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All right, my name is Steve Peterson. I came on with DEA back in the early 80s. I'm a Bostonian by birth, but in DEA's infinite wisdom. They sent me to Atlanta in October of 1983. So I arrive in Atlanta. Huge culture shock for me as you can imagine. I didn't understand a lot of people. They didn't understand me.
Steve Peterson is something of a legend in the DEA. He goes by the nickname Batman, a name he picked up because for a few months in the late 80s, he wore a full Batman costume with the cowl, the cape and everything during drug raids around Atlanta. Before his boss found out and transferred him to Charlotte. But that's another story. This story begins at a fake chemical supply shop on the east side of Atlanta.
I was assigned to DEA SEO 383, DEA Special Enforcement Operation 383. I don't know what the other 382 were, but SEO 383 was a storefront. ...an actual brick and mortar store... ...and we sold glassware and chemicals... ...intentionally to criminals... ...for the purpose of manufacturing illegal drugs. We advertised in biker magazines, High Times, and other somewhat underground publications looking to generate interest in that type of clientele. And they did come to us.
As a storefront, we had a fake sign on the store. I mean, it existed in a strip plaza with other legitimate businesses. And on occasion, legitimate people would come in to purchase chemicals and glassware for whatever their... We'd be rude to them. We'd be mean to them. We would charge them five, six times what they could.
Purchase somewhere else, you know, the price was outrageous. But we were trying to target the criminal element. You know, if you treat normal people badly, then only bad people will come to you. And was that what you'd envision doing as a DEA agent working behind the counter at a store? No, that's not at all. I didn't want to even go to the store. I was not interested in being assigned to the storefront. I wanted to work the street.
A chance to work the street soon presented itself. Steve's co-worker at the storefront was another DEA agent named Terry Mathewson. Terry was 10 years older than Steve and more experienced. He told Steve about a number of cases the Atlanta office had underway. One of them concerned a young man named Daryl Smith. And he told me that Daryl had ordered these 15 55 gallon drums of ether, a chemical solvent that is commonly used in the method.
...manufacturing, not only of methamphetamine, but can also be used in the conversion of cocaine base into cocaine hydrochloride. But this is the size, the quantity of... Ether that was ordered by Daryl would have to be such that he would have an industrial need. I mean, 15, 55-gallon drums, pretty significant. You know, we call that a clue.
According to Steve's partner Terry, the DEA still didn't know much about Daryl Smith. They knew he was young and that he'd received his medical degree from Emory School of Medicine a few years earlier, but he was not a practicing physician. Instead, he seemed to spend most of his time gambling in Las Vegas, London and Monte Carlo. And if he was making meth, judging from the amount of ether he'd ordered, it was enough to supply the entire state of Georgia.
You know, I'm a new guy. I'm a young guy. All I want to do is put bad guys in jail. That's all I want to do. Steve Peterson was only a few months into his first job with the DEA. But he was about to work the most peculiar case of his career. I'm Jed Lipinski. From Odyssey Podcasts, this is Gone South.
In the 1990s, the most popular way to manufacture methamphetamine was the pseudoephedrine reduction method. Basically, this involved getting your hands on a lot of over-the-counter cold medicine like Sudafed, crushing up the pills, and mixing the powder with a solvent to isolate the pseudephedrin inside. You then reduced it with chemicals like iodine or red phosphorus. In just a few hours, you had methamphetamine.
But before pseudephedrine came into fashion, meth cooks were limited to what's known as the P2P method. P2P stands for phenyl-2-propanone. It was the main precursor chemical used to manufacture meth. Methcooks, whether they were making it in a lab or a bathtub, mixed P2P with other precursor chemicals to make the drug. As meth gained popularity in the late 70s though, phenyl-2-propanone was classified as a controlled substance.
And the common precursors, like ether, were tightly restricted. Chemical companies started reporting suspicious orders to the DEA. When a chemical manufacturer in New Jersey learned that an individual in Atlanta with no apparent connection to a laboratory or institution had just placed an order for 15 drums of ether, they immediately contacted the DEA. That's how Steve Peterson learned about it. Not long after Steve joined the storefront...
His team spoke with the ether manufacturer in New Jersey. They learned that Daryl was due to pick up all 15 drums from an Atlanta distributor in a few weeks time. So DEA got permission to drop a tracking device, or what Steve calls a beeper. I call it a beeper, because this is before we had GPS. So this thing just emitted a signal, a beep.
