Part 16

“Four suitcases,” he said. “One is mine but the other three don’t belong to me.”

“You brought them into the country, didn’t you?”

“Yes, but they are not mine....”

The cab driver, unable to comprehend what was taking place, was ordered to open the trunk of the taxi. An agent broke open one of the suitcases. It was packed with plastic bags containing a white powder which laboratory tests would later prove to be almost pure heroin.

Rosal himself opened the small case which he insisted was the only bag which belonged to him. Inside was a package wrapped in brown paper--the parcel which the agents had seen Tarditi carry into his room at the Plaza Hotel that morning. It contained $26,000 in U.S. currency.

The men were placed in the agents’ cars along with the heroin-filled suitcases, and taken to the Narcotics Bureau headquarters for questioning.

Agent Frederick Cornetta said to Mike Cozzi, “I’ve got to drive the station wagon to headquarters. Why don’t you ride with me?”

Mike climbed into the front seat of the station wagon beside Cornetta, who took the wheel.

As they moved down Third Avenue, Cozzi looked into the glove compartment and examined its contents. Then he ran his hand into the space beneath the seat and pulled out a paper sack.

“Hey!” he said to Cornetta, “I think I’ve got two more kilos of the stuff.”

He looked inside and exclaimed, “Money! It’s full of money.”

The sack contained $41,949, which Calamaris and Bourbonnais intended to hand over to Tarditi.

At headquarters, Rosal talked freely. He claimed that he first met Tarditi in Paris in the summer of 1959 through a mutual friend. During one conversation, he had told Tarditi that his mother owed $35,000 on some property in Central America and was in danger of losing it if he could not raise the money.

A short time later, he continued, Tarditi had contacted him in Brussels and asked him to carry narcotics into the United States under a cloak of diplomatic immunity. Twice he had made deliveries successfully. The $26,000 found in his suitcase was his commission for the three trips.

Bourbonnais claimed he was only an errand boy for the syndicate. He rambled on vaguely about a mysterious Madame Simone, the wife of a doctor or dentist, whom he had met in Paris in the winter of 1960. Simone had asked him to collect $250,000 from a debtor in New York and to bring the money to her in Paris. He had made the delivery and she had paid him a commission of 1 per cent. Then Simone had asked him to meet a man in New York who would be standing on Fifth Avenue across from St. Patrick’s Cathedral at 3 P.M. on October 2. This man would be wearing a gray suit and brown hat. He would hand Bourbonnais a package which he was to deliver to Tarditi, who would be in New York at this time.

Bourbonnais said he had met the stranger, received the package, and had arranged to have the package delivered to Tarditi, who passed it on to Rosal. Even if the story were fiction, at least it was one explanation of where the money came from to pay Rosal for the use of his diplomatic immunity.

The heroin in Rosal’s luggage weighed 49.25 kilos. And four days later, agents located another 51.89 kilos of heroin which Tarditi had cached in a trunk on Long Island. It was the largest seizure of heroin ever made in the United States, and Narcotics officials estimated it was worth $20 million on the underworld market.

The Guatemalan ambassador to the United States announced that his government had disavowed Rosal. His trip to the United States had not been authorized, nor had it been sanctioned in any official manner--therefore he was not entitled to the diplomatic immunity which he had claimed.

Rosal was indicted along with Tarditi, Bourbonnais and Calamaris on charges of violating the narcotics laws of the United States. The four pleaded guilty. Rosal and Calamaris were sentenced to fifteen years in prison. Bourbonnais and Tarditi were given nine years each. And in passing sentence, the Federal judge said:

“... I think the death sentence would not be an inappropriate sentence. Under the statute, I can imprison them for up to twenty years. If it had not been for pleas of guilty, I think I would have done so....”

It was only then that the Customs Bureau closed its files on The Case of the Crooked Diplomat.

13

A STRANGE LITTLE ROOM

On a hot July day in 1941, gray-haired Adrian Grasseley sat at a small table in a room whose window overlooked Fifth Avenue, peering intently through a microscope at a large diamond.

Crowds strolled the streets below. Traffic rumbled along the Avenue. Pigeons sailed about the spires of St. Patrick’s Cathedral. Grasseley saw and heard none of this. All of his attention was concentrated on the diamond lying on the table before him--a fabulous stone the likes of which few men had ever seen.

This was the Vargas diamond, discovered two years earlier in Brazil. The stone weighed 726.6 carats. It was Grasseley’s job to divide it into twenty-three smaller stones which would be worth $2 million if he did his job well. The Vargas was one of the largest and most valuable diamonds ever to pass through Customs.

