Nick Reding (8 page)

This was just the beginning of the means by which Lori, who had not made it past tenth grade, laundered her drug money at
the same time that she moved to fill new markets around the region. In 1989, she bought fifty-two racehorses—and hired the
dozen or so grooms, trainers, veterinarians, and jockeys it took to maintain them—along with a 144-acre horse farm from which
to run her ever-multiplying, synergistic empires. People from Kentucky to the Dakotas and from Indiana to Colorado race, breed,
buy, trade, and sell horses, making it the perfect cover for a narcotics distribution business. Lori’s runners, tooling along
in their duallies, a couple of geldings munching hay in the horse trailer, the wheel wells packed tight with crank, became
the down-home
Dukes of Hazzard
version of coke-laden speedboats making the run from Eleuthera to Key Biscayne.

Lori’s true stroke of genius, though, was to build under a series of military tents hidden in the wooded hills of her horse
farm what for almost two decades would be the only meth superlab ever known to be in production outside the state of California.
By then, she was in such good graces with the Amezcua brothers, the California “Kings of Crank,” that they let her borrow
a chemist, whom Lori flew to Iowa to teach her associates how to make meth in ten-pound batches every forty-eight hours: a
state-of-the-art, up-to-the-minute operation. The effect was remarkable, for up until now, Lori had controlled sales of meth
in Iowa and other parts of the Midwest while still having to rely on the Amezcuas for her product. Once Lori opened her own
superlab, she was in control of the entire value chain: manufacture, distribution, and retail. And while she still bought
meth from the Amezcuas, principally to maintain good relations, Lori had no real competition to speak of. In just the two
years between 1987 and 1989, an unassuming high school dropout from little Ottumwa, Iowa, had succeeded in cornering part
of what was becoming one of the world’s most lucrative narcotics markets. What’s more amazing is how close she came to never
getting started.

According to several former agents, back in 1987, there was deep institutional ambivalence within the Drug Enforcement Administration
(DEA) toward methamphetamine. Meth was seen as a biker drug, strictly falling under the purview of losers who didn’t have
enough financial sense to put together a large-scale operation. These were the Reagan eighties, and as tastes ran for big,
deregulated corporate successes, so ran America’s taste for drugs. Cocaine was king. As such, DEA, whose job is to curb the
excesses of the period as they are embodied by America’s choice in narcotics, wasn’t interested in anything aside from the
Cali and Medellín cartels, drug-trafficking organizations run like multinational corporations capable of exceeding their host
nation’s GDP. Who could have imagined the business being built by two lowly coke-dealer brothers in the part of L.A. called
the Inland Empire, or that this business would be connected with a kind of narcotic principate in Ottumwa, Iowa?

Only one person, it turns out: Gene Haislip, the deputy assistant administrator in DEA’s Office of Compliance and Regulatory
Affairs. Haislip knew that large amounts of ephedrine, which was imported in bulk to make nasal decongestants, were being
redirected to the Amezcua organization with no oversight. Ephedrine processing took place in only nine factories around the
world, all of them in India, China, Germany, and Czech Republic. To Haislip, the narrow processing window posed a perfect
opportunity to siphon off the meth trade; all that was required was the cooperation of those nine factories, along with the
pharmaceutical companies that depended on the ephedrine made in them. What Haislip proposed in 1985, two years before Lori
Arnold went into large-scale meth production, was a federal law allowing DEA to monitor all ephedrine imports into the United
States.

According to a 2004 investigative article written by Steve Suo in Portland’s
Oregonian
newspaper, Haislip got the idea based on his earlier work on the illicit U.S. trade in Quaaludes, a legal sleeping pill widely
available on the black market. The manufacture of Quaaludes depended on the synthesis of another legal drug, methaqualone,
which was predominately produced in Germany, Austria, and China. What Haislip noticed was that an enormous proportion of the
methaqualone from these nations was being shipped to Colombia. There, the Cali and Medellín cartels were making it into an
illegal form of Quaalude, which they sold in tandem with cocaine in the same market—one as an upper, one as a downer—in the
same way that meth markets today are often saturated with Oxycontin, a prescription painkiller that smooths out the impending
“tweak” of a meth high. In 1982, Haislip visited the nations whose factories made methaqualone and asked for their help in
monitoring its sale. Congress then banned the use of prescription Quaaludes, which were manufactured by only one American
company. By 1984, according to DEA’s annual narcotics threat assessment, Quaaludes no longer constituted a significant danger
to the illicit U.S. drug market. With meth, Haislip simply hoped to keep organizations like the Amezcuas’ (and to a lesser
extent, people like Lori Arnold) from legally procuring ephedrine without hurting the production and sale of cold medicine
of licit companies like Warner-Lambert, the makers of Sudafed. Haislip’s idea took the form of language inserted into the
Controlled Substances Act, which would be debated by Congress in the fall of 1986.

