CHAPTER TWENTY-ONE
Before the book on Eastern could finally be closed, a couple of meddlesome pilots had to be dealt with by Borman, prior to returning to his office “to clean out his desk,” namely Valdes and Loeb. He probably believed they were working together, so top management monitored their daily activities: Loeb for of his written and verbal remarks to the FBI, and Valdes because of his continued interest in the Flight 980 crash.
Since no one had heeded Valdes’ South American flight safety warnings, he attempted to resurrect ALPA interest in these deficiencies by showing his Illimani crash site video to the ALPA MEC during a meeting held in New Orleans. Afterwards, he fielded questions from MEC members and discussed management’s reaction to his activities. Although the video prompted questions, and a number of MEC members wondered why there had been no NTSB investigation, no formal action was taken. But this demonstrated Valdes’ continued involvement in the Flight 980 disaster to top management, and also that he wouldn’t be intimidated. This prompted further action, including having him investigated by a private detective agency. When I began scrutinizing this situation in depth, I was informed by the Eastern system chief pilot, Captain Bob Shipner, that Eastern’s Internal Security department had hired an outside private investigative firm named Barry Associates, which in turn had subcontracted the job to spy on Valdes to the Intercontinental Detective Agency. This turned out to be false, as Barry Associates was hired specifically at Borman’s direction, who probably also directed that the investigation be handed over to Intercontinental. This came out in testimony taken at Valdes’ subsequent termination hearing. William Barry, the head of Barry Associates, was asked under oath:
Question: “The decision to involve you, at least peripherally, in the investigation of Mr. Valdes and others connected to him, however, was made by who, if you recall?”
Answer: “I would guess Colonel Borman.”
Question: “Colonel Borman?”
Answer: “Yes.”
The only other person Borman might have spoken with about the hiring of Intercontinental was Magurno. Since he is an attorney, these conversations are privileged and subject to lawyer-client confidentiality, so we will never know the absolute truth about who actually retained them. But the answer to this question is significant because there are some very interesting links regarding the Intercontinental Detective Agency and some of the mysterious circumstances surrounding the crash of Flight 980. The question of why Intercontinental was brought in to investigate remains.
The investigation of Valdes was given to an Intercontinental investigator named Luis Dabalsa. For a Florida State-licensed private investigator, Dabalsa had quite an unsavory background. He had been employed previously as a police officer by the Metro Dade Police Department, but had allegedly been involved in a narcotics conspiracy and was arrested. He went on trial in Federal Court, but was acquitted. Following his acquittal, the Internal Review department of the Metro Dade police investigated, determined that he had perjured himself during his criminal trial, and he was subsequently terminated. In 1984, when applying for his Florida State private investigator’s license, he apparently neglected to mention his termination from the Metro Police Department and the license was issued. During his assignment to the Valdes case, Dabalsa attempted to offer a $5,000 bribe to two other investigators; this, according to a formal complaint filed with the Florida State Division of Licensing. These investigators were involved in the case in order to obtain false information about Valdes that allegedly linked him with Loeb in some undefined conspiracy, purportedly against top management. The investigators Dabalsa approached ultimately informed Valdes of the attempt, who then filed a complaint against Intercontinental and Dabalsa, outlining Dabalsa’s actions. I won’t include the entire complaint here, just two of the relevant portions.
15. The two employees of Eastern, who I mentioned earlier were about to be fired for disloyalty [Valdes is referring to himself and Loeb], were allegedly involved in a plot to unseat certain members of Eastern’s Board of Directors. Since I have gone on record on several occasions and complained about certain deficiencies in Eastern’s Flight Safety Program, I have also been a likely target of management sponsored reprisals.”
[Note: Valdes was referring to his prior information sent to Eastern management on his concerns and opinions on the safety deficiencies found in Eastern’s South American flight operations.]
The complaint continued:
My initiative in thoroughly investigating a tragic airplane crash in Bolivia in early 1985 has further embroiled me in controversy with Eastern management. Concerns about flight safety and the airplane tragedy are not grounds which would justify terminating a long-time loyal employee of East-em such as myself. Only by attempting to link me with a plot by other employees against Eastern’s Board of Directors would justification [be] found to fire me.
Mr. Dabalsa knew no such plot existed, yet sought through bribery and extortion to suborn perjury and provide false evidence for his client [East-em Air Lines]. This is a reprehensible abuse of the license to perform private investigative services currently held by Mr. Dabalsa.