For forty years, Adrian Grasseley had cut, sawed and cleaved diamonds in Antwerp and in New York City. But this slender man with the thin, tapering fingers had never had the responsibility of splitting a Vargas. Few men ever had.

Diamond Merchant Harry Winston had purchased the stone for $700,000. He had turned it over to Grasseley to divide, and the cutter’s first important move would be to split the giant stone with a blow on the blade of a knife. If the diamond split smoothly, then the rest of the job would be relatively simple.

For weeks, hour after hour, Grasseley studied the Vargas, searching for the “grain” of the diamond. He looked for a hidden flaw which might cause the stone to burst into fragments, but he could find none.

At last Adrian Grasseley knew what had to be done. He would cut a small V-shaped notch at the precise point at which he intended to split the stone. Into this notch he would place a dull-edged knife. If his calculations were correct, a blow on the knife would cleave the diamond as truly as a piece of fine wood splits along its grain. If the blow were too heavy, or if he had misread the diamond’s structure, then the Vargas might shatter and a fortune would be lost.

On the night before the blow was to be struck, Grasseley did not feel any undue nervousness. His hands were steady and he congratulated himself on being relaxed. But he could not sleep. He turned and twisted in his bed, and he listened to the grandfather clock in the hallway toll the quarter hours.

“What is the matter with me?” he muttered irritably. “I am not nervous and I have not been worrying about the Vargas.” It was almost dawn before he dropped off to sleep.

The diamond cutter slept for only two hours. Then he hurried to the small room at Rockefeller Center where the diamond waited. All morning he worked to cut the small notch. He had lunch. And at 2 P.M. he was ready.

Only Harry Winston and a diamond polisher were in the room with Grasseley when he placed the diamond on the table. He carefully inserted the edge of the knife into the notch and, holding his breath, he rapped the knife with an iron bar. The only sound was the ring of the bar on the knife.

The Vargas didn’t split. In that instant Adrian Grasseley felt only numbness. His calculations had been wrong.

Winston grabbed the stone and examined it under a magnifying glass. He saw at the point of the V-notch a small fracture in the stone. It wasn’t deep. But it was straight and true along the grain as Grasseley had planned.

Winston handed the stone back to Grasseley. “Strike it harder,” he said. “It’s all right.” It was a decision which could cost him a fortune but he had confidence in the gray-haired man beside him. Winston had seen Grasseley involuntarily soften the blow when he struck the knife with the iron bar and he could understand the fear that must have gripped him.

Again Grasseley placed the knife in the V and struck it with the rod. The fracture deepened. And when he struck the third blow, the Vargas split cleanly without even the loss of a fragment of the stone.

Winston heaved a sigh of relief, and when he looked at Adrian Grasseley he saw that the little diamond cutter was crying. The reaction to the weeks of strain had been too much.

The story of the Vargas diamond is only one among thousands of stories of suspense, excitement, glamor and intrigue in the world where diamonds fire the imagination of men and women and form the basis for a giant industry. And because the diamond trade is big business, it becomes the concern of the Customs Bureau.

The Vargas entered the country through one of the most unusual workshops in all the country, located in the nondescript, sprawling Customs building on Varick Street in lower Manhattan. The door to this room is never left unlocked. No one is permitted to enter the room unless he carries a pass or has special permission.

The reason for the extraordinary security is that the room is one of the most important clearing points for diamonds in all the world. It is the workshop of the Customs experts whose job it is to appraise the value--and determine the duty--on the diamonds, rubies, sapphires, and other precious and semi-precious stones which are brought into the United States.

Approximately $75 million worth of cut and polished diamonds enter the United States each year, along with $75 million to $100 million worth of rough diamonds and other precious stones. Each shipment of cut and polished diamonds--with few exceptions--must pass through the obscure little room presided over by Chief Examiner Leroy N. Pipino, a slender, dark-haired, young-looking man who maintains a remarkably detached view toward the treasures that are spread before him each week. In the past ten years, Pipino has appraised diamonds worth more than $1 billion.

Soon after joining the Customs Service in the mid-Thirties, Pipino was assigned as an under clerk to the diamond office. As he watched the flow of gems arrive from abroad and as he listened to the discussions of their good and bad points, he became fascinated with the trade in precious stones.

Pipino began to read all he could about gems in New York City’s libraries. He learned much from the Customs Bureau’s own experts and each day’s work was an education in itself. At night he attended Columbia University to take courses on gems and gemology, and often he talked to some of the country’s leading experts, learning from them.

