U.S. Customs Service was riddled with corruption and that there was
no further need to worry. They were so certain that their system was
foolproof that Guarna went to Italy and arranged the purchase of
$41,000 worth of merchandise, which normally could be imported only
with the payment of $13,325 in duties. The partners were not worrying
about the duties because they had received a communication from Lev
that when Guarna returned “everything will be all right.”
But everything was not “all right.” Earlier in the year a dapper,
dark-haired man had called at the Varick Street headquarters of the
Customs Special Agency Service and asked to see Agent Dave Cardoza,
the big, amiable veteran of a thousand investigations, who headed the
Bureau’s New York Racket Squad.
This man, whose identity has never been disclosed by Customs, had an
interesting story to tell Cardoza. He was a competitor of Battaglia and
Guarna and he had become extremely curious about their sudden rise
in the merchandising field. He also was intrigued by their peculiar
ability to shave prices below a reasonable competitive level.
He had been making his own inquiries and observations over a period of
many months. He knew the names of some of the people who had carried
merchandise into the country for the partners. He had seen Customs
inspectors visit the partners’ place of business--and on one occasion
he had seen Battaglia pass money to an inspector whom he identified
from a picture as being Lev.
On the basis of this information, which was supported by names, places
and dates, the Service opened a formal investigation. Agents sifted
through thousands of declarations, seeking the names of the carriers
for Battaglia and Guarna, and the names of the inspectors who had
signed the suspect declarations.
A study of the declarations convinced the agents that Lev’s name
appeared far too frequently on the documents relating to the partners’
travels. And there were too few imports recorded for a firm as
obviously prosperous as Battaglia & Guarna, which dealt exclusively in
foreign haberdashery.
This investigation was underway when Guarna left for Europe in July.
By mid-August, Cardoza had decided the time had come to crack down on
the partners--and the best time would be when Guarna returned from the
Italian trip. He was reasonably certain that if Guarna were engaged in
smuggling, he would return from Italy with a load of merchandise which
he would try to slip through Customs. For this reason it was important
to know when and how Guarna planned to return to the United States.
The time of Guarna’s return was learned by a telephone call to the
office of Battaglia & Guarna, where a secretary--told that an old
friend from Chicago was calling--disclosed that Guarna was due to
return on October 1 aboard the Italian liner _Cristoforo Colombo_.
With more than a month in which to set his trap, Cardoza began making
plans to keep Guarna within sight of a Customs agent from the time he
set foot on the pier until he cleared his baggage with an inspector.
But this surveillance had to be done in such a manner that it would
not arouse the suspicion of Lev or any other inspector who might be
involved in the smuggling.
Finally, it was decided to use a “zone defense,” in which three
agents would be stationed at strategic points commanding a view of
the pier and the baggage examination area. No one was to leave his
post and follow Guarna or show any undue interest in his movements.
One out-of-town agent--unknown to any of the inspectors--was to be
stationed on the pier under the baggage collection point “G” in the
role of a visitor come to meet one of the passengers.
In September, the agents made a “dry run” of the zone defense to
acquaint themselves with their posts. On October 1, they put the plan
into operation.
Mario Cozzi, a chunky young man especially adept at surveillance, was
sent down the Bay with the Customs boarding party to seek out Guarna
in order that he could be pointed out to the other agents when he came
ashore. None of them knew him by sight.
Cozzi was wandering about the ship wondering how to locate Guarna
without arousing suspicion when he got an unexpected break. Cozzi saw
the Italian Line’s agent, Angelo Cappa, standing by the ship’s rail
talking to a well-dressed, middle-aged passenger. Cappa called him over
and said, “Mario, I want you to meet Mr. Guarna, who is returning from
Italy. Mr. Guarna, this is Mr. Cozzi.”
Cozzi shook hands with Guarna and then hastily excused himself, saying
he had work to do before the ship docked. From that moment he remained
close to Guarna, and when the merchant walked down the gangplank, Cozzi
discreetly pointed him out to the waiting agents.
Guarna hurried to the collection point “G” and paid little attention to
the man who was standing under the sign holding a visitor’s pass in his
hand. He would have been intensely interested had he known the stranger
was Agent Melvin Huffman.
Inspector Lev walked up and shook hands with Guarna. And then he turned
to Huffman and said brusquely, “Do you have permission to be on the
pier?”
