Jackpot

by Jason Ryan

  Despite the few recalcitrant witnesses, on June 29, 1982, the grand jury in Alexandria indicted Lee Harvey, Michael Harvey, Pernell, Toombs, and sixteen others for participation in a smuggling ring that allegedly operated for more than nine years and netted more than $30 million in profits. All of the South Carolina kingpins, including Lee Harvey’s partner, Les Riley, were spared from indictment, though some of these men were listed as unindicted coconspirators. In other words, the Virginia investigators were not unaware of the collaboration between the Virginia-based smugglers and many of the men in South Carolina, but their information against those in the Palmetto State was either not as strong or their crimes were concentrated outside of eastern Virginia. Additionally, the inclusion of too many far-flung suspects had the potential to overwhelm jurors, as well as investigators, who would be forever chasing a sprawling network of shadowy smugglers that seemed to have no end. When investigating the Harveys, Pernell, and Toombs, Lydon says he was wise to recall the advice of a veteran IRS investigator who cautioned him against chasing too many leads at the expense of resolution.

  “At some point,” says Lydon, repeating that advice, “you have to draw a circle around it.”

  Upon release of the indictment, the alleged kingpins were nowhere to be found. Despite their absence, the government persevered, seizing a number of the drug smuggling suspects’ assets, including a 1949 Rolls-Royce automobile and property in Virginia and Florida. The government also subpoenaed two of the Harveys’ lawyers to appear before the grand jury to testify about the fees they earned. Though a court ultimately disallowed this maneuver, it was the latest in a series of contentious exchanges between Tandy and the alleged smugglers’ defense counsel. For their part, the Harvey family’s lawyers had previously accused Tandy of prosecutorial misconduct in a complaint to the U.S. Department of Justice. Defense lawyers also complained that Tandy improperly shared information from the grand jury with federal agents to further their continuing investigation of Harvey. Tandy denied wrongdoing and dismissed the complaints as a “fishing expedition” by defense lawyers that aimed to “impede the grand jury investigation through the back door.” An internal investigation by the Justice Department cleared her of wrongdoing, though an appeals court decision forbid her to subpoena the defense lawyers.

  Tandy’s actions, of course, did not endear her to the opposing lawyers associated with the case. On being subpoenaed to testify, lawyer Bill Moffitt carefully says, “Those were not pleasant days.” A colleague of Moffitt, John Zwerling, says Tandy was slick and not to be trusted. She acted like a crusader, he says, and made the cases personal. Tandy’s colleagues, including Lydon and Mittica, regarded her differently.

  “Karen was one of the most professional, honest, and appropriately aggressive prosecutors I ever worked with,” says Mittica. “I never knew her to have any personal animosity against any defendants; she viewed them as violators of the laws of the United States and her job, as a representative of the United States government, required her to bring them to justice, as they say, ‘without passion or prejudice.’ ”

  One smuggler recalls very unpleasant experiences with Tandy after his arrest in which she routinely pressured him to give sensitive information. Much of her questioning, he says, revolved around Harvey.

  “Her main goal in life was to get Lee,” this smuggler says. “He was a phantom, and he was in her turf.”

  This smuggler and others would mention Tandy to Harvey when they saw him, expressing the passion that seemed to consume the prosecutor when it came to his case and his fugitive status. Harvey couldn’t care less.

  “Aw, fuck her,” Harvey would say.

  “She’s not ever gonna get me.” “She’s got your number, Lee. She’s gonna nail you to the cross.”

  “Fuck her. Who the hell does she think she is?”

  When Toombs became aware that federal agents were closing in on him and his associates, he asked a college professor acquaintance which country he’d recommend hiding in if he needed to dodge the law. The professor’s answer: Costa Rica.