And you had to be line of sight in order to receive the beep. And you looked at it on a little screen. And it kind of looked like Pac-Man. You know, you followed the little dots. And if it were traveling. You would follow the little dots. Okay, well, you must be turning left because the dots are turning left. Looking back now, it's almost as if we were in the Fred Flintstone days, judging from today's technology. But back then, this was all cutting-edge stuff.
On the day Daryl arrived at the distributor, Steve's partner Terry was inside the warehouse, posing as an employee. Steve and other agents were parked outside in unmarked vehicles. A small, single-engine Cessna... owned by the DEA, circled high above, monitoring Daryl's movements. Steve watched Daryl pull up in a cargo van and load all 15 drums. Even at a distance, he could tell Daryl was nervous.
He appeared very paranoid because he was constantly looking around. He just looked like an average guy, just some schmo. You know, he wasn't intimidating. He wasn't threatening looking. When Daryl pulled away, Steve and the other agents followed.
And we follow him all around the city of Atlanta. He's driving all this different way. I assume he's looking to see if he's picked up surveillance or if anybody's following him. He's making somewhat of a circuitous route. And he ends up at a mini warehouse, a mini storage facility. And he rented maybe a 20x30 space. And he put all 15 55 gallon drums in that space. Close the door, put a lock on it. And he drove away.
Steve and his team followed Daryl to a big house on a sprawling 10-acre lot in Roswell, an affluent suburb of Atlanta with manicured lawns and pristine homes. Sitting in the driveway, He had Harley Davidson motorcycles. He had boats. I mean he had all kinds of toys. All kinds of toys. Steve hadn't been with DEA for long.
But he knew enough to know that most meth cooks didn't live this way. They usually lived in rundown homes in remote or rural areas, where the smell produced by the chemicals was less noticeable. And Daryl Smith didn't fit the profile of your typical meth cook. And is it fair to ask like what a more typical meth manufacturer would have looked like at that time? Like it's not a medical student. No. So normally your typical manufacturer is like this.
broken down, skinny old, no tooth idiot, who doesn't really understand chemistry, but understands if you mix A and B, you're going to get C. They don't really understand the chemical breakdowns. They don't really understand the chemistry behind it. They just, it's like me cooking.
I don't know how to make spaghetti sauce, but I know if I put tomatoes in a pot and smush them and I add a few more other things, I can get something I can live with. It's not going to taste like Olive Garden, but at least it's something. You know what I mean? Exactly. But when we learned about his background, and he's got a medical degree, he's a graduate from medical school, and he's making meth. Of course, the first thing that comes to mind is, who is he working for?
Back at the office, Steve filed a court order to look at Darrell's tax returns. He wanted to see how Darrell claimed to be making money. So we were able to see that he was claiming a large amount of income as a professional gambler. He played poker. I know he went to London a lot. He went and gambled in England. He gambled in Vegas a lot. So Steve and some agents in Las Vegas started reaching out to casinos. They learned that Daryl was well known on the local gambling circuit.
The casinos keep impeccable records as to who are the winners and losers. So they know. So we were learning that Daryl was, he was a gambler, a big gambler, but he wasn't a big winner. Occasionally he'd win a couple hundred thousand. But more often than not, he would lose hundreds of thousands of dollars at a time. And the casinos loved him because he was putting a lot of money in them. Daryl wasn't affording his lifestyle through gambling.
So Steve ran a search to see if Daryl or his wife owned or operated any businesses that would account for the home, the cars and the boats. We found out that between he and his wife, they ran and owned a nail salon. Just a few miles from his house up in Roswell. So she had a nail salon that she ran. So when we didn't have things going on at the store. I would often at times just go park at the nail salon in the parking lot.
And I would just sit on the nail salon and watch to see how many people would come and go. And by watching the nail salon and realizing how many customers showed up during the day, you would go, man, this guy's only had like 10 customers a week. By this point, it seemed obvious to Steve and Terry that Daryl was involved in the drug trade.
But the only evidence they had was that industrial-sized order of ether. They hadn't seen him manufacture methamphetamine. They also didn't know where the lab site was, or if one even existed. One afternoon, Steve was staking out the nail salon when he saw Daryl pull up. He was driving the same cargo van he'd used to pick up the barrels of ether months earlier.