Other than the obvious question of why management was attempting to falsely create grounds to terminate Valdes, there are a number of other, pertinent questions raised by these actions. Why were Valdes and Loeb, two Eastern pilots concerned with different aspects relating to the Flight 980 crash, singled out by management for reprisal? Who was the executive Intercontinental was reporting to? Why would top management of a multi-billion dollar, publicly held corporation use corporate money to hire an investigative agency to attempt to falsely incriminate two pilots whose only common link was the Flight 980 crash?
In my attempt to answer these troubling questions, I discovered yet another interesting “coincidence.” Intercontinental had a principal inspector, Raul Diaz, a former Miami policeman. Diaz had a particularly nasty history of alleged drug trafficking that tied in with Eastern. While Diaz was a police officer, he founded CENTAC, an elite corps of Miami police whose goal was supposedly to eradicate the drugs freely flowing into the United States from Latin America through Miami. Differing stories as to why Diaz was eventually forced out of the Miami police department subsequently surfaced, with numerous allegations of corruption. Soon after Diaz left the force, there were rampant rumors linking him with drug shipments and tying him to the CIA efforts to fund the Contras. The following is from the book The Cocaine Wars.
There are officers of almost every local, state, and federal law enforcement agency in Miami, and prosecutors in the US attorney’s office, and investigators for Congress, who believe Diaz was a thoroughly corrupt and corrupting cop. They believe he sat at the center of a web of corruption; that he made up his own laws and selectively enforced them, not necessarily for personal profit—though that allegation hangs in the air—but to pursue his own idea of justice, and to further his career. Since leaving the police force he has been accused of fashioning an unholy alliance between drug traffickers and the CIA in order to supply the Contra rebels in Nicaragua with funds.
Nothing criminal has been proven against (Raul) Diaz, nor is there any evidence that he stole or corruptly received any money. Even so, US prosecutors are still trying to put him in jail. One of them described him as “the most dangerous man in Miami.”1
There are a number of other “coincidences” which tied Diaz to Eastern, the CIA, and the Contra money laundering and supply efforts. Through his association with Intercontinental and Eastern, Diaz was also linked to the Ramon Valdes investigation. In addition, Diaz was suspected
1. The Cocaine Wars. Paul Eddy, Hugo Sabal, Sara Walden. W.W. Norton & Company, New York. pp. 80-81 of being the CIA go-between—in this case, the link between the CIA spies and the drug traffickers. This was also brought out in The Cocaine Wars.
. . . Blum became convinced that he had identified not merely the game but also one of its major players: the “cut out” between those nether worlds of espionage and drug trafficking, the ‘link man’ between the Cartel and the CIA-former police lieutenant, Raul Diaz.2
Was it also purely coincidence that after Diaz’ removal from CENTAC he was chosen to supervise the police force at Miami International Airport? It was also during this time that Diaz underwent divorce proceedings and worked another part-time job, allegedly to make ends meet. Again, by strange “coincidence,” this other employment was at none other than Eastern Airlines. This is what The Cocaine Wars says about his subsequent positions.
On December 15, 1982, almost a year to the day since CENTAC began operations, news of the two investigations and some of the allegations against Diaz were published in The Miami Herald under the headline, “FBI Probes Homicide Supervisor: Metro Officer Denies Corruption Allegations.” The following day, Diaz was relieved of his command of CENTAC but was told he could pick his next assignment; he chose to go to Miami International Airport as commander of the afternoon watch —the equivalent of going to Siberia, which he thought appropriate.
At the airport, Diaz took two jobs because he needed the extra money to help pay for his divorce. From 10 AM until 3 PM, he worked for East-em Airlines, watching the baggage carousels to ensure that nobody stole the luggage. At three he put on his squad commander’s uniform and tackled the daily paperwork, which took, on average, forty-five minutes. For the rest of his shift, until 11 PM, he would stalk the airport, greeting arriving passengers: “Welcome to Miami.”3
2. The Cocaine Wars. Paul Eddy, Hugo Sabal, Sara Walden. W.W. Norton & Company, New York. p. 339
3. The Cocaine Wars. Paul Eddy, Hugo Sabal, Sara Walden. W.W. Norton & Company, New York p. 93
Why would Diaz choose to do work that was the “equivalent of going to Siberia”? Was he simply watching the baggage carousels or did his involvement at Eastern go deeper? His work hours there coincided with the time of arrival of many of Eastern’s South American flights. Was he involved in the large-scale Eastern drug smuggling operation, which in many cases involved off-loaded, checked baggage full of cocaine? Although Diaz wasn’t one of them, a number of Eastern ramp workers were ultimately indicted for unloading bags full of cocaine inbound from Latin America. For a lengthy time they avoided apprehension by simply placing the cocaine-laden suitcases on the baggage carousels from domestic flights. The bags were then picked up without having to clear Customs inspections, a simple, but very effective process.
