The path that brought sports car creator John Z. De Lorean to jail here on cocaine charges has been traced back several years to the beginnings of his relationship with pilot and inventor William Morgan Hetrick, who like De Lorean is described as a technical genius with an appetite for money and success.
Investigators said they believe the relationship between the two men goes back much further than the alleged multimillion-dollar cocaine conspiracy for which they were arrested this week--possibly to when Hetrick worked as a pilot for the Learjet Corp. or for now-deceased California computer entrepreneur Fletcher Jones. One investigator described Hetrick as a "bona fide genius who invented an innovative braking system" for airplanes before he allegedly began ferrying large amounts of narcotics from the Caribbean.
One source close to the investigation said today that officials have word of bank accounts and safe deposit boxes being emptied in a four-county area of Southern California after Hetrick was arrested Monday night along with his associate Stephen Lee Arrington. "Some places we just got to a little too late," one source said about the nationwide Internal Revenue Service effort to locate Hetrick's extensive assets, which reportedly include 28 bank accounts and two Florida pleasure boats.
The IRS also reportedly had taken an interest in De Lorean, and has been looking into a complex partnership organized by De Lorean to finance design work on the dream sports car on which he staked his future: the DMC12 De Lorean with gull-winged doors and stainless steel skin.
Associates said De Lorean's business dealings, ranging far beyond the automobile project, have been so complex that the closing of his Northern Ireland auto plant by the British government on the day of his arrest here may threaten the whole structure.
Prosecutors have estimated De Lorean's personal worth at $78 million, including $50 million in the sports car company. But Bernard Minsky, an attorney who has represented him in California on business-related matters for several years, said in court on Wednesday that he spent so much time talking to De Lorean after his arrest "about some of his other problems" that he had little left in which to discuss the cocaine charges. De Lorean has now asked a prominent Long Beach criminal attorney, Joseph A. Ball, a former senior counsel to the Warren Commission, to represent him in the cocaine case.
Investigators have been reluctant so far to provide many details about two key parts of the case: how they allege De Lorean entered into a deal to save his faltering company with profits from the sale of up to 220 pounds of cocaine and how much federal agents and informants were involved in leading De Lorean to the hotel room meeting at which he was allegedly videotaped while excitedly receiving some of the cocaine.
One investigator said De Lorean first came into contact with a federal informant, allegedly seeking assistance in setting up a drug deal. The informant, the investigator said, later helped put De Lorean in contact with Hetrick.
Capt. Marvin Houghton of the Ventura city police department, a city 70 miles northwest of here, said Hetrick operated his own aircraft repair, service and transport business in the Ventura County town of Oxnard on the Pacific coast, before moving to Mojave in the deserts of Kern County about 80 miles north of here.
In the Mojave desert, according to allegations in court, Hetrick amassed 14 to 16 aircraft which flew out of a remote airport to destinations in the southeastern United States and in Colombia, bringing back to California 200 to 400 pounds of cocaine each time. One source close to the case said there was "no question" that Hetrick, now 50, flew some of the drug runs himself.
Hetrick reportedly spent at least $225,000 on new equipment for his Morgan Aviation Co. and told acquaintances about his boats and other far-flung interests, leading some to wonder where his money came from, according to investigators. A telephone call to his company office in Mojave yesterday was answered by a man who identified himself as an IRS agent.
According to Houghton, Ventura city police investigators were tipped off in March that someone was moving large amounts of money around there in what was suspected to be a "laundering" operation to put into legitimate investments sums of money from illegal activities. After a time, he said, city investigators heard the name "Morgan" in connection with the case.
"That stopped us for a while," said Houghton. "We didn't know anyone named Morgan. Then we learned it was this individual's middle name, and he had this company in Mojave named after him."
U.S. Customs officials were contacted, Houghton said, and "eventually we found we were working up from the bottom while the FBI and DEA Drug Enforcement Administration were working down from the top. In the middle was Hetrick."
At about the same time, De Lorean, now 57, was sinking deeper into business difficulties. His sports car venture, funded with $143 million in various kinds of support from the British government, had been turning out thousands of cars in Northern Ireland, but they piled up on the Belfast docks and at dealers in the United States as the recession hit the auto market. Some who bought the cars complained of faulty doors and hard-to-clean stainless steel bodies.
By December of last year, as financial journalists were writing about the possibility of bankruptcy, further frightening away investors and customers, De Lorean continued to pursue daring financial schemes to save his business. In September, the trade publication Automotive News said the IRS had notified one of De Lorean's partnerships that it intended to audit funds paid to an independent contractor involved in design work on the car to see if some deduction should be disallowed.
The federal investigation of Hetrick, meanwhile, moved into high gear about May, and not long after that, according to investigators, De Lorean suddenly appeared in the web of surveillance and informants set up to trap the alleged Mojave drug runner. This created "a great deal of interest" among all the agencies involved, one investigator said, but he insisted that all were careful not to violate rules of entrapment.
The government's criminal complaint charging De Lorean with conspiracy to possess cocaine with intent to distribute lists his first contact as on July 11, with a "confidential informant" in the Marriott Hotel in Newport Beach, Calif.
On Sept. 4 in Washington's L'Enfant Plaza Hotel, according to a government affidavit filed in court here Wednesday, De Lorean, an unnamed government informant and a DEA agent posing as a drug buyer and distributor named "John Vicenza" met to discuss importing heroin from Thailand and cocaine from South America while other federal agents secretly videotaped them. One investigator said the black-and-white tape is not of the best quality, but the participants can easily be heard and identified.
De Lorean participated in another secretly taped session in the Bel Air Sands Hotel here Sept. 20, this time with Hetrick and FBI agent Benedict J. Tisa posing as a drug distributor and go-between, according to affidavits.
"Hetrick told De Lorean that if he brought cocaine from outside the United States, the price would be appproximately $25,000 per kilogram, and that it would be about 10 days before he could deliver it," an FBI affidavit filed in federal court said. "Hetrick also told De Lorean that he could obtain 100 kilograms 220 pounds of cocaine immediately from a source in San Francisco, but that the price would be $50,000 per kilogram."
On Sept. 28, at another videotaped meeting here, De Lorean and the informant told "Vicenza," actually DEA agent John M. Valestra, that Hetrick could get the cocaine quickly from San Francisco and agreed this was better than waiting weeks for heroin from Thailand, according to affidavits. "Vicenza" promised to invest $3.2 million of his own, distribute the drugs, give De Lorean the first $60 million in profits and then take "a 50 percent share" of the De Lorean Motor Co. in payment for his investment and services. On Sept. 30, a federal prosecutor said in court, De Lorean signed over a 50 percent share to an otherwise unidentified James Benedict, possibly Tisa's cover name.