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by Nick Schou Wednesday, Jul. 18, 2001 at 12:47 PM

FBI releases documents under FOIA linking former high level offical of the CIA with drug traffickers

COVER | FEATURE Vol. 6 No. 45 July 13 - 19, 2001

Crack Cop

FBI documents link an ex-Laguna cop and drug runner to an Irvine executive with ties

to the CIA by Nick Schou


The CIA has always denied it used drug traffickers to raise cash for Ronald Reagan's 1980s war against the Nicaraguan Sandinista government. But FBI documents recently released to the OC Weekly show that a former top agency official met throughout that period with Ronald J. Lister, an ex-Laguna Beach cop who claimed to be the CIA's link between the South American cocaine trade, the Nicaraguan contras and LA's most notorious drug trafficker.

The FBI documents, five heavily censored pages released in response to the Weekly's 1997 Freedom of Information Act (FOIA) request to the CIA, concern Lister and William Earl Nelson, a vice president for security with the Irvine-based construction giant Fluor Corp. Nelson's previous job: deputy director of operations for the CIA. Nelson retired from the CIA in 1976 amid heated controversy over its ill-fated forays into Chile and Angola-clandestine operations that Nelson supervised from his office at the CIA's Langley, Virginia, headquarters.

Lister's relationship with the Fluor executive began in 1978. How they met isn't clear, thanks to government censors. But the documents do show that Nelson told FBI agents he met with Lister three to four times per year until 1985 and discussed various business ventures, including one in Central America.

It's unclear from the documents what became of that project-FBI censors blocked out the details, arguing that revealing them might compromise U.S. national security. But independent sources suggest the deal probably involved Lister's mysteriously well-connected security company, Newport Beach-based Pyramid International Security Consultants Inc.


Lister's jump from police work in Laguna Beach-the Mayberry of Orange County-to life as a security advisor in war-torn Central America is just as strange as it sounds. In 1969, he served as a military policeman, interrogating captured North Vietnamese soldiers. Then, after a few years with the Maywood Police Department, Lister joined the Laguna Beach PD, where he worked as a burglary detective.

In 1979, a year before Lister quit the Laguna Beach force and just months after he first met Nelson, he launched Pyramid to carry out private security work.

There's no question that Pyramid was involved in some highly unusual business in Central America. According to a 1998 U.S. Justice Department Inspector General report, the company was investigated by the FBI at least five times between 1983 and 1986. "In September 1983, Lister's company, Pyramid International Security Consultants, was listed as the subject of a neutrality violation investigation involving the sale of weapons to El Salvador and the loan of money from Saudi Arabia to the Salvadoran government," the report states. "Lister was also alleged to be attempting to sell arms to several other countries."

El Salvador circa the early 1980s was not open for business to just anybody. The entire region was wracked by civil wars and coups d'etat; El Salvador's military-led government was engaged in a systematic campaign of torture and murder against anyone branded a communist or subversive. But in a 1996 interview with San Jose Mercury News reporter Gary Webb, former Pyramid employee Christopher Moore (another ex-Laguna Beach cop) claimed Lister shrugged off the dangers of doing business there. Lister reportedly told Moore he had "a big CIA contact" at an Orange County company and both Pyramid and its employees would be protected while in El Salvador.

"I can't remember his name, but Ron was always running off to meetings with him, supposedly," Moore told Webb. "Ron said the guy was the former deputy director of operations or something, real high up there. All I know is that this supposed contact of his was working at the Fluor Corp. because I had to call Ron out there a couple of times."

Moore said he traveled to El Salvador on Lister's behalf, accompanied by a Spanish-speaking man who said he worked at the Salvadoran consulate in Los Angeles. Once in the capital city of San Salvador, Moore says, he met face to face with Roberto D'Aubuisson, a former Salvadoran army intelligence officer, drug and weapons dealer, and leader of the right-wing ARENA party. But D'Aubuisson's legacy is darker still: he was the architect of El Salvador's paramilitary death squads, a Hitler admirer, and a sociopath reputed to have personally authorized the 1980 murder of Salvadoran Archbishop Oscar Romero.