So we have not seen this van. This van has been missing. It's not been at his house. We've never seen it at his house. We didn't know where he kept it. But the van shows up. And so I was like, holy crap, the van's here. And I'm by myself sitting in a pack a lot. When Daryl and his wife left to grab lunch, Steve crawled under the van with a beeper. I think I had just stuck the beeper on the underside of the van when I look over and here's these two legs standing next to me at the van.
And then the van door opens and it's Daryl getting in. So now I'm like frozen under the van, trying not to move, hoping he's not going to, you know, look underneath the van. But he gets in the van, starts it up. I'm underneath there and I'm thinking, holy crap, what am I going to do now?
He puts it in reverse and he backs out of pocket spot. And as he does this, I just hang on to the drive shaft and it just, I kind of pull myself up, suspend myself under the vent and he kind of drags me backwards. And then when he puts it in drive to go forward, I just let go. This time Steve followed Daryl to a different house, one he'd never seen before.
This one was small in a rural area tucked away in a cul-de-sac. To the untrained eye, this house was totally normal and an unlikely place for a meth lab. But by now, Terry had learned that when it came to Daryl Smith, appearances... could be deceiving. Luleå, Göteborg, Västerås, Malmö Jönköping och Stockholm I'm Jenna Fischer. And I'm Angela Kinsey.
We are best friends. And together we have the podcast Office Ladies. Where we rewatched every single episode of The Office. With insane behind the scenes stories, hilarious guests and lots of laughs. Guess who's sitting next to me? Steve! Det är så gross!
Every Wednesday we'll be sharing even more exclusive stories from The Office and our friendship with brand new guests. And we'll be digging into our mailbag to answer your questions and comments. So join us for brand new Office Lady 6.0 episodes every Wednesday. Plus, on Mondays, we are taking a second drink.
You can revisit all the Office Ladies rewatch episodes every Monday with new bonus tidbits before every episode. Well, we can't wait to see you there. Follow and listen to Office Ladies on the free Odyssey app and wherever you get your podcasts. I can't even begin to tell you how bad it was. It was Lord of the Flies in a building. It was called Straight Incorporated.
An experimental drug rehab for teenagers that infiltrated communities across the country in the 1980s during the height of the war on drugs. Where kidnapping, brainwashing and torture were disguised as therapy. It's the origin story of the troubled teen industry, which continues to profit from the desperation of parents and the vulnerability of their children. And its roots can be traced back to a cult called Synanon.
How do I know this? Because I lived through it. My name is Cindy Ettler, and this is season two of The Sunshine Place. Listen to and follow The Sunshine Place, an Odyssey original podcast. in association with Robert Downey Jr. and Susan Downey. Available now on the free Odyssey app and wherever you get your podcasts.
After following Daryl's van to the house at the end of a cul-de-sac Steve was hoping this was the lab site. But something didn't add up. How could you have a meth lab in the middle of a neighborhood? There are neighbors around. You know, there's neighbors. You're not going to have a large-scale manufacturing site in their neighborhood because the odors that are produced in the clandestine manufacture of methamphetamine are horrendous.
And you just can't mask them. It's very, very difficult to mask the odors. The next day, Steve pulled the property records for the house. He realized Daryl had purchased it for $100,000 in cash a few years back. But then he pulled its utility records. We can see he would go months at a time. No water, no power, no water, no power. And then, boom, one month, he would fill like...
Five Olympic swimming pools. He would use so much water. Or he would use enough power. To light up Yankee Stadium. You know. And then back. No water. No water. No power. No power. At that point. We knew exactly. That this was the lab site.
Agents installed a concealed camera on the property. They determined that Daryl visited the house once a week to mow the lawn and pick up the mail. At night, Steve and his partner Terry would lay out in the swamp behind the house with binoculars, hoping Daryl might show up. And trying to figure out where the lab might be. We could see that there had been alterations to the house which would indicate additional ventilation to the basement area. So...
In our minds, we're saying, okay, based on the floor plan, in this part of the basement, that's where the lab is. That was our educated guess. DEA eventually got a surreptitious search warrant that allowed them to search the house in the middle of the night on the condition they left no trace behind. They brought an FBI agent to pick the lock.
