to the three LA Division Stations that pertains to the return of the money to Zavala--i.e., "Accordingly, at [OGC] request the U.S. Attorney has agreed to return the money to Zavala and to make no use of it during the trial of Zavala on the CCE charge"--may have been "inartfully worded," i.e., it gives too much credit to OGC's influence on the decision. Strickland observes that there may have been a fear at the time that, if the money were not returned, Aviles might have instituted some type of judicial action in an effort to have the money returned on behalf of the Contras. The publicity resulting from such an action would have been of concern to CIA.

366. Strickland speculates that it is possible that AUSA Zanides or others at the U.S. Attorney's Office were not pursuing the money aspect of the case for their own reasons, and that Strickland--in response to that information--may have suggested that the money be given back to Zavala. This would have eliminated the need to take the depositions in Costa Rica, and prevented any further attention to the matter by the Zavala defense. Strickland notes that, if the money were not to be used to support criminal charges and were not to be subject to a civil forfeiture proceeding, the remaining option was to return it.

367. In this context, Strickland suggests that his presentation to AUSA Zanides when he traveled to San Francisco may not have been a "hard sell." Strickland makes clear that he would no doubt remember if the United States Attorney's Office had opposed the idea of returning the money and engaged in a "knock down and drag out fight" over the matter.

368. Former CIA General Counsel and current U.S. Federal District Court Judge Stanley Sporkin says he has no recollection of The Frogman Case. Sporkin says that the relevant CIA records suggest to him that the Agency clearly did not want this information on the front page of the newspapers.

369. Sporkin notes that OGC representatives kept him and other Agency officials properly advised as is evidenced by OGC's weekly report for the period ending October 26, 1984, a report that Sporkin personally signed. Sporkin adds that "we clearly were not trying to help [Zavala] keep drug money." In explaining the purpose for discussing the Zavala case in OGC's weekly report to senior CIA managers, Sporkin says, "I did what a lawyer is required to do, send [relevant material] to the client."

370. Although Sporkin has no current recollection of the Zavala case, he says:

     Maybe we should have found out more whether [sic] or not the money was drug proceeds, but the U.S. Attorney would not want any other agency to be involved in investigating a case he was prosecuting.

In any event, Sporkin adds, "Under my regime [as General Counsel], it was my policy not to succumb to graymail and a person who violated the law would be vigorously prosecuted as the law required."

371. Former Deputy General Counsel Edward Dietel comments that the Zavala case "wasn't explosive except for the money part." Dietel says that there would have been no violation of any OGC procedure at that time if Sporkin was kept informed of the case by the responsible lawyer. In any event, "a request like that would have had to have had [Sporkin's] blessing."

372. Dietel recalls that OGC had a "lot of dealings" with the United States Attorney's Office in San Francisco in the 1980s relating to a "steady flow" of cases. These cases typically were handled by a small group of about ten OGC attorneys. He does not recall whether Strickland was a member of this small group. Moreover, Dietel says there were regular case review meetings in which General Counsel Sporkin would meet with a representative of each OGC division to review each case. There were also oral briefings of Sporkin on an ad hoc basis, as well as memoranda and other means by which Sporkin was kept informed of significant events. How each case was documented in OGC records, however, was not always consistent since "we had more work than time to do it."

373. George Clarke, then-Chief of OGC's Litigation Division and Strickland's immediate supervisor, says he has no recollection of The Frogman Case although "it has a vague ring to it." He recalls that OGC's Operational Support Division typically handled criminal cases, but that the Operational Support Division would use Litigation Division attorneys to assist it as necessary. The OGC files pertaining to the Zavala case do not indicate whether Operational Support Division asked for Litigation Division assistance with respect to the Zavala case. Clarke notes, however, that a copy of the August 3, 1984 Headquarters cable appears to have been routed to the then-Chief of the Operational Support Division, Litigation Division attorneys sometimes handled some cases under the supervision of the Chief of the Operational Support Division and that over time Clarke worked to end this practice and have all litigation handled by the Litigation Division. The former Chief of Operational Support--who no longer works for CIA--says he has no specific recollection of this case nor does he recall any case in which he asked Lee Strickland to represent CIA as the case attorney.

374. Then-Deputy Chief of OGC's Litigation Division Page Moffett says he has no recollection of The Frogman Case. He says, "We would not have just called up the AUSA and dealt with him; for a variety of reasons, we would have contacted [the Department of Justice] first." Moffett believes the sentence in the August 24, 1984 Headquarters cable to the three LA Division Stations that pertains to the return of the money to Zavala--i.e., "Accordingly, at [OGC] request the U.S. Attorney has agreed to return the money to Zavala and to make no use of it during the trial of Zavala on the CCE charge"--might have been hyperbole. Moffett adds, "We never asked [an AUSA] to drop a prosecution," and "We tried not to intrude in a prosecutor's decision." Additionally, "If [John] Gibbons [Chief of the Criminal Division at the San Francisco U.S. Attorney's Office] thought it was not appropriate, then he would not have returned the money."

