Part 20

Mrs. Elizabeth Schmidbauer, the plump, middle-aged wife of a restaurant owner in Munich, Germany, was one of those who became a dupe for a watch smuggling gang in 1954. And her trip to the United States to visit a relative--a trip for which she had planned so eagerly and for so long--became a nightmare for her and her family.

The nightmare began in Munich when Mrs. Schmidbauer told friends at her husband’s restaurant that she was going to America with an aunt, Mrs. Anna Obermaier, who was then visiting in Germany. She talked of the clothes she would need and her intention of buying two new suitcases for the trip. Among those in the restaurant who listened with interest to Mrs. Schmidbauer’s excited chatter was a regular customer named Moritz, with whom the Schmidbauers had been on friendly terms for many years.

Two days before her departure from Munich, Mrs. Schmidbauer answered a knock at her door and found that the caller was Moritz, who was carrying two new suitcases. “I heard you say you needed luggage for your trip,” he said, “and here it is.”

Mrs. Schmidbauer invited Moritz into the living room. Over coffee and cakes he told her that he was willing to pay her fare to the United States if she would do him a favor: deliver the suitcases to a friend in New York along with a small parcel.

“What is in the parcel?” Mrs. Schmidbauer asked.

“Watch movements,” Mortiz said. “If you will take them through customs it will save quite a bit of money. I am ready to pay your fare to the United States if you will do this favor for me.”

“But what about the police and the American Customs?” Mrs. Schmidbauer exclaimed. “I may get into trouble if I do this thing.”

“Nonsense,” Mortiz said. “Nothing can happen to you. All you have to do is sew the watch parts into your corset and no one will be the wiser.”

The lure of free passage to the United States was too great a temptation. Mrs. Schmidbauer agreed to the scheme. That night she obtained strips of cloth and sewed most of the watch movements into her corset. The others she placed in her large handbag.

Mrs. Schmidbauer felt that Moritz was telling the truth when he said that she would have no difficulty. If he thought there would be any trouble, then he would not take such a risk himself.

The plan was very simple. When she arrived in New York and was safely through customs, she was to send a cable to her husband saying, “Gut angekommen,” indicating that all was well. Mortiz would keep in touch with her husband. After the receipt of the message, he would cable his friend in New York and instruct him to pick up the suitcases and the watch movements. Once the delivery was made, then she would receive payment for her fare to New York.

Mrs. Schmidbauer left Munich with her aunt, Mrs. Obermaier, and travelled to Southhampton, England, where she boarded the SS _Queen Elizabeth_ for the Atlantic crossing. The big liner reached New York harbor on December 14, 1954, and docked at Pier 90 on the North River at 8:15 A.M.

On the pier everything seemed to go as smoothly as Moritz said it would. The Customs people were courteous. Mrs. Schmidbauer’s luggage was examined by Inspector Abe Pokress. He did not ask to see the contents of her handbag after she told him it contained only personal belongings. And he inquired amiably about her voyage.

“It was a wonderful trip,” Mrs. Schmidbauer said, watching Pokress’ hands move swiftly through her belongings.

She was immensely relieved when Pokress told her she could close her luggage. She quickly strapped the bags shut. The luggage was placed on a handcart by a porter and Mrs. Schmidbauer thanked Inspector Pokress for his courtesy.

But when the handcart was rolled beside an electronic detection device, Pokress saw a warning light begin to blink. The light indicated the luggage contained a quantity of metal--and Mrs. Schmidbauer’s declaration did not list any metal objects, nor had the casual examination revealed any.

Pokress ordered the luggage returned to his station. He asked Mrs. Schmidbauer to open the bags once more.

“What is wrong?” Mrs. Schmidbauer demanded. “You have inspected the suitcases. Why am I being detained like this?”

“You aren’t being detained,” Pokress said. “But I’m afraid we must take another look at your luggage.”

Pokress began to make a thorough examination of the contents of the smaller of the two suitcases. He was unable to find anything which could have caused the electronic device to trigger the alarm signal.

