Chapter VIII: Julio Zavala
Media accounts have suggested that the return of $36,000 in seized funds by the San Francisco United States Attorney's Office to Julio Zavala in 1984, just prior to his cocaine trafficking conviction, was troubling and suspicious. This matter was the subject of both media and Congressional scrutiny in 1986, but investigators for the Senate Foreign Relations Committee's 1988 Subcommittee told the OIG that they had never been able to gain access to DOJ records, and could not come to any firm conclusions about why the money was returned. The San Jose Mercury News "Dark Alliance" articles raised the subject again, reporting that "the United States Attorney in San Francisco, Joseph Russoniello, had given $36,000 back to a Nicaraguan cocaine dealer arrested by the FBI." The article went on to report: "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 the claim."
This section will examine the circumstances surrounding the return of the $36,000 to Zavala in the "Frogman Case" -- which received its nickname because swimmers were arrested in San Francisco Bay bringing cocaine ashore from a Colombian vessel. We describe in detail the case and the allegations raised in that case by certain individuals concerning cocaine trafficking on behalf of the Contras.
A. Background to the Frogman Case
1. The Investigation
In January 1982, the FBI's San Francisco division initiated an investigation into the activities of a large-scale narcotics distribution network in the San Francisco (California) Bay area. The investigation, which was conducted jointly by agents from the FBI, DEA, and U.S. Customs Service (USCS), became the first Organized Crime and Drug Enforcement Task Force (OCDETF) case in the country. FBI Special Agent (SA) David E. Alba was the case agent. Assistant U.S. Attorney for the Northern District of California James Lassart oversaw the investigative portion of the case, and Assistant U.S. Attorney Mark Zanides handled the eventual criminal prosecutions of the defendants. The investigation, which included a six month court-authorized wiretap, resulted in the arrest and conviction of over 50 subjects and the seizure of approximately 555 pounds of cocaine, fourteen vehicles, approximately $300,000 in United States currency, and approximately $100,000 worth of jewelry. Among the defendants arrested were Nicaraguans Julio Cesar Zavala-Moreno and Carlos Augusto Cabezas-Ramirez. The primary drug seizure in the case occurred on January 17, 1983 when twelve persons, some of whom were dressed in wet suits, were arrested while attempting to unload 430 pounds of cocaine from a Colombian freighter in San Francisco Bay.
2. The Arrest of Zavala and Seizure of $36,000
After the frogmen were arrested, OCDETF agents obtained indictments and arrest warrants for twenty-two other defendants in the cocaine smuggling ring. Julio Zavala was one of the defendants arrested on February 15, 1983 pursuant to those arrest warrants. Zavala was arrested at his own residence in South San Francisco along with two other people.(65) The execution of a search warrant by OCDETF case agents at Zavala's residence resulted in the seizure of numerous items, including approximately 364 grams of cocaine, two weapons, and $36,020 in United States currency from Zavala's bedroom. The seized money, along with the other seized items, was maintained in the custody of federal authorities pending trial.
In an interview with the OIG on April 8, 1997, Zavala claimed that agents had actually seized $65,000 from his bedside table -- $45,000 in Contra money and $20,000 of his own -- but reported seizing only $36,020. Zavala never filed any formal complaint about the alleged missing money, but claimed to have reported the discrepancy to his attorney, Judd C. Iversen. In his interview with the OIG, Iversen was unable to recall Zavala's ever reporting the alleged shortage to him.
3. Disposition of Charges Against Zavala
Following his arrest, Zavala was indicted in San Francisco federal court on various narcotics trafficking charges, including a charge under the Continuing Criminal Enterprise (CCE) statute. On July 6, 1984, without any agreement with the federal prosecutors, Zavala pled guilty to one count of possession with the intent to distribute cocaine. Because this count carried a far smaller penalty than the other counts, the prosecutors decided to go to trial on the remaining charges.(66) Zavala contested whether he was guilty on the CCE charge, which carried the most severe penalty -- a mandatory minimum prison term of ten years without parole and a maximum sentence of life imprisonment. On March 29, 1985, after a bench trial with stipulated facts, Zavala was found guilty on five counts of unlawful use of a communications facility and also on the CCE charge. He was sentenced to ten years imprisonment, to be followed by three years of special parole.
B. Allegations of Zavala's Connections to the Contras and the CIA
1. First Mention of the Contras in the Zavala Case
Before both Zavala's plea and his subsequent bench trial, his defense counsel, Judd Iversen, filed several motions on Zavala's behalf. On May 2, 1983, Iversen filed a motion to reduce Zavala's bail, along with several attachments. Included as attachments to the motion were a declaration by Zavala and a February 20, 1983 article from the Nicaraguan newspaper La Barricada. In his declaration, Zavala stated that the article depicted him as a "somocista" (Somoza supporter) who had used drug trafficking to support counter-revolutionary (Contra) activities in Nicaragua. Zavala claimed that because of the articles, he was unable to return to Nicaragua or Costa Rica without endangering his life and the lives of his wife and her family.