Huffman handed over his pass and said amiably, “I’m waiting for a
friend--Mr. Gardiner. He’s supposed to be on the _Colombo_ and he asked
me to meet him here.”
Lev examined the pass and then handed it back, satisfied that Huffman
was only a visitor. He said, “It’s all right. Mr. Gardiner should be
along soon.”
Lev then called over another inspector and whispered in his ear. The
inspector nodded and shook hands with Guarna. He quickly examined four
small pieces of luggage and then he pasted clearance stickers on a
half-dozen large trunks without opening them.
This operation was witnessed by Huffman and also by Agent Carl
Esposito, who was watching from a nearby telephone booth. The
examination was in violation of orders, because the inspectors had been
instructed that morning to make a thorough examination of all baggage.
None was to be cleared without inspection.
As Guarna’s baggage was being taken to a platform to be loaded onto a
truck, Cardoza walked over to the telephone booth where Esposito sat.
“That’s a lot of baggage,” Cardoza said. “We’ll have to hire a truck to
get it to the office.”
Esposito grinned maliciously. “Why don’t we wait,” he said, “and let
Guarna hire his own truck. Then he’ll have to pay the bill.”
“Why not?” Cardoza said.
Porters were preparing to heave the trunks onto a truck at the loading
station when Cardoza and Esposito approached Guarna. They identified
themselves as Customs agents and asked to see the contents of the
trunks.
Guarna said nothing. Perhaps he was too frightened to speak. He merely
took several keys from his pocket and began unlocking the trunks.
When the agents raised the lids, they saw that each was packed with
expensive men’s haberdashery which had not been declared.
Guarna and Battaglia talked readily. They identified the inspectors
who had helped them in their smuggling. When agents completed their
examination of the partners’ books, they were able to prove that over
a period of two and a half years, the two men and their accomplices
had smuggled into the United States merchandise with a wholesale value
of $147,613--and they had avoided payment of duties totalling some
$56,600. They had paid out $6,000 to various inspectors, of which the
lion’s share--about $5,000--went to Lev.
Battaglia and Guarna were convicted and fined $10,000 and $5,000
respectively, and placed on five years’ probation. Inspector Lev
was fined $2,500 and sentenced to three years in prison, along with
Inspector Danis. Six other inspectors were dishonorably discharged from
the service.
17
THE INNOCENTS
Betty Warren and Harriet Davis--trim and attractive in their U.S. Army
nurses’ uniforms--were wide-eyed with excitement as they looked from
the window of the airliner and saw Hong Kong for the first time. The
clouds hung low over the peaks of the island jutting from the sea at
the edge of Red China. In the harbor they saw great luxury liners at
anchor alongside battered old freighters from the four corners of the
earth. The harbor was alive with Chinese junks and sampans.
Their excitement grew no less as the plane landed and a bus carried
them into the bustle of Kowloon to the Grand Hotel. The hotel would be
their headquarters for several days of sightseeing and shopping before
they returned to their posts at Yokosuka Army Hospital, and the end of
a vacation tour which had included Manila, Calcutta and Bangkok. It
was one of the standard tours arranged by the military for personnel
stationed in Japan and other Far Eastern bases. And Betty and Harriet,
both lieutenants, were only two among the hundreds who made the circuit
each year.
Before leaving Yokosuka, a fellow nurse had told them: “When you get
to Hong Kong, be sure to look up Mr. Chu in the Miramar Hotel arcade.
He’s terribly nice--and honest. He can tell you where to buy things at
the cheapest prices and he’ll show you around Hong Kong. He gets a
commission on anything you buy--but it’s worth it.”
The next morning after their arrival, blonde, blue-eyed Betty and
dark-haired, brown-eyed Harriet headed toward the Miramar Hotel arcade
to find Mr. Chu. They were window-shopping in the arcade when a voice
said politely, “Excuse me, please. I am Mr. Chu. Are you Miss Warren
and Miss Davis?”
The two women exclaimed in surprise. Betty said, “Yes. But how in the
world did you know who we are?”
Chu, a smiling, dapper, middle-aged man, said, “Lieutenant Bess and
Lieutenant Marge were here last week. They said you would be in Hong
Kong soon. So I have been watching for you. I would be happy to show
you around Hong Kong if you wish.”
The next morning, Chu called at the Grand Hotel with a chauffeur-driven
car. Obviously to make the girls feel more at ease, he had with him
his three-year-old son--a cute, button-eyed boy who stared at the two
American women as though they were creatures from another planet.