Senado var det like 4 av oss, 4 av 5 av oss, DEA-agent, inside the house. Vi kunde vore det lab var, vi bara inte vet hur det. Så en av de guys sa, well, I bet there's a trapdoor upstairs, underneath the wall-to-wall carpet. So like morons, we went upstairs and we pulled all the wall carpet up. Hell, there was no trapdoor there. So we had to put all the wall carpet back down together. And one of the guys was in the garage and he's just staring at the wall in front of the van.
And he says, you know, hey, how come these studs are double studded here and double studded there? Why would that be? So he looks a little further and he finds little pins, takes out these little pins on the double studs. That whole section of the wall comes out. And it's a tiny hallway that leads to another locked door. The FBI agent picked this lock too, and they all walked in. It was a large room and it had a whole bunch of chemical containers, drums.
and bottles and barrels because different types of chemicals come in different containers but it had a lot of supplies the floor the walls the ceiling all covered in linoleum He had countertops in there. I mean, this was a pharmaceutical quality laboratory. And it all vented out through PVC pipe that he had put in. He had forced it down into the swamp. So all his waste and all his fumes, he bubbled up through the swamp to filter out the odors.
Steve och his team sampled the chemicals and sent them to the DEA's forensic lab in Miami. Traces of methamphetamine contain methamphetamine. These were all the precursors used in the manufacture of methamphetamine. Finally, they had proof of what they'd suspected all along. Daryl Smith, the clean-cut medical school graduate, was leading a double life as a methamphetamine chemist. And yet, they still didn't know who Daryl was working for.
Typically, when you have an operation of this size, somebody controls distribution, somebody else controls manufacturing. Now, it might be the same organization that controls all of it, but the chemist doesn't have anything to do with the distribution.
That's just typically the way it is. And that's what we were trying to figure out with Daryl. Who is he cooking for? Who's running this? Because it's not Daryl. Steve and Terry discuss next steps with their bosses at DEA and the US Attorney's Office. And of course, the game plan ideally would be wait for him to manufacture another load and then take him off.
After he's manufactured. You don't want to take him off. While he's manufacturing. Because this stuff is so volatile. I mean you could cause a massive explosion. So to take him off after he's manufactured, that way we'll have him, you know, kind of with his fingers in a cookie jar. He'll, you know, have dope on him, he'll have done it. But the problem was we had no idea how long that could take. We didn't know when he would manufacture again.
So the powers to be kind of determined that we were going to go ahead and indict him, get an arrest warrant and go lock him up. We weren't going to wait until he manufactured again. We're going to go get him now. The Fed sealed the indictment to make sure they arrested Daryl before word got out. And we decide, OK, we're going to arrest him on Tuesday. So Monday we determine, hell, he's not here in Georgia.
And we do some checking with the airlines. And we find out he's in Vegas. So Steve's partner Terry flew out to Vegas. At 7 in the morning on December 4th, 1984. Agents arrested Daryl and his wife at the Golden Nugget Hotel and Casino. Though he was arrested without incident, a newspaper reported that Daryl was armed with an Uzi pistol and a sawed-off shotgun.
They added that he was wearing a dagger belt buckle with a handcuff key sewn into the belt. Back in Atlanta, Steve and a team of agents raided the lab site and Daryl's house in Roswell. At the house, they found, among other things... A submachine gun, a pet boa constrictor, and a large collection of gambling trophies. Some of them were for legitimate poker tournaments, but others were he finished number one.
Han hade dem gjort det lokala trophies. Han hade de här sakerna gjort så att han kunde pröver till neighbors och andra människorna att jag är en professionell gambler. Och när vi gicka på sin residen, vi hattade de foyerna. FOIA stands for Freedom of Information Act. It's the same thing as a public records request. And I have to assume that the FOIA requests were because he was trying to find out who's looking for him, who's watching me. Is anybody following me?
In the kitchen, Steve spotted something else. Something that led him to believe Daryl knew they were on to him. But also, in the cabinets above his refrigerator in the kitchen, I found the beeper that I stuck on the van. As they were wrapping up their search of Daryl's home, an agent tripped and fell in some blown insulation in the attic. He landed painfully.