Mrs. Schmidbauer stood watching the search with tears welling in her eyes. She made no further protest as Pokress removed the clothing from the bag and began to measure the inside depth of the suitcase against its outside depth. The measurement disclosed a discrepancy of approximately three-quarters of an inch.

Pokress was reasonably certain the suitcase had a false bottom. He placed the suitcase on a small platform between two metal cabinets standing nearby. The cabinets housed an X-ray device called an inspectroscope, which Customs inspectors and agents frequently used in peering into luggage and boxes suspected of containing contraband made of metal.

Pokress opened the door of one of the cabinets and squeezed into a seat before a small screen similar to a fluoroscope. He turned a few dials and switched on the X-ray. And then on the screen appeared in clear outline the metal fastenings, screws and other hardware used in the construction of the suitcase. In addition the screen showed several rectangular metal objects in the bottom of the suitcase.

Pokress switched off the inspectroscope and emerged from the cabinet. He had Mrs. Schmidbauer taken to an inspection room. And there inspectors discovered that both her suitcases had false bottoms which concealed several thin tin containers. The containers were packed with 759 Swiss watch movements.

A woman inspector led the weeping Mrs. Schmidbauer into a room where she was searched. It was found that she had 167 watch movements sewn into her corset and 26 movements in her handbag. The 952 watch movements were estimated to have a wholesale value of more than $10,000.

Mrs. Schmidbauer tearfully told Customs agents of being approached by Moritz in Munich. She told them of his offer to pay her fare to the United States if she would bring the watch parts through Customs hidden on her person. She said that he told her he had put something in the suitcases but he did not tell her what it was and she did not know that there were watch movements hidden in false bottoms of the luggage. She also told of the arrangement whereby she was to send a message to her husband if all went well.

It was obvious to agents that Mrs. Schmidbauer was only a dupe in the smuggling plot. Mrs. Schmidbauer was asked to cooperate in trapping Moritz’s accomplice. She quickly agreed.

Mrs. Schmidbauer dispatched a cable to her husband saying, “Gut angekommen.” Then two agents, Harold F. Smith and Abraham Eisenberg, accompanied Mrs. Schmidbauer and Mrs. Obermaier to Mrs. Obermaier’s apartment to await the call from Moritz’s accomplice.

They did not have to wait long. Mrs. Obermaier received a call from a man who identified himself as Hans Berger. Berger said, “I understand Mrs. Schmidbauer is visiting you and that she has something for me.”

Mrs. Obermaier said that Mrs. Schmidbauer was ill and could not talk to the caller herself. She added that she did have something for him if he would call at the apartment the next morning at ten o’clock.

The agents were hidden in the apartment the following morning when a knock came on the Obermaiers’ door. Mrs. Obermaier opened the door and a man stepped in.

“You are Hans Berger? You called yesterday?” she asked.

The caller said, “Yes. May I see Mrs. Schmidbauer?”

Mrs. Obermaier invited him into the living room. She asked him what he came for and who had sent him.

Berger said he was sent by “Moritz.” He handed her a slip of paper which said, “Dear Mrs. Schmidbauer--I hope you arrive safely in New York. I beg you to be kind enough when you receive this piece of paper to turn over the things. Best regards, Your Moritz.”

At this point the agents stepped from hiding. Questioning of Berger convinced the agents that he had called to pick up two suitcases and a package from Mrs. Schmidbauer without any knowledge that he was getting involved in a smuggling plot. He thought he was merely doing a favor for his friend, Moritz, who would show up later to claim them.

But Moritz never showed up in New York. Berger was not prosecuted, and Mrs. Schmidbauer was given a six-months suspended sentence.

* * * * *

One of the largest smuggling rings dealing in Swiss watch movements was broken up by customs agents in 1956 on a tip received from customs officials in Germany. This ring involved a foreign shipping firm working with an American importer, an American shipping official, and a dishonest customs broker in New York.