Pipino advanced to the post of assistant appraiser during the war years, and then in 1949 he was appointed chief examiner. In the handling of so impressive a fortune in jewels, one might expect to find him in the elegant surroundings of a Tiffany showroom. But in Pipino’s rather drab-looking workshop, the gems are spread irreverently on a battered table for examination. Around the room are laboratory aids commonly used by gemologists--the diamondscope, a binocular microscope with a special attachment for controlling light source; a dichroscope which reveals color variances in stones; a refractometer for measuring light rays; equipment to test the hardness of stone; and the most-used instrument of all, a ten-power microscope.

Ninety-five per cent of all the diamonds coming into the United States pass through the port of New York and are brought to Pipino’s office for examination. Most of them come from Europe, South Africa, Israel or Brazil. They are weighed and their value is appraised. If there is no discrepancy between the weights and the values listed on the importer’s invoices, the gems are released to Customs brokers for delivery to the persons or firms to which they were shipped.

In this small room also are made the examinations of the modern gold and platinum jewelry and all the antique jewelry. The cut and polished diamonds are subject to a 10 per cent duty. Rough diamonds arrive duty-free. Diamonds which have been incorporated into industrial tools or processed for industrial use are dutiable at 15 per cent of their value. There is no duty required on antique jewelry.

Antwerp is the largest diamond-cutting center in the world, and has been for many years. Most of the cutting of small diamonds is done by the Antwerp craftsmen, although in recent years Israel has developed into an important diamond-cutting center.

The birth of the Israeli diamond industry was part of the chain reaction of the Nazi invasion of the Lowlands in World War II. Many of the best diamond cutters in Europe were Jews. When the invasion came, they fled from Belgium and from Holland. As Hitler’s persecution of the Jews became more and more oppressive, reaching further and further, they scattered across the world to places of asylum. Many of these wanderers later went to the new state of Israel and with their skills they founded an industry that has been growing steadily in importance.

Diamonds--like gold--are sensitive to economic and political instability. There is a constant shifting of these treasures about the world, seeking havens of safety or places of the greatest profits.

Leroy Pipino and his associates didn’t even have to read the newspaper headlines back in 1938–1939 to know that trouble was brewing in Europe. They could read the warnings in the increasing volume of diamonds and other precious stones which were being imported into the United States. The flight of jewelry from Europe was a measure of the fears of millions of people.

Most of the jewels arriving in New York at that time were carried by refugees fleeing before the threat of the Nazis. Families brought with them their treasured and often priceless heirlooms. Many had converted their property and life savings to the currency of diamonds.

As non-residents, the alien refugees were permitted by law to bring all of their personal jewelry into the country without paying a customs duty. But if they intended to sell any of the jewelry within a period of three years from the date of their arrival, then the jewelry had to be declared and duty paid on it.

There was, and still is, a provision in the law which allowed these people to manipulate their jewelry and to take advantage of the lowest customs rate in cases where they intended to sell the gems. They could do this by removing the stones from their settings.

Gems imported in their settings automatically become subject to a 30 per cent duty, based on the total value of the gems and the settings. But if the stones were separated from the mountings, then the importer paid only a 10 per cent tax on the stones and a 30 per cent tax on the mountings. Since most of the value of jewelry was in the stones, the refugees were able to reduce the duty roughly 20 per cent by this manipulation.

Americans travelling abroad today may take advantage of this law when they bring home a fine piece of jewelry. They are permitted to separate gems from setting and then have them appraised separately.

The flight of jewelry to the United States from Europe was great before the war, but it was even greater in the years immediately following the conflict. Pipino’s office handled a record-breaking 10,000 packages of gems in 1947. And the rise in diamond shipments was a gauge of Europe’s economic desperation.

In the postwar years, Europe’s economy was shattered. Factories were in ruins. People were digging out of the debris of war to repair the ravages of the long struggle. They needed money not only to rebuild, but to survive.

Men and women took their gems from vaults, cupboards, and from secret burial places and forwarded them to the United States to exchange them for U.S. dollars. The demand for diamonds and other precious stones was strong in the United States and prices were high. The flow of gems became a flood.

The weakness of Britain’s pound sterling in the postwar years also had a strong influence on the movement of diamonds. Countries with a large accumulation of sterling were willing to give discounts of up to 10 per cent on diamonds if the purchasers agreed to pay for them in dollars. And in this juggling of currencies and discounts, diamonds were moving about the world in strange patterns.

Diamond shipments would leave South Africa and go to Holland, for example. There they would be re-addressed and shipped to the United States so that payment could be made to Holland. Holland would accept dollars in payment and transfer pounds sterling to South Africa. The same thing was happening in Japan and other countries in the Far East where the currencies were weak.

Black market operators also found ways to evade currency controls. Some of them shipped their diamonds to Switzerland and then used that country as their base of operations to take advantage of Switzerland’s total secrecy in banking operations. In this manner they were able to mask the origin of the diamonds.

