Organized Crime, Drugs, and the CIA

Allegations of links between the CIA and the drug trade first came to public attention in the 1970’s when a number of public officials came forward with evidence of such links. One of these was a former police officer in the Los Angeles Police Department (LAPD), Michael Ruppert. In 1977, as a result of his official investigation into the drug trade in Los Angeles, Rupert uncovered evidence that the CIA was playing an active role in bringing drugs into New Orleans and Los Angeles. When Rupert disclosed this information to his superiors in the LAPD, he became a target for surveillance, harassment and burglaries that eventually led to his resignation. [67]

Another key official is a retired Drug Enforcement Agency agent, Celerino Castillo III, who was the lead DEA agent in Guatemala and discovered that the CIA was involved in the drug trade to raise finances for its covert operations. In a written statement to the House Permanent Select Committee on Intelligence Castillo gave detailed information on a number of drug running operations that involved cooperation between the CIA and organized crime cartels. [68] Celerino claimed:

The key to understanding the "crack cocaine" epidemic, which exploded on our streets in 1984, lies in understanding the effect of congressional oversight on covert operations. In this case the Boland amendment(s) of the era, while intending to restrict covert operations as intended by the will of the People, only served to encourage C.I.A., the military and elements of the national intelligence community to completely bypass the Congress and the Constitution in an eager and often used covert policy of funding prohibited operations with drug money. [69]

Another prominent official was Marine Colonel James Sebow, the third in command of the El Toro Airbase, California, who discovered evidence that C-130 cargo flights coming into the airbase from Central America were filled with drugs. Sebow communicated his finding to the base commander, Col Joseph Underwood, and then found himself along with Col Underwood, subject to investigations for minor offenses, relieved of command and threatened with Court Martial if he did not cooperate with the investigation. On January 22, 1991, Sebow was found dead, apparently by suicide, but an investigation by family members and supporters revealed evidence that he in fact was murdered for what he had discovered. [70]

On the day before his death, Sebow’s widow recalled a conversation Sebow had with Col Underwood who had stopped by for a visit:

Underwood stopped by and repeatedly tried to talk Jimmy into accepting an early retirement to avoid a court-martial. Jimmy objected strongly. At this, Underwood became quite angry. Sally stated, "I have never seen such a vicious face as Joe's when Jimmy said he would not retire and would take the entire matter to a court-martial if necessary. Underwood jumped up and said, "You'll never go to a court-martial, and I mean never!" [71]

The events surrounding Sebow’s death support allegations that he had uncovered a CIA supported drug running operation into
the US, and was murdered to prevent this from being exposed.

In the July 12, 1985 personal notes of Oliver North, used by his legal defense during his various trials and Congressional
hearings over his role in selling US weapons to Iran to fund the Nicaraguan Contras, North reported that at a meeting involving a number of NSC and CIA officials, $14 million was mentioned as the funds the Contra rebels would raise from the drug trade.[72]

North’s admission did not get serious press coverage despite the apparent confirmation that the CIA was complicit in the use of drugs as revenue for covert operations.[73] It can be inferred that North’s efforts were an amateurish
effort by an NSC ‘basement team’ to raise revenue for NSC covert operations that was modeled on a far more successful
effort by the CIA to use revenue from the drug trade.

The best known case of an alleged link between the CIA and the drug trade emerged from the pioneering investigative journalism of Gary Webb in 1996 who published the “Dark Alliance” series in the San Jose Mercury during Summer 1996. [74]

Webb presented a compelling case that the CIA played a role in allowing drug money to be used to fund the Contra rebels in Nicaragua. While Webb’s series was focused on the proceeds of drug activities going to the Contras, his conclusion that the CIA colluded in this endeavor supported broader allegations of the CIA using the drug trade to finance covert operations. Webb’s series of articles generated intense national interest until the publication of ‘independent’ investigation by the Washington Post on October 4, 1996, claimed there was insufficient evidence to support Webb’s allegations. [75]

The New York Times and Los Angeles Times followed up on October 20 with equally critical articles. [76] Criticisms began to mount and eventually led to the editors of the San Jose Mercury apologizing for ‘errors’ in Webb’s Dark Alliance series, and had Webb transferred to a less prominent news bureau. [77]

Webb resigned in disgust in November, 1997, ending a nineteen year career as a journalist. It was subsequently learned that one of the two writers of the Washington Post article, Walter Marcus was a CIA asset, suggesting that the Post had been co-opted into a covert campaign to undermine Webb’s work. The critical stories in the New York Times and Los Angeles Times relied on similar ‘unnamed sources’ to the Post article indicating that Webb had become a victim of a covert CIA operation through the ‘establishment’ newspapers to discredit his findings. [78] In January 1998, the Inspector General of the CIA released a report exonerating the CIA of any role in the drug trade. [79]

Having so far determined the existence of a black budget created by the CIA that circumvents Congressional intent on the use of appropriations of different federal departments and agencies, and/or involves laundering of funds possibly gained from organized crime and the drug trade, it is worth estimating the size of the CIA’s black budget and what it is used for.

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Estimating the Size of the CIA’s ‘unofficial’ Black Budget

Using Fitts estimates of money missing from HUD, and knowledge of the appropriations process, a more accurate figure of the CIA’s ‘unofficial’ black budget that feeds the intelligence community associated with DoD can be estimated. It should be emphasized that it is only the CIA that has Congressional authority to draw appropriations through other government agencies without ‘without regard to any provisions of law’ or ‘intended use of appropriations’.

