DOUBLECROSS: U.S. CUSTOMS EMBARASSED BY SMUGGLING INFORMANT

SAM DONALDSON, ABC NEWS - Last month, President Clinton called for
cooperation among nations in the fight against drugs. But what if the
people who are supposed to be keeping drugs out of the United States
instead are putting the government smack in the middle of dealing drugs?
Tonight, a six-month PrimeTime investigation reveals how agents of the US
Customs Service turned a pot smuggler into a big-time cocaine kingpin and
then turned a blind eye while he poured billions of dollars of cocaine on
to
the streets of America. Tonight, Forrest Sawyer talks to Rodney Matthews,
a
smuggler turned top informant who became one of the biggest embarrassment
s
in US Customs history.

FORREST SAWYER, ABC NEWS (VO) New Year's Eve, 1988. When Rodney Matthews
touched down at his private airstrip in Damon, Texas, hauling a ton of pu
re
cocaine, he wasn't working alone.

RODNEY MATTHEWS Yes. By all means, I'm a drug smuggler. The government
authorized me to smuggle. And the government paid me to smuggle.

FORREST SAWYER (on camera) Did you have the feeling that they knew how mu
ch
cocaine could hit the streets?

RODNEY MATTHEWS I'm sure they must have realized it.

FORREST SAWYER And that would be how much?

RODNEY MATTHEWS Tons.

DICK CARDWELL, FORMER US CUSTOMS AGENT Have you ever seen a picture of
1,800 pounds of coke? That's a lot of dope. That seizure of 1,800 pounds
of
coke was a big seizure. And we got the guy that was doing the deal, Rodne
y
Matthews.

FORREST SAWYER (VO) Houston Customs agent Dick Cardwell had gotten wind o
f
an unauthorized plane heading toward Matthews' airstrip. US Customs and
Texas police set up a stakeout. When they saw a truck pulling out, they
chased it down Rural Road 1462.

RODNEY MATTHEWS The Texas highway patrolman pulled me over, asked me what
was on the truck. I told him 700 kilos of cocaine. He got a little excite
d.

FORREST SAWYER (VO) Trooper Billy Frank Teague 8A

BILLY FRANK TEAGUE, TEXAS STATE TROOPER He's trying to tell us that, "Hey
,
I'm one of you guys. I'm working with you." And at that point, I placed t
he
shotgun at the back of his head and ordered him to be still so that we
could handcuff him.

RODNEY MATTHEWS And I'm trying to tell him, "Hey, this load is for you."

BILLY FRANK TEAGUE And he's still trying to tell us, even after he's
handcuffed, "Hey, I'm working for you guys. This is for y'all. I'm one of
you." And we weren't buying it.

FORREST SAWYER (VO) And neither was Dick Cardwell, who knew Matthews was
working as an informant for the US Customs Service. But he was convinced
Matthews had been running loads of cocaine behind the government's back.

DICK CARDWELL I knew he was a smuggler. And I knew he was working outside
of law enforcement. The problem was trying to catch him doing it.

FORREST SAWYER (VO) Now Cardwell had proof. Matthews caught red-handed wi
th
the biggest load of cocaine in Texas history, a load that no government
agency had approved. Matthews was going down, until, just as he was being
booked, the order came to let him go.

DICK CARDWELL We just caught this guy with 1,800 pounds of coke, and we'r
e
going to turn him loose. And he did. He walked out of the door, got into
a
yellow cab and went home.

FORREST SAWYER (on camera) Because of a deal that agents from your own
agency had made?

DICK CARDWELL They gave probably one of the best smugglers in the country
,
they gave him the keys to the-to the candy store. They gave him permissio
n.

FORREST SAWYER (VO) How Rodney Matthews became one of the biggest
embarrassments in US Customs history, revealing that the government makes
loose and sometimes illegal deals with informants, allowing tons of cocai
ne
into the country-that story begins four years earlier, 40 miles and a wor
ld
away from Houston.

RODNEY MATTHEWS Fort Bend (ph) County, Mayberry, USA. Everybody knows
everybody. Everybody knows everybody else's business.