2. Defense Motion to Conduct Depositions in Costa Rica
On June 4, 1984, Iversen filed, under seal, another pre-trial motion, with supporting materials, requesting leave to conduct depositions in San Jose, Costa Rica. In these materials, which included his own declaration entitled "Declaration of Judd C. Iversen in Support of Motion for Order Granting Leave to Take Depositions," Iversen made two basic claims concerning the charges against Zavala: (1) that the money seized from Zavala belonged to the Contras and was not drug trafficking proceeds; and (2) that agents of the United States government were involved in the alleged drug trafficking conspiracy for which Zavala had been arrested. Iversen provided as support for these allegations:
-- newspapers reports that the CIA and the United States government were supporting the Contras;
-- a newspaper article stating that Zavala was involved in cocaine trafficking to support the Contras;
-- letters allegedly from two Contra leaders stating that Zavala was a member of and assistant treasurer in their group, that Zavala was in America "to promote reinstatement of democracy in Nicaragua," and that, for this mission, Zavala had received $45,000 in cash on the last week of January, 1983, in San Jose, Costa Rica. According to the letters, this was the money seized as alleged drug trafficking profits by the agents who had arrested Zavala;
-- Iversen's belief that "the Government of the United States of America has been aiding and supporting the [Conservative Party of Nicaraguans in Exile (PCNE)] to reinstate the democratic system of Nicaragua" and that this support included training, weapons, funding, and assistance in obtaining all of the above;
-- Iversen's belief that "agents of the [PCNE] are presently in the United States to raise funds for their cause and their presence and purpose is both known to and aided by agents of the United States of America.";
-- Iversen's belief that one of the wiretap conversations, after having been identified as involving an ambassador from Nicaragua, was "minimized" by agents even though it appeared the conversation was drug related;
-- Iversen's belief that the CIA engaged in drug trafficking during the Vietnam war as a means to fund covert operations.
Iversen concluded from this information that:
[A]gents 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 [Zavala] into participating under the belief that such activity was sanctioned.
3. Authenticity of Aviles and Rappaccioli Documents
Iversen attached to his motion Spanish and English versions of documents allegedly written by Vicente Rappaccioli Marquis, General Treasurer of the PCNE, and Francisco Aviles-Saenz, Political Secretary of the PCNE.
The first document was an unsigned "Recibo Por $45.000" (Receipt for $45,000) on PCNE letterhead paper, which stated that Zavala had received $45,000 cash from the PCNE in San Jose on January 24, 1983. Zavala's name was typed at the bottom. There were no signatures or other identifying marks.
The second document was an undated, single paragraph memorandum typed on PCNE letterhead paper and entitled "Tesoreria" (Treasury). The document, signed only by Rappaccioli, stated that Zavala had been named "Assistant to the General Treasury [sic] of the Conservative Party," and that he was "authorized to collect [money] within the United States for the liberalization [sic] of Nicaragua from International Communism."
The third document, also an undated, typewritten statement on PCNE letterhead, was signed by both Aviles and Rappaccioli, and said that Zavala was a member and Assistant Treasurer of the "Conservative party" -- apparently a reference to the PCNE. The document further stated that Zavala was in America to promote 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 document stated that United States government's retention of the money was harming the Contra effort.
The fourth document, signed only by Aviles, was also an undated, typewritten single-page letter on letterhead from La Union Democratica Nicaraguense, Fuerzas Armadas Revolucionarias de Nicaragua (the Nicaraguan Democratic Union, Revolutionary Armed Forces of Nicaragua) (UDN-FARN). The letter stated that Zavala was a member of UDN-FARN who had made several trips to Costa Rica "before the last week of January 1983," and that, on his last trip "the amount of forty-five thousand dollars in cash was given to him for purchases characteristic to this organization."
It is interesting to note that the document signed by both Aviles and Rappaccioli, which is on PCNE letterhead, and the letter signed only by Aviles, which is on UDN-FARN letterhead, each states that Zavala had been provided with $45,000 -- presumably by the organization upon whose letterhead the document was written. Despite what the documentation indicates, Zavala only claimed to have received a total of $45,000 from the Contras.
With the exception of Rappaccioli, who is deceased, the OIG interviewed all those persons who appear to have had some involvement with the writing, procurement, or submission to the court of these documents. Each gave the OIG a different story.
