Chapter VII: Part 7

As the pressures mounted, the hunted man became desperate. And desperately he tried to wreck the cases against him by sending witnesses out of the state, by intimidation, and by murder. The heat was on the underworld as it had never been before. The rumor spread that if Lepke did not surrender to the authorities, he would be killed by one of his own kind. Lepke had at last become too much of a liability even to his old pals.

Hunted and frightened, with every day holding the threat of sudden death, Lepke began negotiations to surrender to New York Columnist Walter Winchell--on the condition that he would be turned over to the FBI rather than New York State authorities.

During the evening of August 5, Winchell received a telephone call from a man who refused to identify himself. “Lepke wants to come in,” he said. “But he’s heard so many different stories about what will happen to him. He can’t trust anybody, he says. If he can find someone he can trust, he will give himself up to that person. The talk around town is that Lepke would be shot while supposedly escaping.”

Winchell called FBI Director John Edgar Hoover in Washington and told him of the mysterious call and Lepke’s willingness to surrender if he could be assured of protection.

Hoover told Winchell: “You are authorized to state that the FBI will guarantee it.”

For almost three weeks the dickering continued between Winchell and his mysterious callers until Hoover finally said, “This is a lot of bunk, Walter. You are being made a fool of, and so are we. If you contact those people again, tell them the time limit is up! I will instruct my agents to shoot Lepke on sight.”

Winchell relayed this information to the intermediary. Then it was that arrangements were made for Hoover to be waiting in his automobile on 28th Street near Fifth Avenue at 10:15 on the evening of August 24.

Winchell was parked in his car at Madison Square when Lepke came out of the shadows and stepped into the car beside him. “Hello,” Lepke said. “Thanks very much.”

Quickly, the columnist drove to 28th Street, where he pulled up behind Hoover’s car. Lepke quickly moved into the automobile beside Hoover.

Winchell said, “Mr. Hoover, this is Lepke.”

“How do you do,” Lepke replied. “Let’s go.”

And so ended one of the greatest manhunts in American criminal history.

Four months later, Lepke went on trial in the Federal district court in New York City. He sat in silence, his brown eyes expressionless, as his former henchmen paraded to the stand to tell the details of their narcotics smuggling.

Among the government witnesses, many of them pale from sunless days in prison, were Jack Katzenberg, Ben Schisoff and John McAdams, the Customs employee. No longer were they afraid of the little man who sat there staring at them.

The trial dragged through fifteen days, but in the end Lepke was convicted. He was sentenced to serve fourteen years in prison and was fined $2,500 on ten narcotics charges. Two weeks later in General Sessions Court, Lepke was convicted on thirty-six counts of extortion and sentenced to an additional thirty years in prison.

Among the others involved in the smuggling ring, Lvovsky received seven years in prison and was fined $15,000. Sam Gross was sentenced to six years and fined $15,000, while Katzenberg was given ten years and a $10,000 fine. Both the Customs employees, McAdams and Hoffman, also received prison sentences.

But the final ordeal for Lepke was yet to come. In October, 1941, Lepke was taken from prison and returned to New York to stand trial for his role as mastermind in the operations of Murder, Inc. Specifically, he was charged with ordering the murder of a former garment industry truck driver, Joseph Rosen, who had ignored his warnings to get out of town and out of reach of questioning by District Attorney Dewey at the time Dewey was investigating the rackets in New York.

Manuel “Mendy” Weiss was named by the state as the actual triggerman in the slaying, and a small-time hood named Louis Capone (no kin to Al Capone) was accused of being the man who assisted Weiss in his getaway. Rosen had been found shot to death on the morning of September 13, 1936, lying on the floor of his small candy shop in Brooklyn.

One of the witnesses against Lepke was Max Ruben, whose death Lepke had ordered when Ruben refused to stay out of New York. One of Lepke’s henchmen had shot Ruben through the neck and left him lying near death. But he had recovered to tell his story to Prosecutor Burton Turkus.

Ruben testified that Lepke--two days before Rosen was killed--told him: “That bastard Rosen is going around Brownsville shooting his mouth off that he’s going downtown. He and nobody else are going down anyplace or do any more talking ... or any talking at all.”

Allie Tannenbaum, another of Lepke’s triggermen, supported Ruben’s testimony. He said he had heard Lepke say of Rosen: “There’s one son-of-a-bitch who’ll never go downtown.” By downtown, Lepke meant the office of the district attorney.

Tannenbaum also told of hearing Mendy Weiss describe how he had shot Rosen--after which his pal, “Pittsburgh Phil” Strauss, had pumped bullets into the body just for kicks.

When Lepke was advised that Rosen was dead, Tannenbaum said his boss replied, “What’s the difference as long as everyone is clean and got away all right.”