This means that money missing from the Congressional appropriations of other agencies would be initially being siphoned through the CIA and no other intelligence agency. Other agencies in the intelligence community gather their appropriations through the DoD that generates the ‘official’ black budget through fictitious line items on its annual budget.

Consequently, it can be concluded that appropriated money channeled through HUD and other agencies is going into the CIA’s ‘unofficial’ black budget that in turn goes directly into deep black programs within the DoD associated intelligence agencies and specialized programs of the Joint Chiefs of Staff.

The CIA’s ‘unofficial’ black budget would therefore not appear on the DoD budget as single line items but would be annually moved through the DoD budgetary mechanisms in a way that cannot be financially tracked. A description of the way this is done appears is described by Tim Weiner, author of Blank Check: The Pentagon’s Black Budget:

One way the form [Form 1080, Voucher for Transfer Between Appropriations and/or Funds] is used to allow money to flow from the Treasury to the Army, or from one Army account to another, is for an officer to fill out the 1080. The bursar then signs the form and issues a Treasury check. The 1080 vouches that the money has been used to pay for the costs of authorized programs. It creates an audit trail - a paper path showing money flowing. [80]

An estimate of the size of the CIA’s black budget, would therefore be unaccounted movement of funds through the DoD. According to an investigative journalist, Kelly O’Meara, the use of a range of accounting mechanisms such as "unsupported entries," "material-control weakness," "adjusted records," "unmatched disbursements," "abnormal balances" and "unreconciled differences" are evidence of large sums of money that are moved through the DoD that cannot be accounted for. [81]

Since the Inspector General of DoD has a certain degree of independence, traces of the CIA black budget would appear in auditing anomalies using some of the terms O’Meara describes. David K. Steensma, Acting Assistant Inspector for auditing DoD wrote in a 2002 report that “DoD processed $1.1 trillion in unsupported accounting entries to DoD Component financial data used to prepare departmental reports and DoD financial statements for FY 2000.” [82]

Elaborating on the significance of the DoD Inspector General reports, O’Meara has written:

[T]he deputy IG [Inspector General] at the Pentagon read an eight-page summary of DoD fiduciary failures. He admitted that $4.4 trillion in adjustments to the Pentagon's books had to be cooked to compile the required financial statements and that $1.1 trillion of that amount could not be supported by reliable information. In other words, at the end of the last full year on Bill Clinton's watch, more than $1 trillion was simply gone and no one can be sure of when, where or to whom the money went. [83]

According to the Office of the Inspector General, the accounting irregularities for fiscal year 1999 were even larger and added up to 2.3 trillion dollars; and for fiscal year 1998, these irregularities were 1.7 trillion (see table 2 below).

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Table 2. Department of Defense (DoD) – Unsupported Accounting Entries 1998-2003
 

The Inspector General reports are important evidence that trillions of dollars were siphoned through the Department of Defense (DoD) for the fiscal years 1998-2002. [89] Using the Inspector General reports of accounting anomalies, it can be estimated that Fitts and O’Meara’s estimates of missing money from the DoD is a close approximation to the CIA’s ‘unofficial’ black budget.

Consequently, the CIA black budget is annually in the vicinity of 1.1 trillion dollars – a truly staggering figure when one considers that the DoD budget for 2004 will be approximately 380 billion dollars. [90] This suggests that the vast size of the DoD in terms of its personnel, weapons systems and research into ‘conventional weapons systems’, is dwarfed by something that in funding terms is almost three times larger than the entire conventional military system funded by the DoD budget.

The vast size of the estimated CIA ‘unofficial’ black budget is strong evidence of a collective effort by the CIA and DoD associated military intelligence agencies and the Joint Chiefs of Staff, to fund a network of highly classified projects so large in scope that they collectively dwarf the original Manhattan Project conducted at Los Alamos National Laboratories during the Second World War. [91]

Since the original Manhattan Project aimed to develop an atomic bomb for use in the war against Nazi Germany, it can be inferred that the network of projects funded by the CIA’s black budget aims to develop a range of advanced weapons systems and intelligence capabilities for use against an adversary whose existence and identity still remains classified. [92] I will henceforth refer to this network of highly classified projects as the second Manhattan Project - ‘Manhattan II’ is the ultimate beneficiary of the CIA’s ‘unofficial’ black budget.

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Conventional Oversight System for the CIA’s and DoD’s Classified Programs

Oversight of the Manhattan II would predictably have been a major concern for the Truman Administration that was instrumental in the passage of the National Security Act of 1947 and the CIA Act of 1949 that institutionalized the black budget that would fund Manhattan II. Major considerations of the Truman administration would have been to create an oversight body dominated by professionals that would not be affected by the partisan political process or by the new political appointees that came and went with each Presidential administration.

Consequently, an oversight system would have evolved comprising individuals appointed either due to the technical abilities (e.g., scientists), political skills (e.g., international diplomacy experts), or military expertise (e.g., J-2 & J-3 directorates in the Joint Chiefs of Staff).