Francisco Aviles-Saenz (Aviles) is a Nicaraguan attorney who fled Nicaragua for Costa Rica in 1981 because "he was accused of being a right-wing terrorist with intentions of blowing up an oil refinery." Aviles was Political Secretary of the PCNE and Secretary of International Relations for the UDN-FARN. Aviles wrote or signed several of the documents at issue. We interviewed Aviles twice. In both interviews, Aviles admitted that he had provided several documents concerning the seized money to Zavala or Doris Salomon (Zavala's wife).(67) In the first interview, however, after reviewing the documents that had been presented in court, Aviles asserted that these documents had been altered. He denied having written any document stating that Zavala had been given money by the Contras; he claimed that the documents he wrote said only that Zavala was a member of the party who was authorized to raise funds for the Contras and that the money which was seized had been raised by Zavala. When interviewed again, Aviles conceded that, though he still recalled having written only that the money had been raised by Zavala, his recollection was "fuzzy," and it was possible that the documents had not been altered. Aviles noted that he had written the letters in part to help Doris Salomon, Zavala's wife, who had asked him to write them. He added that he had not known that Zavala was involved with drugs at the time he wrote the letters.
Zavala told the OIG that he had nothing to do with obtaining the documents from Rappaccioli and Aviles. Zavala claimed that, after his arrest, he had contacted his wife, Doris Salomon, in Costa Rica and asked her to inform Aviles that the money had been seized by the federal government. Zavala claimed that Salomon had arranged for Aviles to submit the documents. Zavala did not know who Rappaccioli was, but thought a second document from another member of the organization had been submitted. (We discuss his claims, and other people's claims, about the source of the money in section G of this Chapter.)
Doris Salomon told the OIG that she knew of only one document concerning the seized money which had been provided for Zavala. She recalled speaking to Aviles, at Zavala's request, about a letter requesting the return of the money. She believed that the letter signed by both Aviles and Rappaccioli was the document she requested. Salomon denied having altered, changed or forged any of the documents submitted with Iversen's declaration, and denied having any knowledge of, or involvement in, anyone else having done so.
Judd Iversen told the OIG that he had no personal knowledge of the circumstances surrounding the creation of any of the documents submitted with his motion. He believed that Salomon had arranged for them. Iversen's understanding was that the money seized from Zavala had been sent to San Francisco by the Contras to use for raising funds. He had no reason to believe that it was to be used to purchase any type of war gear. Iversen recalled thinking that it was strange for the Contras to be sending money to the United States, but that Zavala was fairly credible about the matter and at least followed through in getting the affidavits, which is more than most of his clients did.
The DOJ OIG and CIA OIG jointly attempted to obtain the originals of the documents, which should have been filed with the court along with Iversen's motion, intending to have them analyzed by a document examiner. Unfortunately, only one of the documents filed with the court, the one signed by Aviles alone, was an original -- the others were photocopies. The DOJ OIG suggested that a document analyst from the Immigration and Naturalization Service (INS) Crime Laboratory review the original document; he found no evidence of alteration.
Based on the conflicting information provided by all those interviewed, we are unable to reach a definitive conclusion as to exactly how the documents from Aviles and Rappaccioli were obtained for inclusion in the motion. It seems clear, based on Aviles' statements and the INS Laboratory's report, that at least the document signed only by Aviles is genuine in its present form, and that Aviles provided the document to someone for use on behalf of Zavala.
4. Ruling on Defense Motion
On June 12, 1984, Chief Judge Robert F. Peckham held an ex parte hearing to consider Zavala's motion to take depositions in Costa Rica. Iversen said he needed to depose two people in Costa Rica for two separate reasons. The first reason was to establish the purpose of Zavala's trips to Costa Rica and the source of the money that was seized from him. Iversen maintained that many of Zavala's trips "had to do with his relationship with a Nicaraguan Democratic Union," and that the money belonged to that Contra organization. The second reason was Iversen's hope to find evidence of the connection between the United States government's support of the Contras and the drug trafficking activities of the Contras, if such a link existed. Such evidence would be relevant, Iversen believed, to an "outrageous government conduct defense."
Judge Peckham asked Iversen what evidence existed to prove the involvement of the CIA or another U.S. agency or official in drug trafficking. Iversen explained that he believed one of the government informants in the case, and the informant's son, had been heavily involved in the activities of the conspiracy, but had not been arrested. Additionally, Iversen stated that he believed the informant had significant political involvement in the revolution in Nicaragua.
Judge Peckham ruled that there was no basis for allowing the depositions in order to develop the "outrageous government conduct defense," but he granted the motion to take depositions in Costa Rica to allow Iversen to develop evidence as to the source of the money.