...on a small metal box. The box contained a receipt from a mini warehouse in downtown Atlanta. A warehouse they were not previously aware of. So based on what we found on that box, we got another search warrant, went to that warehouse. Executed it and in the warehouse, we found foot lockers containing somewhere like about 70 kilos, which is like about 150 pounds of finished methamphetamine, finished product. We never would have found that.
It was actually 75 lbs, not 70 kg, that they found in the Foot Locker. Still... DEA estimated the street value of the product at around 3.5 million. The head of Atlanta's DEA office told the press, Steve and his colleagues were thrilled about the big bust. But they were also puzzled. How and why did Daryl Smith, a promising medical student, become a high-volume meth manufacturer? So we sat down and we basically said, all right, Daryl, tell us a story. How did you get started?
How did this begin? How did you get into making meth and all? So he told us the story. Following Daryl Smith's arrest, the Fed suspected they'd just busted a major drug ring. Daryl's arrest made national headlines. Reporters tracked down his former med school classmates, who painted a picture of a brilliant, quick-witted, but abrasive young man.
With a distaste for authority. Like, what's your impression of this guy when you finally see him and he starts talking? He's like a little nerdy guy. He was an inch or two shorter than me. He was a little bit smaller than me. Steven Terry asked Daryl how he'd gotten started. Roughly, in a nutshell, the story is...
Back in the mid to late 70s, while he's either a freshman or junior at medical school, he's riding his Harley Davidson, an older Harley Davidson motorcycle. He's riding it for pleasure, brakes down on the side of the interstate. Another biker stops, works with him for an hour or so, gets the bike running and helps him on his way. Well, unbeknownst to Daryl, the biker who stopped.
was part of a criminal organization, an outlaw motorcycle gang, called the Outlaws. They are like one of the big rivals to the Hells Angels, the Outlaws. Well... Daryl doesn't know he's an outlaw. He's not wearing his colors as an outlaw. Daryl just thinks he's another Harley rider. And during this stop on the side of the road when they're working on Daryl's bike, the conversation comes to Daryl's like, yeah, I'm in medical school. I'm doing that.
Biker basically says as they're leaving, hey, have you ever thought of manufacturing methamphetamine? So Daryl's like, no, I never thought no. So they exchange phone numbers. The biker gives Daryl a BS number. It's not real. Daryl gives the biker his real number. And once a month or so, the biker calls Daryl. Hey, Daryl, remember me? I'm the biker. According to Steve...
Daryl said he borrowed some glassware and equipment from a medical school classroom and cooked up a small batch of meth in his rental house. He almost burned his house down, but he was successful. And he said, well, son of a gun. This isn't as hard as I thought it would be. So when a guy called back and said, Hey, Daryl, have you given any thought? Daryl goes, Well, you know, how much money can I make? And then the hook was set. Because now the bikers got him.
And from that moment forward, Daryl was manufacturing meth for the Outlaw Motorcycle Gang. And yet Daryl claimed, after that initial encounter with the biker, he'd never met with anyone from the Outlaw Motorcycle Gang. So when the bikers wanted methamphetamine, they would call Daryl and they would say, all right, Daryl, in 30 days, I need 50 kilos. I need 100 kilos, whatever it was, it was.
So Daryl would get to manufacturing and he would finish up and he'd get his 50 kilos. He would then put the drugs in a duffel bag. He would drive to downtown Atlanta. He would go to the Trailways bus station downtown. Put the duffel bag in a locker, take the key, drive a few blocks away to this iconic hot dog place called the Varsity. He would go to the Varsity restaurant, sit at a specific table at a specific time.
He would put the key to the Trailways bus locker in the napkin dispenser and he would leave the table. He'd come back from the bathroom, reach in the napkin dispenser, he would retrieve a different key. you go back to the trailways bus station find the locker associated with that key open the locker there would be a duffel bag full of cash
So for the entire time he was manufacturing, he never met another human being. He never met anybody other than that guy on the side of the road when his bike broke down. And as you can imagine, this is why we were skeptical of the story. I'm like, oh, come on, Daryl. You never met anybody I don't believe. I didn't believe him. So we put him on a polygraph. And son of a gun. He was telling the truth.
In April 1985, Daryl pleaded guilty to one count of manufacturing amphetamine and one count of possession of the drug with intent to distribute. Given Daryl's status as a first-time nonviolent offender, He was given nine years at a medium security prison in Tallahassee. Not long after Daryl's sentencing, the DEA's Atlanta storefront, the last of its kind in the country, shut its doors.