This oversight system would have most likely evolved in a manner that was independent of the conventional oversight system for classified projects. Consequently, before considering how oversight of the Black Budget and Manhattan II are conducted, it is worth exploring how the conventional oversight system works for classified programs in the CIA and DoD.

This conventional oversight system for highly classified intelligence activities and/or covert projects concerns Controlled Access Programs (CAPs) of the intelligence community or Special Access Programs (SAP) of the DoD. CAPs/SAPs are programs that have additional security measures attached to them over and above the normal classificatory system (confidential, secret, top-secret) attached to most classified information and programs. [93]

CAPs/SAPs are divided into two classes ‘acknowledged’ and ‘unacknowledged’ as described in a 1997 Senate Commission Report:

“Publicly acknowledged programs are considered distinct from unacknowledged programs, with the latter colloquially referred to as “black” programs because their very existence and purpose are classified.” [94]

A ‘waived’ CAP/SAP is so sensitive that only eight members of Congress (the chairs and ranking members of the four intelligence [or defense] committees divided between the House of Representatives and Senate) are notified of a waived CAP/SAP without being given any information about it. [95]

This would enable them to truthfully declare no knowledge of such a program if asked, thereby maintaining secrecy of this CAP/SAP. If unacknowledged CAPs/SAPs are ‘black programs’, then ‘waived’ unacknowledged CAPs/SAPs are ‘deep black’. The most secret of the intelligence and covert operations conducted by the CIA are ‘deep black’ CAPs.

CAPs are funded through the ‘official’ black budget and in theory are subject to both Executive and Congressional oversight. [96] In practice though, Congressional oversight in the case of waived acknowledged CAPs is nominal as revealed by the 1997 Senate Commission Report. President Clinton’s Executive Order 12958 issued on April 17, 1995, reformed how CAPs/SAPs would in future be created and oversight established.

The main component of the Executive Order was that only the Director of Central Intelligence or the Secretaries of State, Defense and Energy (or their principal deputies) could create a CAP/SAP. CAPs/SAPs would be kept to an “absolute minimum”; and would be created when “the vulnerability of, or threat to, specific information is exceptional,” and their secrecy cannot be protected by the normal classification system. [97]

As far as oversight was concerned, the key clause in Executive Order 12958 was an effort by the Clinton Administration to coordinate oversight through a central executive office (Information Security Oversight Office) that would be responsible to the National Security Council (NSC) and annually report to the President. [98] The President’s effort to centralize and coordinate oversight features of CAPs/SAPs was resisted by both the Defense and Intelligence communities.

While in theory, oversight coordination occurs in the Information Security Oversight Office set up in the NSC that issues an annual report to the President; the power to approve or terminate a CAP/SAP lies with the respective intelligence community and DoD committees and executive officers. In general, Executive Office oversight of CAPs/SAPs has been described as “nothing more than a sop used to placate anyone who questions the propriety of an administration’s covert action policy.” [99]

Oversight of CAPs/SAPs is performed by a committee comprising officials from the Intelligence Community, the Controlled Access Program Oversight Committee (CAPOC); and a similar committee in the DoD, the Special Access Program Oversight Committee (SAPOC). [100] CAPOC reviews CAPs and Sensitive Compartmented Information (intelligence data) in the intelligence community annually and can recommend their ‘compartmentation’ or termination. [101] It is however, only the Director or Deputy Director of the CIA that has the authority to “create, modify, or terminate controlled access programs.” [102]

While CAPOC provides more direct oversight and coordination of CAPs, it is not ultimately the body that oversees the CIA’s most secret projects conducted in collaboration with the military intelligence community. The exclusion of some CIA CAPs from CAPOC is indicated in the following Directive from the Director of the CIA (DCI):

“The DCI or DDCI may waive review by the CAPOC for programs covered by equivalent oversight mechanisms, or when review by the CAPOC is unnecessary to carry out the DCI's responsibilities.” [103]

Essentially, if the DCI deems it unnecessary for CAPOC to provide oversight information of a CAP, then CAPOC plays no role in monitoring the program. While the DCI is legally obliged to verbally notify Congress of the CIA’s most sensitive CAPs without providing specific budgetary or operational details, there is no independent way of confirming if he indeed is doing so. Similarly, the DCI could similarly withhold information of the CIA’s most sensitive CAPs to the National Security Council’s ‘Information Security Oversight Office” (ISOO).

The extent to which authority is vested in the different security agencies is the way in which program managers of CAPs/SAPs have the authority to come up with their own rules concerning access and security. A 1994 Commission Report stated:

The special access system gave the program manager the ability to decide who had a need-to-know and thus to strictly control access to the information. But elaborate, costly, and largely separate structures emerged. According to some, the system has grown out of control with each SAP [CAP] program manager able to set independent security rules. [104]

Program managers of CAPs/SAPs have the power to restrict access and information to the heads of Congressional Intelligence Oversight Committees, and even to the NSC’s Information Security Oversight Office. Consequently, operational control of CAPs and SAPs is firmly maintained by CAP/SAP program managers who answer only to their immediate superiors despite the fact that they are funded by the CIA’s unofficial black budget with the explicit support of the DCI.

Consequently there are two categories of waived CAPs/SAPs or ‘deep black programs’:

• those CAPs/SAPs where oversight is exercised by the relevant oversight committees in the CIA, DoD and the Executive Office;

• and those CAPs where the program managers answer to an entirely different oversight body. I now explore whom it is that does provide oversight of the CIA’s ‘unofficial’ Black Budget and Manhattan II.