5. Allegations in Declaration Regarding CIA
When interviewed by the OIG, Iversen explained that the allegations in his declaration about CIA involvement in drug dealing were taken from a newspaper article. Iversen could not recall when, or in which paper, the article had appeared. Iversen stated that Zavala had mentioned CIA involvement in drug dealing to Iversen, but Zavala had no specific information about that topic. Iversen said that the newspaper article gave him a good faith basis to make allegations in the affidavit and then try to find evidence in Costa Rica to support them.
Zavala told the OIG that he did not know why his lawyer had made allegations in the affidavit about the CIA's involvement in drug dealing with the Contras. Zavala acknowledged that his attorney had been acting on his orders, but said he had only heard rumors about such CIA activities and had no facts to support the claim. Zavala stated that he also did not know why his attorney had alleged that the identity of the Costa Rican witnesses could not be revealed because of fear of CIA retaliation against them.
A memorandum written by Assistant U.S. Attorney Mark Zanides, dated August 6, 1984, documented a telephone conversation he had with Marvin Cahn on August 3, 1984. Cahn was one of Zavala's defense attorneys and Iversen's partner. According to the memorandum, Cahn told Zanides that the main reason for going to Costa Rica was to obtain information regarding the source of the money, but that the defense also wanted to gather materials to impeach one of the government's witnesses at trial. Cahn told Zanides that the defense believed that the person the defense suspected of being a government informant in the case was working for the Sandinista government buying AR-15 rifles and hand grenades, and was also involved in cocaine and weapons trafficking.(68)
At bottom, the allegations of United States government involvement in the drug trafficking of Zavala were clearly a defense tactic and were not based on any credible evidence. Iversen himself described the allegations of outrageous government misconduct as the "theatrical" aspect of the case.
6. Preparations to Take the Depositions in Costa Rica
Upon being notified of Judge Peckham's order granting the motion to take depositions in Costa Rica, Assistant U.S. Attorney Zanides took a number of steps to initiate the process. On July 25, 1984, after obtaining the approval of United States Attorney Joseph P. Russoniello, Zanides submitted an official request for approval of the travel to the Department of Justice's Executive Office of United States Attorneys. On July 26, 1984, Zanides applied to the State Department Passport Office for an official government passport. The FBI San Francisco office notified FBI Headquarters of the proposed travel by Zanides and FBI Special Agent David Alba to Costa Rica, with a request that the "logical individuals/agencies" be notified. Depositions of Aviles and Rappaccioli were scheduled in Costa Rica for August 16, 1984.
7. Unsealing of Defense Motion
In his August 6, 1984, memorandum documenting his telephone conversation with Marvin Cahn, Zanides reported having told Cahn that "Washington was having fits with the money situation with regard to the trip to Costa Rica." The memorandum stated:
I then asked him what it was they really wanted from the depositions and if an explanation of the source of the money was the only thing that we were really after. Cahn said that [he] thought that the money was the major thing. I then suggested that if that were true, would it be necessary to go to Costa Rica if I decided to forget the money. Cahn said that he thought that that would be okay, but that he would have to talk to Judd Iversen and get back to me on Monday.
On August 7, 1984, the U.S. Attorney's Office filed a motion with the court to obtain access to the sealed papers that Iversen had filed in support of his deposition request. On August 8, 1984, the court held a hearing on this motion, and the Court granted the prosecutor's request, ordering the documents to be unsealed. That same day, the U.S. Attorney's Office rejected a settlement proposed by the defense that would have returned the money to Aviles. On August 9, after having reviewed the documents, the U.S. Attorney's Office moved to have the documents resealed. Because of this request, the court vacated its order of the previous day unsealing the submissions, and the documents were resealed. On August 28, the Court entered the order ruling that the documents Iversen filed in support of his motion to take depositions be placed under seal until further notice.
65. Review of FBI and U.S. Attorney's Office records revealed that one of these other persons was not prosecuted in this case. We asked the case agent, David Alba, and OCDETF Chief James Lassart why the person was not prosecuted. Both men told us that to the best of their recollections, the person had never been a subject of investigation in the case, nor had he been involved at all in the drug trafficking enterprise. Both Lassart and Alba opined that the person had probably "just happened to be" at Zavala's house when the arrest and search warrants were executed, and that he had gotten "swept up" in the process.
66. Despite heavy pressure from the court to drop the additional charges against Zavala and proceed with sentencing based on his original plea (because of the additional cost to the government that a trial would entail), the U.S. Attorney's Office nevertheless proceeded to trial on the remaining charges.
67. Zavala has been married twice. Prior to the initiation of the Frogman case, he was married to Maritza Cabezas, sister of Zavala's co-defendant Carlos Cabezas. In January 1981, Zavala married his current wife, Doris Salomon.
68. Iversen told the OIG that Cahn had stated that "someone at the State Department" threatened to confiscate their passports if they attempted to travel to Costa Rica. Cahn told the OIG that this never happened.