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"I thought, if you want a real estate person to show you around a house, do you tell them you don't have any money?" Kapetanovic says. "No, you tell them you are a serious buyer. It's just business, the way things are done.

So during one of his first conversations with Askins, Kapetanovic told him he was inquiring about buying the Nicaraguan weapons for the Croatian National Police, the nation's only armed force at the time. It was a lie that would cause Kapetanovic more trouble than he could possibly have imagined.

@body:Askins realized he couldn't sell Nicaraguan weapons he didn't have. But after talking to Kapetanovic, the resourceful operative soon hit upon another way to make a profit.

Askins contacted Customs agents in San Antonio. He had run undercover operations for the service before, and he would be willing to do so again, pretending to sell Kapetanovic arms from within the United States. In exchange, he would receive an immediate payment of $5,000, along with a $100,000 slice of whatever was raised from the sale of Kapetanovic's personal property, which the federal government could seize under RICO laws after Kapetanovic's conviction on smuggling charges. Customs readily agreed.

Goode charges that the arrangement was tantamount to placing a "bounty hunter" on the federal payroll.

"You've got a 20-year veteran of trickery and chicanery like Askins being embraced by the federal government to bring down a man who hadn't expressed any desire to break the law," Goode says.

At the same time Askins was pitching his "sting" operation plan, the other arms dealer, Vancouver's Allen Lever, was telling Customs agents in Phoenix about Kapetanovic's response to his magazine ad. Lever also offered to help investigate Kapetanovic, but because he lacked Askins' CIA-taught undercover skills, he was paid $10,000 simply to introduce Kapetanovic to his "partner"--in reality, a Customs agent named Thomas McCaffrey.

Soon McCaffrey was also trying to sell weapons to Kapetanovic.
Court records show that federal officials don't deny making the deals with Askins or Lever. What they do deny is Goode's suggestion that the arrangements were improper.

"Based on what Ivan was telling the informants, he was preparing to make a very major arms deal," Aspey says.

But Goode insists that agents misled Kapetanovic, then employed high-pressure tactics that veered dangerously close to entrapment.

@body:First, Goode says, came the bait and switch. Kapetanovic had approached both Askins and Lever with the intention of getting information--and possibly arranging a buy--on weapons from Nicaragua and Hong Kong, as had been advertised. Had such a sale taken place, it would have been perfectly legal under U.S. law.

But almost immediately, both Askins and McCaffrey began the hard sell--trying to broker American weapons on American soil.

"Customs was setting up a snare," Goode says. "[Customs] made it look like they were talking about weapons out of the country and the minute somebody answers [the magazine ads], they start directing them back into this country, doing everything they can to make it look like you're doing something illegal."
Kapetanovic should have broken off his dialogue with the two dealers once he realized that they were proposing an illegal deal. But he says the information they were providing him was a strong incentive to keep the relationship alive.

During the winter and early spring of 1991, Kapetanovic accumulated a vast amount of data from the duo, asking for prices and technical information on an astonishing variety of instruments of mass destruction. He obtained price quotes on M-16 rifles, mortars, M-2 heavy machine guns, antitank rockets and grenade launchers. He threw a stream of weapons-related questions at Askins and McCaffrey, all information requested by the Croatian government.

The undercover agents would reply dutifully, often faxing responses the same day. Kapetanovic was scoring special points with his Croatian friends for supplying the price lists, which the Croats were comparing with prices quoted by other Asian and European gun sellers--thus ensuring that they weren't being cheated.

"The information I was getting was much appreciated [in Croatia]," Kapetanovic says. "I needed to get more."
Besides, he reasoned, there wasn't any harm in just talking. Once he had realized that Askins and McCaffrey were trying to sell him domestic weapons, he had made a point of telling them, time and again, that any purchases would have to wait for permits that could only be obtained after official U.S. recognition of Croatia.

As far as Kapetanovic was concerned, obtaining permits was a vital prerequisite to discussing any possible weapons sale. "Otherwise, [we can] ship nothing out," Kapetanovic forcefully told McCaffrey. According to transcripts of taped conversations released by the U.S. Attorney's Office to New Times, it was a theme Kapetanovic repeated at least a half-dozen times in the first months of conversations with undercover agents.

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Darrin Hostetler