Ex-Con Tells of DEA Agents’ Drug Deals : Corruption: Trafficker testifies about paying agents for cocaine stolen from agency’s evidence vault. Two men have pleaded guilty, while a third awaits trial.

“Bunny” is a heavy-set, street-savvy New Yorker who knows his way around Brooklyn. He has made and lost fortunes trafficking in cocaine.

A 60-year-old ex-convict with a criminal record going back four decades, Bunny knows people on both sides of the law. So, when he was convicted eight years ago on drug trafficking charges, he went to work with the U.S. Drug Enforcement Administration in an undercover role to avoid a long prison sentence.

That was how he first met DEA agent John Jackson, the drug dealer recalled. Together, they helped convict a reputed Mafia boss and seven others. By then, Mahlon Joseph Steward--known as Bunny to his associates--had become close friends with Jackson.

Their friendship, prosecutors now contend, led to the biggest corruption scandal in the DEA’s 17-year history.

Last August, Bunny surfaced as a key witness against Jackson and two other former DEA agents, all who worked in the agency’s downtown Los Angeles office.

Although a federal trial is not scheduled to begin until next month in Los Angeles, Steward was ordered to begin his testimony Aug. 1 because the government feared that he might die before the trial began. Less than a week after appearing before a federal grand jury on Jan. 27, 1988, Steward suffered a massive heart attack that resulted in quintuple bypass surgery.

During his five days of videotaped testimony, which only recently became available, Steward recounted how he trafficked for three years in cocaine and heroin supplied to him by two of the three DEA agents.

He said he mailed the federal agents more than $1 million in drug profits--some of it shipped directly to the DEA’s Los Angeles headquarters in the World Trade Center.

Steward also recounted how he and the agents became such close friends that they vacationed together in Hawaii with their wives and dined and window-shopped in Beverly Hills.

Steward testified that some of the cocaine that Jackson supplied him was stolen in 1984 from the DEA’s evidence vault.

He also said that much of the drug profits the men made were generated by the theft in 1985 of more than 150 kilograms of cocaine from a drug hide-out in Pasadena, which the government called “The Big Rip.” That theft accounted for $1 million in profits, Steward said.

Steward, an unindicted co-conspirator, agreed last year to become a prosecution witness. After the agreement, he returned to New York, where he pleaded guilty to violating terms of his probation, which grew out of a 1982 heroin trafficking conviction. He hopes his testimony will win him a sentence reduction.

Under questioning from Assistant U.S. Atty. Joyce Karlin, Steward said Jackson told him he waited until the timing was right before taking the cocaine from the stash house. The agents got two-thirds of the drug profits, Steward said, and he got the rest.

Prosecutors allege that the enormous drug profits financed a luxurious lifestyle for Jackson, 41, of Claremont, and the two other former DEA agents, Darnell Garcia, 43, of Rancho Palos Verdes, and Wayne Countryman, 47, of Walnut.

The government contends that Jackson and Garcia used the profits to buy expensive homes and to open multimillion-dollar bank accounts in Europe.

Jackson and Countryman have pleaded guilty to drug trafficking charges, but Garcia--a bespectacled, black-belt karate expert--has chosen to fight the indictment. His trial is to begin in federal court on Nov. 13 before U.S. District Judge Terry J. Hatter Jr.

During his emotional testimony, Steward locked eyes with “J.J.,” as Jackson is called, and broke down and wept on the witness stand. Hatter recessed the hearing until the next day.

Steward recalled that he was such friends with the agents that in 1985 he sent Jackson $70,000 in cash as a Christmas present. The money came from drug profits, he said.

In April of the following year, Steward said he dined with Jackson and Garcia in Beverly Hills and then, accompanied by their wives, went “window shopping” on Rodeo Drive.

Four months later, Steward and the two agents, along with their wives, vacationed for two weeks in Hawaii, staying in the same hotel in Honolulu. Steward said they had made so much money off “The Big Rip” that they were in high spirits. Garcia and Jackson looked into buying some island real estate, he said.

“It was a vacation and to relieve tension,” Steward testified, “We didn’t need any more money at that point. . . . We all were over the hump, and all had made some money.”