Through the postwar years, the United States was the financial magnet drawing jewels from all parts of the world. But as the economies of the European countries improved with the support of American foreign aid programs, the tide began to turn in the 1950s. The purchasing power of the West Germans, British, French and Italians had improved to the point where the flight of jewelry was from the United States to Europe. The time had come when the baubles were more important to the buyers than American dollars.

Despite the ebb and flow of the diamond trade, diamonds remain one of the most tightly controlled commodities in the world. Each diamond-producing country tries to police the production to maintain price stability--since diamonds are an important means of earning dollar exchange.

The Diamond Syndicate, based in London, each month allots the rough diamond material to buyers in Belgium, Holland, Israel and the United States. Each country’s share depends on the Syndicate’s appraisal of what the world market will absorb without disturbing the price structure. The list of dealers permitted to purchase the rough stones remains relatively constant and there is rarely room for new members.

The tight monopoly held by the Syndicate has created a black market supported by dealers who look to sources other than the Syndicate for their merchandise. This market is called, in polite terms, the “open market.” It also is the market of the underworld, operating illicitly and in defiance of the Syndicate controls.

Liberia in recent years has become an important source of diamonds for the “open market.” It is whispered in the diamond trade that all of the diamonds which come from Liberia actually were stolen from the neighboring diamond-producing country of Sierra Leone where the production is controlled by the Syndicate. There are some who claim these diamonds were mined on Liberian soil near the Sierra Leone border.

One enterprising European dealer years ago started a mail-order business with individual diamond miners who would smuggle diamonds from the mines and mail them to him at various post office boxes. From a small beginning, these shipments reached the point where a $50,000 shipment was not uncommon.

This flow of bootleg diamonds has created a problem for Customs. The illicit material cannot be officially acknowledged by the merchants and no record can be made by the cutters in those countries where the production is carefully policed. The result is that these diamonds find their way into the hands of smugglers, who constantly are seeking ways to slip them past Customs without payment of duty.

With the rise in popularity of the marquise and teardrop diamonds, the demand for the emerald-cut diamond has waned. Cutters look for rough material which can be shaped into the marquise, teardrop, or the round diamond. The round stone has never lost its popularity and continued year after year among the fashion leaders. The oval diamond fell from popularity for a period of time but it, also, has staged a comeback.

Determining the value of a gem is often a controversial task for Pipino and his aides, who must study such factors as size, the quality of the cutting, the color of the stones, their cleanliness, and the imperfections left by nature. A diamond may be “ice white” or it may be any shade of yellow from “top silver cape” to “canary” or any one of several hues of brown. The colors may vary with the location of the window through which the light falls on the stone. The imperfections may range from a speck smaller than a fleck of dust to sizable fissures, crystals or carbon spots. It may be slightly off-color or the color may lack a clear definition.

Basically, the value of a diamond is determined by what is known in the trade as the Four Cs--color, cleanliness, cutting and caratage. As far as Pipino is concerned, the most important of all of these is the color, even though color often can be extremely deceptive in certain diamonds. Stones which come from the Premier mine in South Africa have a bluish cast in daylight, but when placed under an artificial light they have a yellowish glow. However, the Customs experts usually can look at a diamond and make an educated guess as to its origin--whether it came from Brazil, South Africa or French Equatorial Africa. Very seldom are these guesses wrong.

The standards used in judging the value of a diamond are the same as those used in determining the value of other precious stones. The finest of the rubies, sapphires, emeralds and many of the semi-precious stones have a deep, rich, velvety color instantly recognizable by the expert. In addition, the better stones have a glow which comes from within the stone itself.

Most of the fine gems imported into the United States in recent years have been those which came from famous jewel collections of the past. A tiara which Napoleon I reputedly presented to Empress Marie Louise was brought into the country as an artistic antiquity--free of duty. Then the jeweler, quite legally, removed the gems from the tiara and placed them in pieces of modern jewelry. Other fine stones have come from the collections of Indian maharajas.

To qualify as an artistic antiquity--free of duty--a piece of jewelry (or any other object) must have been produced prior to 1830. This arbitrary date for determining antiquity is a sensitive point in the import trade. As Pipino explained it to one puzzled inquirer: “Anything that was produced before 1830 is permitted into the country free of duty as an artistic antiquity--and not as an antique. We don’t presume to tell a dealer or a curator what is to be considered antique and what is not. But an antique is not necessarily an artistic antiquity. To qualify for this legal description, it must have been produced prior to 1830--the date fixed by Congress for determining which cultural objects shall be free of duty and which shall not.”