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Oversight of the CIA’s ‘Unofficial’ Black Budget & Manhattan II

Considering the vast size and unconventional funding source for Manhattan II, it is worth exploring how oversight of both the CIA’s ‘unofficial’ black budget and of Manhattan II has evolved, and whom program managers for projects funded by the CIA’s unofficial black budget actually answer to.

The vastness and secrecy surrounding Manhattan II from its inception sometime during the Truman Administration places it outside of the conventional political process where the appointment of key civilian leaders is subject to partisan politics that could compromise the secrecy of Manhattan II and the black budget that funds it. In contrast, the conventional political process has little direct influence on the appointment of senior military personal who undergo a process of first being recommended to the President by the relevant DoD promotions boards, then appointed by the President and finally confirmed by the Senate.

While the military leadership of the DoD is outside the partisan political arena, this is not the case for the appointment of the civilians who take on key positions as Secretaries, Deputy Secretaries, and Undersecretaries of the different military services in the DoD with each new administration.

It is very likely that the senior military officials in key bodies such as the Joint Chiefs of Staff, are aware of Manhattan II without having detailed knowledge of the black budget that funds it. It is likely that the politically appointed leaders of the DoD have little substantive knowledge of Manhattan II, and have as their chief task the goal of ensuring secrecy of Manhattan II and of the CIA generated ‘black budget’ that feeds it.

Thus the Secretary of Defense would play no formal oversight of Manhattan II, far less of the black budget that sustains it. The operational side of Manhattan II, in terms of product testing and application, is most likely be controlled by the Joint Chiefs of Staff and the Directorates for Intelligence (J-2) and Operations (J-3) that are responsible for intelligence and operational functions of the DoD.

It is unlikely that the Director of the CIA (DCI) is made fully aware of the extent of the ‘unofficial’ black budget, the activities used to raise money for it, and the second Manhattan project it funds. The DCI like all agency and department heads appointed by the President and confirmed by the Senate is subject to the partisan political process. Up to the Carter Administration, the tradition was that the appointment DCI would not be politicized.

However, President Gerald Ford effectively abandoned this with the appointment of George Bush as DCI in 1975. [105] President Carter appointed Admiral Stansfield Turner as the new DCI in 1977, who in turn was replaced by William Casey as the new DCI by President Reagan in 1981. Given the partisan political nature of the DCI since Bush, it is likely much of the budgetary authority of the DCI was secretly delegated by executive authority to a body that formally plays the key oversight role for the ‘unofficial’ black budget, and the covert projects it funds that make up Manhattan II. [106]

The delegated powers would most likely have derived from the Truman administration in the form of an executive order and/or National Security Council directive not published in the US Federal Gazette that is required for all executive orders, and thereby remains secret. [107] Such an executive order/NSC directive would been reconfirmed and gradually expanded by subsequent administrations so that ultimate oversight of the black budget and of Manhattan II remained firmly outside of the conventional oversight process.

Consequently, effective oversight of Manhattan II, comes from an ‘executive committee’ especially established in a way that would make it immune to the partisan political process thus ensuring strict secrecy can be preserved, and politically motivated leaks prevented. The power and resources delegated to this ‘executive oversight committee’ for Manhattan II by the Executive Office, and its role in ensuring that ‘black budget’ funds are correctly used and kept secret from the general public, justifies a description of it as a ‘shadow government’.

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Conclusion

The method used in guiding the analysis in this report is to simply follow the money trail created by the CIA’s black budget that enables a number of important insights to be drawn by the institutions playing key roles in generating, protecting and distributing black budget funds. Critical in this analysis has been the experience of individuals and companies such as Catherine Fitts and Hamilton Securities that experienced what evidence indicates was a CIA orchestrated covert campaign to discredit the financial tracking reforms that threatened to make more transparent the financial flows of HUD and other government agencies.

The systematic accounting problems experienced by HUD and other agencies points to the existence of an unofficial black budget of up one trillion dollars annually. The size of the black budget and the CIA activities used to generate funds for it, point to a vast secret network of projects that is funded outside of the normal Congressional appropriation process. Consequently, what follows is a discussion of some of the primary conclusions that can be drawn and arguments made concerning the CIA’s ‘unofficial’ black budget and the Manhattan II project it has been argued to fund.

It is worth repeating that the CIA is legally authorized by Congress to transfer, “without regard to any provisions of law”, funds from other government agencies for the generation of a black budget. There is strong evidence that the CIA uses this power to disregard law to complement whatever funds it can generate through Congressional appropriations, with funds gained through the drugs trade and organized crime that is laundered through different government agencies.

The total annual sum of the black budget is best estimated in the form of accounting anomalies in the main departmental recipient of all black budget funds, the DoD, and is in the vicinity of 1.1 trillion dollars that funds a network of classified intelligence activities and covert operations that collectively form a second Manhattan Project.

The oversight of Manhattan project occurs outside of the conventional oversight system that can be easily compromised by partisan politics. The oversight system that has evolved has been very successful in dividing different functions for Manhattan II in ways that balance institutional rivalries between national security organizations without compromising secrecy.