Two days after Steward completed his testimony, Jackson pleaded guilty to drug trafficking, including charges that he stole drugs from the DEA’s evidence vault and participated in the theft of drugs from the Pasadena stash house.

Shortly after Jackson’s plea, Countryman pleaded guilty to participating in the same narcotics trafficking conspiracy.

Prosecutors see Steward’s testimony as an important component in their case against Garcia, even though he has admitted committing perjury twice two years ago when he testified before a federal grand jury investigating the DEA agents. At the time, he denied that he had any knowledge that Jackson and Garcia were trafficking in drugs.

Steward admitted in August that he lied twice before the federal grand jury to protect Jackson and because he did not think federal investigators had enough evidence to convict him and the agents.

“Most everything I said was a lie,” Steward testified.

Steward now maintains that Jackson came to him in 1983 with a proposition to traffic in a “girl,” his street jargon for a kilo of cocaine. The two men had just completed their undercover investigation of the Mafia family and Jackson was returning to Los Angeles to resume work on other cases.

“(He) told me that he was going to send me a kilo of cocaine, a little girl,” Steward recalled. “Actually, I didn’t believe it fully until it came.”

Steward said he assured his friend J.J. that he could turn the kilo over to his New York network and his people would sell it on the street. He said the kilo from Jackson soon arrived at Steward’s Brooklyn residence, in waterproof brown wrapping.

By 1984, Steward said, more drugs were sent to him by Jackson. Under questioning from rosecutor Karlin, Steward recounted how the federal agents used sleight of hand to steal drugs from the DEA property room vault.

Steward testified that Jackson and his partner, whom he did not identify, used a ploy to divert the property clerk’s attention, and then stole the drugs.

“Now, I don’t know which one did the flimflamming, but they flimflammed somebody down in the property room,” Steward said.

Steward said he did not meet Garcia until 1986, when he was in New York preparing for the Mafia trial. Steward testified that while standing in a parking lot next to the U.S. attorney’s office in Manhattan, he gave Jackson $9,000 from a cocaine sale while Garcia watched.

Karlin: And what did you see Mr. Jackson do with the money?

Steward: He handed it to Mr. Garcia.

Karlin: And did you see what Mr. Garcia did with that money?

Steward: Yes. He put it in his pocket.

Karlin: And did Mr. Garcia say anything at that time?

Steward: Yes, he would like to get some more Federal Express packages.

Subtracting his commission, Steward testified that he would mail the cash profits back to Jackson and Garcia via express mail. Some of the illicit cash was addressed to Jackson at the DEA’s Los Angeles office, he said, and some of it went to Jackson’s post office box in the same building.

Mark E. Overland, one of Garcia’s two defense attorneys, said Steward is a liar, citing his perjured testimony before the grand jury.

“If I were a juror, I wouldn’t believe anything he says,” Overland said.

Garcia, incarcerated at the federal Metropolitan Detention Center in downtown Los Angeles, declined to be interviewed for this story.

Garcia’s attorneys must persuade a jury that his lifestyle--which included an expensive home and approximately $3 million currently frozen in Luxembourg bank accounts--was generated largely through jewelry smuggling and related business for an Italian firm.

“It’s pretty obvious where the money came from--jewelry transactions, including some smuggling,” Overland said. “That accounts for all of the $3 million. There’s no drug money.”

Government prosecutors contend the $3 million represents drug trafficking profits.

Because he was extradited by Luxembourg on drug trafficking-related counts, Garcia cannot currently be charged with jewelry smuggling.

Garcia also is charged in the indictment with passing on DEA intelligence information to fugitive drug dealers.

“He helped them move money,” Steward said. “He also helped them avoid being caught.”

Steward said that Garcia had an FBI contact who provided Garcia with information that helped one of the drug dealers avoid arrest on one occasion in downtown Los Angeles.

“Well,” Steward said, “there was a little laughing joke that (the FBI) just missed (one of the fugitives) on South Figueroa Street. They went in one door and he came out the other.”

An FBI spokesman in Los Angeles said the agency had no comment on Steward’s testimony.

Steward said he decided to tell the truth because he was convinced that the government had built a solid case against him and the DEA agents.

“In plain language,” Steward said, “they got us.”