Prison gang case puts role of FBI informants under scrutiny

Investigation results in 13 guilty pleas; 9 more defendants face trial next year

Julia Reynolds, George Sanchez, Center for Investigative Reporting

San Francisco Chronicle

Saturday, November 29, 2003

For more than 10 years, one of California's most brutal criminal organizations has been operating from behind the walls of the state's highest- security prison. From cells in Pelican Bay State Prison, Nuestra Familia's leaders have ordered murders and assaults and controlled much of the drug trade in Northern California cities, according to court and law enforcement records.

Despite being locked down 23 hours a day in the prison's Security Housing Unit, gang leaders have used elaborate communication systems to send out orders, including writing coded messages disguised as love letters, using urine as invisible ink and sending letters marked "legal mail" to a nonexistent law firm in San Francisco, FBI records show.

Communicating with paroled gang members out in the streets, Nuestra Familia leaders have been able to order crimes and collect a percentage of the take from robberies and sales of methamphetamine, heroin and marijuana by the state's thousands of Norteños -- Northern California gang members. The California Department of Corrections says Nuestra Familia controls street gangs from Bakersfield to the Oregon border.

Law enforcement efforts to break up the criminal operation have been extremely difficult. For the FBI, infiltrating such an organization from the outside was virtually impossible. To join Nuestra Familia ("Our Family") and rise in its ranks takes years of studying the gang's written constitution, training, and committing violent crimes inside and outside of prison. One "test" a prospective member must pass to join Nuestra Familia is to have committed at least one murder for "the cause," according to a gang investigator with the state Corrections Department as well as Al Valdez, an investigator with the Orange County district attorney's office and a gang consultant with the state attorney general's office.

The gang has strict categories of military-style membership ranks, ranging from a Category One member, who might strive to be the "regiment commander" of a city, to Category Three, one of only three positions on the gang's governing board in Pelican Bay.

In the late 1990s, law enforcement officials put into action the only plan that could crack open the violent criminal enterprise -- getting someone from the inside to turn on his brethren.

In a $5 million crime-fighting effort dubbed Operation Black Widow, several Nuestra Familia members agreed to become FBI informants; they wanted protection when they found themselves on the gang's hit list, or they cut a deal as the government was about to indict them.

Government agents knew that working with such violent criminals was risky, but they reasoned it was the only way they could build a far-reaching racketeering case that might break up the gang once and for all.

The investigation did in fact lead to indictments in 2001 of 22 Nuestra Familia gang members on charges including murder, racketeering, assault, drug trafficking and conspiracy. Thirteen defendants have pleaded guilty. The remaining nine defendants will face trial next year in San Francisco in the courtroom of U.S. District Judge Charles Breyer, and the legal proceedings are expected to last two to three years.

But at the trials, questions about the FBI's ability to fully control its gangster informants are being raised: When the FBI hires a criminal to be its eyes and ears in the inner workings of a dangerous gang, can the informant cease to engage in criminal activity? Can he maintain credibility with fellow gangsters and yet prevent violent acts plotted by them in his presence? When agents learn a violent crime is being plotted, should they step in to prevent it and risk botching their undercover probe?

And, in the end, is the expected payoff -- indictments of brutal gangsters and busting their criminal enterprise -- worth the risk of paying dangerous informants who may continue to commit serious crime while under government supervision?

Law enforcement's use of informants is controversial. Lawsuits seeking more than $2 billion have been filed against the government by families of people murdered in the course of informant-based investigations.

A spokesman for Rep. Tom Davis, R-Va., chair of a House committee currently investigating the FBI's use of criminals as informants, says the FBI is now "in the process of doing a complete review of the way they handle informants."

Operation Black Widow, where murders, assaults and drug trafficking were committed under the watch of two informants working for the government, fuels the debate.

The operation began in 1997 under the leadership of the FBI and involved nearly 30 federal, state and local law enforcement agencies, including the Drug Enforcement Agency; the Bureau of Alcohol, Tobacco and Firearms; the state Department of Corrections; five district attorneys' offices and police departments of San Francisco, Santa Rosa, Salinas, San Jose, Visalia, Modesto, Tracy, Stockton and Watsonville, among others.

Defense attorneys lost a motion to dismiss the case, based on a claim that the government was responsible for murder and assault because it essentially ran Nuestra Familia activities through its informant Daniel Hernandez, who commanded the gang's street operations outside of prison.

U.S. Attorney Kevin V. Ryan told the court that the undercover techniques used by FBI agents during the investigation were "well within established legal boundary." The judge agreed, saying "the government has presented substantial evidence suggesting that the government's role in the affairs of the Nuestra Familia was at most that of a facilitator" and, citing legal precedent, was not "tantamount to the 'engineering and direction of the criminal enterprise from start to finish.' ''

The FBI has declined to issue any comment on the Black Widow investigation.