What’s important to understand is that, despite the fact that Haislip’s job was to write legislation, DEA is not a political
entity. According to the cliché, one of which most DEA agents seem proud, the administration occupies a place that is all
but outside the law. While FBI agents stereo typically tail potential bad guys in their sedans, and CIA agents listen to phone
conversations, DEA agents are supposedly assassinating major narco-figures in the world’s more inhospitable environments.
Whether or not this is a fantasy is unclear. What it suggests is an institutional frustration regarding the governmental process:
it’s easier to shoot people in other places than to write legislation here, which must then be tailored to the concerns of
members of Congress and the lobbyists who influence them.

DEA’s proposals are subject to long, withering debates and years of compromise. And that is where the administration, if not
actually a political entity, is a highly politicized one. Back in 1986, even as Nancy Reagan gave her famous “just say no”
speech, Haislip had to bow to pressure from Democrats and Republicans alike not to raise the ire of pharmaceutical lobbyists,
whose job, in part, is to comb through legislative bills looking for anything that could potentially upset their clients’
sales. That’s how Haislip’s bill, according to the
Oregonian
article, came to the attention of Allan Rexinger, who was in the employ of a trade group called the Proprietary Association
on behalf of Warner-Lambert. Rexinger didn’t like what he saw.

For several weeks during 1986, according to Rexinger, he worked to change the language of Haislip’s bill in a way that would
exempt Warner-Lambert from the potential bane of federal importation oversight. When DEA and Haislip continued to resist his
pleas, said Rexinger, he had no choice but to get the White House involved by making a phone call to, as he proudly told Suo
in 2004, “the highest levels of the United States government.”

By the time Attorney General Edwin Meese III presented Haislip’s bill to Congress in April 1987, five years had passed since
Haislip had initially imagined nipping meth production in the bud. Meantime, the Amezcua cartel had spread throughout California
and the Desert West, and had linked up with Lori Arnold’s Stock-dall Organization in Iowa, which by now was well on its way
to producing its own industrially manufactured P2P meth. The language in Haislip’s bill proposing oversight of ephedrine had
been drastically altered as well, allowing for the drug to be imported in pill form with no federal regulations whatsoever.
All that meth manufacturers had to do in order to continue making the drug would be legally to buy pill-form ephedrine in
bulk and crush it into powder—a small, added inconvenience. What Haislip had imagined as an early answer to a still-embryonic
drug threat instead became both a mandate and a road map for meth’s expansion.

In 1987, the year that Cargill cut wages at its Ottumwa meatpacking plant from $18 an hour to $5.60 with no benefits, Lori
Arnold sold a pound of pure, uncut crank for $32,000. This meant that with the very first ten pounds produced at her superlab,
she had paid off the $100,000 initial investment in equipment and chemicals and had cleared a profit of nearly a quarter of
a million dollars, or over a century’s worth of median wages for an Ottumwa adult that year. Meanwhile, she was still buying
ten pure pounds at a time of Mexican Mafia dope from California, at $10,000 a pound, which she then sold for three times the
price, again making nearly a quarter of a million dollars every time one of her runners returned from the West Coast.

Where crank’s personality converges with its mathematics is this: No one with whom I spoke, and this includes varsity-level
addicts like Roland Jarvis, can physically handle snorting, smoking, or shooting 98 percent pure methamphetamine. So while
Lori only sold her product uncut, each pound, once it was distributed, equated to three or four pounds of ingestible crank,
and probably more, given that each dealer along the line was likely to continue cutting it—with bleach, laundry detergent,
or baking soda. Seen that way, Lori’s lab wasn’t producing ten pounds every forty-eight hours; it was producing the eventual
equivalent of thirty to forty pounds. (By that stretch, the biggest labs in the Central Valley of California today would be
producing the so-called street equivalent of up to five hundred pounds a day, while an Indonesian megalab would make five
thousand pounds of saleable meth each week.) In one month alone during Lori’s prime, that’s somewhere on the order of a quarter
ton of meth being distributed in the relatively underpopulated environs of the central Midwest. Add to that the dozen or so
big loads she was getting from California each month, and it’s easy to see how Lori was, by her own admission, involved in
one manner or another with “thousands of people” and making “hundreds of thousands of dollars monthly.” When pushed for an
answer, Lori admits that she has no idea how much she made, in pounds or dollars.