This case began to develop when four packing cases of roughly the same dimensions arrived in the foreign trade zone in Germany from Switzerland. Two of the cases, documented as containing camera tripods, were consigned to a firm in the United States. The other two cases were documented as containing 4,488 Swiss watch movements.

A German customs officer became suspicious when he saw two men transferring the watch movements from their original cases into the cases marked as camera tripods. The Customs officer made no move at that time to interfere with the transfer of the merchandise, but he notified his superiors and an investigation was begun. The Germans at that time believed that it was an effort to avoid payment of German customs. When they realized that the transfer was being made as part of a scheme to violate American customs laws, the U.S. Customs agent stationed in Bremen was informed of the facts in the case. These facts were forwarded to agents in New York, who were alerted to be on the lookout for the arrival of the boxes labelled as carrying “camera tripods.” Several days later a German customs official advised the Customs agent in Bremen that the two suspect boxes, marked IH74 and IH75, were being shipped aboard the SS _Black Falcon_ manifested as camera tripods valued at $200.

The SS _Black Falcon_ arrived at the port of New York on January 23, 1956, and docked at the Smith Street Pier in Brooklyn. Customs agents kept the two boxes under surveillance. They were watching as the boxes were moved from the pier by a trucker to a warehouse. Agents hidden in the warehouse saw the trucker and the broker switch the watches from the cases and replace them with camera tripods.

Had this scheme succeeded, the chiselers would have paid duty on camera tripods valued at $200 rather than on watch movements valued at more than $50,000.

* * * * *

Stephen Schrieber of New York City was one of the cleverest of the chiselers. He was a tall, thin, balding man in his middle years who was engaged in the import-export business. Customs had no reason to suspect Schrieber of wrongdoing until agents got a tip that he was smuggling gold out of the United States, selling it on Europe’s black market, and then smuggling diamonds into this country.

On April 29, 1952, Customs agents learned that Schrieber was preparing to make another trip outside the country and that he had booked passage for Cherbourg, France, aboard the SS _Queen Mary_. Schrieber also had arranged to export a car on the _Queen Mary_ as “accompanying baggage.”

After Schrieber delivered his car to the pier to be taken aboard the liner, agents made arrangements to examine the vehicle, a 1949 Pontiac. The examination began at approximately 4 P.M. They searched the car for ninety minutes without finding any contraband.

At last one of the agents said, “Why don’t we weigh the car and check its weight against the Blue Book weight that is listed by the manufacturer.”

With the cooperation of Customs inspectors and Cunard Line officials, the car was removed from Pier 90 to the scale house at Pier 84. The automobile Blue Book listed the Pontiac as weighing 3375 pounds. But when it was put on the scales, it registered 3840 pounds. There was a discrepancy between the listed weight and the actual weight of 465 pounds. It was obvious that something was concealed somewhere on the vehicle and that the hiding place had not been discovered.

The car was then moved back to Pier 90 and driven to a service station at the corner of 51st Street and Eleventh Avenue. It was run over a grease pit in order that the searchers could take a better look at the underside. One of the searchers began tapping the gas tank of the Pontiac and then tapping gas tanks on other automobiles in the station to compare the sound. He called to an agent, “There’s something wrong with this gas tank. It doesn’t sound like these other gas tanks when I tap on it.”

With the help of service station personnel, the searchers removed the gas tank. As soon as it was loosened from its fastenings, they knew that they had discovered hidden contraband: the gas tank was so heavy that it took the combined efforts of four men to lift it out of the grease pit. It was specially built of heavy steel.

Inside the gas tank, the searchers found a cleverly concealed compartment which contained thirty-three individually wrapped packages of gold bullion, valued at $110,000.

Apparently Schrieber became suspicious that he was suspect or he was tipped that the gold hoard had been discovered. At any rate, he did not show up as a passenger before the Cunard liner sailed. He was reported to have fled from the United States on a phony passport. After that, he was reported variously in Canada, in South America, and in Europe.