  The small, lush Central American country had earned a reputation as a safe haven for criminals, partially owing that legacy to its history of granting political asylum to the persecuted. American fugitives, in particular, were well protected because of a 1923 extradition treaty that was regarded as useless. During the first fifty-nine years of the treaty’s existence, only a single American was extradited to the United States. One of the more famous Americans to escape to Costa Rica was fugitive financier Robert Vesco, who lived there from 1973 to 1978 before leaving for the Caribbean. In 1982 the U.S. Embassy in Costa Rica estimated that sixty U.S. fugitives had fled to Costa Rica in the previous two years.

  Among those sixty fugitives were Toombs, Pernell, and at least four other drug smuggling associates from Virginia and Maryland. After fleeing the United States in December 1981, Toombs and Pernell moved into homes outside San Jose and invested in orange grove plantations. They ingratiated themselves into local society, authorities said, and obtained official status as retired pensioners through the help of a Costa Rican lawyer. Once settled into their own private colony, Tandy said, they began calling potential witnesses and drug smuggling suspects in Virginia, offering to fly them down to Costa Rica on private planes for a stay “until all this blows over.”

  Pernell even called Tandy in May 1982, trying to negotiate a deal. On one end of the line was Tandy, with agents Mittica and Lydon just feet away, hearing only her half of the conversation. On the other end was Pernell, with Toombs in the same room, hearing only his half of the discussion. Although there is some disagreement about the exact wording Pernell used, those present in Alexandria and Costa Rica said Pernell told Tandy he wanted to trade “their assets for their asses.” Tandy responded that the U.S. government had already seized more than $3 million of his assets, to which Pernell said, “That’s chicken feed.” No deal was struck.

  Investigators then thought of tricking Pernell and Toombs, having a smuggling associate offer to fly them to a Caribbean island to discuss a potential deal. What Pernell and Toombs would not know, Lydon explains, is that the associate was an informant, and that the plane they boarded in Costa Rica would be a DEA airplane flying to American territory at U.S. Naval Base Guantanamo Bay, where they could be arrested. Unfortunately, Toombs and Pernell wouldn’t bite.

  Finally the U.S. government submitted an extradition request to the Costa Rican government. Despite previous difficulties obtaining cooperation with Costa Rican authorities, prosecutors were hopeful that they could extradite the defendants by way of an international narcotics treaty that both the United States and Costa Rica signed in 1961. Additionally, the Reagan administration had been dangling economic incentives for Central American and Caribbean nations as part of the Caribbean Basin Initiative, creating a friendlier political climate in the Western Hemisphere.

  In July 1982 Tandy and Mittica traveled to Costa Rica, lugging a suitcase full of copies of eighty-page indictments and supporting documentation of Pernell’s and Toombs’s alleged drug activity, all of it in triplicate. Before leaving, a colleague in the State Department advised them to dress up the documents to create an impression of authenticity and urgency. Mittica did so.

  “I remember going out to an office supply store and purchasing red ribbon and gold seals. We punched holes in the margin of the documents, ran the red ribbon through the holes, and tied it in small bows; we affixed the gold seals on the cover sheets of all the documents and used a generic sealer to emboss the gold seal. There was really nothing legally special or official about all of this,” he says. “But the packages sure looked good.”

  A week or so later, on August 5, 1982, Costa Rican special forces, some of whom Toombs alleges were hired guns, raided the homes of Toombs, Pernell, and their fellow fugitives. Toombs hid under a staircase until he believed the coast was clear, and then made a run for it, only to be arrested. Pernell credits media coverage of the raid for delaying an outrigh
t kidnapping of the fugitives.

  “They had plans to kidnap us that morning, but they couldn’t get my brothers out of the houses,” Pernell later testified. “They got the [television] cameras and newspapers there. So then, by the time they got my brothers out of the houses, they realized they couldn’t kidnap us, so we were locked up and held by the immigration authority in Costa Rica.

  “We stayed there six months. We went to court three times. And the last time, we won by their supreme court. We would be getting out the next morning at eleven—

  “The next morning, eight o’clock, U.S. agents with machine guns came in the jail, took us out to the airport, [put us] on a plane, nine hours later, I was in Washington, D.C.”