FORREST SAWYER (on camera) Now, I would think everybody and his brother
would know exactly what you were flying in.

RODNEY MATTHEWS There was some suspicion.

FORREST SAWYER (VO) Then 40 years old, Matthews had spent most of his adu
lt
life flying planeloads of marijuana into a little airstrip he had built i
n
the middle of a cow pasture. He was making millions, until Valentine's Da
y,
1984, when Bob Nestoroff, a sergeant in the Texas Department of Public
Safety, busted him with 600 pounds of pot. Matthews quickly made his firs
t
deal-his freedom in exchange for information.

SGT BOB NESTOROFF, TEXAS STATE POLICE His usefulness to us was to go out
and set up deals where we could seize loads.

FORREST SAWYER (on camera) Delivered you four cases?

BOB NESTOROFF Yes, sir.

FORREST SAWYER With a ribbon on them?

BOB NESTOROFF That's correct.

FORREST SAWYER (VO) Drug agents soon realized that Rodney Matthews was a
natural snitch, who not only knew the smuggling business inside-out but w
as
willing to take chances for them. Just when he could walk away a free man
,
US Customs agents in San Antonio asked him to start playing a bigger game.
But to get to Matthews, they had to go through Bob Nestoroff. The Texas c
op
was the only handler Matthews trusted.

BOB NESTOROFF Narcotics, Nestoroff.

FORREST SAWYER (on camera) And Bob, if you got involved in a Customs
investigation with your informant and it worked out, that would be good f
or
you, right?

BOB NESTOROFF That's correct, it would be.

FORREST SAWYER Nice career move?

BOB NESTOROFF Yes, sir.

FORREST SAWYER (VO) And their target was legendary Texas smuggler Vic
Stadter, chased for half a century by Customs agents who call him "the
original cocaine cowboy." To this day, Stadter swears he's a smuggler all
right-gold, whiskey, exotic animals, anything but drugs. (on camera) You
just got through telling me that you're one of the best smugglers in the
whole 8A

VIC STADTER, US CUSTOMS TARGET I am. I am.

FORREST SAWYER You've never smuggled drugs in your life?

VIC STADTER Never had anything to do with drugs in my life, and there's
nobody knows it better than the US government and their damnable agents.

FORREST SAWYER (VO) Agents convinced Stadter ran an international cocaine
ring that helped build his 350-acre ranch out in Texas hill country. (on
camera) We have talked to these guys. They appear to be sincere in their
belief that you are in the drug smuggling business in a very big way.

VIC STADTER Well, why don't they back it up?

FORREST SAWYER That's what they were trying to do.

VIC STADTER By getting a rat to set me up?

RODNEY MATTHEWS I didn't know if this guy was about to blow up the White
House or why there was so much interest. I did know that he had embarrass
ed
them a few times.

FORREST SAWYER Not that he was the biggest drug smuggler around, not that
he was a danger to the community, just that he was embarrassing the agent
s?

RODNEY MATTHEWS Right. That he had beat them and rubbed their face in it.

FORREST SAWYER (VO) In 1986, US Customs agents decided to turn Matthews
into a cocaine kingpin. To get close enough to catch Stadter red-handed
with a load of coke, they allowed Matthews to do what no drug agent is
permitted, break the law.

RODNEY MATTHEWS And it was clear that smuggling cocaine in and letting it
hit the street was part of that deal. And making money on the side was pa
rt
of that deal.

FORREST SAWYER (on camera) Am I wrong? Did they just set you up in busine
ss?

RODNEY MATTHEWS Yes, by all means. I made it very clear that I'm in this
for the money.

FORREST SAWYER (VO) And make money, he did. Suitcases full, with the
government looking the other way.

RODNEY MATTHEWS Over that period that I worked with the government, I'm
sure $10 million passed through my hands-ranches, real estate, airplanes,
at least a dozen airplanes. Some of them expensive airplanes.

FORREST SAWYER (VO) And making money right along with Matthews, his
longtime friend and partner, Jimmie Ellard (ph).

JIMMIE ELLARD We've moved about $6 billion worth of drugs over a five-yea
r
period, about $6 billion.