* * * * *

Saul Chabot of New York City was also one of the chiselers. Chabot was a slender, middle-aged man with graying sandy hair and bushy eyebrows who had built up a large-scale business in used rags. But the profits from his rag business weren’t enough for Chabot--and he decided to expand his operations into gold smuggling.

Chabot might well have smuggled a fortune in gold from the country had it not been for the alertness of Matthew Jake Berckman of Jersey City, New Jersey. Berckman had joined the Cunard Line’s police force in 1937 and he had remained on this job until 1947, when he was employed as a pier checker, checking automobiles to be shipped abroad.

On February 15, 1951, a 1950 Buick sedan bearing a New York license drove up to the pier where Berckman was checking the cars to be taken aboard the _Queen Elizabeth_, which was sailing for Cherbourg. The driver of the car identified himself as Saul Chabot. He showed Berckman his contract receipt for shipment of the car aboard the liner. He turned over his keys to Berckman, who assured him that the automobile would be handled carefully.

Berckman told Chabot to remove the cigarette lighter and the contents of the glove compartment and to lock the articles in the automobile’s luggage compartment. When Chabot opened the compartment, Berckman saw there was nothing inside except tools and a spare tire.

He also noticed that although the compartment was virtually empty, the car looked as though it were heavily loaded because it sat low in the rear.

As they were talking, there was a banging from underneath the car. A longshoreman was having difficulty removing the tap from the gasoline tank. Chabot seemed extremely nervous and said, “What’s the matter? What is he doing?”

Berckman replied, “He’s loosening the tap on the gas tank. We can’t take a car aboard the ship until the gas tank is empty.” Then he added, “This is a very heavy car, isn’t it?”

Chabot said, “Yes, these Buicks are very heavy.”

Berckman gave Chabot his receipt. He told him that he would look after his car and he need have no further worry. But Chabot said, “Well, I’ll stay and see that he gets the gas out all right.”

Chabot remained until the gas had been drained from the car and then he walked across the street. Berckman noticed that Chabot hung around for another fifteen or twenty minutes watching his automobile. It was Chabot’s nervousness which aroused Berckman’s suspicions. He decided to inspect the other cars and to show no further interest in Chabot’s car as long as he was around.

After lunch, Berckman went back to Chabot’s automobile to look at it more closely. He saw what appeared to him to be a new welding on the inside of the trunk near the rear fenders. The welding was odd because the car did not look as though it had been in a collision. There was no sign of any damage to the front or rear of the car and the original paint was unmarred.

Berckman went to the office of Customs Inspector Howard Walter and reported his suspicion that the car had been tampered with and that it might be loaded with contraband. Inspector Walter dispatched Inspector Mario Cozzi and James P. Dalton, along with three port patrol officers, to investigate.

The preliminary examination revealed nothing unusual about the car except that it did seem to sag heavily on the rear springs and there was no apparent explanation for the welding near the rear fenders.

Cozzi began rapping on the sides of the car with his knuckles. It seemed solid enough until he rapped on the body just above the rear fenders--and then the rapping gave forth a hollow sound.

“Let’s unbolt one of these fenders and take a look,” Cozzi said.

Three bolts were loosened near the left rear door post. The fender was pried away from the body far enough to reveal a piece of gray cardboard. When Cozzi poked into the cardboard with a screwdriver, he could see it covered a package wrapped in heavy black cloth.

The fender was removed and the searchers found that it concealed a secret compartment containing several parcels--all of them packed with sheets of gold. Two secret compartments yielded eighty-two packages of gold valued at $171,197.

Customs agents were alerted. They kept Chabot’s apartment under surveillance. They were following when he and Mrs. Chabot left the apartment at 9:30 A.M. enroute to Pier 90. The couple boarded the _Queen Elizabeth_ and went to their cabin, D291. And it was there that agents questioned Chabot.

