Informant in militia case admits running drugs for Hells Angels

Jury sees video of FBI arresting Fairbanks militia members.

Anchorage Daily NewsMay 23, 2012 

The confidential informant who brought down the Fairbanks militia leadership finished his testimony in federal court Wednesday, admitting under oath that his work as a drug-hauling Alaska trucker years ago was as an initiate for the Hells Angels motorcycle gang.

Gerald "J.R." Olson had started his testimony Monday by admitting his personal criminal history, citing the cocaine and marijuana that he allowed a "criminal organization" to pack among the boxes of Fred Meyer groceries he hauled to Alaska from Washington state.

But prosecutors had sought to keep the identity of the criminal organization from becoming public, notifying the judge and defense lawyers only in a sealed filing. They said Olson's life could be at risk if the information became widely known because he informed on the gang before going undercover inside the Alaska Peacekeeper Militia in August 2010.

But Nelson Traverso, the lawyer for militia leader Schaeffer Cox, said outside of the jury's presence that he intended to question Olson about it, and U.S. District Judge Robert Bryan said the subject was proper. When the jury returned to the courtroom, Assistant U.S. attorney Steve Skrocki beat Traverso to the punch and made it one of the final points of his direct examination.

Olson, 37, said he never joined the gang after working as a "prospect," sometimes taking the drugs he brought from Puyallup, Wash., all the way to the fortified Hells Angels clubhouse in Spenard. He was never caught during the 17 months he hauled drugs, but was charged later with felonies for cheating as a contractor and for stealing a mini front-end loader.

After Olson's cover was blown with the arrests of Cox, Coleman Barney, and Lonnie and Karen Nelson in March 2011, Olson and his family were whisked out of Fairbanks and placed in the federal witness protection program, he said.

The highlight in the courtroom Wednesday, aside from the loud bang from the courtroom next door when kidnap suspect Israel Keyes attempted to escape during his arraignment, was the dramatic "take-down" of the militia members, shown to the jury in split-screen video.

Olson had been the go-between in negotiating the purchase of three silencer-equipped pistols and four hand grenades for the militia members.

In a secretly recorded meeting at the Home Town Restaurant in Fairbanks, Karen Vernon told Olson she would sell her jewelry to pay for the weapons. Lonnie Vernon said they needed the grenades more than they would need the jewelry.

For the planned arrests, the FBI installed two video cameras in Olson's truck (Olson himself would wear a hidden third camera). Something apparently went wrong with the installation, and Olson couldn't start the truck the next morning, setting back the schedule. The FBI came with a heater and got the truck started.

The idea was to first arrest the Vernons, then repeat the exercise with Cox and Barney. The arrests would take place in the parking of a quiet warehouse on South Turner Street on the edge of town.

Olson picked up the couple and drove them to the warehouse, where he parked. He picked up the guns and grenades from a pack stashed beneath a trailer and brought them back to his truck. The price was $600 for the guns and $150 for the grenades.

"These aren't smokers," Lonnie Vernon said of the grenades.

"No, these are blasters," Olson said.

"All right, let's go do this," Lonnie Vernon said, reaching for his wallet.

Just then the shouts of the FBI fill the recording.

"Holy s--t," Lonnie Vernon said. Then came the explosion from a flash-bang stun grenade.

"Hands up! Get your hands up!" an agent shouted.

"What the s--t?" said Karen Vernon.

Despite lots of tough talk from Lonnie Vernon on tapes played earlier in the trial, he and his wife went meekly. Olson was also arrested to keep his cover.

An hour or two later, Olson was back in his truck, this time bringing Cox and Barney to the South Turner Street weapons rendezvous spot. The two were unhappy when they learned that the pistols were .22 caliber instead of the 9mm they were seeking, but agreed with Olson they'd be effective at close range.

Like he did with the Vernons, Olson left the truck to retrieve the weapons and hand them to Cox and Barney. It was later in the day than originally planned and another truck rolled into the parking lot. It was the owner of the warehouse, a man Cox recognized from church.

The man walked up to Olson's truck. The split video showed Barney and Cox quickly concealing the weapons. They had not paid for them.

The man was clearly suspicious and asked what they were up to. Olson made up a story about meeting a trucker in a flatbed.

"This is where he told us to meet him," Olson said. "I assumed he knew the owner or something."

"Well, the reason that I'm here," said the man, "is there's a whole line of guys out there with bulletproof vests on and they all looking in here -- like that guy," the man said, pointing at an FBI agent.

"Holy s--t," said Olson.

In a van nearby, FBI Agent Kurt Oberlander was listening to the conversation in Olson's truck on his headset.

"At some point, I see his eyes bulging out of his head and hear him say, excuse my expression, 'Oh, s--t!' " FBI SWAT team leader Michael Thoreson had earlier testified.

Oberlander yelled, "Compromise." Thoreson repeated that word three times in the radio to the force, and they quickly surrounded the truck. Cox and Barney were arrested without incident. The other man was briefly detained.

Anchorage Daily News columnist Michael Carey contributed to this report. Reach Richard Mauer at rmauer@adn.com or 257-4345.

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