The estimates were that Eastern Airlines was utilized for the importation of twenty to twenty-five percent of the cocaine used in the entire United States during 1984 and 1985. At the same time, the now-documented Contra-related drug shipments were flowing freely into the States from Latin America via Eastern. Were all these cocaine Intercontinental-Eastern tie-ins just happenstance? I think not.
This is what The Cocaine Wars has to say about that:
Diaz said that in the War On Drugs, he had lost sight of that, [the objective being to remain in the game] and gone for overall victory, and, consequently, he had lost. He was, he said, no longer so naive: “The whole thing’s a game. It’s all a fucking game.”4
I attempted to discover who at Eastern had hired the Intercontinental Detective Agency, the firm that employed Diaz, allegedly “the most dangerous man in Miami.” All fingers ultimately pointed to Borman, as shown by the previously cited sworn testimony. Only Borman would have had insider knowledge that Diaz was also a player, albeit at a different level and in a different manner, in the same, clandestine, top-secret money-laundering and “guns for the Contras” operation in which Eastern played a central role. It would make sense to hire a firm that employed a person with a clear understanding of why management needed to fire two meddlesome pilots, and that could fabricate seemingly valid grounds for their terminations.
4. The Cocaine Wars. Paul Eddy, Hugo Sabal, Sara Walden. W.W. Norton & Company, New York p. 270
There were, undoubtedly, specific reasons why Borman felt particularly intimidated by Valdes and Loeb. Borman feared Valdes because of his personal wealth, which he most likely equated with power, as well as his many ties to the large Miami Latino community. Some others involved in the Iran-Contra scheme were also Latino, and Borman likely perceived that it would only be a matter of time until Valdes stumbled upon what was going on.
Loeb also needed to be dealt with because of his private statements to Borman, public statements to the MEC, and subsequent letters to the FBI concerning the money offloading and possible sabotage of Flight 980. He was snooping in a dangerous area where he didn’t belong. Management’s campaign began by first stigmatizing Loeb with Davidson’s name calling, followed by his removal from his ALPA MEC position. But the truth was far different. Loeb had enough firsthand observations and other information to provoke awkward questions about Eastern’s involvement in the money laundering and the possible sabotage of Flight 980. Borman also knew Loeb was reporting his suspicions to Schulte. It turned out that at least one other person, a now deceased, former ALPA Eastern MEC Chairman, Lloyd Anderson, had also provided a copy of Loeb’s report to top Eastern management. I don’t know for certain how Anderson received it, but can state from past dealings with Anderson that he was clearly in management’s hip pocket—and that is a benevolent portrayal.
Loeb hoped his eyewitness reports would initiate an official FBI probe. However, only much later did I discover that the FBI was also reporting his allegations directly back to top management! This was proven to be the case under sworn testimony given at the Pilots System Board of Adjustment.
Magurno, Eastern’s chief legal officer testified as follows:
Question: What MEC meeting?
Answer: I believe it was a MEC meeting which took place in early February, 1986 in which allegations were made off the record by an Eastern pilot that Mr. Valdes had already discussed his investigation of me. He told pilot X he had an investigation begun on me for the purpose of determining my sexual preference, and the subject matter of Valdes’ investigation was a subject matter of discussion before the MEC in February.
Question: So what you are saying is a pilot who remains unidentified . . .
Answer: Jerry Loeb.
Question: Jerry Loeb?
Question: Mr. Loeb then carried that allegation . . .?
Answer: That is correct, Mr. Loeb then carried that allegation to, of all places, to the FBI where he had a discussion with the FBI about my alleged sexual preference; that discussion was on or about January the 3rd or 4th, 1986.
Question: So I understand, based on information that Mr. Loeb presumably obtained from Mr. Valdes regarding your sexual preference, Mr. Loeb communicated the same, according to your testimony, to the MEC during the course of a February, 1986 meeting and also to the FBI on January the 3rd, 1986?
Answer: 3rd or 4th of January.
Question: How do you know these things?
Answer: The FBI informed me about it.
Question: The FBI, who?
Answer: I don’t know the gentleman’s title. He was in a director capacity in the Miami office.
Question: When did the FBI inform you of this fact?
Answer: In January of 1986.”
