Automobile magnate John Z. De Lorean was ordered held today on $5 million bail at his arraignment in connection with a $6.5 million drug deal designed to save his De Lorean sports car company from financial disaster.
In an affidavit submitted today and in statements before U.S. magistrate Volmey V. Brown Jr., federal agents and prosecutors described De Lorean sitting in a Los Angeles hotel room shortly before his arrest Wednesday, cradling a wrapped package of cocaine in his lap.
"This is better than gold. It came just in the nick of time," De Lorean said in a meeting with an undercover agent that was secretly videotaped, according to the prosecutor.
Assistant U.S. Attorney James Walsh had asked for $20 million bail, disdaining pleas from De Lorean's attorney that he had led a blameless life and was just trying to save his company, whose bankrupt factory was closed Wednesday in Northern Ireland. "One doesn't create an industry on the backs of cocaine users and heroin addicts," Walsh said.
In a criminal complaint filed today, the government said discussions of narcotics transactions between De Lorean, 57, and various confidential informants and federal undercover agents began as early as July 11 in the Marriott Hotel in Newport Beach, Calif.
According to an affidavit submitted by FBI agent Jerry G. West, federal agents secretly videotaped a meeting between De Lorean and an unnamed "cooperating individual" at the L'Enfant Plaza Hotel in Washington Sept. 4. The two men discussed "the importation and distribution of heroin from Thailand and cocaine from South America as a means of generating large amounts of capital to be put into" De Lorean's company. De Lorean agreed to furnish $1.8 million in cash with $3 million coming from a person described as a "Mr. Vicenza," but later identified as DEA agent John M. Valestra acting as an undercover agent.
Under the arrangement, after $60 million in profits from the drug deals had come to De Lorean, Valestra was to own half of De Lorean's firm.
De Lorean was led into the courtroom in handcuffs by U.S. marshals. He wore a dark blue suit with a blue shirt and no tie and looked very tired. His attorney, Bernard Minsky, said De Lorean had not slept while in jail last night.
His wife, actress and model Christina Ferrare, came immediately over to sit beside him at the side of the courtroom and the two engaged in intense conversation for several minutes before the hearing began. De Lorean did most of the talking. She kissed him several times before he was led away by marshals.
One of De Lorean's attorneys asked that De Lorean be freed immediately while arrangements were being made to put up his $1 million home in San Diego for a loan to raise the bail, but Brown denied the request. Just before De Lorean left the courtroom, he signed the necessary papers and Minsky said he thought De Lorean could be freed by Thursday. Although De Lorean entered no plea, Minsky said the plea would be not guilty.
De Lorean has been charged with conspiracy to possess cocaine with intent to distribute it. The charge followed a five-month investigation which Drug Enforcement Administration and FBI agents said showed that De Lorean was planning to serve as financier for the distribution in Southern California of at least 220 pounds of cocaine worth $24 million. That included 60 pounds, worth approximately $6.5 million, that federal agents said was confiscated in the operation.
Facing the same charge, after their arrests Monday, were William Morgan Hetrick, 50, of Mojave, Calif., owner of an aircraft service company, and Stephen Lee Arrington, 34, of San Diego, reportedly an associate of Hetrick.
Nearly 200 reporters, lawyers, secretaries, friends of De Lorean and various hangers-on jammed the courtroom at the U.S. courthouse here to stare at the tall, gaunt, gray-haired suspect, and listen to Walsh and Minsky debate his right to freedom on bail.
Minsky said "the whole world knows that Mr. De Lorean has been in need of money . . . . People contacted him, and because of this need, I think he felt preyed upon. I think he is a victim."
Another De Lorean attorney, Samuel Miller, said that his client's "motivation in getting involved in this alleged offer was to save his company. There was no allegation that Mr. De Lorean was trying to make money for himself."
But Walsh noted that De Lorean's net worth had been assessed at $78 million and that "he can go any time any place he wants to. He can travel like a fish swims in water."
Walsh referred repeatedly to the videotapes of De Lorean's meeting concerning the drug deal, which Walsh said he had seen. According to West's affidavit, they also included:
* A meeting in the Bel Air Sands Hotel here Sept. 20 in which Hetrick told De Lorean he could obtain 220 pounds of cocaine immediately in San Francisco.
* A Sept. 28 meeting at the Bonaventure Hotel here at which De Lorean and the unnamed "cooperating individual" told Valestra of Hetrick's offer and Valestra agreed to cooperate, noting it would take five weeks to import any heroin from Thailand.
* The final meeting Wednesday in the Sheraton Plaza Hotel in which Valestra, another undercover agent and the "cooperating individual" inspected a suitcase containing about 44 pounds of cocaine provided by Hetrick. Valestra told De Lorean he could expect about $5 million from sale of the cocaine in a few days, leading De Lorean to say it was just "in the nick of time" because his Northern Ireland plant would be shut down Friday.
Walsh said De Lorean was "a 57-year-old defendent with the realistic prospect of spending the rest of his life in jail. Would you run? Would I? I don't know." Walsh said later that several counts would be brought against De Lorean, which could lead to as much as 25- or 30-year sentence.
Brown, however, saying "the rich man as well as the poor man is entitled to reasonable bail," knocked down the amount. De Lorean is required to come up with 5 percent of the $5 million, surrender his passport and restrict his travel to New York and Southern California.
Brown, shortly before the De Lorean hearing, reduced from $500,000 to $250,000 the bail for Arrington, who delivered the $6.5 million worth of cocaine to undercover agents. Arrington's attorney pointed out that his client had served four tours in Vietnam while in the Navy and been credited with saving the lives of several downed pilots. But Walsh said Arrington, who appeared in court in blue T-shirt and jeans, had also been convicted while in the Navy of selling marijuana.
According to an affidavit filed in federal court today, Hetrick told FBI undercover agent Benedict Tisa that he would fly in from Florida Monday with 220 pounds of cocaine, DEA agent Gerald V. Scotti said. Tisa agreed to a price of $5 million, the affidavit said.
Tisa met Hetrick Monday afternoon when his Pan Am flight arrived from Miami and drove with him to the Sheraton Hotel near the airport where Hetrick told Tisa he had only about 55 pounds of cocaine, the affidavit said. Tisa agreed to a price of $1.5 million and he, Hetrick and another unnamed informant met Scotti and DEA agent John Valestra in the hotel, the affidavit said. Scotti and Valestra posed as drug distributors.
At the 7:45 p.m. meeting in room 501, Scotti showed Hetrick a briefcase containing $1.8 million in cash. Hetrick, the affidavit said, "expressed some concern because he had never dealt with us before, but said that future transactions would go more smoothly after we got to know each other better." He said the remaining 187 pounds of cocaine would follow in a day or two, according to the affidavit.
After some initial confusion over how Hetrick would deliver the cocaine, the affidavit said, Hetrick met Arrington in the hotel lobby and had Arrington drive Scotti and the unnamed informant in Hetrick's Cadillac to Van Nuys Airport in northwestern Los Angeles.
Arrington parked, walked away to another part of the parking lot and then returned driving a Chevrolet Caprice. He pulled a switch hidden under the dashboard and the back seat popped forward, revealing several "kilo size" packages wrapped in brown paper and masking tape filling the entire area behind the back seat, according to the affidavit.