Thus the CIA generates the black budget that in turns transfers these funds to projects that are institutionally located in the military intelligence and special operations units of the DoD. The various military intelligence agencies in turn hire private contractors and/or provide the necessary military resources for these covert programs to be conducted in national laboratories, military bases, private corporations or other classified locations.

The program managers of each of the classified projects associated with Manhattan II answer directly to an ‘executive committee’ that is outside of the regular oversight process in DoD, CIA, Congress and the Executive Office. The Joint Chiefs of Staff have control of the testing and applications of Manhattan II products that are conducted in collaboration with the intelligence community. The respective intelligence, defense and appropriations committees in the US Congress provide legitimacy for Manhattan II and the black budget that funds it by not revoking the budgetary powers allocated to the CIA through the 1949 CIA Act.

Finally, the Executive Office through the National Security Council issues the necessary executive orders/NSC directives to coordinate the functions and activities in all the branches of government in order to secretly run Manhattan II. Thus each branch of the national security system plays an important role in Manhattan II, without being fully in control of it, thereby insuring a division of powers according to different functions required for Manhattan II. Effective oversight of Manhattan II, however, comes from an ‘executive committee’ that is immune to the partisan political process and whose oversight power and control of resources makes it virtually a ‘shadow government’.

It needs to be emphasized that the ‘unofficial’ black budget and Manhattan Project have legally evolved in ways to respond to a national security contingency that is yet to be revealed to the American public. The classified adversary that this elaborate secret system has been developed to respond to is arguably a potential threat that warrants an extraordinary network of covert programs that dwarf the original Manhattan Project and annually consume as much as 1.1 trillion dollars in a non-transparent manner. More disturbingly, the importance of Manhattan II is such that the CIA has evidently used organized criminal networks and the drug trade as sources to partially fund Manhattan II.

It is unclear when the full scope and impact of Manhattan II will be disclosed to the American public. However, the consequences in terms of increased loss of trust in federal government agencies, loss of morale among senior agency officials instructed to cover up black budget transactions, non-transparency in the flow of government appropriations, targeting of policy makers and business leaders who discover the fraudulent accounting and money laundering that occurs with the black budget, all warrant a serious examination of the need for maintaining the secrecy of Manhattan II and the black budget that funds it.

Finally, the classified adversary against whom Manhattan II is directed requires immediate declassification due to the inherent dangers of dealing with what appears to be an undisclosed security threat in a non-transparent and unaccountable manner, and totally outside of the moral/legal restrictions that emerge from vigorous public debate in democratic societies.
 