Chabot protested that he knew nothing of any gold hidden in the automobile. He claimed that two weeks earlier a man he knew only as “Carl” had given him $1,900 and told him to go to a used car lot and buy a certain automobile. Chabot said he bought the car for $1,750 and that he turned it over to Carl. Then Carl had brought the car back to him and he had delivered it to the steamship line without any knowledge that the gold had been hidden behind the fenders.

Chabot’s story was not very convincing. He was tried and found guilty on a charge of smuggling and was sentenced to five years in prison.

As for Matthew Jake Berckman, the car checker whose suspicions led to the gold seizure, he was given a reward of $16,119 by the government for his alertness.

* * * * *

Unfortunately, the chiselers sometimes have been found in the ranks of Customs employees. The bad ones have been the exception, but occasionally there have been those who were tempted to make a racket of their places of trust. In one such case an importer of Italian-made men’s wear built up a booming business with smuggled merchandise--acting on the advice and with the connivance of Customs inspectors who drifted into a conspiracy which wrecked their careers.

Giuseppe Battaglia, an enterprising merchant of Milan, Italy, had not the slightest intention of entering into a smuggling operation when he first arrived in the United States in 1952 seeking a market for silk ties, robes, sweaters, pajamas, shirts, scarves, and other men’s wear and accessories.

Battaglia operated a retail haberdashery in Milan which was popular with American tourists, Hollywood movie celebrities, and businessmen who liked the distinctive and expensive Italian styling. Business was so good that the darkly handsome Battaglia decided the time was ripe to develop outlets for Italian-made merchandise in the United States.

He arrived in New York in February, 1952, after making arrangements to act as sales agent for three firms manufacturing ties, gloves and scarves. He was to pay all expenses and receive a straight 15 per cent commission on sales in the United States.

Battaglia had no difficulty in finding a market for his merchandise. Sales of Italian-made clothing and accessories were increasing throughout the country. Business was so promising, in fact, that he expanded his line of men’s wear and became agent for such respected and well-known Italian houses as Galliene, Ratti, Salterio, Longhi and Caelli. He opened an office in the Empire State Building (later moved to 15 West 37th Street) and took a partner, Domenico Guarna, into the business. The partnership arrangement permitted Battaglia to travel throughout the country calling on retail outlets. He also was able to return to Italy on buying trips while Guarna looked after the New York end of the business.

On each return trip from Italy, Battaglia listed on his declaration the samples of silk materials and other merchandise he was carrying with him. He paid the required duty without question.

The partnership of Battaglia and Guarna operated honestly and aboveboard, Customs files show, until January 18, 1954. On that day, Battaglia arrived in New York harbor aboard the SS _Vulcania_. He handed over his declaration to Inspector Benjamin Danis, who was a short, pudgy man who soon impressed Battaglia as an extremely courteous and helpful officer. Danis made only a casual inspection of Battaglia’s trunks and luggage, which was not unusual on this particular day because the inspectors’ instructions were to make only a spot check of travellers’ baggage.

After clearing all the baggage, Danis hinted amicably that if Battaglia had not listed the samples of merchandise on his declaration, he could very easily have overlooked them and there would have been no need to pay the duty.

“Is that so?” Battaglia said in surprise. “I was told to list everything.”

Danis grinned. “It’s simple if you know the right people.”

Battaglia reached into his pocket and pulled out a business card. “Take this card and drop around to see me at my place of business,” he said to Danis. “And would you give me your name and address? I would like to send you a few Italian ties as a gift. You have been very courteous.”

Danis gave Battaglia his name and address. “I’ll be around to see you,” he said. “I can give you some tips that will help you in clearing Customs.”

A few days later, Danis visited the shop of Battaglia and Guarna and chatted with the partners for several minutes about the problems of Customs clearances. Battaglia asked him to take his choice of several expensive Italian ties. But after Danis selected them Battaglia realized that Danis expected more than a gift of ties. He handed him a $20 bill, which Danis accepted.