Soon the four of them were touring Kowloon and the New Territories,
the farm land stretching from Kowloon to the border of Red China. Chu
entertained them as they went along with a history of the countryside
and of the people. They even stood at one end of the bridge at the
border, looking into Red China and watching the impassive Red soldier
standing guard at the other end with a Russian-made machinegun slung
from his shoulder.
Before their Hong Kong stay had ended, Betty and Harriet were as much
impressed by Chu’s courtesy and helpfulness as other military personnel
had been in years past. Chu had concentrated on building good will
among the American military people, with the result that he knew scores
of Army, Navy and Air Force men and women throughout the Far East. He
carried on a lively correspondence with them, acting as their agent in
buying gifts to be shipped to friends and relatives in all parts of the
United States. His reputation for fair dealing was impeccable.
On the last day of their stay, Chu called at the Grand Hotel to bid the
nurses goodbye. They thanked him profusely for his kindnesses and asked
if there was anything that they could do for him.
“If you would be so kind,” Chu said, “I would like for you to deliver
some gifts to a relative in Japan.”
He explained that he would have a seaman deliver two suitcases to
them at Yokosuka. The cases, which they would be free to open if they
wished, would contain a few shirts, some dolls for his relative’s
children, and a few other inexpensive gifts. The nurses would not have
to bother about delivering them, because his relative would call for
them at their quarters. The nurses said they would be delighted to do
him a favor. And they bid one another goodbye.
Betty and Harriet were not the only Americans who had sought the
services of Mr. Chu that week of February, 1958. Air Force Captain Bob
Hampton, a tall, slim young jet fighter pilot, also was one of his
customers. Hampton had hitched a ride from Japan to Hong Kong aboard an
Air Force transport. He had called on Chu to help him purchase several
tailored suits and shirts, a camera, a watch and other gifts.
Before they parted Chu also asked Hampton if he would mind carrying a
suitcase back to Japan for his relative, a Mr. Lee. The captain said he
would be glad to do him a favor, whereupon Chu brought out a suitcase
from the shop where he worked. He opened it to show his friend that it
contained only a few dolls, several shirts, ties, and other inexpensive
small gifts. Hampton bid Chu goodbye, carrying the suitcase with him as
he hurried to catch his plane back to Tokyo.
Soon afterward, Chu once more ran into a friend, Seaman Leslie Brown, a
broad-shouldered young native of Los Angeles who had come ashore from
the SS _President Cleveland_ when the big liner docked with its load
of ’round-the-world tourists. Chu had met Brown on a previous visit,
introducing himself to the lonely sailor he had noticed wandering
through the streets of Kowloon and inviting him on a tour of the
colony. Brown had repaid Chu by introducing him to other crew members
on shopping expeditions.
When they met once again, Chu invited Brown to lunch at a restaurant
where waiters brought to the table the most bewildering variety of
Chinese food Brown had ever eaten. “This is the best and cheapest food
in all Hong Kong,” Chu said.
During the meal, Chu asked Brown if he would do him the favor of
delivering a suitcase to a relative, Mr. Lee, in Los Angeles. He
explained, as he had to the other Americans, that the suitcase
contained only a few gifts.
“Sure,” Brown said, “if there is nothing in it to cause me any trouble.”
Chu assured Brown there would be no trouble. He took him to the home of
a friend, Ting Ching-Tsoi, where Mrs. Ting brought out a suitcase. Chu
opened it to show Brown that it contained nothing but the gifts he had
described. And then he gave Brown $20 for his trouble in delivering the
luggage.
That night, Chu also delivered two suitcases to a seaman aboard the USS
_Kearsarge_, to be taken to Betty Warren and Harriet Davis in Yokosuka.
Unknowingly, these Americans were innocents in a plot to smuggle
millions of dollars worth of narcotics into the United States, either
directly or by way of Japan. Each of the suitcases contained a false
bottom in which packets of heroin were concealed.
As American and British agents later pieced together the story, Chu
himself was unaware that the luggage contained heroin, or that he was
being used as a pawn merely because he had so many friends among the
military people and seamen who visited Hong Kong.
