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[00:00:06]

Pushkin. Hey, listeners, this is Jake and I need your help. We'd like to do a season two of deep cover and we're looking for a great story. Our theme or focus is people who go undercover or in some way or another live double lives. This could be a story about law enforcement or spies or something else entirely, like someone infiltrating a cult or a family member who has a secret life. We want it to be big epic in scope so that it can hold the for a bunch of episodes.

[00:00:40]

If you have any ideas, please send your suggestions or leads to deep cover at Pushkin FM. That's deep cover. All one word at Pushkin P.. You S.H. k i n as in Nancy Dot FM. OK, now for episode eight. Previously on Deep Cover, FBI agent Ned Timmins finally had his victorious moment, the kingpin of the drug smuggling operation, Lee Rich, a.k.a. Mr. Beach Club, was nabbed at the airport in Jamaica.

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And then the authorities arrested Mike Vogel, the grocery guy in Michigan.

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We had the whole SWAT team out there laying in this place all night long, waiting for word that they had Lee in custody. And once we got word, then we had Vogels house.

[00:01:37]

And Stephen Caliche, the smooth talking gentleman smuggler who'd gotten cozy with General Noriega down in Panama, was also behind bars. If you recall, Stephen had an escape plan in place. He had a group of mercenaries, special forces guys that he kept on retainer for this very purpose.

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I had a serious escape plan. Oh, I had one. Before I ever got arrested, a friend of my brother ran a Special Forces team. I put him on a 100000 dollar retainer to come and rescue me no matter where I was.

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But the Special Forces guys told him there was a catch, they could break him out.

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But in the process, someone might get killed.

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This was a problem because the gentleman smuggler was a declared pacifist. So what to do? Lee Rich and his partner, Steven Kalish, decided to fight the charges against them, so they were prosecuted together down in Tampa. The trial began in February of 1987 and is opening arguments. The assistant U.S. attorney at the time, Robert Kennedy, described the lyric as the classic kingpin living in a fancy house in the Caymans, throwing lavish parties, flying around in his Lear jet and raking in millions.

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And he depicted Steven Kalish as the field general, quote, a leader who inspired other people to work for him and work for him very efficiently, unquote.

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As the prosecution started making its case, Stephen wasn't hopeful.

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Had been on trial for about six weeks and there had been about 50 or 60 witnesses. And it was a joke because we were we were cooked.

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The prosecutors had an army of witnesses, truck drivers, pilots, boat captains, radio operators and even the bail throwers who had unloaded the drugs, mountains of incriminating evidence started piling up.

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Stephen claims that at some point he began encouraging people to testify against him to save themselves. And it turns out Steven was making plans of his own one day a few weeks into the trial. Lee says that his partner in crime, the gentleman smuggler, kind of vanished.

[00:04:03]

They'd moved him out of the cell the night before, afraid someone's going to stick him. So my lawyer says, yeah, he he Rodley, he's become an informant.

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When your lawyer says that to you, what's your reaction?

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Well, I wasn't happy. I can tell you that. I was thinking whether that's a real dirtbag. I know he's saving his ass, but I was looking at life in prison, no parole, and so was he.

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Lee claims he would never have done this. I've never testified in a courtroom against anybody, ever, and never will. It's not in my blood to turn in people and never will be.

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Steven remembers this all differently in his telling of events.

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He doesn't just disappear one day during the trial. Instead, he was candid with Lee and told him exactly what he intended to do.

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I said, I'm the only one that holds any Cartier. And those cards and Noriega, in my relationship with Noriega, I said I'm not going to sit through this trial any longer. In fact, Stephen had been talking with prosecutors for months, sussing out the possibility of a deal because Steven thought he might have a get out of jail free card.

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I just knew that the information that I could divulge about Noriega and his activities were a bombshell. There's no doubt in my mind that there's ramifications that go all the way to the top. I mean, literally from Reagan on down.

[00:05:46]

I'm Jake Halpern, and this is deep cover. Episode eight, The Political Shitstorm. Stephen Kalish was a man who always had a backup plan long before he was ever arrested.

[00:06:26]

He had hired those Special Forces guys to break him out if need be. But in the end, he couldn't stomach the possibility that someone might die.

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I said, well, that's a deal breaker. I said, I've never harmed anybody in my life. I'm not going to do it now. I said, if they can't get me out of here without somebody being hurt. Then I'll figure out another way. And it turns out he did find another way or so he thought, and it involved his friend, General Noriega, General Noriega had always been stevens' ace in the hole.