"That was probably the highlight of my life at that point," Moore told Webb. "There I was, a reserve police officer who'd only been in the country for a couple of days, and I was sitting in this office in downtown San Salvador across the desk from the man who ran the death squads. He had a gun lying on top of his desk and had these filing cabinets pushed up against the windows of the office so nobody could shoot through them."

The timing of Moore's trip to El Salvador coincides with a 1982 Pyramid contract proposal to provide security to the Salvadoran Ministry of Defense; narcotics detectives found the paperwork in a 1986 raid on Lister's home. The contract, written in Spanish and running more than 30 pages, shows Pyramid boasted the services of numerous (but unnamed) former CIA physical security officers and surveillance experts.

Intriguingly, the document suggests that Lister was negotiating directly with Defense Minister General José Guillermo García, linked by El Salvador's Truth Commission to the 1981 massacre of more than 800 villagers in El Mozote. A close ally of D'Aubuisson, García was one of the most powerful members of the right-wing military junta that took control of El Salvador in 1979.

One of Lister's partners in the venture, San Diego SWAT team weapons maker and government supplier Tim Lafrance, told the Weekly in 1997 that Pyramid was a "favored corporation" used by the CIA to help smuggle weapons to the Nicaraguan contras. Lafrance said he traveled to El Salvador with "two giant boxes full of machine guns and ammunition"-goods Lafrance said returned with him at the end of the trip.

"The whole idea was to set up an operation in El Salvador that would allow us to get around U.S. laws and supply the contras with guns," he explained. "The smart way to do this was to find a military base. It's much easier to just build the weapons down there."

While in El Salvador, Lafrance claimed, he manufactured weapons for Nicaragua's CIA-backed rebels known as the contras inside a mass-transit center run by the military. The weapons were airlifted by helicopter to contra training bases in Honduras, on Nicaragua's northern border. Lafrance also asserted that Pyramid's employees were guests at the well-appointed barracks of the elite, U.S.-trained Atlcatl battalion, the unit that carried out the massacre in El Mozote.

The Pyramid security contract offers further evidence of Lister's CIA connections. On its cover page, the contract lists Richard E. Wilker as the firm's "technical director." Wilker is identified in corporate papers as an employee of another Newport Beach company, Intersect Inc. Wilker's current whereabouts are unknown, but two founding members of Intersect-both former CIA agents-told the Weekly they knew Lister.

Although both nervously denied the CIA ever employed Wilker or Lister, the firm's vice president, John Vandewerker, said Wilker once traveled to El Salvador on business and mysteriously had to flee the country. "It was kind of touchy . . . as far as getting out of the country and all that kind of stuff," he said. Vandewerker also said that either Lister or Wilker had once helped him apply for a job with Nelson at Fluor Corp. "For a while, I tried to get a job at Fluor when I stopped working, and I know Rich [Wilker] was trying to sell something to Fluor," he said.

Nelson seemed to be a potential source of employment for many former CIA agents-an irony, given that one of his final acts as a deputy director at the CIA was to recommend the agency terminate full-time jobs for CIA agents who were "marginal performers."

"We owe these people a lot," Nelson wrote then-CIA director George Bush in a 1976 memo. "But not a lifetime job."

Hundreds of CIA agents left the agency's payroll that year, including Vandewerker and Nelson himself, who said he was retiring for personal reasons.

During his FBI interrogation, Nelson claimed Lister had applied for a job with Fluor. "He was never offered a job," states the FBI memo. The next sentence was censored by the FBI, but the memo continues, "Nelson thought Fluor might be able to use his [Lister's] company"-an apparent reference to Pyramid. "Nelson said [Lister] started traveling overseas, Lebanon and Central America, and he always had some scheme that never materialized."


The Lister-Nelson-D'Aubuisson connection is only one strand of Lister's life story. But the FBI documents also appear to allude to another: Lister's claim that he was simultaneously running cocaine with the support of the CIA.

Nelson told his FBI interrogators that during a March 1985 meeting with Lister, the former Laguna cop begged Nelson for help. "I did a dumb thing because of greed," Lister reportedly told Nelson. What Lister meant is unclear-the next seven lines of the FBI memo are blacked out. But Nelson's response is intact: he told the FBI he informed Lister there was no way the Agency could help him.

