Paper: No Crack Conspiracy -- Probe Finds Market Forces, Many Dealers - Not U.S. Plot

LOS ANGELES - The crack epidemic in Los Angeles followed no blueprint or master plan. It was not orchestrated by the contras or the CIA or any single drug ring. No one trafficker, even the kingpins who sold thousands of kilos and pocketed millions of dollars, ever came close to monopolizing the trade.

Instead, a Los Angeles Times investigation has found that the explosion of cheap, smokable cocaine in the 1980s was a uniquely egalitarian phenomenon that lent itself more to makeshift mom-and-pop operations than to the sinister hand of a government-sanctioned plot.

Although it's unclear what, if anything, the U.S. government might have known about this trade, a few truths are clear: Cocaine was flowing from Colombia into Los Angeles long before the Nicaraguan traffickers arrived on the scene - Oscar Danilo Blandon, the Nicaragua ring's Los Angeles point man, was not "the Johnny Appleseed of crack in California," as the San Jose Mercury News contended in a report in late August. South Central drug dealers produced it, not Latin American middlemen.

There also is no evidence that any significant drug profits from the Nicaraguan ring were pumped back to the contras - less than $50,000 went to the rebel cause, according to a contra supporter and a business partner who sold drugs with Blandon. Nor did crack sales fill the coffers of the Bloods and Crips gangs, although individual members profited from the drug. Most experts consider the gangs too

disorganized and preoccupied with their own rivalries to function as efficient criminal enterprises.

The South Central Los Angeles dealer named "Freeway" Ricky Ross, who purportedly was the sole conduit of cocaine from Nicaragua to the Bloods and Crips gangs, was determined to rise to the highest echelons of the drug world, with or without the help of his Nicaraguan sources. According to interviews and court testimony, he was an established crack retailer before meeting Blandon in 1983 or 1984, at which time the Nicaraguan said his tenuous links to the anti-Sandinista resistance already had been severed.

"This was not some grand design of the drug cartels or someone at CIA headquarters in Langley (Va.) who was sitting around thinking up ways to raise money for the contras," said Ronald Siegel, a professor at the University of California, Los Angeles, who did some of the nation's first research on the smoking of cocaine.

Rather, the rise of crack was driven by a broad array of factors - a worldwide glut of powder cocaine, shifting tastes among addicts, and the entrepreneurial moxie of the inner-city hustlers who marketed it.

New cocaine market

For Colombian smuggling cartels, crack opened up a new market. For users, crack offered a swifter, more intense high than snorting the drug, and at a unit price - about $20 - that seemed more affordable than it really was. For the street-level retailers, crack became a parallel economy, creating a new subclass of outlaw capitalists in an era of shrinking legitimate prospects.

Crack was breaking out everywhere - New York, Washington, D.C., Miami and Los Angeles - at almost exactly the same time in the early 1980s.

Although Ross was a dominant figure on the Los Angeles scene, he still had to jostle with the likes of Thomas "Tootie" Reese, Wayne "Honcho" Day, Elrader "Ray Ray" Browning and the Bryant family - all drug lords of the late '70s and early '80s who came on the scene before Ross or at the same time.

Ross was still big enough that Los Angeles authorities in 1986 formed the "Freeway Rick Task Force," which contributed to his reputation as crack's leading entrepreneur. But even members of that squad acknowledge they could have picked any number of targets.

At the Mercury News, Executive Editor Jerry Ceppos now acknowledges that he is unsure whether Ross' Nicaraguan ring was the first to bring cocaine to Los Angeles' African-American neighborhoods. But Ceppos says he continues to believe it was the first to import the drug in "huge masses" that "people in South Central could afford."

Blandon was convicted of cocaine trafficking in 1992 and then helped the government snare his old customer Ross in a sting. If Ross can prove that the CIA or the contras behaved worse than he did, he might be able to persuade a U.S. District Court judge to spare him from life in jail.

Ross, originally a small-time dealer, worked his way up the crack sales chain, finally slipping his phone number to Henry Corrales.

For much of the next year, probably 1982 or 1983, according to court testimony, Ross was supplied by Corrales and his brother-in-law Ivan Arguellas.

Through Corrales and Arguellas, Ross testified, he was introduced to a circle of Nicaraguan dealers, alternately friends and competitors, including Blandon. College-educated, with a master's degree in marketing, Blandon served as director of wholesale markets for a Bank of International Development project in Nicaragua until Sandinista rebels toppled the Somoza regime in 1979.