  Despite the displeasure of getting arrested, Toombs credits his time in Costa Rican jail as “the best thing to ever happen to me.” Finally, he said, he received a break from alcohol, cocaine, and smuggling-related anxiety. For about six months he was able to rest.

  Once returned to the United States, Pernell and Toombs each negotiated plea deals with the government and were sentenced to ten and fifteen years in prison, respectively. The deal required them to forfeit most of their assets, though they were able to retain interests in their orange groves in Costa Rica. Among the assets Toombs agreed to turn over was jewelry and cash held by his wife in Costa Rica. So nearly a year after their arrests, agent Mittica traveled back to San Jose, Costa Rica, and collected a Rolex watch, a six-carat Thai ruby, a check for more than $200,000, and more from Toombs’s wife. As he prepared to go home, Mittica noticed that his passport had expired, though his visa was still valid. This triggered some fretting about what laws he might be violating by leaving Costa Rica without declaring such valuable items. He explained his predicament to a DEA agent stationed in San Jose, and the fellow agent promised to escort him through customs and security, but warned him not to pack any of the valuables in his checked luggage, which would be inspected.

  “When I left the country,” Mittica says, “I was wearing the Rolex, had the ruby hidden in my sock and the check and the rest of the jewelry in various pockets on my person and in a small carry-on bag. I was nervous; felt like a smuggler.”

  President Ronald Reagan once remarked that “a hippie is someone who looks like Tarzan, walks like Jane, and smells like Cheetah.” Comments like this made plain his distaste for the liberal counterculture that thrived in the 1960s and 1970s. When it came to drugs, he was similarly repulsed. “Let us not forget who we are, “said Reagan. “Drug abuse is a repudiation of everything America is.”

  Not only was it un-American, Reagan said, but crime and drugs were inextricably linked. In its 1982 attempt to dramatically decrease the supply of illegal drugs, the Reagan administration deployed Organized Crime Drug Enforcement Task Forces nationwide, including one in South Florida overseen by Vice President George H. W. Bush. Among the men chosen to draft guidelines for this strategy was Brian Tim Wellesley, the former IRS criminal chief of the Carolinas who had helped spark Operation Jackpot when he approached U.S. Attorney Henry McMaster and IRS special agent David Forbes. Just months earlier Wellesley had been promoted to director of investigations for the IRS, supervising more than forty-two hundred special agents and staff from his Washington, D.C. office.

  While on the committee drafting rules for the national drug enforcement task forces, Wellesley submitted his and his colleagues’ work to Associate Attorney General Rudy Giuliani. The task forces were modeled, Wellesley says, on the successful investigations in Los Angeles and South Carolina. Despite just forming, the South Carolina task force was achieving remarkable progress, a testament to its unique composition of investigators from different agencies committed to a financial investigation and the seizure of property through civil forfeiture actions. The other task forces to be created throughout the country would be similarly designed, creating an approach that a successor to Giuliani characterized as a “scorched earth policy” in which suspected drug kingpins had criminal charges lodged against them as their wealth and property were taken.

  In December 1982, eight months after the start of Operation Jackpot, the U.S. Congress committed $127.5 million to Reagan’s crimefighting efforts, enabling the formation of drug task forces across the country and the hiring of 1,260 more government investigators and 200 federal prosecutors. That same month, Reagan gathered more than 20 federal agency heads and military leaders in the White House and told them, “We’re rejecting the helpless attitude that drug use is so rampant that we’re defenseless to do anything about it … We can fight the drug problem, and we can win.” A month later he delivered the State of the Union, briefly mentioning the problem of drugs and his determination to stamp out its negative influence. “It is high time that we make our cities safe again. This administration hereby declares an all-out war on big-time organized crime and the drug racketeers who are poisoning our young people.”