Perhaps Lister was talking about the activity that earned him the most money-and ultimately the most trouble-in the 1980s.

In 1982-the same year Lister first traveled to El Salvador for Pyramid-and while meeting regularly with Nelson, Lister hit upon a lucrative business scheme: running cocaine to raise cash to support rebels in neighboring Nicaragua. Despite their close ties to the CIA, the rebels had a problem: their reputation on Capitol Hill. Among many U.S. lawmakers, they were known as terrorists, more likely to murder Nicaraguans than liberate them. The U.S. Congress fought the Reagan administration's requests to fund the contras and then, in 1984, banned any U.S. military aid for the rebels. Two years later, a federal investigation known as Iran-contra revealed that the Reagan administration had illegally sneaked around the ban, selling weapons to Iran for cash it transferred to the Nicaraguan contras.

There was also evidence the contras were selling drugs in the U.S. to finance their operations. Among others, Lister would later claim that he helped in the fund-raising. He hooked up with Danilo Blandon, a drug-dealing Nicaraguan exile then living in Los Angeles. According to voluminous law-enforcement documents, Blandon and Lister established a vast cocaine network throughout California. The network was especially strong in South Central. Blandon would later testify that Lister's job was money laundering and security. Lister kept Blandon well-stocked with surveillance gear and high-tech weapons: Mack 10s, police scanners, Uzis, even grenade launchers. Blandon said he passed the equipment on to his South-Central LA connection, "Freeway" Ricky Ross. Using Lister's gear to avoid police detection, Ross emerged as the region's most notorious cocaine trafficker. He would later recall that one of his favorite entertainments was to use his police scanners to eavesdrop on cops raiding rival drug rings-while he and his buddies counted the cash from their latest deal.

Even as the FBI investigated Lister on weapons export charges, narcotics agents were zeroing in on the Blandon-Lister-Ross network. A separate FBI report from the same period shows that while its agents were interviewing Nelson, they were also investigating Lister's purchase of a Mission Viejo home for 4,000 in cash.

The FBI memo also shows that while the bureau was investigating Lister, Nelson had been coaching him on his upcoming grand-jury testimony. "He [Lister] then told of his meeting with the FBI and that he had been subpoenaed before the grand jury in San Francisco," the FBI memo states. "He told Nelson he was terrified. Nelson said go. . . . [Lister] admitted being stupid and that he had done a dumb thing. Nelson said [Lister] left and then called back after his grand-jury appearance and said he really did well."

Whatever else Lister told Nelson about his testimony is a mystery because the FBI censored the next three lines, again citing national security considerations.

The FBI memo reveals that, seeking to help Lister in his trouble with the FBI, Nelson made telephone calls to at least one other former CIA agent, a strange action assuming the CIA never had any relationship to Lister. "Nelson told [Lister] no one could help him, including the CIA," the memo states. "Nelson told [Lister] he had discussed his problem with another retired CIA agent and that no one could help him until he cleared himself with the FBI. Nelson said he told [Lister] he no longer cared to continue their relationship and he has not heard from him since."

Nelson described Lister as a "blowhard" and a "name dropper who always had a get-rich scheme." He added that Lister "did have some good ideas, such as a laser-sighting device, but could never get it off the ground. [Nelson] knew of no intelligence activities by [Lister]."

That last claim was-and is-clearly disingenuous. First, the source of the claim is a retired CIA official who admitted he spoke with other former agents on Lister's behalf while the latter was being investigated by the FBI. Second, whatever Lister and Nelson were up to in the 1980s, it is important enough to remain classified as "vital to U.S. national security" today, nearly two decades later.


Nelson retired from Fluor in 1985. Within a year, Lister was in deep trouble. Although the FBI never prosecuted him for his international arms sales, his drug dealing finally caught up with him in October 1986. After spending months on the case, a multi-agency narcotics unit led by LA County sheriff's detectives raided dozens of houses and apartments belonging to various members of the Blandon-Lister-Ross drug ring-including Lister's mountain retreat in Crestline, which police suspected was a drug warehouse.