Blandon has testified that he began selling cocaine in 1982 at the behest of Norvin Meneses, a Bay Area drug dealer and contra sympathizer. By the end of 1982, however, Blandon said, he had decided that the contras were receiving sufficient funds from the Reagan administration and no longer needed his help. So he began pocketing the money.

About a year later, Blandon said, he met Ross. Although Ross had become a millionaire by 1984 - one of the first to make his fortune solely on crack - the market was so huge by then that even a dealer of his stature could seem dwarfed.

"Even on the best day Ricky Ross had, there was way more crack cocaine out there than he ever could control," said Lt. Ernie Halcon, a narcotics detective in the Los Angeles suburb of San Fernando.

How the crack epidemic reached that extreme, on some level, had nothing to do with Ross. Before, during and after his reign, a bewildering roster of other dealers and suppliers helped fuel the crisis. They were all responding to market forces that many experts believe would have created the problem whether any one individual sold crack or not.

Compared with powder, which usually required a $100 investment to get high, crack was sold in units cheap enough for almost anybody.

An entrenched, highly efficient distribution network run by Colombians was already in place before Blandon or Ross entered the drug trade.

Their distribution system did not bypass the African-American community, which has always used cocaine at about the same rate as white America, according to national drug-abuse surveys.

Just as crack sales were beginning to erupt across Los Angeles, another event unrelated to Ross or Blandon dramatically altered the market.

In an effort to stanch the flow of cocaine into the country, U.S. authorities in the early '80s launched a massive crackdown in Southern Florida, which was then the principal port of entry for the drug. Those air-and-sea interdiction efforts redirected traffickers through Mexico and then into Southern California. In 1985, the DEA issued a news release pointing out that Los Angeles cocaine prices, for the first time, were cheaper than those in Miami.

Those price differentials suddenly opened new frontiers for the South Central dealers - there were tremendous profits to be made by shipping it to distant communities, such as Seattle, Denver and Kansas City, where prices might still be double or triple the Los Angeles rate.

Ross began exporting, too, taking his crack enterprise to Cincinnati, where federal authorities named him in a 1989 interstate-trafficking indictment. In an odd turn of events, the Los Angeles officers who had been tracking him also had been indicted - part of a massive money-skimming and brutality case.

The U.S. government wanted Ross as a witness. In exchange for his testimony, he was paroled in 1994, after serving less than five years.

By 1988, the tide had begun to turn against the Colombian cartels. U.S. authorities launched a massive money-laundering sting known as Operation Pisces, which resulted in 241 arrests, the confiscation of 4,500 kilos of cocaine and the seizure of $23 million from 1986-87.

Smuggling had become the domain of a new generation of Mexican drug lords, now believed responsible for 70 percent of the cocaine that enters the United States.

From the time it hit South Central streets, crack has been almost synonymous with Bloods and Crips.

Although there remains much debate over the role of gangs in controlling drug markets, many experts have come to conclude that it is a matter of individual members selling cocaine, not the organizations.

"It's not like an organized-crime family, where all the money goes to the godfather and the godfather parcels it out to the lieutenants, or capos," said Los Angeles County probation officer Jim Galipeau.

Malcolm Klein and Cheryl Maxson, University of Southern California sociologists who studied South Central cocaine sales from 1983-85, found that gang members accounted for only about 25 percent of all crack-related arrests.

A good crack ring "has to be cohesive, organized, strongly led and loyal - none of which fit with our understanding of the nature of street gangs," Klein added. "If a drug dealer has people in his organization who are throwing gang signs and doing drive-by shootings, that's going to screw up the business something furious."

--------------------- Another investigation ---------------------

A storm of controversy has followed a report in late August that a Nicaraguan drug network with ties to the CIA-backed contra rebels allegedly opened the first cocaine pipeline to the black neighborhoods of Los Angeles. These Nicaraguans are said to have provided tons of cocaine over a decade to a single South-Central Los Angeles dealer who funneled the supply to L.A. gangs, generating the cash that paid for their automatic weapons and catapulting the crack-cocaine crisis across urban America. The Seattle Times published the story, produced by the San Jose (California) Mercury News, on Page 1 on Aug. 22 and 23. Today, The Los Angeles Times reports the results of its own investigation into the matter.