The Unknown Soldier
Mickey Downie used to be the government's hired gun. Now he's in its crosshairs.
BY THOMAS FRANCIS
Subtlety doesn't work at the Medina Gun Show. So Mickey Downie mounted an M-60 machine gun high above his booth, knowing that it could be seen from anywhere on the floor, beckoning gun lovers the way a church steeple summons the God-fearing of a small town. If that wasn't incentive enough, he hired two beauties in halter-tops and mini-skirts to stand by his side.
"They think they're above the law," says Downie of his old bosses.
Sex and violence drove gun sales, but Downie was more interested in being known as a big shot. The arsenal, the eye candy, and the Jaguars, Porsches, and Cadillacs he drove all spoke of a prodigious but mysterious wealth. The popular assumption: Downie was a high roller on the black market.
On the strength of this reputation, Downie never failed to make friends. One guy wanted help selling kiddie porn. Another wanted help arming his drug dealers. Yet another wanted to unload hot cars. There were offers of counterfeit money and stolen merchandise. Downie was interested in it all.
But the best proposition he ever heard came from two middle-aged, nondescript men who stopped at his booth in 1989, Downie's 16th year at the Medina show. The men were shopping a cache of military hardware worth about $8 billion, more than the firepower of some small nations. "Can you market large quantities of arms?" they asked Downie.
"Absolutely," he answered.
"Can you market arms from Vietnam?" they asked.
"No problem," he said.
Thus began Operation Leatherneck, one of the biggest arms-smuggling investigations in American history.
To the men he met that day, Mickey Downie was exactly what he appeared to be: a grizzly, sleepy-eyed gun dealer with a Canadian accent, who lived in Northeast Ohio. Only his connections weren't on the black market -- they were inside the federal government. Frank Caliendo, the man whom Downie would introduce as his bodyguard, was really a U.S. Customs agent based in Cleveland.
Downie himself was more of an investigative freelancer: When someone approached him with a criminal scheme, Downie forwarded it to Customs -- or another federal agency -- for potential investigation. Downie would then work the case undercover, often with Caliendo. For about 20 years, this was his job. And Operation Leatherneck looked like the biggest case of his career.
The smugglers boasted of friends in politics and corporate America -- the kind who could ensure that money was laundered, that weapons slipped past law enforcement. Downie and Caliendo told their bosses they could bust the smugglers, their corporate pals, and any dirty politicians they encountered along the way.
Leatherneck not only tracked the smugglers through their partner banks in America; it unearthed millions in illegal profits that American corporations were making in Vietnam, in violation of a trade embargo. Downie and Caliendo say they forwarded the lists of suspects to their superiors.
But instead of urging them to move forward, Customs kicked Caliendo off the case and reined in Downie. They were furious, as were investigators from another agency working the case. Hardest to accept was an order forbidding them to acknowledge the operation's existence. "We all refused," says Downie. "We all basically paid for it with our careers."
None paid more severely than Downie. In the dozen years since Leatherneck folded, he has sought justice through civil lawsuits, claiming his biggest victory in December, when a federal judge ruled that Downie was mistreated by Customs. He wants the money he claims he's owed for risking his life. And he wants to expose those he says would rather protect corporate interests than prosecute the world's biggest arms dealers.
"The first time you hear this story, you have to think I'm crazy," admits Downie. "But it's all true."
Barrel-chested, self-righteous, with a fierce belief in American justice, Mickey Downie seems carved from a Tom Clancy novel. He has more guns than Rambo and tells a far more elaborate tale of government betrayal.
He got his first undercover assignment in the late 1960s. Downie was a teenager. His father's friend, a cop, needed someone to pose as a junkie, he says. Downie bought drugs from small-time dealers in the Cleveland suburbs, then gave them to police, who gave Downie checks for his trouble. "I liked the challenge of it," he says. When Downie learned he could do the same thing for federal agencies, he found a profession.
In the 1970s, Downie says, he worked with the Cleveland office of the Bureau of Alcohol, Tobacco, and Firearms, busting illegal gun dealers. It was there that he met Caliendo. The two continued to work together even after Caliendo moved to Customs in 1983.
Downie doesn't talk about the intricacies of his work. "I catch bad guys," he simply says. It's a job made easier by his talent for playing the bad guy.
The Canadian arms dealer is the only character in Downie's repertoire, but it's one he mastered. Though he grew up outside Cleveland, Downie's parents were Canadian, and he inherited their accent. He says he persuaded Canadian authorities to issue him a driver's license, Social Security number, and address, all under his false identity. He says the Canadian government even kept a file that cast him as a political radical. If a bad guy ever did a deep background check, Downie would seem exactly the right-wing nut he portrayed.
