Part 21

As he stuffed the bill into his pocket, Danis said, “Let’s get down to business. If you will let me know in advance when you or your representatives are arriving from Europe, I can arrange to handle the inspection of your baggage. I won’t ask any questions if all your merchandise is not listed on the declarations.”

Battaglia said, “But what if we arrive and you are sick--or for some reason can’t handle the inspection?”

“That’s no problem,” Danis said. “If I can’t handle the inspection myself, then I’ll arrange for someone else to do it.”

“What if we’re caught bringing in merchandise which is not on the declaration?” Battaglia asked.

Danis laughed. “The worst that will happen to you is that you’ll have to pay the duty. So what have you got to lose?”

It seemed so simple to the partners that they decided to give it a try on the next trip that Battaglia made to Italy. If Danis could arrange the clearance of sample merchandise so easily, then it was reasonable to assume he would have no difficulty with larger shipments of merchandise as well. If they could save the payment of duties, then the partnership’s profits would rise in spectacular fashion.

A few days after this conversation, Danis returned to the office of Battaglia and Guarna, accompanied by Customs Inspector William Lev, a tall, fat man with a swarthy complexion. Danis advised the partners that Lev was a man they could trust. He said in the event one of them should arrive in New York and he, Danis, was not available to help them through Customs, then they could depend on Lev to help them just as they could depend on him.

Battaglia returned to Italy in June, 1954, on another of his buying trips. He remained there until January 17, 1955, when he returned to the United States aboard the SS _Andrea Doria_. Prior to his arrival, Guarna telephoned Inspector Danis and advised him of the time of Battaglia’s arrival.

Danis was on the pier when Battaglia walked from the ship, and he handled the examination of his baggage. The examination and clearance proceeded smoothly. None of the samples which Battaglia brought from Italy was listed on his declaration. And there was no reason why Danis’ perfunctory inspection should have aroused the suspicion of any other inspector because again that day the inspectors had orders to make only a spot check of the travellers’ luggage. On some days, the inspectors were required to inspect all luggage. On other days only spot checks were ordered.

In testing the scheme proposed by Danis, Battaglia carried merchandise valued at something over $1,000, on which the duty would not have been more than $300 even had he declared the imports. He took the merchandise from the pier to the office on West 37th Street, and shortly thereafter Danis appeared to receive his payment. Battaglia gave him $100 in cash.

Both Battaglia and Guarna were elated over the discovery that they could bring merchandise into the country so simply without the payment of duties. They began planning to bring even greater quantities of merchandise from Italy on future trips.

In the months that followed, Battaglia and Guarna brought from Italy trunks packed with expensive men’s wear which they were able to slip through Customs without the payment of duty. When unable to make a trip themselves, they arranged to have acquaintances and relatives bring the merchandise. In each case, there were prearranged inspections, with Lev having taken over the inspection end of the operation.

Inspector Theodore Rider, a tall, long-nosed, sallow-faced man, became involved in the operation quite by accident. On one of his many trips, Battaglia was standing on the pier waiting for Lev to make an inspection of his baggage when Rider approached and asked if he could help with his clearance.

“Thanks,” Battaglia said, “but Inspector William Lev is a good friend of mine and I’m waiting for him to handle the clearance. He’ll be along shortly.”

Rider said, “Whatever Lev can do, I can do.”

“Well,” Battaglia said, “go easy on the examination, will you?”

Rider took only a casual look at a couple of small suitcases and then stamped all the baggage for clearance. For their cooperation in this case, Rider received $100 and Lev was paid $300. Battaglia and Guarna saved $6,185 in duties.

By midsummer of 1957, Battaglia and Guarna were convinced that the 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.