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ENDNOTES

[1] I wish to acknowledge H.M. for his hospitality, intellectual stimulation and research facilities for the completion of this paper. Many thanks to A.M. for his assistance in printing and distributing this report.
[2] 50 United States Code (U.S.C.) 403j(b). For an online database of all federal statutes codified in the USC, go to: http://www.access.gpo.gov/uscode/index.html 
[3] See Tim Weiner, Blank Check: The Pentagon’s Black Budget (Warner Books, 1990) 118
[4] 95 Congressional Record 1945 (1949). Also quoted in Weiner, Blank Check, 119
[5] 50 U.S.C. 403f(a)
[6] This occurred to Catherine Austin Fitts whose work in detailing the black budget will be examined later.
[7] Cited in Fletcher Prouty, The Secret Team, http://www.ratical.org/ratville/JFK/ST/STchp3ii.html 
[8] Data comes from a declassified CIA document detailing its projected budget for fiscal year 1953, “Location of Budgeted Funds for Fiscal Year 1953,” CIA, 15 February, 1952, available online at: http://www.fas.org/sgp/othergov/cia1953bud.pdf 
[9] Converting 1953 dollars into 2002 dollars, I used the conversion factor 0.175. For more details see, “Consumer Price Index (CPI) Conversion Factors to Convert into 2002 dollars,” http://oregonstate.edu/Dept/pol_sci/fac/sahr/cv2002rs.pdf 
[10] Quoted in Weiner, Blank Check, 218.
[11] Quoted in Weiner, Blank Check, 219.
[12] Quoted in Weiner, Blank Check, 220-21.
[13] Quoted in Weiner, Blank Check, 222. Richardson v. U.S. 465 F. 2d 844, 853, United States Court of Appeals for the Third Circuit, 1972.
[14] For the courts ruling as well as dissenting opinions, see U.S. v. Richardson (418 U.S. 166) 167-202.
[15] For further discussion see “The CIA’s Secret Funding and the Constitution,” 84 Yale Law Journal 613 (1975).
[16] See Senate Select Committee on Intelligence, Whether Disclosure of Funds for the Intelligence Activities of the United States Is in the Public Interest, Report No. 95-274, 94th Congress, 2nd Session, June 16, 1977 (Government Printing Office, 1977). Also quoted in Weiner, Blank Check, 137-38
[17] See Weiner, Blank Check, 138.
[18] FOIA was enacted in 1966 as Title 5 of the United States Code, section 552. For online information, see http://www.usdoj.gov/04foia/referenceguidemay99.htm
[19] See “FAS Sues CIA for Intelligence Budget Disclosure,” http://www.fas.org/sgp/foia/ciafoia.html
[20] For a copy of the lawsuit, see “FAS Sues CIA for Intelligence Budget Disclosure,” http://www.fas.org/sgp/foia/ciafoia.html . For a website describing the Intelligence Community, go to http://www.intelligence.gov/  .
[21] See Intelligence Authorization Act for Fiscal Year 1998, Amendment No.416 Congressional Record: June 19, 1997 (Senate) p. S5963-S5978]; Available online at: http://www.fas.org/sgp/congress/s858.html
[22] “House Debate on Intelligence Budget Disclosure,” Intelligence Authorization Act for Fiscal Year 1998, Congressional Record: July 9, 1997 (House)] p. H4948-H4985. Available online at: http://www.fas.org/sgp/congress/hbudg.html
[23] See “Statement of the Director of Central Intelligence Regarding the Disclosure of the Aggregate Intelligence Budget for Fiscal Year 1997,” http://www.fas.org/sgp/foia/victory.html
[24] Marchetti and Marks, The CIA and the Cult of Intelligence (Alfred Knopf, 1974) 61, 81.
[25] Wise, The American Police State (Random House, 1976) 185.
[26] See Federation of Atomic Scientists, http://www.fas.org/irp/agency/budget1.htm 
[27] The conversion ration is 0.908 to convert from 1998 to 2002, see “Consumer Price Index (CPI) Conversion Factors to Convert into 2002 dollars,” http://oregonstate.edu/Dept/pol_sci/fac/sahr/cv2002rs.pdf
[28] See Mari Kane, “On the Money Trail: The dangerous world of Catherine Austin Fitts,” North Bay Bohemian, September 5-11, 2002: http://www.metroactive.com/papers/sonoma/09.05.02/fitts-0236.html
[29] See Kane, “On the Money Trail,” North Bay Bohemian (September 5-11, 2002). Available online at: http://www.metroactive.com/papers/sonoma/09.05.02/fitts-0236.html
[30] See Kane, “On the Money Trail,” http://www.metroactive.com/papers/sonoma/09.05.02/fitts-0236.html
[31] See Kane, “On the Money Trail,” http://www.metroactive.com/papers/sonoma/09.05.02/fitts-0236.html
[32] See Uri Dowbenky, “HUD Fraud, Spooks and the Slumlords of Harvard,” Bushwacked: Inside Stories of True Conspiracies (National Liberty Press, 2003) 1-18. Available online at: http://www.conspiracydigest.com/bushwhacked.html
[33] Paul M. Rodriquez, “Mortgage Scandal - HUD Gives Up With Fitts,” Insight On the News, available online at: http://www.insightmag.com/main.cfm?include=detail&storyid=161204
[34] See Fitts, “Summary of Events As of February, 2001: http://www.solari.com/media/summary.html
[35] Catherine Austin Fitts, “Experience with FHA-HUD Background Information for Unanswered Questions,” June 2003. Available online at: http://solari.com/gideon/fhalist.htm
[36] See Kelly Patricia O’Meara, “Why Is $59 Billion Missing From HUD?” Insight on News (Nov 6, 2000). Available online at: http://www.insightmag.com/main.cfm?include=detail&storyid=246245
[37] Susan Gaffney , “Audit Results for the Department of Housing and Urban Development," Testimony before a hearing of the Subcommittee on Government Management, Information, and Technology (March 22, 2000 1999). Available online at: http://www.whereisthemoney.org/59billion.htm  and http://www.hud.gov/offices/oig/data/reform.pdf 
[38] Quoted in Kelly Patricia O’Meara, “Why Is $59 Billion Missing From HUD?” Insight on News (Nov 6, 2000). http://www.insightmag.com/main.cfm?include=detail&storyid=246245
[39] Quoted in Kelly Patricia O’Meara, “Why Is $59 Billion Missing From HUD?” Insight on News (Nov 6, 2000). http://www.insightmag.com/main.cfm?include=detail&storyid=246245