It is impossible to verify everything Downie says. Governments usually don't discuss their undercover operatives, and much of the documentation covering his claims is labeled classified by the feds. For example, one Freedom of Information Act request filed by Scene -- concerning an investigation on Leatherneck's failure -- had more than half the material blacked out. The feds are even loath to discuss matters that have been disclosed in court.
But what is clear is that Downie intrigued Robert Muir, the man whom government documents identify as Operation Leatherneck's key target.
A number of federal agencies kept files on Muir, all of which were classified. But what Downie was told was this: Muir was an American with a background in U.S. intelligence in Southeast Asia.
When the U.S. fled Vietnam in 1975, it left behind warehouses full of guns and tanks, hangars packed with choppers and fighter planes. The Viet Cong inherited it all, and Downie says they hired Muir to sell the weapons abroad.
Through the mysterious men at the Medina Gun Show, Downie was put in contact with Muir. Soon, they were communicating by phone and fax. (Muir, whose whereabouts are unknown, could not be reached for comment.)
The faxes indicate that their discussions occurred in late 1989, a bad time to be an arms dealer. The Berlin Wall had crumbled, and the U.S.S.R.'s demise was imminent. Any country that needed weapons could scavenge them off the Soviet empire. Also, the weapons left in Vietnam were becoming obsolete. Downie guessed that Muir was desperate to move them soon
The Unknown Soldier (cont.)
"Bring your shopping list," Muir wrote in one fax examined by Scene. "Warehouses are full." Among a host of smaller weapons, he also listed 15 A-37 bombers, 24 F-5 jets, seven C-130 helicopters, 20 Huey helicopters, 107 M-41 tanks, 100 armored personnel carriers, and 140 howitzers. Muir and his men didn't seem to care where the arms were sold. "On one of my undercover tapes, I told them I would market some of these weapons to Qaddafi," says Downie. "That's as anti-American as it gets." Muir didn't flinch. Downie added that he'd sell the machine guns to street gangs. This, too, was fine by Muir.
A career undercover has left Downie with thousands of tapes.
Next, Downie says, he told Muir's men he needed to move the money through a bank account that couldn't be traced by federal investigators. "I said, 'I'm putting up several million dollars, so I want to make sure it's not lost,'" says Downie. "They were very flamboyant about it, and they said that such-and-such corporation gives us money, and we've never lost it before."
(Government documents list some corporations -- Mobil Oil, Shell Oil, TRW, and Coca-Cola, among others -- but offer no evidence that trade violations were committed. Downie is legally barred from revealing that aspect of the investigation.)
Whenever the smugglers engaged in corporate name-dropping, Downie and Caliendo took note in their reports. The disclosures raised the stakes. Since the U.S. maintained a trade embargo against Vietnam, any company doing business there was in violation of the Trading With the Enemy Act -- a federal offense just a notch below treason.
The Office of Foreign Assets Control (OFAC) is a small agency charged with enforcing that act. Its agents began to monitor the bank accounts Muir's men offered for Downie's use. OFAC watched major American companies wire funds into the accounts, which were then tracked to Vietnamese officials, according to a government source.
The documents also confirm that the National Security Council approved the OFAC investigation. In May 1990, Customs labeled it "level one," its highest intelligence rating. The objective: Arrest the smugglers and bring them to trial in the U.S., then nail the corporations violating trade laws.
Downie and the smugglers agreed that $70 million would be the price for the first arms shipment. Downie had only to wire the money, and 17 freighters full of military hardware would steam toward America.
"They were kind enough to give me the name of the bank, the banker, the attorney that handled the transactions, the countries that the money would flow through," says Downie.
Still, Downie and Caliendo expressed concern that the arms would be intercepted by U.S. law enforcement. "You'll never have to worry about being arrested or losing your weapons or funds," the smugglers told them. "We have protection at the highest levels."
"What I didn't realize," says Downie, "was they were right, and we were wrong."
Leatherneck was cursed from the moment it uncovered the money trail linking U.S. corporations to the Vietnamese government. At least, that's the conclusion of Downie and others who took part in the investigation. It's the only way they can make sense of their superiors' decisions.
"I don't know how high this goes," says Downie. But he has no doubt that Richard Siegel, who directed Customs' Cleveland office, helped sabotage the case.
It was Siegel, says Downie, who ordered him not to accept Muir's invitation for a personal meeting. He also says the smugglers bragged that they "had a congressman in their pocket." Downie wanted to meet the congressman. Again, he says, Siegel stood in the way.
The congressman's name is blacked out on government documents, and it is not clear whether his intent was criminal. Downie would face criminal charges if he revealed more of this classified part of the operation.