A battery of nine attorneys defended Lepke. But this time the king of the underworld couldn’t squeeze out of the trap. Too many of his old gang had decided to talk. They had lived too long in fear that Lepke would order their own deaths in his effort to remove anyone who might be dangerous to him. Now they wanted Lepke out of the way.

Lepke, Weiss and Capone were convicted of murder and sentenced to die in the electric chair. They went to their deaths on December 2, 1941.

* * * * *

Control of the narcotics traffic in the United States is primarily the responsibility of the Narcotics Bureau. But Customs agents also have a direct responsibility in the government’s efforts to throttle the illicit trade. For this reason Customs agents frequently are teamed with Narcotics agents in investigations which often are international in scope.

It is not unusual for Customs agents to work for as much as two years in tracking down a single narcotics smuggler and removing him from circulation. These cases require endless hours of surveillance and hunting for the one bit of information which will trap the quarry.

Such a case was dropped in the laps of Customs agents in San Francisco and Seattle on August 2, 1954, when an informant tipped Customs agents at Seattle that $30,000 worth of heroin was to be smuggled into the United States aboard the SS _M. N. Patrick_ by a Negro seaman named Robert King. He described King as tall, jug-eared and middle-aged, with a taste for conservative clothes and gaudy night spots. The tipster said King planned to take the heroin ashore in San Francisco when the _Patrick_ completed her run from Hong Kong.

Seattle forwarded a teletype message to San Francisco saying: “Information considered to be very reliable received today that ship _M. N. Patrick_ arriving San Francisco between August 4 and August 8 from India via Hong Kong has heroin valued at about $30,000 on board. Vessel supposed to be in Seattle today but not verified. The suspect, Robert King, in steward’s department, is owner and will try to bring ashore at San Francisco.”

Alerted by this message, San Francisco agents began checking on the probable arrival time of the _Patrick_ only to discover that the ship had changed its sailing schedule and would not touch San Francisco on that trip. A message was forwarded to Seattle saying: “We have just checked here and find that _Patrick_ is not coming to San Francisco this trip. She is due in Seattle today (August 6) and will make two trips from Seattle to Alaska and then back to Far East. Under circumstances consider probable that King will try to unload at Seattle....”

The _Patrick_ had already docked in Seattle when this message was received. Agents rushed to the waterfront. But as the agents were walking aboard the ship, King was walking off undetected, apparently carrying the heroin with him.

A few hours later it was learned that King had contacted a known narcotics peddler in Los Angeles and had arranged for a $30,000 “loan.” It was suspected by agents that King had made his contact successfully and disposed of the narcotics before agents could get on his trail.

Agents began checking on King’s background and on his movements as far as possible in previous years. They discovered that while he had no known source of income, he owned an apartment building in San Francisco valued at $135,000. He maintained a bank account which showed heavy deposits and withdrawals. It was discovered also that in past years he had made frequent trips to Hong Kong and Japan. On occasions he had shipped as a seaman, and at other times he had gone abroad as a tourist.

Treasury agents in Japan found that King often frequented the Port Hole Bar in Yokohama, which was a known meeting place of narcotics peddlers when they were trying to contact seamen to use as carriers.

For more than a year and a half agents kept a periodic check on King’s movements in an effort to trap him in an act of smuggling or trafficking in narcotics. They had no success until a seemingly unrelated incident occurred in Japan.

On February 9, 1956, Japanese postal inspectors at Yokohama seized a shipment of narcotics which proved to be of special interest to Customs agents in San Francisco and Seattle. While making a routine examination of a package mailed by international air mail, they found 167 grams of heroin and 217 capsules of cocaine hidden in the folds of a pair of woman’s pajamas and slippers. The package was addressed to a Mrs. Hazel Scott in Seattle, Washington. The Customs declaration tag gave the name of the sender as W. M. Scott and listed an address in Yokohama. The addresses were written by typewriter. The narcotics were in a manila envelope bearing the words “For Walker.” The Japanese turned this information over to the U.S. Embassy.

During the years of the Allied Occupation of Japan after World War II, American and Japanese authorities had achieved close cooperation in combatting the traffic in narcotics and other contraband. This cooperation was continued after the signing of the Peace Treaty in 1952 formally ending the occupation.

The United Nations made the control of narcotics traffic one of its important objectives soon after its formation, resulting in a combined effort by many nations to strangle the illicit trade by joint efforts which were unknown in the years prior to the war.

Treasury agents were stationed in Tokyo as liaison officers to work with Japanese authorities on any cases involving American interests. And it was a routine matter for the Japanese police to give Treasury agents the information on the seizure of the package addressed to Mrs. Scott. This information was relayed from the U.S. Embassy to Customs agents in San Francisco.

The agents found there had been a seaman named Walter Scott aboard an American naval vessel in Yokohama at the time the package was sent--but Scott had not mailed a package while his ship was in Yokohama. Obviously whoever had sent the package containing narcotics had used Scott’s name without his knowledge. As for the envelope marked “For Walker,” agents suspected that it was probably intended for a known narcotics dealer named Roosevelt Walker, who first came to the attention of Customs in 1940 when he was arrested in Nogales, Arizona, and was charged with smuggling a quantity of marihuana into the country.