FORREST SAWYER (VO) Back in the spring of 1985, Matthews had recruited
Jimmie Ellard as a pilot. Ellard was busted one month later.

JIMMIE ELLARD I felt that Matthews was the only family I had at that time.
One of us had a problem, the other one was there. That's the way it alway
s
was.

FORREST SAWYER (VO) Out on bail, Ellard fled to Colombia. His friend Rodn
ey
said he would help set him up in business.

RODNEY MATTHEWS So I gave him a couple of names and off he went.

FORREST SAWYER (on camera) How did he do?

RODNEY MATTHEWS Eventually, he-he did very well. He moved up.

FORREST SAWYER How far?

RODNEY MATTHEWS Right up to the top.

FORREST SAWYER (VO) To the very top, becoming one of the biggest
transporters for the man who was then the world's most powerful cocaine
baron, Pablo Escobar.

JIMMIE ELLARD Pablo Escobar was a billionaire. When we ended up in 1990,
I
was a multimillionaire.

FORREST SAWYER (VO) Running flights and organizing others for Escobar,
Ellard claims he was making up to $5 million a week. And Rodney Matthews?
He and Ellard were busy building one of the biggest cocaine trafficking
rings in the country.

AIR TRAFFIC CONTROLLER Second tower, roger. Make straight (inaudible) app
roach.

FORREST SAWYER (VO) By 1988, their drug flights into Fort Lauderdale
executive airport were so routine, they were calling themselves the
"Federal Express of cocaine." (on camera) You figure as far as the
government's concerned, that's just fine?

RODNEY MATTHEWS Yes.

FORREST SAWYER It sounds like nobody's running things. It's, you're
off-well, you're off smuggling.

RODNEY MATTHEWS Well, that's what I was supposed to be doing, off smuggli
ng.

FORREST SAWYER (VO) Three years, 50 flights in broad daylight, low and sl
ow
across the Gulf of Mexico. Never once intercepted. Never even fearing the
radar planes put up to catch them. Rodney Matthews had Ellard and the
Colombians convinced they could buy the radar planes' flight schedules fr
om
him. The asking price? Six million dollars. (on camera) What was the real
value of what you were selling them?

RODNEY MATTHEWS Zero.

FORREST SAWYER Because?

RODNEY MATTHEWS Because I didn't have any inside information.

FORREST SAWYER (VO) It was all just one more Rodney Matthews double-cross.
No information about the radar plane flights, he claims, no dirty agent,
nothing but raw nerve and $6 million in his pocket. (on camera) And you
were just gambling that those radar planes were not up?

RODNEY MATTHEWS Right.

AIR TRAFFIC CONTROLLER We have a contact here.

FORREST SAWYER You are not unaware of the Colombians' reputation-if you g
ot
caught, what would happen?

RODNEY MATTHEWS Death-sometimes a slow death.

DICK CARDWELL This guy walked a tight rope. I mean, he walked a tight rop
e
not only with law enforcement. He walked a tight rope with the cartels as
well.

FORREST SAWYER And played them both against each other?

DICK CARDWELL Oh, absolutely. And was making money on both ends of the fe
nce.

FORREST SAWYER Now, that's a hell of a game.

DICK CARDWELL He was good.

FORREST SAWYER (VO) Good at making money, but lousy at catching Vic
Stadter. Three years after he started his Customs investigation, Rodney
Matthews had turned up exactly nothing. (on camera) How close did Matthew
s
get in his efforts to bust you?

VIC STADTER He dated my secretary. And outside of that, the one time I me
t
him, that was it.

FORREST SAWYER Well, let me see if I got it straight. He brings in tons o
f
cocaine 8A

VIC STADTER Yeah.

FORREST SAWYER 8A to get you, and it comes down to 8A

VIC STADTER Dating my secretary. Yep.

FORREST SAWYER (VO) So what did US Customs agents decide to do next?
Federal prosecutors say that instead of shutting him down, Customs turned
Rodney Matthews completely loose, giving him "carte blanche" to break
virtually every US drug law to nail Stadter.