[40] “HUD’s Financial Woes Continue,” Insight On the News (April 18, 2003). Available online at: http://www.insightmag.com/news/421370.html
[41] For discussion of the difficulties encountered by Fitts’ company, see Paul Rodriquez, “Thankless Task,” Insight on the News (May 21, 2001). Available online at: http://www.insightmag.com/main.cfm/include/detail/storyid/210955.html
[42] Catherine Fitts, “The Myth of the Rule of Law or How Money Works: The Destruction of Hamilton Securities.” SRA Quarterly: Third Quarter Commentary (London, 2001) 2. Available online at: http://www.solari.com/gideon/q301.pdf
[43] Dowbenky, Bushwacked, available online at: http://www.conspiracydigest.com/bushwhacked.html
[44] Dowbenky, Bushwacked, available online at: http://www.conspiracydigest.com/bushwhacked.html
[45] Dowbenky, Bushwacked, available online at: http://www.conspiracydigest.com/bushwhacked.html
[46] See Fitts, “Summary of Events,” http://www.solari.com/media/summary.html
[47] For background information on Judge Sporkin, see “Stanley Sporkin, Bio & Selected CIA Iran Contra Background,” http://www.solari.com/media/SporkinBio.html 
[48] Fitts’ own conclusion was that the CIA was indeed involved in the destruction of Hamilton, but her view was that HUD was being used to launder money from the illicit drug trade. Catherine Fitts, “The Myth of the Rule of Law or How Money Works,” SRA Quarterly, 5.
[49] Report of Senator Fred Thompson, Chairman, Committee on Governmental Affairs, on Management Challenges Facing the New Administration (US Senate, 2002) available online at: http://www.senate.gov/~gov_affairs/vol1.pdf
[50] Special Access and Covert Access programs will be described later in this report.
[51] For history of OSS, See Michael Warner, “Office of Strategic Services,” http://www.cia.gov/cia/publications/oss/foreword.htm 
[52] See State Department history of Intelligence Services, http://www.state.gov/www/about_state/history/intel/intro.html 
[53] See 50 U.S.C. 401
[54] The Intelligence Community website is: http://www.intelligence.gov/
[55] 50 U.S.C. 404(b).
[56] 50USC403-4(c)
[57] 50 U.S.C. 403-5(a)
[58] 50 U.S.C.403-6(a)
[59] Statistics on the estimated budgets and personnel of the different intelligence agencies are available online at: http://www.fas.org/irp/commission/budget.htm 
[60] 10 USC114. Available online at: http://www4.law.cornell.edu/uscode/10/stApIch2.html
[61] The relevant Congressional statutes for SAPs is 10 U.S.C.119
[62] 50 U.S.C.403j (b)
[63] 50USC403q (b)(3)
[64] 5a U.S.C.3(a)
[65] 10 U.S.C.114. Available online at: http://www4.law.cornell.edu/uscode/10/stApIch2.html
[66] See Gary Webb, The Dark Alliance (Seven Stories Press, 1998). For online information on the connection between the CIA and the drug trade, see Michael Rupert’s ‘From The Wilderness’ website: http://www.fromthewilderness.com/ 
[67] For a brief summary of Rupert’s background, see “Opening Remarkks of Michael C. Rupert for the Senate Select Committee on Intelligence,” available online at http://www.fromthewilderness.com/free/ciadrugs/ssci.html
[68] “Written Statement of Celerino Castillo III (D.E.A., Retired) to the House Permanent Select Committee on Intelligence,” April 27, 1998. Celerino’s statement is available online at: http://www.fromthewilderness.com/free/ciadrugs/contra1.html
[69] Castillo, “Written Statement,” available at: http://www.fromthewilderness.com/free/ciadrugs/contra1.html
[70] See David Zucchino, The suicide files: Death in the military----last of a four part series,” The Philadelphia Inquirer, December 22, 1993. Available online at: http://www.whatreallyhappened.com/RANCHO/POLITICS/MENA/suicide4.html  . See also Gary Null, “The Strange Death of Col Sabow,” available online at: http://www.garynull.com/documents/sabow.htm 
[71] Gary Null, “The Strange Death of Col Sabow,” http://www.garynull.com/documents/sabow.htm
[72] Lawrence E. Walsh, Final Report of the Independent Counsel for Iraq/Contra Matters, Vol 1. (United States Court of Appeal for the District of Columbia Circuit, 1993) ch. 21. Available on line at: http://www.fas.org/irp/offdocs/walsh/chap_21.htm 
[73] See Michael Ruppert, “A CIA Confession: Oliver North Exposed,” From the Wilderness, October 21, 1998. Available online at: http://www.fromthewilderness.com/free/ciadrugs/volii.html
[74] Webb subsequently wrote the book, Dark Alliance (Seven Stories Press, 1998).
[75] See Robert Suro and Walter Pincus, “The CIA and Crack: Evidence is Lacking of Alleged Plot,” Washington Post, October 4, 1996. See also Webb, Dark Alliance, 448-50.
[76] See “Tale of CIA and Drugs Has Life of Its Own,” New York Times, October 20, 1996. The Los Angeles Times articles ran over three days beginning October 20. See also Webb, Dark Alliance, 452-55.
[77] See Webb, Dark Alliance, 461-65.
[78] Webb, Dark Alliance, 450-52.
[79] Inspector General, CIA, “Report of Investigation: Allegations of Connections Between CIA
and The Contras in Cocaine Trafficking to the United States (Office of Inspector General Investigations Staff, CIA, January 29, 1998) Vols 1-2. Available online at: http://www.cia.gov/cia/reports/cocaine/report/index.html 
[80] Weiner, Blank Check, 178-79.
[81] Kelly Patricia O’Meara, “Government Fails Fiscal-Fitness Test,” Insight on the News (April 29, 2002). Available online at: http://www.insightmag.com/news/246188.html 
[82] David K. Steensma, “Agency Wide Financial Statements. The Department of Defense Audit Opinion.” (February 26, 2002) The Report can be viewed online at: http://www.dodig.osd.mil/Audit/reports/fy02/02-055.pdf 