375. Individual Statements: Zavala's Defense Attorneys. Judd Iversen, one of Zavala's two defense attorneys, says that Russoniello described the money that was refunded to Zavala as "chump change." Iversen agrees that, in terms of the expense necessary to obtain the depositions in San Jose, the prosecution's decision to return the money was a "practical move." Iversen adds that it would have been evident to him if there were other motivating factors that influenced the decision to return the money. His sense is that Lassart is a man of integrity and that "if the CIA was involved, the prosecution would not have handled the case as they did." Iversen further observes that it "probably made no sense from the U.S. Attorney's perspective" to travel all the way to Costa Rica for the depositions.

376. Iversen says the cost of travel by members of the defense team to Costa Rica would have been paid from funds provided by the Criminal Justice Act. The funds for the expenses of such travel by U.S. Attorney's Office representatives, on the other hand, would have come from the U.S. Attorney's budget.

377. Iversen says he remembers it was a "nightmare" to cash the check that returned Zavala's money since one of the payees was in "South America." Although he has no specific recollection of Zavala's mother-in-law's role regarding the check, Iversen says he may have said something to Zavala about a power of attorney in relation to the check, but "it was not my task to cash the check." The check could have been mailed or delivered to Iversen by the U.S. Marshals for Zavala. Iversen has no recollection of a second, replacement check being provided, although he believes Zavala's wife Doris Salomon may have had some involvement in the cashing of the check.

378. Iversen also claims that Marvin Cahn, Zavala's other defense attorney, was called by someone from DoS who reportedly said that the defense attorneys should not travel to Costa Rica and threatened to pull their passports if they did. Cahn recalls having had telephone discussions with DoS officials regarding Embassy support to the depositions trip. However, he recalls absolutely no threat, explicit or implicit, regarding his passport should he have gone to Costa Rica. Cahn makes clear that, had such threats been made, he would have protested this both in Court and in the media.

379. Cahn does not accept the contention of Zanides, Lassart and Russoniello that the money was given back to Zavala to avoid the cost of taking the depositions. He recalls that the prosecution initially argued that going to Costa Rica to take depositions might involve some element of personal risk, possibly because of the general turmoil in the region. Cahn calls this argument "ridiculous."

380. Cahn also recalls that Russoniello, in justifying the return of the money, claimed that the amount of money involved was not worth contesting. Cahn characterizes Russoniello's assertion as "absolutely ridiculous," noting that he recalls that the U.S. Attorney's Office fought hard in other cases to retain seized assets of even lesser value than the money seized from Zavala.

381. When the money was returned, Cahn recalls having thought that "something is going on." Moreover, Cahn suspects that the prosecution did not want the two individuals in Costa Rica to be deposed because that could have led to the disclosure of some type of U.S. Government activity in Central America. Cahn speculates that this was the reason Russoniello chose to return the money and forego using it as evidence against Zavala.

382. To what extent and why did CIA become involved in the prosecution of The Frogman Case? CIA did make contact with prosecutors in the Zavala prosecution in order to protect what CIA believed was an operational equity, i.e., a Contra support group in which it had an operational interest. A CIA cable indicates that approximately $36,000 seized from Zavala at the time of his arrest was returned to Zavala--based on the claim they were Contra funds--by the prosecutors at CIA's request. However, the prosecutors state that the decision to return Zavala's money was based on other considerations, not CIA's representations, and that there was no evidentiary value to retaining the money. In any event, the actions taken by CIA to have the cash returned did not appear to be intended to influence the outcome of Zavala's trial, which resulted in his conviction.

To what extent did CIA respond to congressional inquiries regarding The Frogman Case?

383. A June 12, 1985 routing slip from the DO transmitted to CIA's Comptroller, as an attachment, proposed DO responses to May 2, 1985 questions from the House Appropriations Committee (HAC) regarding the Contras. One question related to allegations of corruption by Contra officials. Included in the lengthy DO response to that particular question was the statement that there was, "according to the FBI, no obvious connection between Zavala and Cabezas and the Nicaraguan resistance." No information has been found to indicate whether or how CIA conveyed this information to the HAC.
384. In the late 1980s, as part of an investigation into matters related to the Contra war, a subcommittee of the Senate Foreign Relations Committee (SFRC) examined alleged Contra links to drug trafficking. CIA records indicate that CIA officials met with the Chief Counsel of the SFRC on May 8, 1986 to discuss the SFRC's investigation. A May 8, 1986 CIA memorandum for the record regarding this meeting noted that the SFRC "had received a letter written by the U.S. Attorney in San Francisco that refuted the charges that members of the democratic resistance had been involved in drug smuggling." Attached to the memorandum was a copy of the March 19, 1986 letter from United States Attorney Russoniello to the San Francisco Examiner responding, among other things, to charges that The Frogman Case defendants were in any way connected to the Contras.
385. As part of its investigation, the SFRC asked the FBI to provide the Committee with documents relating to the "San Francisco narcotics investigation on Julio Zavala." As a result of the SFRC request, the FBI asked CIA on February 20, 1987 to review three of the FBI documents that referred to CIA.
386. On April 17, 1987, following a review of the FBI documents, CIA informed the FBI that it could not "consent to the FBI providing the SFRC with this information. The documents reveal an Agency source, and it is our policy not to provide such information to a committee which is not charged with the oversight of intelligence agencies."

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