BY VANESSA GALLMAN and LEWIS KAMB
Mercury News Washington Bureau
WASHINGTON -- At an angry meeting that drew an audience of more than 1,500, members of the Congressional Black Caucus Thursday called for an investigation into Central Intelligence Agency connections to a Bay Area drug ring that helped touch off the ''crack'' cocaine epidemic of the 1980s.
The revelations were raised in the Mercury News' three-part series last month, ''Dark Alliance,'' which detailed how a drug ring based on the Peninsula sold tons of cocaine to the street gangs of South-Central Los Angeles and funneled millions in drug profits to a CIA-run guerrilla army. The series traced the crack cocaine explosion to two Nicaraguan cocaine dealers, Danilo Blandon and Norwin Meneses, who were civilian leaders of the Frente Democratica Nicaraguense (FDN), an anti-communist commando group formed and run by the CIA during the 1980s.
The director of the Central Intelligence Agency, John Deutch, has ordered the agency's inspector general to look into the allegations, but also has said he does not believe they are true.
On Thursday, however, more than 1,500 blacks attended a hastily called meeting here to say they do believe it.
Encouraged in recent weeks by black radio talk-show hosts, community activists and local elected officials, they met to start planning street protests and legislative action. Also on Thursday, the president of the NAACP, Kweisi Mfume, called for an congressional investigation.
In a campaign season in which ''the drug war'' has become political fodder, the controversy could provide momentum for those opposed to the sentencing disparity for crimes involving crack and powdered cocaine, which has resulted in high rates of black incarceration.
Democratic Rep. Maxine Waters, who represents the Los Angeles area in Congress, praised the crowd ''for having the audacity to be outraged. .‚.‚. that the government put drugs in our communities.'' She convened the meeting, held during the annual gathering of the Congressional Black Caucus.
The Mercury News' series reported that Danilo Blandon, a former Nicaraguan government official, was the conduit for thousands of kilos of cocaine that flowed to the Los Angeles street gangs between 1982 and 1986.
Blandon, who pleaded guilty to cocaine trafficking charges in 1992 and went to work for the Drug Enforcement Administration as an informant, recently testified in federal court that he sold the cocaine in the city's black neighborhoods as a way to raise money for the guerrilla army seeking to overthrow a revolutionary socialist government.
His biggest customer was a drug kingpin, Rick ''Freeway'' Ross, who turned the drugs into crack, a cheaper, smokable form of cocaine. Ross is now in jail, set up by Blandon in a 1994 drug bust.
The reporting reinforces conspiracy theories deeply held by some blacks, going back to rumors that the government used heroin to weaken the Black Panther Party, a black nationalist group popular in the 1960s.
Such theories have gained momentum in recent years as prisons have increasingly filled with black street dealers and addicts.
The Rev. Jesse Jackson put it this way at a breakfast meeting of reporters: ''Just because I'm paranoid doesn't mean no one is after me.''
Yet some political leaders are clearly hoping to turn the controversy to their advantage to fight the sentencing disparity on cocaine charges.
Currently it takes possession of 500 grams of powdered cocaine -- a $7,500 value -- to qualify for a five-year federal sentence. It takes 5 grams of crack cocaine, worth $750, to get the same penalty.
''That is not fair. They are the same drug. So they should be treated the same way,'' Phyllis Newton, staff director of the U.S. Sentencing Commission, told the crowd.
The commission, appointed by President Clinton, sought to equalize the penalties last fall. Despite endorsement from the attorney general and his drug adviser, Clinton rejected the recommendation. Another commission report on the issue is expected in the spring.
Members of Congress -- Sen. Dianne Feinstein, D-Calif., Sen. Barbara Boxer, D-Calif. and Waters have all called for congressional hearings in the last few weeks. Some Bay Area lawmakers have added their voices to the chorus, including Rep. Tom Campbell, R-Campbell, and Rep. Zoe Lofgren, D-San Jose.
In a letter asking Comptroller General Charles Bowsher to investigate, Campbell said he was concerned that federal money may have been misused ''to traffic drugs in California.''
Lofgren wrote to U.S. Attorney General Janet Reno and asked for the appointment of an independent counsel, saying she had ''some reservations about potential conflicts of interest that could arise in an investigation by the Department of Justice'' and asked Reno to request the appointment of an independent counsel.
Such investigations were made into Watergate, the Iran-Contra scandal and, most recently, the Whitewater investigation.
Deutch, in a letter responding to a call for investigation, said a 1988 CIA study presented to intelligence committees already concluded the CIA ''neither participated in nor condoned drug trafficking by Contra forces.''
But Eric E. Sterling, a Judiciary Committee staffer who oversaw drug policy during that period, said congressional staff never had the time or resources to fully investigate leads on drug trafficking. ''That was a clear lack of interest on the part of the congressional leaders,'' said Sterling, head of a drug-policy think tank.
Too many people think the Mercury News stories are ''old news'' because of the Iran-Contra hearings, said John Newman, a University of Maryland professor active in pushing for public access to government records.
But the controversy may finally open up the details of what he said was the greater tragedy of ''cocaine-Contra.''
''In our goal to win the Cold War, we lost sight of a more worthy goal -- peace at home,'' he told the crowd. ''Our zeal made us as ruthless as the enemy we fought.''
Mercury News Staff Writer Gary Webb contributed to this report.