  The escalation of the War on Drugs marked a major shift in the attitudes of the nation and its leaders toward illegal drugs, especially marijuana, which had a history of continually passing in and out of public favor in the United States. With Reagan’s crime-fighting initiatives and strong support from the so-called moral majority, the pendulum had swung back toward prohibition of pot and narcotics, a sentiment shared a decade earlier during the administration of President Richard Nixon, who initiated his own War on Drugs and declared drugs “Public Enemy Number 1.” During the Nixon administration, spending on drug-related law enforcement ballooned, police were given broader search powers, and, in 1973, a handful of federal agencies were combined to form the Drug Enforcement Administration. Nixon proclaimed that drugs were “a growing menace to the general welfare of the United States.”

  But as Nixon ramped up the rhetoric, conservatives and liberals alike saw little point in punishing moderate marijuana users. In 1973 a Nixon-appointed presidential commission urged the decriminalization of possession of small amounts of marijuana. This recommendation was supported by numerous national medical, legal, religious, and civic organizations, including the American Medical Association, American Bar Association, and National Council of Churches. Conservatives and libertarians were not overly concerned with people getting high, but rather with restrictions on personal freedoms and the growing amount of resources the government steered toward drug enforcement. As conservative columnist James Kilpatrick wrote, “I don’t give a hoot about marijuana, but I care about freedom.”

  In 1977 President Jimmy Carter asked Congress to revamp the nation’s drug laws, stating, “penalties against possession of a drug should not be more damaging than the use of the drug itself; and where they are, they should be changed. Nowhere is this more clear than in the laws against possession of marihuana in private for personal use.” Congress ignored Carter’s pleas.

  Despite asking for more lenient drug-related punishments, Carter did not reduce the budgets for drug enforcement efforts. In fact these budgets had grown from $43 million in 1970 to $855 million in 1981, when Carter left office. Reagan inherited these bloated budgets, then pushed for more money in the War on Drugs and created the task forces. Reagan would also direct the military and CIA to help curtail trafficking by assisting civilian authorities, while, through a national campaign, First Lady Nancy Reagan urged American schoolchildren to “Just Say No” to drugs. In 1983 the First Lady made guest appearances on the soap opera Dynasty and sitcom Duff’rent Strokes to promote her anti-drug message. That same year, Drug Abuse Resistance Education (D.A.R.E.) classes premiered in Los Angeles classrooms.

  For Operation Jackpot, Reagan’s support resulted in increased staffing. By 1983 the task force included seventeen agents. New to the task force were investigators from the Bureau of Alcohol, Tobacco, and Firearms and members of South Carolina’s state police force. But removed from the task force was Wells Dickson, the assistant U.S. attorney who had been coordinating the investigators. McMaster, Dickson says, was not happy with the amount of time it was taking to prepare indictments.
After a falling out between the men, McMaster shifted Dickson to another job within the office.

  Meanwhile, tensions were rising between McMaster and Lionel Lofton, an assistant U.S. attorney who had worked for twelve years in the Charleston office under at least three other U.S. attorneys, often prosecuting drug smuggling cases. Lofton had been a candidate for U.S. attorney, and, when he was passed over for McMaster, he stayed at his post. The hundred or so miles between the U.S. attorney offices in Columbia and Charleston did little to reduce friction between Lofton and his new boss.

  “He didn’t know diddly-squat about what he was doing,” says Lofton, who bristled at McMaster’s habit of courting publicity.

  He also balked at the amount of memos McMaster issued and what Lofton characterized as “micromanaging.” A majority of the memos, says Lofton, were for trivial reasons. One that particularly rankled Lofton and Dickson was a memo requesting the assistant U.S. attorneys in the office to attach personalized license plates on their automobiles that reflected their job, such as AUSA12 or AUSA13. Lofton and Dickson didn’t do it, and they weren’t the only ones.

  “Why would I want a bull’s-eye on my back?” says Lofton.

  Then came another memo from McMaster, says Dickson, which read: “The people that have assistant U.S. attorney license plates should not let their wives drive the vehicles with their hair in curlers and children eating ice cream and throwing paper out the windows and stuff like that.”

  “That’s paraphrased,” Dickson says, “but that’s the substance of the memo.”

  One day, Lofton had enough and called McMaster.