RODNEY MATTHEWS Well, it was like a 007 license. I didn't know the
government did that. It was hard to resist.

FORREST SAWYER (on camera) What could Rodney Matthews have done that woul
d
have been breaking the law with such license?

BOB NESTOROFF Well, I seriously doubt they would condone murder. I sure
hope they wouldn't.

FORREST SAWYER But drug smuggling is fine?

BOB NESTOROFF I believe so. That's correct.

FORREST SAWYER That puts the United States government smack in the middle
of dealing drugs.

BOB NESTOROFF They're authorizing the man to do something that they're
fighting. But the fact remains that they did it.

SAM DONALDSON For Rodney Matthews, it was as good as it gets, but there
would be one more double-cross still to come.

ANNOUNCER In a moment, Matthews' most loyal ally turns against him, and
federal agents run for cover.

DICK CARDWELL We were looking at 20 years for doing our jobs-for taking
dope off the street and for telling the truth.

ANNOUNCER When PrimeTime continues.

(Commercial Break)

ANNOUNCER Did US Customs agents allow one of their own informants to floo
d
drugs onto the streets?

MARK CONRAD We got in bed with Rodney Matthews.

ANNOUNCER The insider who says it's not an isolated case.

MARK CONRAD It happens routinely in virtually every situation where you'r
e
dealing with informants.

ANNOUNCER When PrimeTime continues, after this from our ABC stations.
(Station Break)

ANNOUNCER PrimeTime continues. From Washington, Sam Donaldson.

SAM DONALDSON After Rodney Matthews had been caught red-handed with a ton
of cocaine destined for the streets of Miami, New York and Philadelphia,
it
still looked like he'd played the informant game and won-until his deal
with Customs came under fire. And as Forrest Sawyer learned, the agents w
ho
had cut Matthews loose started to feel the heat.

FORREST SAWYER (VO) When Rodney Matthews walked away from the biggest bus
t
in Texas history a free man, it didn't play too well in the local
newspapers. (on camera) And there were a lot of people who were embarrass
ed?

RODNEY MATTHEWS Very embarrassed. The idea that the United States Justice
Department and US Customs would authorize cocaine to be smuggled into the
United States.

FORREST SAWYER (VO) And things got even worse when Matthews told Texas co
p
Bob Nestoroff that a week earlier, he had brought in yet another half ton
of cocaine that did make it to the streets. (on camera) You figured he wa
s
just on the job?

BOB NESTOROFF That's correct.

FORREST SAWYER You mean flying in 1,800 pounds of cocaine that is going t
o
hit the streets of America is part of his job?

BOB NESTOROFF That's correct. If he was taking huge advantage of it, so b
e
it. He still was doing what he was told he could do to get into the Stadt
er
organization.

FORREST SAWYER (VO) That was the central problem. No one had the authorit
y
to let Rodney Matthews break the law. And now, the deal they had given hi
m
was coming under fire, which sent the Customs agent who was supposed to b
e
controlling Matthews running for cover. That agent was Tom Grieve. (on
camera) Was he told he could do whatever was necessary to fly cocaine and
bust Vic Stadter?

TOM GRIEVE, FORMER US CUSTOMS AGENT No.

FORREST SAWYER Was there anything said, anything that could have been in
your wildest imagination misinterpreted to mean that Rodney Matthews coul
d
bring in a load and let it hit the streets?

TOM GRIEVE No. Not hit the streets. No, no, no, no. No. See, that's-no, n
o.

FORREST SAWYER Tom Grieve says that there was no carte blanche, nothing
like carte blanche.

MARK CONRAD, US CUSTOMS INTERNAL AFFAIRS Tom Grieve is simply a liar.

FORREST SAWYER (VO) Mark Conrad runs internal affairs for Customs in
Houston. A 27-year veteran, Conrad spoke to PrimeTime in New York over th
e
objections of the Customs Service.

MARK CONRAD We got in bed with Rodney Matthews and the importation of a
humongous amount of narcotics coming into the United States.

FORREST SAWYER (on camera) And the reason wasn't because they were dirty?