The plot had its beginning when Chu’s friend, Ting Ching-Tsoi,
conceived the idea of using Chu as an unwitting agent in a
heroin-smuggling ring. Ting approached Chu with a proposition that they
could make a big profit by sending watch parts to the United States,
hidden in the false bottoms of suitcases carried by Chu’s American
friends. Ting knew that Chu would have nothing to do with narcotics
but that his code of ethics would not be violated if he thought he was
having his friends smuggle a few watch parts.
Chu agreed to a deal. Ting sent a confederate, Kung Kee-Sun, to nearby
Macao, where anything can be bought if one has the cash--and where
heroin can be purchased by the pound as easily as a woman can be bought
for the night.
Kung smuggled the heroin past the British customs patrol. Then Ting
bought several good-quality leather suitcases. He took them to a friend
in Kowloon, who inserted false bottoms, fashioned of thin plywood
covered with leather. The packages of heroin literally were built into
the luggage. The job was so well done that only a careful inspection by
an expert would disclose anything wrong.
Then, quite by chance, the system broke down because an Air Force wife
became suspicious. When Captain Hampton returned to his home near the
Tachikawa air base outside Tokyo, he found that his wife was on a
shopping trip into town. He put the suitcase Chu had given him in a
closet and promptly forgot about it. He also forgot to inform his wife
that a Chinese would be calling for the suitcase later. Then he was
suddenly called away from home on a training mission.
While he was gone, a Chinese called at the Hampton home. When Mrs.
Hampton opened the door, the Chinese introduced himself as Mr. Ling. He
inquired about the gifts which Captain Hampton had brought from Hong
Kong from his relative, Mr. Chu. He said he had come for them and would
appreciate it if Mrs. Hampton would give him the suitcase.
But Mrs. Hampton knew nothing about gifts in a suitcase. She knew
nothing about a Mr. Ling and nothing about a Mr. Chu. “I’m very sorry,”
she said, “but you will have to return when my husband is home. He has
said nothing to me about it.”
Mr. Ling was visibly upset and seemed not to understand why Mrs.
Hampton would not give him the suitcase. But he left, promising to
return.
When Hampton returned home, his wife told him of the strange Chinese
who had called and how upset he had been when she had refused to turn
over a suitcase to him.
“I’m sorry,” Hampton laughed. “I put the suitcase in the closet and
forgot all about it.” He explained he had brought it home and was to
deliver it to Ling as a favor to Chu. “There’s nothing in it except a
few cheap gifts,” he said.
But Mrs. Hampton remembered the sudden distress she had seen in Ling’s
eyes when she disclaimed any knowledge of a suitcase. “I don’t like the
looks of this at all,” she said. “That man Ling was actually frightened
when I wouldn’t give him the suitcase. The loss of a few cheap gifts
shouldn’t upset him like that.”
Captain Hampton began to worry that perhaps something was wrong. He
checked the contents of the case but saw nothing to get alarmed about.
Nevertheless he decided to report the matter to Air Force intelligence
officers. When the agents examined the suitcase carefully, they found
the hidden narcotics.
The Air Force investigators turned the case over to Japanese police.
Ling was arrested and finally broke down. He confessed the smuggling
plot. He also told investigators about the shipment of narcotics
in the suitcases destined for the two Army nurses. These bags were
intercepted, and when the bottoms were pried loose, the investigators
found that each contained heroin valued at $50,000 on the retail market.
The news of Ling’s arrest reached Chu in Hong Kong. He was appalled
that he was being used as a tool in the smuggling of narcotics. He
wrote a frantic note to Lieutenants Warren and Davis, urging them to
destroy the two suitcases as soon as they arrived, in order to avoid
trouble. He apologized to them for causing them any embarrassment or
trouble.
And then he wrote a letter to Seaman Leslie Brown. He mailed one copy
to Honolulu and another copy to Brown’s home in Los Angeles. He said:
Dear Leslie:
I hope this letter will catch you up in Honolulu or Los Angeles. If
in San Francisco too late. I want to tell you about the story of
the suitcase. It is a very dangerous thing. Please do not take it
back to your house. Please keep it board ship and return it to me
in Hong Kong, otherwise you will have big troubles. If you already
took them home, and have no trouble, please keep it. If some
Chinese people try to get it, please do not let any people have it.
The best thing is to return to Hong Kong. It is a very dangerous
suitcase. Be careful of yourself. You have family and I also have
family. I don’t want you and me to have troubles.
I am very sorry for everything. Please take my word. Please return
me a mail. I am looking forward to hearing from you in the very
very soonest.