Police also raided Lister's Mission Viejo home. They found him there, unshaven, still drinking his morning coffee. Because both of Lister's properties were clean, police suspected he had been tipped off about the raid. Clad only in a bathrobe and looking wild-eyed, Lister boasted that he knew he was being watched by police and claimed that he did business in South America and worked for the CIA.

Inside his house, detectives found what might have seemed evidence to support that assertion: military training films, photos of Lister posing with Nicaraguan contras, an array of sophisticated surveillance gear, a copy of the 1982 Pyramid contract-even his notes listing Nelson and D'Aubuisson as business contacts. All that, but no drugs. Lister wasn't arrested. Just days later, most of the paperwork seized from Lister's home mysteriously disappeared from the LA Sheriff's Department evidence room.

Unperturbed, Lister continued to deal drugs. In 1988, he tried to sell two kilos of cocaine to a prostitute he met at a Newport Beach boat party. The woman turned out to be a Costa Mesa police informant, and Lister ended up behind bars for the first time since he began dealing drugs with the contras. Two kilos was enough to land Lister in prison for years; instead, he walked out of jail after only two days. Having signed a deal with the Orange County district attorney's office, Lister had become a narc.

But his new career as an informant was short-lived. The following year, DEA agents arrested Lister again, this time in connection with a San Diego-area cocaine distribution ring. Two years later, a jury convicted Lister on drug-trafficking charges; he was sentenced to 97 months in prison and 60 months of probation. Lister appealed, asserting that while an informant, he had testified before two federal grand juries about a "major Central American cartel" and his "activities in Central America concerning certain key figures from Nicaragua alleged to have been involved in the Iran-contra scandal."

In establishing grounds for a softer sentence, Lister told the court he had certainly run drugs, but he had also cooperated with the government. He claimed he gave prosecutors thousands of pages of documents and notes regarding his work for the CIA "from 1982 to 1986 and beyond, and I did it in detail, location, activity," he said. "I gave them physical evidence, phone bills, travel tickets, everything possible back from those days-which most people don't keep, but I do keep good records-to assist them in this investigation. They were excited about it."

It's not clear what happened to the notes Lister says he gave investigators or to his testimony about his work with a "major Central American cartel." What is clear is that he put on quite a show. In 1998, the U.S. Justice Department noted, "An FBI special agent was convinced that Lister [and] Blandon . . . were connected to the CIA."

Lister's appeal was successful in erasing a conviction on tax evasion charges. After completing a drug-treatment program, he walked out of prison in 1996, three years early. His whereabouts are unknown, and he has refused repeated offers to share his story with the press. Nelson, Lister's "big CIA contact" at Fluor Corp. in Irvine, died six years ago in Corona del Mar.

Fluor officials refused to comment for this story but have previously told the Weekly the company had no business in El Salvador in the 1980s. That would suggest that Nelson's "Central America" meetings with Lister had nothing to do with Fluor and everything to do with Pyramid-and perhaps Nelson's former employer, the CIA.

Tom Crispell of the CIA's public-affairs office said the agency has already denied any involvement with Lister. "This individual [Nelson] had been retired from the agency for a number of years, and we're not in a position to comment on his private life or conversations he had in his private life," Crispell remarked.

But Crispell's claim runs headfirst into the facts, chief among them: the CIA refused for years to release any documents on Lister and, when it finally did so, released them in heavily redacted form citing national security concerns.

"Now we know that Lister was meeting with Nelson and that the grand-jury investigation was somehow tied into this," responded Gary Webb, who left the Mercury News shortly after his editors backed away from his Dark Alliance series focusing on the CIA-contra-crack connection in May 1997. "What we don't know is how Lister even knew Nelson, why Nelson would continue to meet with [a man dismissed as] a bullshit artist, and why anyone would even consider helping Lister once he cleared himself with the FBI."

The documents are mute on one other, particularly chilling mystery: What kind of top-secret "business"relationship could Nelson, a retired CIA deputy director, possibly have with Lister, a drug-dealing, gun-running "security consultant" and D'Aubuisson, the leader of El Salvador's death squads?

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