Part 20

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.

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.