MARK CONRAD No. The reason is there's a great deal of pressure on agents
in
the field to make cases, to make the big one. And the bigger, the better.

FORREST SAWYER The customs agent involved, you, and the assistant US
attorney overstepped their authority and offered too much, and once it
became an embarrassment, what could you say except it didn't happen. "I
don't care what those other guys say, it didn't happen"?

TOM GRIEVE No. They did a-they did an investigation. They did an internal
investigation, and it's totally unfounded.

FORREST SAWYER Which is true. The Customs Service investigation did
criticize Tom Grieve for a lack of control, but it found no evidence of
wrongdoing. In fact, the 18-page report never even mentions the
controversial words "carte blanche." The reason, Mark Conrad says there w
as
a cover-up that continues to this day.

MARK CONRAD We hide things. We cover them up. We don't-we're not honest a
t
times within our own organization, and we're clearly not honest at times
with the media.

FORREST SAWYER (on camera) You know, I think a lot of American people are
going to be shocked to hear that letting drugs hit the street is what we
really do in the drug business.

MARK CONRAD It would never be officially condoned. You'll never find any
policy that approves of it, but it happens routinely in virtually every
situation where you're dealing with informants.

FORREST SAWYER (VO) In fact, more than a dozen agents and former drug
enforcement officials told us that letting dope hit the streets is the co
st
of doing business, that while the Matthews case is extreme, it's just the
tip of the iceberg. (on camera) Agents say, yes, they gave Rodney Matthew
s
a long leash. They really did believe he was out there working for them t
o
get you, a drug smuggler.

VIC STADTER Well, how stupid can they be? When Matthews ain't working and
making any money at anything and flying million-dollar airplanes, now how
stupid can they be?

FORREST SAWYER (VO) As for the Customs agent in charge of Rodney Matthews
in 1988, Tom Grieve was fired two years later. Not because of the Matthew
s
case, but because he had lied about the improper use of a government
vehicle. And Rodney Matthews? His real problem wasn't in Texas anymore. I
t
was in Florida. And it was named Jimmie Ellard.

JIMMIE ELLARD One of the greatest shocks in my life is that day when I
found out that Rodney Matthews had actually set me up.

FORREST SAWYER (VO) In March 1990, Ellard was arrested in Vero Beach,
Florida. Agents, who wanted Ellard to testify against his longtime partne
r,
showed him an old government report that proved Matthews was
double-crossing Ellard since their pot-smuggling days.

JIMMIE ELLARD I read the report three different times, and I just kept
reading it. And finally, the guy said, "Now, do you want to protect
Matthews, or do you want to work with the government?"

TERRY THOMPSON, ASSISTANT US ATTORNEY Hi. This is Terry Thompson. I just
wanted to 8A

FORREST SAWYER (VO) The answer was easy. He accepted a deal from this man
,
assistant US Attorney Terry Thompson-plead guilty to hauling 28 tons of
cocaine into the US and turn star witness against Matthews. (on camera) I
s
there a difference in kind between Rodney Matthews and Jimmie Ellard? Are
they the same animal?

TERRY THOMPSON They're the same beast.

FORREST SAWYER (VO) With one very big difference.

DIANE SAWYER (CLIP FROM ABC NEWSCAST) In Colombia today, an explosion
onboard a Colombian jetliner. All 107 people onboard died.

FORREST SAWYER (VO) In November 1989, Pablo Escobar blew up Avianca Fligh
t
203, just so he could kill two informants. And it was Jimmie Ellard who
earlier advised Escobar on how to destroy an airliner and everyone on it.
(on camera) Ought you to make a deal with somebody like Jimmie Ellard? He
's
a bad guy.

TERRY THOMPSON Jimmie Ellard is a necessary evil, unfortunately.

FORREST SAWYER And is that right? Does that mean that the ends justified
the means?

TERRY THOMPSON He made things possible, prosecution-wise, that probably
would not have been possible without him.

FORREST SAWYER (VO) Ellard made it possible for Thompson to go after his
biggest target of all-dirty agents. It was a deal that had been offered t
o
Matthews himself when he was arrested in 1992, but he turned it down flat.