One incident that raises questions about the investigation involves FBI informant Joe Ybarra, through whom investigators tracked a revenge murder plot through the streets of Salinas but postponed making arrests; in the interim, a man was killed and his companion seriously wounded.

The attack occurred in October 1998, after a gangster was shot and wounded as part of a Nuestra Familia internal power struggle in Salinas. Ybarra recorded the anger of gang members while law enforcement agents listened in. FBI transcripts and court testimony revealed at least five revenge murders were discussed during several taped meetings. "Start whacking these fools," one gang member exhorted in one such discussion.

According to the transcripts, the group discussed the purchase of black ski masks, gloves and walkie-talkies to be used for the hits, and even the type of bullets to be fired. A task force of law enforcement agents listening in learned that Nuestra Familia member Hector Gallegos was scheduled to be the first victim.

Before Ybarra and other gang members arrived at Gallegos' apartment, police parked a patrol unit near the building, according to police and FBI documents. The gangsters saw the vehicle as they approached and, according to the informant, postponed the attack.

But police and the FBI, wanting to build their case, did not arrest the gang members for conspiracy to commit murder. The suspects, under heavy surveillance, roamed Salinas with loaded weapons for several days. Taped conversations indicated that on Nov. 1, 1998, they planned to proceed with the killings.

On that day, police undercover vehicles followed the gang members through the streets while a California Highway Patrol helicopter tracked them from the air. The gangsters stopped in front of an apartment building, and Nuestra Familia member Paul Salcido and an associate got out of the car and ducked into an alley.

According to trial testimony, Salcido slipped on gloves and a ski mask, entered the apartment complex and fatally shot Geronimo Garza, 41, who was not named in revenge discussions taped by the FBI, and wounded Maria Lopez, now 43.

Police heard shots and screaming and swarmed the alley, where they arrested Salcido and other gang members. Salcido was convicted of murder and sentenced to life in prison.

Former Salinas Police Officer Mike Lazzarini, now a gang investigator with the Santa Rosa Police Department, was one of those listening in on the murder plans. He later told a federal grand jury that law enforcement agents had not arrested the gang members earlier because prosecutors and the task force wanted to gather more evidence in the murder conspiracy.

"It was decided to allow it to go on until sufficient overt acts were completed that prosecutors felt that convictions could be obtained," Lazzarini testified.

That strategy was challenged by former Deputy Assistant FBI Director Daniel O. Coulson, who led bureau anti-terrorism and organized crime teams from 1966 to 1997, and who defends the use of criminal informants as "worth the risk" to make difficult cases. But Coulson said in an interview that agents should step in quickly if they learn a murder plot has been advanced.

Agents only need to know that there is a conspiracy, Coulson said. "If (suspects) commit a single overt act that furthers the conspiracy -- buying a gun or a car, for example -- that's enough to arrest them. If an individual is the target of a murder plot, you have to protect him."

Informant Daniel Hernandez, a former Nuestra Familia leader, is expected to be a star witness in the federal trial under way in San Francisco.

Hernandez, who grew up in Pittsburg in Contra Costa County, has a long and violent criminal history, committing armed assaults, admitting conspiring to murder a former gang member in San Jose in 1999 and to talking with fellow gang members about killing two Santa Clara County prosecutors. In grand jury testimony, a former cellmate said Hernandez ordered 17 stabbings while in prison.

In December 2000, Hernandez struck a deal with the FBI. Upon being paroled after serving more than six years for assault, he would become a paid informant and would not be prosecuted for racketeering in the current federal case in San Francisco, according to his agreement with the FBI and the U.S. attorney's office.

Hernandez was a big catch. When he left prison, he became Nuestra Familia's "street liaison commander" in charge of all the gang's operations outside prison, according to court documents. He would wear a recording device,

tape telephone conversations with gang members and set up organizational meetings in Rohnert Park, Salinas, San Francisco, Milpitas, Tracy and Sacramento that the FBI would secretly videotape.

"He was directed that any telephone calls he made, any meeting he had with various NF members or associates, he was to record the conversations," FBI Special Agent Sean Ragan told the grand jury.

But, according to current and former FBI agents, ensuring that informants comply with such orders can be difficult. "Informants cannot be monitored 24 hours a day," says Coulson, the former FBI commander.

Such would prove the case with Hernandez, who was paid $52,200 over seven months. He agreed to abide by Justice Department guidelines that said he must not commit "unauthorized crimes." He could only participate in crimes approved by his FBI handlers, such as planned drug and gun purchases.

At first, Hernandez came through, providing hours of incriminating tapes. But by April 2001, government agents began to lose control of their prized informant. FBI records indicate that he failed to record or report on phone calls with gang members and he disappeared without telling his handlers. Then, in May, his Salinas street crew entered a bar and shot and killed an enemy they believed was moving in on their heroin-dealing turf.

The day before the killing, gang subordinate Martin Ramirez discussed the enemy with Hernandez, who was wearing a recording device. Hernandez, as street liaison commander, previously had given a "no-bloodshed" order, and, according to the transcript, he tried to calm the situation, although he was ambiguous in playing both of his roles -- informant and gang leader.