Sincerely yours,
_Chu_
The letter was waiting for Brown when the _President Cleveland_ arrived
at Honolulu. Again he examined the suitcase closely, and everything
that was in it. But he could find nothing that was suspicious. He
decided that the best thing to do was to keep the case in his cabin and
to take it back to Hong Kong on his next trip.
Brown wrote to Chu, saying:
Dear Chu:
Received your letter in Honolulu. Was quite surprised and hurt
to know you put me in such a spot after I asked you if there was
anything in the suitcase. We arrive in San Francisco today. I have
the suitcase on the ship and will return it to you next trip when
I come. That is if nothing happens to me. I have spent every night
since then worrying about the spot you put me on.
Well, I will close for now. Hope you write and that your children
are well.
Sincerely yours,
_Leslie Brown_
When the _President Cleveland_ reached Los Angeles, Brown left the
suitcase in his cabin and hurried ashore to his apartment. He was told
that a Mr. Lee, a Chinese, had made several calls inquiring about his
return. And within a few minutes after his arrival, there was a knock
on his door. Brown opened the door and found that his caller was a
Chinese about fifty-five or sixty years of age. He had thin, sharp
features and a dark complexion. His hair was turning gray. He was
wearing a brown suit and a topcoat.
“I am Mr. Chu’s relative, Mr. Lee,” the visitor said. He asked if Brown
had brought the suitcase from Mr. Chu.
“I can’t give it to you,” Brown said. “I got a letter from Chu and he
told me to hang on to that suitcase or I’d get in trouble.”
Lee angrily accused Brown of trying to keep the suitcase in order to
sell it. He demanded to know where it was.
To prove he still had it as he claimed, Brown took Lee with him aboard
the _Cleveland_ and showed him the suitcase in his cabin. But he
refused to give it to him. Brown had the bag in his cabin when the
_President Cleveland_ sailed from Los Angeles on the return trip to
Hong Kong.
The U.S. Customs agents in San Francisco and Los Angeles were informed
by the Customs representative in Tokyo of the developments at that end
of the line. By this time they had learned that Brown was involved in
the smuggling operation and that he was to make delivery to a Chinese
known only as Mr. Lee. But the message from Tokyo arrived after the
_Cleveland_ had put to sea.
When the _Cleveland_ arrived in Yokohama, Treasury agents in Japan
boarded the vessel and asked Brown if he still had the suitcase which
had been given to him by the Chinese in Hong Kong. Brown said, “Yes. I
know which one you are talking about.” He took them to his cabin and
showed them the case. “I have looked it over,” he said, “and I can’t
find anything wrong.”
A customs agent went over the suitcase carefully, discovered the false
bottom, pried out the piece of plywood, and uncovered the cache of
heroin. It was estimated to be worth $500,000 at retail prices.
Brown agreed to work with Customs agents when he returned to the United
States and to help trap the Chinese who had called on him for the
narcotics. The narcotics were turned over to the ship’s captain and
Brown was confined to the ship. When the vessel docked in San Francisco
the heroin was turned over to Customs agents. Brown was taken in tow by
Customs Agent Paul Samaduroff, a blond-haired, broad-shouldered man who
had specialized in tracking down West Coast narcotics smugglers.
Samaduroff and other agents in San Francisco suspected that the “Mr.
Lee” who had called on Brown in Los Angeles was actually Li Sheung,
also known as Shin Lee. He fitted the description which Brown had given
the agents when he was questioned in Japan. Li had been on the agents’
wanted list for months--but they had never been able to trap him while
he was buying or selling narcotics. Now the chance had come.
The agents placed fake packages of heroin in the false bottom of the
suitcase and went with Brown to the bus depot, where the bag was
checked in a locker. Then Brown was taken to a telephone, where he
placed a call to Li Sheung’s hangout at a shirt shop on Grand Avenue
in Chinatown. The shop owner answered the phone and Brown asked if he
could talk to Li Sheung. The shop owner said, “You call later, and I’ll
see if I can contact him.”
Several times Brown called the shirt shop only to be told to call
again. Late that evening the contact was made. A man who identified
himself as Li Sheung got on the phone and talked to Brown. Brown
identified himself as a seaman aboard the _President Cleveland_ and
said he had something which he was supposed to deliver to Li Sheung.
“Yes,” Li said, “I remember you in Los Angeles. Why didn’t you give me
the suitcase when I was in Los Angeles?”