[83] Kelly Patricia O’Meara, “Rumsfeld Inherits Financial Mess,” Insight on the News (Aug. 10, 2001). Available online at: http://www.insightmag.com/main.cfm?include=detail&storyid=139530  . Another media report on the 1.1 trillion missing dollars is Tom Abate, Military waste under fire $1 trillion missing – Bush plan targets Pentagon accounting, San Francisco Chronicle (May 18, 2003. Available online at: http://www.ratical.org/ratville/CAH/DODtrillions.html#p6 
[84] Independent Auditor's Report on the Department of Defense Fiscal Year 2002 Agency-Wide Principal Financial Statements (1/15/03) Project D2002FI-0104.000, part III, p. 225, http://www.dodig.osd.mil/Audit/reports/
[85] Independent Auditor's Report on the Department of Defense Fiscal Year 2001 Agency-Wide Financial Statements (02/26/02), Report No. D-2002-055, http://www.dodig.osd.mil/Audit/reports/
[86] Office of the Inspector General, Compilation of the FY 2000 DoD Agency-Wide Financial Statements -- Report No. D-2001-181(PDF)-Project No. D2001FI-0018.003 http://www.dodig.osd.mil/Audit/reports/
[87] Department of Defense, Office of the Inspector General – Audit, “Department-Level Accounting Entries for FY 1999” Report No. D-2000-179 (PDF) http://www.dodig.osd.mil/Audit/reports/
[88] Testimony: Statement of Eleanor Hill, Inspector General, Department of Defense, Before the Subcommittee on Readiness and Management Support Senate Armed Services Committee, United States Senate on Defense Financial Management (04/14/99) http://www.dodig.osd.mil/Audit/reports/
[89] See Fitts, “Real Deal, Saving Tennessee,” Scoop UQ Wire (July 4, 2002). Available online at: http://www.scoop.co.nz/mason/stories/HL0207/S00031.htm#a
Fitts has a website with a number of resources describing how more than a trillion dollars are annually unaccounted for in a number of government agencies. Go to http://www.solari.com
[90] “Fiscal 2004 Department of Defense Budget Release,” Defense Link, February 03, 2003. Available online at: http://www.defenselink.mil/news/Feb2003/b02032003_bt044-03.html
[91] See Leslie R. Groves, Now It Can Be Told: The Story of the Manhattan Project (Da Capo Press, 1983).
[92] For an intriguing description of what the black budget funds and the ‘classified adversary’, see Catherine Fitts, “The $64 Question: What's Up With the Black Budget? – The Real Deal,” Scoop: UQ Wire (23 September, 2002). Available online at: http://www.scoop.co.nz/mason/stories/HL0209/S00126.htm  . For a more conventional assessment of potential future adversaries, see Judy Chizek, “Military Transformation: Intelligence, Surveillance and Reconnaissance” (Congressional Research Service, Library of Congress, May 2002). Available online at: http://www.fas.org/irp/crs/RL31425.pdf
[93] For an overview of the classification system, see Report of the Commission on Protecting and Reducing Government Secrecy: 1997. Available online at: http://www.access.gpo.gov/congress/commissions/secrecy/index.html
[94] Report of the Commission on Protecting and Reducing Government Secrecy: 1997. Available online at: http://www.access.gpo.gov/congress/commissions/secrecy/index.html 
[95] Report of the Commission on Protecting and Reducing Government Secrecy, 26. Available online at: http://www.access.gpo.gov/congress/commissions/secrecy/index.html 
[96] For a slightly though still excellent overview of oversight mechanisms for the CIA, see “The Need to Know: The Report of the Twenthieth Century Fund Task Force on Covert Action and American Democracy” (The Twentieth Century Fund Press, 1992).
[97] Office of the Press Secretary, “White House Press Release: Classified National Security Information,” Executive Order #12958 (April 17, 1995) Section 4.4. Available online at: http://foia.state.gov/eo12958/part4.asp#rtt 
[98] Executive Order #12958 (April 17, 1995). Available online at: http://foia.state.gov/eo12958/part4.asp#rtt
[99] “The Need to Know: The Report of the Twentieth Century Fund Task Force on Covert Action and American Democracy,” 71.
[100] See, Director of Central Intelligence, “Controlled Access Program Oversight Committee,” Directive 3: 29 (June 1995) http://www.fas.org/irp/offdocs/dcid3-29.html  . For the DoD oversight body, see Deputy Secretary of Defense, “Special Access Program Oversight Committee,” Information Bulletin: November 1994. Available online at: http://www.fas.org/sgp/othergov/sapoc.html  .
[101] For description of the functions of CAPOC see Director of Central Intelligence, “Controlled Access Program Oversight Committee,” Directive 3: 29 (June 1995) Article 3.3. Available online at: http://www.fas.org/irp/offdocs/dcid3-29.html .
[102] Director of Central Intelligence, “Controlled Access Program Oversight Committee,” Directive 3: 29 (June 1995) Article 2.4. Available online at: http://www.fas.org/irp/offdocs/dcid3-29.html .
[103] Director of Central Intelligence, “Controlled Access Program Oversight Committee,” Directive 3: 29 (June 1995) Article 3.2. Available online at: http://www.fas.org/irp/offdocs/dcid3-29.html
[104] Joint Security Commission Redefining Security: A Report to the Secretary of Defense and the Director of Central Intelligence (Washington, D.C., February 28, 1994) http://www.fas.org/sgp/library/jsc/chap2.html 
[105] John Helgerson, CIA Briefings with Presidential Candidates (Central Intelligence Agency, 1996,) ch. 5, available online at: http://www.cia.gov/csi/books/briefing/cia-8.htm
[106] See Harold Relyea, “Presidential Directives: Background and Overview,” available online at: http://www.fas.org/irp/crs/98-611.pdf
[107] For an overview of Presidential Directives and executive power to create new bodies and delegate authority without Congressional approval, see Harold Relyea, “Presidential Directives: Background and Overview” (Congressional Research Service, Library of Congress, February 2003) Available online at: http://www.fas.org/irp/crs/98-611.pdf.

 

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