Posada was serving time in a Panama prison for a 2000 assassination attempt on Castro when outgoing Panamanian President Mireya Moscoso pardoned him and three accomplices in August 2004 in what some observers saw as a favor to President Bush to rally the Cuban-dominated Florida vote for his reelection.
The three other Cuban Americans returned to Miami as heroes; Posada arrived six months later, reportedly fetched from Mexico by a shrimp boat owned by an anti-Castro benefactor.
As Venezuela, Cuba and human rights groups clamored for Posada's extradition for trial on the plane-bombing charges, federal authorities here arrested him in May 2005 for illegal entry. A federal judge in Texas ordered him deported, but another judge prohibited his being sent to Venezuela, heeding claims by Posada's lawyers that he could face torture or execution there.
None of a half-dozen friendly countries contacted by the State Department would agree to take Posada.
An immigration fraud case was brought by federal prosecutors later that year but dismissed in May 2007. U.S. District Judge Kathleen Cardone accused federal authorities of using trickery, fraud and deceit in pursuing a criminal case against him.
Federal prosecutors appealed and are waiting for a ruling from the U.S. 5th Circuit Court of Appeals, said Dean Boyd, spokesman for the Justice Department.
Analysts speculate that the U.S. government has dodged calls for prosecution of Posada for fear he would disclose details of CIA involvement in coups, assassination plots and scandals, including the Iran-Contra Affair.
Peter Kornbluh, head of the Cuba Documentation Project at George Washington University's National Security Archive, has compiled declassified CIA and FBI documents on Posada that show he remained in close touch with Washington handlers throughout his covert service.
"The spectacle of a wanted international terrorist being publicly feted as a hero in Miami makes a mockery of the Bush administration's commitment to wage a war on terrorism," he said of Posada's coming-out party.
Rep. William Delahunt (D-Mass.) convened a congressional hearing in November on the administration's handling of the Posada case, arguing that there was "compelling evidence" implicating Posada in the plane bombing.
Delahunt said Tuesday that "there doesn't seem to be much enthusiasm" under the current administration for prosecuting Posada, but that he would push again for legal action against Posada after the fall election. "To have Posada honored in such a way sends a terrible statement to the rest of the world," the congressman said of the tribute.
Posada, still under a supervision order with U.S. Immigration and Customs Enforcement, entered the banquet to a standing ovation, his face beaming and minus the scar from a 1990 attack by gunmen in Guatemala.
"He's a real hero for Cuba. He's been fighting for the freedom of Cuba since the day he arrived in the United States," said Hector Morales-George, a retired surgeon who attended the dinner.
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carol.williams@latimes.com