[00:07:02]

When Stephen was a fugitive living in Panama, Noriega gave him a safe haven, a way to launder his money, way to keep smuggling drugs. And now, once again, Stevens relationship with Noriega might come in handy. I didn't know how it was going to work out. I didn't know if they would drop charges. I had no idea how everything was going to play out. By going public with his story, Stephen understood he might make some enemies.

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He knew that Noriega had allies in Washington, D.C., people who might not want this getting out.

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I mean, a lot of trepidation. You know, I have to be really careful about, you know, who I disclosed as to how it's disclosed, whether it's going to become public. So it's very, very. Secret and very concerning. Stephen wouldn't be the first person to offer up dirt on Noriega, the famous investigative journalist Seymour Hersh had written a front page article in The New York Times about Noriega about eight months before the trial. It was damning.

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Hersh wrote that Noriega was involved in money laundering and that he was, quote, a secret partner, end quote, in a drug smuggling business. The article seemed to be describing Noriega's arrangement with Stephen Kalasz exactly.

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But it was all pretty vague. Hersh relied entirely on anonymous sources.

[00:08:36]

In theory, Stephen could change all of that. He could give these allegations a name and a face and a story line. So at least six months before he went on trial down in Tampa with Lee Rich, Stephen had already begun to talk with prosecutors hinting at what he knew that one of America's top allies was actually a drug trafficker.

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One prosecutor in particular took a keen interest, Doug McCullough. McCullough was the first US attorney for the Eastern District of North Carolina. He had his own case against Steven. Remember that ghost ship from episode for the one that gets abandoned in the harbor with all the marijuana in it that was working on that case?

[00:09:19]

He'd been in touch with Stevens lawyers and he'd gotten word that Steven had secrets to tell that went far beyond the ghost ship. Well, a new Kailash had this evidence that would implicate Noriega in money laundering. His lawyers had told us that in what's called a proffer, but I wanted to hear it from Caliche, his own mouth, and see what kind of person he was.

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So Doug arranges for Steven to travel up to North Carolina. Well, they put me in some shitty jail. I mean, it just typical rat infested shithole. And then Doug takes me back to his offices. Right. And he goes, well, we want to take you to a secure location and sit down with you and debrief you.

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Steven knew what Doug wanted to talk about. The question was, what did Doug want to do with it? This information was currency. And one way or another, Stephen wanted to profit from it.

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Either way, if they want me to talk, I want something for it. If they want me to shut up, I want something for it. I don't give a shit. They it's their call. It's not my call. I'm just going to tell the story and then let the cards fall the way however they fall. So they all get off to Camp Lejeune, the big Marine Corps base in North Carolina. Doug McCullough, the prosecutor, his team, along with Steven and his defense lawyers, Doug, has arranged for two trailers, one for the prosecution and one for the defense team.

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Steven remembers the Marine guards were stationed all over, but their sixteen's everyone piles into one of the trailers and Stephen starts telling his story. I detail my smuggling operations, obviously, in North Carolina, which is one of the things that concerned them, but it lifts all up to me getting to Panama and then about me going to Panama and me paying off Noriega and then me buying helicopters and jets for Noriega drugs, basically almost shell shocked. I mean, he's visibly shaken by it all.

[00:11:28]

Doug wasn't naive. He understood that a guy like Noriega might be corrupt. What blew him away was Steven. He was a runaway kid from Texas who become a drug tycoon and was apparently Noriega's business partner. And he had evidence he had airplane logs that show on his private jet, him flying Noriega around.

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These logs show that Noriega used Steven's plane during a trip to the United States. And this trip, it was a big deal.

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Noriega went to D.C. and met with the secretary of defense and then the director of the CIA. There's a celebratory lunch for him at the Pentagon. It's pretty much a hero's welcome.

[00:12:13]

So, yeah, Stevens evidence would make a lot of people look very bad.

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The debriefing session goes on and on until finally Stephen says, OK, guys, I've talked for five or six hours. I said, now it's my turn. I want to see my wife feel satisfied.

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Stephen's wife was actually waiting to meet with him. That was part of the deal that Stephen says he worked out with Doug ahead of time ever. The gentleman smuggler, Stephen, had asked for some very gentlemanly terms. He wanted a steak dinner and he wanted a trailer overlooking the Atlantic.

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And I said, OK, well, if you're satisfied, I want my wife and I to have several hours together in Ducos more than satisfied, they brought me a nice steak dinner and a beautiful meal, I think a bottle of champagne and. And my wife, we made love a couple of times. After I finished with my wife, Duck comes in and he goes, we're going to Washington, D.C., because I've been ordered by my boss that they want you at Main Justice in Washington, D.C. for debriefing.