At one point in the transcript, Ramirez and Hernandez are talking about whether to beat up or kill the intended victim, and Ramirez remarks: "Might as well kill the mother -- if it's for a third strike." Hernandez replies, "Yeah" and adds: "Why are you gonna beat up somebody when they're just gonna come back and shoot you up, right?"

Ramirez tells Hernandez he believes "it's in motion tonight. We're going to take care of it. ... " Hernandez: "Yeah."

Hernandez then lectures Ramirez about how sometimes "we look the other way" when others are selling drugs, though "when they come and try to take over, that's different. ... It's a business. If it comes to it ... we have no choice ... but if we have a choice in the matter, then let's make it the right choice. ... And the right choice is looking away."

According to FBI records, Hernandez handed over the tape of the conversation and reported to his handlers immediately afterward. The records indicate Hernandez did not mention that a murder plot had been discussed; it is not known when agents listened to the tape -- before or after the murder.

Three gang members later said in interviews or police reports that Hernandez gave a "green light" to commit the murder. One of those was Armando Frias, the triggerman who pleaded guilty to the crime and was sentenced in late October to a term of 29 years to life.

In a letter to the court, Frias said that a fellow gang member "pushed the matter (with Hernandez) and finally got the 'green light' for the murder .. . from the FBI informant." In a jailhouse interview, Frias said that days before the shooting, he was present when a gang commander placed a cell phone call to Hernandez in which Hernandez authorized the hit.

Subpoenaed phone records show that an eight-minute call was placed from a Salinas gang member's cell phone to Hernandez five days before the killing, but there is no FBI report or transcript of the call to indicate he had taped it, as required by the informant's agreement with the FBI.

Ramirez told police upon his arrest as a co-conspirator in the murder that Hernandez, who had not yet been revealed as an informant, gave the go- ahead for the killing.

Everyone in the Salinas Nuestra Familia crew was arrested in the murder, except Hernandez, who continued to inform on the gang. On June 18, 2001, Hernandez told his handlers that a subordinate was distributing more than a dozen guns to young gang members in town, according to FBI reports.

Salinas police sources say the FBI never passed on information about who had the guns, and Frias says that a number of the weapons are still in use today.

Frias, 22, said that in addition to himself, others who received the guns included two gang members, who within months used the weapons in Salinas in a murder and an attempted murder. Both pleaded guilty in separate cases.

By late June 2001, according to FBI records, information from other informants showed that Hernandez had lied to his FBI handlers on other matters.

When confronted about unauthorized trips, Hernandez said he slipped away without permission to play golf in Stockton. He later admitted the "golf" trip was to deliver two pounds of methamphetamine to a cousin. He also admitted receiving about $7,000 for drugs and other criminal activities with gang members and to participating in other unauthorized drug deals while on the FBI's payroll.

FBI records show that by late July, the bureau stopped working with Hernandez, and he was arrested on a parole violation. He is now in protective custody at an unknown location.

U.S. Attorney Steven Gruel declined to comment on whether the informant might lose his protection from prosecution, because Hernandez, by his own admission, violated terms of the agreement in which he said he would not lie to his handlers, commit new crimes, or keep any illegally earned assets.

On Nov. 30, 2001, FBI agents overseeing Hernandez wrote in one of their final reports: "Source (Hernandez) participated in unauthorized criminal activity while under the direction of the Federal Bureau of Investigation."

Such is the risk the government runs in using criminal informants to help law enforcement efforts. As San Francisco lawyer Mark Zilversmit, an attorney for one of the indicted Nuestra Familia members, notes, "That operative who's now working for the government is going to have to do some pretty bad things. He has to in order to maintain credibility."

Was the Black Widow investigation, with its 22 indictments and possible convictions and breakup of the criminal enterprise, worth the risk?

Frias, the convicted triggerman in the April 2001 murder, thinks the FBI's operation may have destabilized Nuestra Familia, but he gives more credit to the gang leaders' own "hypocrisy" in turning on each other for any decline in its strength. In the Black Widow investigation, more than 20 gang members or associates have become informants or have agreed to testify against others in the case.

Some in law enforcement believe that, while fighting Nuestra Familia was worthwhile, younger members will soon rise to take leadership. "Nuestra Familia will be back," says law enforcement gang consultant and former Modesto Police Officer Jared Lewis.

One FBI supervisor was starkly realistic about the whole process. Informants, he said, will always be an essential part of investigations. But trying to supervise violent criminals is akin to "dancing with the devil."

For links to documents cited in this story, go to the Center for Investigative Reporting website.

Additional reporting by Nada Behziz, Justin Kane, David Montero, Michael Chandler, Marlena Telvick, Mara Reynolds, Oriana Zill de Granados, Serene Fang and students from Lowell Bergman's investigative reporting seminar at the UC Berkeley Graduate School of Journalism.