When Lori first got into meth, a gram would last her an entire weekend. By 1991, Lori was snorting up to three grams a day.
She remembers not sleeping for weeks at a time. She wore, she says, a lot of hats. Multiple-business owner, mother, drug baron:
Without the meth, she could never have done it all. She was, she says, one of the main employers in Ottumwa, and a benevolent
one, at that. She donated plenty of money to the local police and to the county sheriff. She planned to open a day care center
and video game arcade next to the Wild Side, so local kids would have somewhere to go while their parents were in the bar.
Together, Lori and meth were an antidote to the small-town sense of isolation, the collective sense of depression and low
morale that had settled on Ottumwa since most farms went belly-up, the railroad closed, and the boys at the meatpacking plant
lost their jobs.

If you ask her, Lori Arnold will say she did more for the state of Iowa than all the politicians put together, who let the
place go to hell overnight. People were proud of her, she says, and they should have been: she gave them back the life that
the government and the corporations took away. If there was ever a problem with meth, says Lori, it wasn’t with the clean
dope she sold. Her dope wouldn’t do anything freaky to you. It was the rot-gut the batchers cooked up that made people crazy.
And it was always Lori’s plea sure to put those people out of business—it was her civic duty to keep the likes of Roland Jarvis
from selling too much crap-batch, getting people paranoid and blathering on about black helicopters and heads in trees. In
Lori’s reality, she was a businesswoman, not a drug dealer in what she calls “the classic sense.” She’s right, insofar as
she had an unprecedented vertical monopoly, which she claims to have run at least in part to assuage the detrimental effects
of the very monopolies like Cargill and Iowa Beef Packers that were born in that same era of deregulation. Add to this that
Lori’s rise required putting home cooks—the Iowa Hams of the meth world, if you will—out of business, and the self-styled
Robin Hood of crank begins to look awfully corporate. At a deeper strata of irony, consider that Lori almost single-handedly
ushered into the Midwest the next generation of the meth epidemic, which would be controlled by five Mexican drug-trafficking
organizations that today enjoy the same kind of market control of meth that Cargill enjoys with respect to the food industry.

Perhaps inevitably, like Roland Jarvis, the kind of small-time tweaker for whom she had the utmost disdain, Lori did see a
helicopter, though in her case it was real. It hovered over her house one day in 1990 while agents from the Bureau of Alcohol,
Tobacco, and Firearms (ATF) took photos of her meth lab in the woods. Later that day, Lori was zooming around town in her
green Jaguar Sovereign doing errands when she got the call from a stable boy that things were getting a little weird out at
the farm. There were cars parked along the country roads, said the boy, and men with binoculars trained on the place. That
night, Lori says, the feds sent in an army: ATF, FBI, DEA—you name it. By morning, she was in the local jail, telling jokes
to the agents who stood guard. After all, says Lori, if you don’t have a sense of humor, what do you have left?

Six months later, Lori Arnold’s crank empire fell apart when she was convicted in federal court in the Southern District of
Iowa of one count of continuing a criminal enterprise; two counts of money laundering; one count of carrying and using a firearm
in conjunction with drug trafficking; and multiple counts of possession, distribution, and manufacture of methamphetamine.
Floyd Stockdall was tried separately and sentenced to fifteen years in Leavenworth prison, where he died of a heart attack
two months before he would have been paroled. Lori got ten years in the federal penitentiary in Alder-son, West Virginia,
and was released after serving eight, on July 2, 1999. Her son and only child, Josh, was fifteen years old; Lori had been
gone for half his life. By then, the meth business in the Midwest had mutated into something Lori couldn’t believe, though
she was quick to comprehend that it was a new, much more fully developed phenomenon than that which she’d created along with
the Amezcuas. And once Lori identified a spot for herself in the new order, she did the thing she’d been doing all her life:
She went right back into business.