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A few days later, they all fly up to D.C. together to the headquarters of the Department of Justice, according to Stephen, they go to a big conference room and meet with a whole host of officials.

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And once again, Stephen tells his story when it's all over, they basically just thank him for his time, seem like a dead end.

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But toward the end of the day, Doug McCullough remembers an assistant attorney general pulling him aside and saying all of this information has been passed up to the National Security Council. So apparently people were taking notice.

[00:14:16]

For all of his efforts, Stephen gets pretty much zilch, no one gives him a get out of jail free card or really anything close to it. So in February of 1987, Stephen goes on trial in Tampa alongside his old partner, Lee Rich, for a few weeks.

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They're fighting it out together. But by mid-March, Stephen says he sees the writing on the wall. There's no winning this case. So he reaches a deal with prosecutors, as they say in the business. He joins Team USA and agrees to testify for the government. In return, he gets, well, less than he hoped for. He's promised a jail sentence of no more than 20 years. Meanwhile, Lee Rich keeps defending himself at trial, but in the end, he loses.

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He's found guilty of running a continuing criminal enterprise. His sentencing hearing was brutal. The prosecutors said good old Mr. Beach Club had, quote, no redeeming social value, end quote. He was sentenced to 30 years.

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So it seemed like Stevens big move and the whole story of the general went pretty much nowhere.

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A big dud. But that wasn't the case.

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By peddling his story around in D.C. and elsewhere, he'd gotten people talking and started something much, much bigger than he ever imagined.

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More on that after the break.

[00:15:52]

Hi there, I'm Michael Lewis, host of Against the Rules, and we're back for our second season, we're talking about coaches. It wasn't that long ago that we only had coaches in sports, but now there are life coaches and coaches. You can even hire a coach to improve your online dating performance and your charisma. But coaching has become an odd source of unfairness.

[00:16:13]

Who has access to these coaches and who doesn't find against the rules wherever you listen brought to you by Pushkin Industries. Start your mornings with the news that matters in just 10 minutes. I'm Nyla Boodhoo, host of Axios Today. Every weekday, I'll be talking to a team of award winning journalists to bring you scoops from the White House, analysis on the economy and insights into the trends shaping our world. Axios is known for our smart brevetti reporting in our newsletters and HBO show.

[00:16:42]

Now we've teamed up with Pushkin Industries to bring that to a podcast. It's like taking a seat at the smartest breakfast table in the world. Listen, wherever you get your favorite podcasts sponsored by Chevron and Goldman Sachs. So Stephen's story was slowly making its way through the grapevine in Washington, D.C., and it turns out totally independent of this, another investigator named Jack Blum was also taking a closer look at Noriega. Jack was special counsel for the Senate Foreign Relations Committee under John Kerry.

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And Jack, like everybody else, had heard the rumors and read the article in The New York Times about Noriega and his alleged drug trafficking to Jack.

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It was intriguing, but not an open and shut case.

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I didn't have a smoking gun. The Times certainly didn't have a smoking gun, but there was enough there so that anybody who really wanted to know could find out a lot more.

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Jack was interested not just in Noriega, but in all the particulars of how drugs were being smuggled and how money was being laundered. And so in the mid 80s, this became Jack Bloom's mission. But he was not just some policy wonk sitting in some room with his whiteboard, Jack was more like, well, a detective.

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I went to visit these people in jail, spending time talking to them, so I actually became quite a visitor to the federal prison system. And of all the people that he interviewed, one in particular still stands out to this day.

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I remember particularly leverage the words that come to mind are clean cut. Nice guy. I could go out drinking with them. I could have him as a business partner.

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One of the things that came clear was how normal and routine and pleasant some of these five star criminals turned out to be.

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And Lee starts to tell his story all about how he smuggled his drugs and how he laundered his money with the help of the general Manuel Noriega.

[00:19:03]

It was quite a revelation.

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People were talking about Noriega, who was in charge of everything in Panama, and he was our guy. Well, you heard this and it was on wait a minute, he's not our guy. It was one thing to have a newspaper article with a bunch of unnamed sources, but it was another thing entirely to have a guy like Mr. Beach Club who could verify it all and say basically, yeah, General Manuel Noriega, he was our business partner. And here exactly is how he helped us launder our money.

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The further into this mess that I got, the more apparent it became that it was a very tangled mess. You start looking at the awards that were given to Noriega. There are photographs of of the the top man in DEA giving plaques to Noriega in Panama, congratulating him for assisting in various busts. Jack began to piece it all together, what exactly Noriega had been doing, he'd been cooperating with the U.S. war on drugs, kind of basically Noriega would apprehend some drug smugglers, but he was being very selective about which bad guys he went after, namely the guys who didn't use his money laundering services.