Steve was promoted to lead the Southeast region's new clandestine lab enforcement team. That was the second name it was given. The first name it was given was the clandestine lab investigation team, Steve said. Until he pointed out that the acronym was CLIT. Not something you'd want written on your hat. So we just worked other cases and some of them were labs and some of them weren't. You know, Daryl goes on with his life and...
I'm on to something bigger and better. But then, in the spring of 1987, Steve got a surprising call from a U.S. marshal. He goes, hey, do you remember Daryl Smith? And I was like, yeah, yeah. He goes, well, he escaped from prison. The marshal explained that Daryl, the nerdy little med student, had somehow escaped from FCI Tallahassee months earlier. He then returned to Atlanta, tracked down a local attorney at his home,
and beat him with a shovel before shooting him five times in the legs. Steve was shocked by the news. And I was just like, holy crap, where did this all come from? The U.S. Marshals put Darrell on their 15 Most Wanted list. The poster described him as armed and dangerous, adding that he is a medical school graduate who has never practiced medicine.
Daryl was on the run for another six months before agents tracked him to a home in Johnson City, Tennessee, where he'd allegedly tried to rob a convenience store. News reports said Daryl tried to escape after a minor scuffle, but no shots were fired. A federal judge added 25 years to his sentence for the escape and the aggravated assault. Daryl was placed on a higher security tier.
Steve Peterson would go on to work a number of other high-profile cases for the DEA. He was an undercover agent on one of the largest seizures of cocaine in DEA history, over 4,000 kilos stuffed into a Danish freighter by the Medellin cartel. Years passed. Then, just shy of Steve's retirement, the first season of Breaking Bad came out. Breaking Bad told the story of a lowly high school chemistry teacher named Walter White, who, after receiving a terminal cancer diagnosis...
Decides to manufacture methamphetamine to secure his family's financial future. And winds up descending into the criminal underworld. It kind of sensationalized criminal activity. Walter was the antihero. But a few years after he retired, he and his wife were bored one weekend and decided to binge some of it on Netflix.
So we started watching it. Well, God bless. My wife and I got hooked and we watched like eight years of it in just a few months. And as I was watching the show and the theme was unfolding and his. His role was changing and his involvement. And I thought, son of a gun. I said, this is Daryl Smith modernized to meet today's trafficking trends back in the 70s and 80s that were bikers.
Today, it's the cartel. They've just changed it up a little bit. But this, the same method of manufacturing? Holy crap, his transformation from a meek little bookwormy guy to this violent criminal? This is Daryl. This is Daryl all over. Steve never spoke with Daryl again after that one conversation in December 1984. And from what I could tell, Daryl had never spoken to the press. I was curious if he'd talk to me.
A quick public record search showed that he might be living in North Carolina. I left messages on a half dozen possible numbers, but I never got a response. And frankly, I was a bit relieved. I assumed he wasn't proud of his days as a meth manufacturer. And that he wouldn't be happy about someone dredging up the story. If he was willing to shoot an attorney, what would he do to a journalist? Then, just after we'd finished the episode, I got a voicemail.
It turns out, Daryl was more than happy to talk. That's next time on Gone South. Please email us at gonesouthpodcast at gmail.com. That's gonesouthpodcast at gmail.com. Gone South is an Odyssey original podcast. It's created, written and narrated by me, Jed Lipinski. Our executive producers are Jenna Weiss-Berman, Maddie Sprung-Kaiser, Tom Lipinski, Lloyd Lockridge and me. Our story editors are Maddie Sprung-Kaiser and Tom Lipinski.
Gone South is edited, mixed and mastered by Chris Basil and Andy Jaskowitz. Production support from Ian Mont and Sean Cherry. Special thanks to J.D. Crowley, Leah Reese-Dennis, Maura Curran, Josefina Francis, Kurt Courtney, and Hilary Schuff. If you want to hear more of Gone South, please take a few seconds to rate and review the show. It really helps. You might think financial crime is all about money.
But sometimes it ends in murder. I'm Nicole Lapin, host of Money Crimes, a Crime House original podcast. Each episode features a thrilling story about the dark side of finance and how to protect yourself from it. Follow and listen to Money Crimes and on. Textning Stina Hedin www.btistudios.com