RODNEY MATTHEWS On the way to the courthouse, the Customs internal affair
s
agents said, "Look, we know you're a smart guy. You don't have to go to
jail. Just tell us about the dirty agents."

FORREST SAWYER (on camera) Who were the agents they were after?

RODNEY MATTHEWS Cardwell and Nestoroff.

FORREST SAWYER (VO) Matthews refused to turn on agents he says were
innocent. But Bob Nestoroff, the Texas cop, was accused of taking bribes
anyway. And Jimmie Ellard named Dick Cardwell as the dirty agent who sold
those radar plane schedules.

DICK CARDWELL I couldn't believe it. It's just flat unbelievable.

FORREST SAWYER (on camera) Would you ever imagine, in your wildest dreams
,
that the word of Jimmie Ellard could get an indictment against you?

DICK CARDWELL He's lied, money laundered, smuggled tons of dope. Conspira
cy
to kill folks. Blow up airliners. I mean, he's a PR nightmare. Yet they
signed up to him.

FORREST SAWYER You don't think that any of the things that he told you
might be lies?

TERRY THOMPSON If you're asking me if someone is capable of smuggling
55,000 pounds of cocaine into the country and incapable of lying, no, I'm
not going to say that.

FORREST SAWYER (VO) In fact, Thompson couldn't make Ellard's claims of
corruption stick, but he tried the two agents anyway for perjury. On
September 13, 1996, after a five-week trial, it took a Houston jury only
two hours to acquit them. They called the case a joke, but the careers of
Dick Cardwell and Bob Nestoroff were destroyed.

DICK CARDWELL We were looking at 20 years for doing our jobs-for taking
dope off the street and for telling the truth.

FORREST SAWYER (on camera) And you're in here for how long?

RODNEY MATTHEWS Until deceased.

FORREST SAWYER (VO) On December 14, 1993, Rodney Matthews was convicted o
f
smuggling 28 tons of cocaine into the US He is now serving a life term in
Leavenworth.

VIC STADTER So who takes the fall? Matthews. You don't see none of these
agents in jail.

FORREST SAWYER (on camera) You say these agents should be put in jail?

VIC STADTER Why certainly, they should. They're the thieves.

BOB NESTOROFF Maybe he's right.

FORREST SAWYER Maybe they are 8A

BOB NESTOROFF Maybe they are just as guilty. Maybe they are guilty of
bringing the dope in because they authorized it.

FORREST SAWYER This includes you.

BOB NESTOROFF You bet. I'm partially responsible for it, and I accept tha
t
responsibility.

FORREST SAWYER (VO) Even the judge who sentenced Rodney Matthews attacked
the US Customs Service from the bench, saying its dealings with Matthews
were "sick, symbiotic, manipulative and exploitive," an "embarrassment" f
or
which the United States government should be ashamed of itself. (on camer
a)
You know, there were a lot of losers in this case.

DICK CARDWELL Oh, yeah.

FORREST SAWYER Any winners?

DICK CARDWELL All you have to look at is Jimmie Ellard.

FORREST SAWYER The worse guy of all is the winner?

DICK CARDWELL Absolutely. Look at it. The facts speak for themselves.

FORREST SAWYER (VO) After pleading guilty to putting $6 billion of cocain
e
onto the streets and admitting his role in the Avianca bombing, Jimmie
Ellard served only six years in prison. He was given his freedom on May 2
8,
1996. He still has millions of dollars made smuggling drugs.

SAM DONALDSON The head of the US Customs Service declined our request for
an interview. In a letter, he stated it is not Customs policy to allow
illegal drugs to disappear and said they learned valuable lessons from th
e
Matthews case. But public affairs officers at Customs were quick to tell
us
theirs is not the only agency to let cocaine hit the streets. A final
note-Dick Cardwell resigned last year from the US Customs Service, saying
he was disgusted with his agency's willingness to break the law to make
their cases. And Rodney Matthews says he's fighting for his freedom from
his prison cell in Leavenworth.

copyright 1998 ABC News