(Customs spokeswoman Cherise Miles refused to discuss Leatherneck.)
In the years after Leatherneck, the U.S. Treasury Office of the Inspector General investigated the conduct of Siegel and other federal officials. Since much of Leatherneck remains classified, the Inspector General's report remains the sole source of information.
In his interview with IG investigators, Siegel said, he encountered Downie at a Cleveland-area gun show and witnessed him speaking in a "loud and boisterous manner." Siegel also saw Downie in the company of a woman in a see-through blouse and questioned Caliendo about Downie's flamboyance.
Caliendo responded that Downie was selling his character. "This type of behavior was typical for gun shows," Caliendo told Siegel, according to the IG report.
Siegel remained skeptical. Later, he learned that the two met in Caliendo's Cleveland-area home to plot strategy. He told IG investigators that he believed that Caliendo was "losing control" of Downie. In June 1990 -- just three weeks after Customs sanctioned the operation -- Siegel took Caliendo off the case.
Downie threatened to walk. He says Siegel ordered him to remain in touch with the smugglers and to introduce a new agent, who would use the name Mike Goldsmith. But at just 24 years of age, Goldsmith had never worked a major undercover, says Downie. He also happened to be Jewish. This was a problem, since one of the smugglers was a rabid neo-Nazi. Downie and Caliendo told Siegel this, according to the IG's report. Siegel nonetheless insisted on Goldsmith.
Having worked with Caliendo for 12 years, Downie wasn't about to audition a new partner. "I was working at the highest level of arms dealing on the planet," he says. "You make a mistake, people die."
So Downie dropped out of Leatherneck, aiming a few parting shots at Siegel as he went. "I cannot accept your decision, which I believe increases my personal jeopardy to an intolerable level," Downie wrote in his letter of resignation.
Siegel, now retired and living in Medina, agreed to discuss with Scene only those facets of the case that have come up in open court. His take is that Downie and Caliendo were suckered. For all Muir's talk of a giant weapons stash, he refused to give them a single firearm as a sample.
"The information that had started to come back to us was that these guys weren't legit," says Siegel. "This looked like a big pipe dream."
The Unknown Soldier (cont.)
Walter Novak Downie has Ashcroft's politics -- and Rambo's guns.
And even if Muir were legit, Siegel says, Caliendo's meeting with Downie at home was "definitely a violation of Customs procedure" and that "Downie was not taking direction from Caliendo." Siegel brought in Goldsmith to "come up with a new opinion on the case," he says. But others close to the investigation didn't share Siegel's perspective. Investigators for OFAC, who worked with Downie and Caliendo, saw no conflict between the two and complained that Caliendo's departure imperiled the operation, since he had already met the smugglers.
"Taking Caliendo off Operation Leatherneck was a mistake," one OFAC investigator told the Inspector General.
Another Customs agent from Cleveland replaced Downie, but by this time, Muir's men were spooked, according to the IG's report. They abandoned the deal.
Federal prosecutors didn't have enough to file charges. It seemed the end of Leatherneck.
Yet part of the case was still alive. OFAC investigators Stephen Plitman and Robert Sheridan had kept tabs on the bank accounts that were allegedly used for corporate payoffs to the Vietnamese government. An Associated Press story revealed that, by August 1991, Plitman and Sheridan had documented millions in cash flow between the two sides. But before they could present their case to a U.S. attorney for prosecution, their boss intervened.
R. Richard Newcomb, a Toledo native who attended Case Western Reserve University, has headed OFAC for 16 years -- an eternity, given the revolving door of presidential appointments. The Washington Post calls him America's "sanctions czar." Still, he has been a polarizing figure. His critics suggest that he caters to special interests at the expense of law enforcement.
Before he assumed a role in Leatherneck, Newcomb had been skewered for allegedly stalling the prosecution of Texaco Corp., which OFAC investigated for business dealings in Haiti, another nation once on the enemies list.
More controversy arrived after Newcomb directed his agency to dole out the maximum penalty to a small Houston-based airline called BaseOps, which had been paying Vietnam a fee for crossing its air space. BaseOps' CEO got a six-month prison sentence. Yet nearly every major U.S. airline made much larger payments to Vietnam -- and escaped with modest fines. It appeared to be a case of serving up small fry as a way to avoid facing a backlash from more influential offenders.
But it was Newcomb's role in Leatherneck that would finally earn an Inspector General's investigation.