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Those guys, they got busted.

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All the while, Noriega is providing valuable info to the CIA because, well, he did know all kinds of things, Noriega is talking to Fidel Castro.

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Noriega is relating to all of the heads of state and characters who are all over Central America one way or another. He's got his hands in every pie. Now, of course, the stupidity of it is he's really working for himself. The more the jack looked into who Noriega was and how he operated, the more troubling it became. At one point, Jack interviewed one of Noriega's pilots who detailed the murder of Hugo Spadafora. Spatafore was a prominent doctor and revolutionary who'd criticized Noriega for his involvement in the drug trade, and he paid for it.

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In nineteen eighty five, some Panamanian soldiers abducted him and his decapitated body was later found in a ravine. The notion of torturing and beheading his opponent and doing it the way he did it, this man is really evil from top to bottom. Up until now, Jack says Noriega's bad behavior had been tolerated because he was so helpful to agencies like the CIA. I actually found an internal CIA document from the time marked secret that since been declassified, it said, quote, We have no smoking gun on Noriega, but he is closely associated with some connected to the drug trade.

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So, yeah, they had an inkling. So the CIA had its agenda for Panama. They were interested in their mission and nothing else. And their response, if you ask, why are you doing business with all these terrible characters, was pretty simple. Terrible characters are our stock in trade. It's the criminals who know how to get around the law and get around all of the systems and who can help us do our job. It was kind of like what Ned Timmins had told me from the very beginning, if you wanted to get Intel on the bad guys, well, then you also had to play with the bad guys.

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For Jack Bluhm, the only way to blow all of this open was to hold congressional hearings and use guys like Mr. Beach Club to go public and make some headlines.

[00:23:12]

More on that after the break. Hey there, I'm Ashleigh Ford, host of the Chronicles of Now podcast Chronicles of Now commissions, amazing authors like Roxane Gay, Colum McCann, Carmen Maria Machado and Curtis Sittenfeld to write short fiction inspired by the headlines.

[00:23:32]

Each episode features a new work of fiction inspired by the biggest stories of our time, like what does covid-19 do to our relationships? How do we make sense of climate change and extinction? And perhaps most mysteriously, what is going on with Trump's tweets?

[00:23:49]

Because in such uncertain times, sometimes art fiction is the only way to make sense of it all.

[00:23:56]

The show is great for fans of short speculative fiction, historical novels, podcasts that go behind the news and narrative shows like Radiolab and The Moth. The Chronicles of Narnia is imaginative storytelling at its most compelling author's helping us understand our world. Subscribe and Apple podcast or wherever you listen brought to you by Pushkin Industries.

[00:24:23]

In early 1988, about a year after they'd gone on trial down in Tampa, Lee Rich and Steven Caliche went public with the story about Noriega, and they did so in the biggest possible way in Washington, D.C. before the Senate.

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In front of live TV cameras, the US Congress today heard about a strange partnership between Panama's military ruler, Manuel Noriega, and a convicted American drug dealer.

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At this point, many senators were interested in the subject of narco trafficking. In general, there were multiple sets of hearings. Jack Blum organized one of them all together. They created a spectacle. A parade of former criminals showed up to tell their stories. Steven and Lee hope that by talking publicly, they'd get their jail sentences reduced.

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On TV, Stephen is super clean cut, perfectly combed hair, huge black rimmed glasses, a dark suit, he looks like he could be a stockbroker on his lunch break. And he's telling a story, but he's reading it, checking a script constantly, not nervously, just like he doesn't want to get a single detail wrong in his testimony. Stephen explains how exactly he'd become friends with the general.

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I was taken to General Noriega private home. I had been instructed to bring a gift for the general large enough to show how serious I was about doing business in Panama.

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I placed three hundred thousand dollars cash in my briefcase. The briefcase, stuffed with cash, would become an icon for the scandal that unfolded.

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Kind of like Monica Lewinsky's dress or Richard Nixon's White House tapes. It was a singular image that people could picture. And that told the whole story here was the head of state hosting a drug dealer in his house and accepting a briefcase stuffed with bills. A few months later, at a separate set of hearings, Lee Rich, Mr. Beach Club, also testified he backed up Steven Caliche account, corroborating the now famous story of the three hundred thousand dollars in the briefcase, Mike Vogel, the Detroit grocery guy he testified to.

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In the time between Steven Kalish and lyrics testimonies, there was big news the US Justice Department was going after Noriega.

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The military leader of Panama, General Manuel Noriega, was indicted today on charges of drug smuggling and racketeering.