The foregoing meant a conveniently unidentified FBI Director was keeping Magurno fully abreast of Loeb’s assertions. More problematic is that the FBI would even report Loeb’s concerns to management when Loeb’s statements involved alleged criminal activity by one or more members of top management. Why the FBI did this has never been answered. But it was subsequently disclosed that certain high-ranking FBI officials were aware all along of the ongoing illicit money shipments and drug smuggling onboard Eastern’s planes, which were taking place with the Reagan Administration’s blessing. Perhaps the FBI was equally concerned with how close Loeb was to uncovering the totality of this illegal scheme, including the possible related sabotage of Flight 980—concerned enough to pass on Loeb’s allegations to top management, providing the pretext for his termination.
Loeb represented a serious potential threat, not only to Eastern management, but also to the secretive U.S. government agencies clandestinely involved in the Iran-Contra conspiracy. Powerful people could go to jail. Consider the following partially redacted excerpt from an FBI report, one of the very few Loeb successfully secured under the Freedom of Information Act.
FM MIAMI (192B-134)
To: Director Immediate
Attention: Cid, Organized Crime Section
Section Chief Frank Storey
Attention: Office of Congressional and Public Affairs
BT
UNCLAS E F T 0
Information Regarding Possible Allegations of Criminal Activity at East-em Airlines
Re TELCALL ASAC William E. Perry, Miami to Section Chief Frank Storey, April 21, 1986, and Re Miami Teletype to FBIHQ January 23, 1986.
For information of FBIHQ and as reported in referenced Miami teletype of January 23, 1986, Gerald K. Loeb, Legislative Coordinator for the Airline Pilots Association (ALPA) at Eastern Airlines (EAL) [information deleted] appeared at the Miami FBI Office on January 8, 1986, and provided information regarding possible allegations of criminal activity by management personnel et al. RETEL set forth a synopsis of the allegations provided. Interviews were conducted by the FBI Miami [information deleted] regarding criminal activity. Investigation by FBI did not substantiate criminal activity.
[information redacted]
The FBI should be alert to this and be prepared to respond to any media attention orchestrated by Loeb. FBI Miami did not confirm or deny that Loeb had provided allegations or what, if any, investigation may have been conducted.
[information deleted]
Miami FBI does not intend to make any comment at this time to EAL regarding this matter. Since at this time Miami is unaware of what, if anything, Loeb will say to the media, no FBI comment is deemed appropriate . . .
This heavily censored memo seemingly indicates that the FBI investigated Loeb’s allegations, but found them “unsubstantiated.” However, all the corroborating witnesses named by Loeb were never contacted nor interviewed by FBI personnel. But because Loeb had provided statements to the FBI coinciding with the labor turmoil at Eastern, the FBI seemingly had an excuse to question what he was alleging.
Another interesting aspect of this memo is where it is stated,“. . . Miami FBI does not intend to make any comment at this time to EAL regarding this matter.” (note: EAL stands for Eastern Airlines.) Yet, according to Magurno’s sworn testimony, someone from the FBI, whose name he conveniently couldn’t recall, had informed him of Loeb’s allegations. According to Loeb, there were three agents who were conveying his allegations back to top management: Special Agent in Charge F. Corliss, Assistant Special Agent William Perry, and Special Agent Rod Beverley.
If Loeb was guilty of anything, it was attempting to accomplish too much at the same time. By simultaneously advocating for the replacement of management at Schulte’s behest and probing the mysterious circumstances surrounding the Flight 980 crash and related money laundering, he made himself a target. Unbeknownst to him, thanks to different individuals, probably including Schulte, Davidson, Anderson and the FBI, top management was being kept fully abreast of his assertions on a timely basis. Through information supplied, in part by the FBI and the Intercontinental Detective Agency, management obviously felt there was enough evidence to justify the firing of Loeb and Valdes.
Since their reports are not covered under the Freedom of Information Act, I could not discover what Intercontinental manufactured or disclosed to management concerning Loeb or Valdes. Furthermore, I was also unable to determine how they either manufactured or received it, how this information was conveyed to top management, or who did the reporting. Their report was shrouded in secrecy.
Loeb was the most obvious and immediate threat because of his former union position. All he had to do was convince anyone in the media of top Eastern management’s involvement in the then-unfolding Iran-Contra scandal and how this might be connected to the possible sabotage of Flight 980. With the media’s access to many sources of information, any subsequent investigative reports could have uncovered the entire conspiracy and forced a full-scale, in-depth investigation that would result in a feeding frenzy that no government agency would be able to stop. The entire house of cards could collapse, including the Texas Air transaction. If proven, besides putting those involved behind bars, the President and Vice President of the United States could be impeached.