According to the IG's report, one OFAC investigator -- government sources say it was Plitman -- accused Newcomb of deliberately scuttling OFAC's case against the corporations. He claimed that Newcomb barred investigators from speaking to the U.S. Attorney prosecuting the case. The Inspector General's office also validated Plitman's claim that Newcomb had drafted a letter to the New York bank handling the illicit cash transfers, ordering it to "cease and desist." Essentially, this alerted the bank to OFAC's investigation and prevented investigators from gathering more evidence on the corporate players involved.
Still, Plitman and Sheridan continued to gather evidence against the companies, including Mobil Corp. But a close friend of Newcomb's was an attorney for the company. During the very period when OFAC was investigating Mobil, Newcomb met with its executives, according to the IG report.
Plitman knew the probe had sprung a leak when he received a call from Mobil's attorneys. "I was completely taken aback, and I immediately asked them how they became aware of the investigation," said Plitman in an affidavit cited by The Los Angeles Times. (When Scene asked the Inspector General's office for the same document, it denied knowledge of its existence.)
"They stated that Mr. Newcomb told them about the allegations," Plitman said in his affidavit, "and that they were sure they could respond in a satisfactory fashion."
This, Plitman says in the IG report, amounted to "nothing less than a tip-off."
Exxon Mobil spokesman Tom Cirigliano admits that the company prospected for oil off the Vietnam coast before the war, but says it left when the war began and did not return until after the embargo was lifted in 1993.
Downie talked to Southern Ohio Congressman John Boehner (R-Hamilton) about Leatherneck in July 1993. Boehner, in turn, called OFAC, asking why such a promising case went bad. In the affidavit cited by The L.A. Times, Plitman claimed that Newcomb asked him to lie to Boehner. Plitman refused. Boehner's office did not respond to interview requests, but in a letter to one of Downie's attorneys, Boehner made his frustration known, complaining that "official inquiries by my office are met with stonewalling and obfuscation as a matter of policy."
In the end, OFAC declined to prosecute the corporations suspected of moving money to the Vietnamese government. Plitman and Sheridan both filed grievances against Newcomb, alleging that their boss ruined Leatherneck, among other investigations. (Sheridan, who has since retired, could not be reached for comment. Plitman, now a Customs investigator in Washington, D.C., refused comment.)
The final IG report faulted Newcomb for not pursuing the criminal case and admonished him for meeting with the targets of OFAC investigations. But Newcomb received no punishment from his superiors in the U.S. Treasury. He remains director of OFAC today. (Newcomb declined comment.)
Downie can't believe Newcomb's leaks happened by accident. Nor can he imagine that Siegel believed it was possible to carry out Leatherneck after replacing the undercover agents.
"It was destroyed by design," he says. "It was too devious, too sophisticated to be incompetence. They attacked the operation from all directions."
Leatherneck left bureaucratic fallout in Washington. But its failure had more devastating effects for those on the front lines.
The Vietnamese government appointed a general to be its intermediary with Muir, and according to Downie, the government told the general that delays in completing the sale would mean death by firing squad.
"He was charged with moving these arms out of Vietnam and moving money in," says Downie. "He was on a time schedule. When I received orders to slow things down, I slowed things down. I did as I was ordered. When I did so, he couldn't get the business done soon enough and so they killed him."
Downie first heard of the general's death from the smugglers, but guessed it to be a bluff. Three weeks later, he says, U.S. State Department intelligence confirmed it. Another government source says the same thing.
The Unknown Soldier (cont)
Caliendo lodged complaints with Siegel's superiors and was later demoted and transferred to the Customs office in Orange County, California. Caliendo would sue under the Whistleblower Protection Act, alleging that his transfer amounted to retaliation. He lost that case, and a second suit filed in federal court was also dismissed. Plitman and Sheridan remained unrelenting critics of Newcomb. Besides filing grievances against their boss, they gave damning testimony to the Inspector General and to a House Banking subcommittee investigating OFAC. In the midst of the latter, Plitman and Sheridan were transferred to Customs. The move was billed as a reorganization, but Plitman and Sheridan told the subcommittee that it was retaliation.
Leatherneck destroyed Downie's career, if only because he was hell-bent on making Siegel and other higher-ups accountable for the operation's demise. The day after he resigned, Downie sought out the FBI, telling an agent that Siegel deliberately botched the operation. The FBI then questioned Siegel.
A few months later, Siegel issued a memorandum circulated through Customs nationwide; it accused Downie of being "both undesirable and unreliable." The letter states that Downie defied the orders of his "control agent" (Caliendo), that he endangered the life of an agent (Goldsmith), and that he leaked Leatherneck details to another agency (the FBI).
The first two allegations are false, Downie says. As for the third, he offers no apology. "They say I shared intelligence, and they're right. I did -- as any good American would have."