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In all of U.S. history, this was only the second time that the Justice Department had indicted the head of a foreign nation. Only problem was Noriega was still safely situated in Panama, very much in control.

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The indictment only created more controversy. The legendary Congressman Charles Rangel accused the Reagan administration of, quote, a full blown cover up of the facts and quote, At last, the political shitstorm had arrived.

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Noriega didn't just stand by and watch all of this silently in the press, he defended himself. He said that the U.S. was really just interested in getting rid of him so it could keep control over the Panama Canal beyond 1999 when the U.S. was supposed to be out of there.

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Noriega actually did an interview with Mike Wallace of CBS to make his case.

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As you know, General, the American people are being told at this moment. But Manuel Noriega is a criminal. He's a drug dealer. He has an arms dealer. He is a money laundering question, why Noriega and why now? But they were precisely in the interview.

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Noriega said essentially, look, all of this is political conspiracy. This is retribution because I wouldn't do the US's dirty work in Nicaragua and help the Contras. During the 60 Minutes interview, Wallace asked about Stephen Kalasz.

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You know, Stephen Michael Caliche.

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I here hear many people come by when you work in my profession and also as a politician, you see a lot of people not that you know them, I would know should.

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He gave me three hundred thousand dollars and he said that the first time he met you, he left a bag behind for three hundred thousand dollars in fraud. And he also said that you were a full scale coconspirator in his drug operation, that he paid you eventually millions of dollars that you you're talking of to convict, let's say they both gave money to. If that doesn't invalidate the money, what does? This was a big part of Noriega's defense. Stephen Caliche is a convict, you can't believe a word he says.

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Look, some of Noriega's critiques were legit, like the fact that the U.S. messed around in small countries in order to advance its own sketchy interests. Yeah, fair enough. But when it came to the drug and money laundering charges, the evidence against Noriega was pretty damning. The real question and a lot of people's minds was how could the U.S. allow this? How could it buddy up with a drug trafficker like Noriega? Because our intelligence services knew what he was up to.

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Two years before the congressional hearings, John Poindexter, the national security adviser at the time, went to Panama. According to The New York Times, he told Noriega to, quote, cut it out. So, yeah, people knew. In fact, as far back as the early 1970s, U.S. officials were in the know they'd heard the allegations of Noriega's involvement in the drug trade. And this evidence was actually passed along to the U.S. Senate at the time when it was negotiating a new treaty with Panama.

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But for years and years, the U.S. had opted to do very little about this. Not anymore. Not after the story of the gentleman smuggler and his briefcase. That was it. While all of this is going on, the congressional hearings, the indictment against Noriega, the growing scandal, Ned Timmons was back in Detroit, no one had asked him to testify before Congress. Apparently, he was just another cog in the machine, that it helped bring all of this to light.

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But Ned was still plenty busy at work thanks to his time on the Lee case, Ned had all kinds of contacts in the drug world. One of them was a beautiful young woman from Colombia who knew things.

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She was connected with the biggest people in the cartels and talked a good game, she knew what she's talking about, she knew the right names. These are the people that would have supplied the drugs to likely Rich. They're the people that controlled everything on the north coast of Colombia. It seemed like this could be the final piece in the puzzle, after all, Ned and the FBI had busted the distributor with the big warehouse in Detroit that gotten the master smuggler with his armada of ships.

[00:31:42]

They got in the kingpin from a safe haven in the Caymans. Even the money launderer, Noriega, had been indicted and now Nedd had a shot at the source.

[00:32:07]

Next time on Deep Cover, our final episode in the series, A Real Reckoning for Ned with his marriage and with the FBI. I mean, she was a strikingly beautiful woman, and now she's sitting here with no husband, she's got no other connections besides net, not a good situation to have your husband involved in. I mean, you can almost predict trouble. Deep cover is produced by Jacob Smith and edited by Karen Mukherjee, our story editor is Jack Hitt.

[00:32:55]

Original music in our theme was composed by Louis Scarra and Flora Williams is our engineer. Fact checking by Amy Gaines. Mia Lobell is Pushkin's executive producer. Ned's novel is read by Walton Goggins special thanks to Julia Barton, Heather Fain, Carly Migliore, Lee, Tom Mallott, Maya Kerning, Eric Sandler, Maggie Taylor, Kadija Holland, Zoe Quinn and Jacob Weisberg at Pushkin Industries Special. Thanks also to Jeff Singer at Stayaway Entertainment. Additional thanks to John Dingess, who wrote Our Man in Panama, a meticulously researched, excellent book by Manuel Noriega.

[00:33:36]

I'm Jake Halpern.