At any point during his career, Downie might be working on several different undercover operations. Even before Leatherneck's end, Downie had assumed an undercover role in an FBI probe of illegal gambling and drug dealing among Cleveland police.
While Downie was in the midst of the case, Siegel demanded that he testify in a previous Customs case involving the sale of counterfeit Gucci bags. In the past, Downie had been protected from subpoenas to preserve his undercover identity.
Downie sought to quash the subpoena. Given the scope of the investigation against the Cleveland police, Downie figured it would only be a matter of time until one of the targets saw his name on the witness list. But he believes Customs was trying to blow his cover. "These people didn't care who got hurt or killed out of this," says Downie.
Siegel told IG investigators that Downie's testimony was needed in the counterfeit Gucci case, that Downie's reluctance to testify amounted to insubordination, and that this was a big reason Siegel had cast him as unreliable in the memo.
Marilyn Bobula, the assistant U.S. attorney who prosecuted the Gucci case, tells it another way. She told the IG that, since the case against the alleged counterfeiter was weak, her office was declining to prosecute. She didn't need Downie to testify, so it was odd that Siegel demanded it. Furthermore, Bobula told the IG that "a [Customs] 'guy under Siegel' came to her and tried to turn her against Downie." Bobula added that Downie was "100 percent reliable."
Dan Estrem, the FBI agent who worked with Downie on the Cleveland police sting, used the same phrase, adding that Downie did "a hell of a job" on that bust.
Driven perhaps by spite even more than injustice, Downie has used the years since Leatherneck to hurl lawsuits at his former bosses.
A judge dismissed a suit in which Downie demanded $20 million for what would have been his cut of the confiscated weapons.
Another suit, filed in 1994, finally went to trial December 3. It involves payments Downie never received for Customs work he did prior to Leatherneck, including the Gucci case. Caliendo and many of the characters from Leatherneck came to Cleveland to testify.
Downie wanted the testimony on public record, contending it would reinforce his claim that the intelligence community, though charged with guarding national security, abandons its objectives in the face of political pressure.
But Federal Judge Bohdan A. Futey closed the proceedings and sealed all documents from public view. (Futey did not return calls or respond to letters asking why such an old case would remain classified.)
Downie says that Futey ruled in his favor, saying from the bench that Customs' blackballing of Downie was "arbitrary and capricious." Department of Justice spokesman Charles Miller told Scene that Futey's ruling is sealed and refused to comment. But Downie says the only remaining issue is the amount he'll be paid for damages.
Downie no longer has a booth at the Medina Gun Show. There are no leggy models on his payroll, no luxury cars. After Siegel issued his memo in 1991, Downie continued to offer to work undercover for Customs in Cleveland, but was rejected out of hand. By the late 1990s, he finally gave up.
Since Siegel's attempt to subpoena him, Downie has felt like a marked man. After 20 years of being the hunter, Downie has spent the last 10 years feeling hunted, whether by the subjects of his many investigations or by superiors whose misdeeds he has sought to expose.
Yet he claims to reject both fear and paranoia. "If you're going to look over your shoulder, you'll never be good at this line of work, and you don't belong in it." In the same breath, however, he acknowledges an appreciation for his mortality. "We're talking about real life here, not television," he says.
He certainly errs on the side of caution. The year after Siegel tried to subpoena him, Downie moved his family three times. He agreed to be interviewed at his Northeast Ohio home under the condition that Scene not mention where he lives. A dog alerts him when someone nears his property. And Downie still owns lots of guns. He is working today, but he will only say that it "involves law enforcement."
Perhaps the only person to emerge a winner was the investigation's original target, Robert Muir. He was never arrested -- and some believe that he finally managed to sell his aging stockpile.
In 1997, The San Diego Union-Tribune reported what was believed to be the largest cache of weapons ever discovered on American soil: two cargo containers 20 feet long, 8 feet wide, and 8 feet deep, packed with Vietnam-era grenade launchers and M-2 carbines. They were warehoused just north of the Mexican border, waiting to be shipped to Mexico City. A Customs official admitted that the discovery was pure "fluke." Three more containers with the same weaponry surfaced in New Jersey, having arrived from the West Coast via train.
Customs officials speculated that the first cache might have been headed to Mexico's drug cartels. The Union-Tribune used shipping records to trace the weapons back to Southeast Asia.
But while Downie acknowledges that the seizures were large, they were but a fraction of the weapons stash Muir claimed to possess. Even Customs officials admitted the likelihood that other containers had slipped into the United States.
"Had we been allowed to complete the case, [the weapons] would have been in the hands of the U.S. government," says Downie, "where they belonged."
Return to the Customs Corruption Homepage