And agents found another interesting fact: Walker was a companion of Robert L. King. King had been in Tokyo at the time the package was mailed, but there apparently was no way to link him with this smuggling effort.

And so the surveillance of King was continued. On July 16, 1956, agents trailed King to the International Airport at San Francisco. He had booked passage on Pan American Flight 831 for Tokyo by way of Honolulu and Manila. King was nattily dressed in a brown business suit and he wore a rakish straw hat as he boarded the plane. The agents watched his plane leave San Francisco at 10 A.M., making no effort to stop him. Honolulu and Tokyo were alerted to the fact that King was aboard the plane and that his movements should be watched.

King was permitted to enter Japan unmolested. He also was allowed to leave Japan for a trip to Hong Kong, where he spent several days shopping before returning to Tokyo.

The return to Tokyo was a mistake for King. For months Japanese police had been trying to trace the typewriter which had written the addresses on the package containing the narcotics. They found that King, at the time the package was mailed, had been living in Yokohama at the Tomo Yei Hotel. They also found that King had rented a typewriter--two days before the parcel was mailed--from a Mr. Ono who ran a shop near the hotel. And then they matched a sample of typing from this machine with the typed address on the package containing narcotics. The comparison left no doubt that this was the machine which had been used by the would-be smuggler.

When King returned from Hong Kong on September 20, he was arrested by Japanese police at the Tokyo International Airport and lodged in jail at Yokohama, charged with narcotics smuggling. Unable to raise money for a bail bond, King remained in jail for six months while authorities in Japan and the United States investigated his case. But at last he obtained money from friends in the United States and made bond. He was released, pending a trial. The Japanese held on to his passport as insurance that he would not leave the country.

Passport or no passport, King was determined to get out of Japan before his trial. He went to the Yokohama waterfront and found an old friend who agreed to smuggle him aboard the military transport _General C. G. Morton_. The ship docked at Pier 5 at Oakland on April 14, 1957, and King slipped ashore.

Within a matter of hours, Customs agents were on his trail. FBI agents were called in on the case because King had returned to the country without a passport, which was in the hands of Japanese police. The agents found a seaman who testified he had seen King aboard the _C. G. Morton_. The seaman told agents: “About two days before we got to San Francisco, a friend came to me and said, ‘How would you like to make some money?’ I asked him how and he said, ‘Take a package off the ship for me in San Francisco.’ He showed me the package and it contained ten rubbers filled with heroin. About two days after we got to San Francisco I took the narcotics off at Pier 5, Oakland Army Terminal. My friend walked off just ahead of me. I had the package of heroin under my coat. We got in my car and went to a motel somewhere in the Richmond district and registered. We stashed the package of heroin in our room. I don’t know who picked up the heroin. The next night my friend gave me King’s address and told me to go and see him. I went to the hotel and King gave me $500.”

King denied that he had re-entered the United States illegally and claimed that he had returned on a Pan American flight from Tokyo. But agents were able to prove that King had not been booked aboard the plane which he claimed he had been on. They broke down his alibis and at last King entered a plea of guilty to a charge of conspiracy to smuggle narcotics into the United States and to entering the United States without a passport. He was convicted, fined $13,000 and sent to prison for five years.

But it seems that whenever the Kings and the Lepkes are taken out of circulation, there is someone new to take their place. That is why there is a U.S. Customs force.

12

THE CASE OF THE CROOKED DIPLOMAT

The Case of the Crooked Diplomat had its beginning when an Arab informer whispered a warning to a U.S. Bureau of Narcotics agent in faraway Beirut, Lebanon. And before it was closed, agents of the Customs Bureau, the Bureau of Narcotics and the French Sûreté had teamed up in a cooperative drive to smash a ring of criminals attempting to smuggle $20 million worth of heroin into the United States.

They were an oddly assorted lot, the members of this ring. There were only four known members, but in early 1960 their operations had begun to stir alarm across the country among law enforcement agencies seeking the mysterious source of heroin which at intervals had begun to appear in large lots on the underworld market.

The quartet was composed of:

Mauricio Rosal, forty-seven, Guatemala’s ambassador to Belgium and the Netherlands, and the son of a respected Central American diplomat; a small, portly, balding man known favorably in many countries as a witty conversationalist and shrewd politician of seeming integrity; something of a dandy, he usually wore dark homburg hats, expensively tailored dark blue suits and maroon ties; he affected an air of aristocratic elegance both in dress and manners.

Etienne Tarditi, fifty-five, a short, heavy-jowled, paunchy, gross figure of the Parisian underworld with a cloudy background; addicted to trench coats, pork-pie hats and the notion that he resembled Alfred Hitchcock (which he did); a gambler who played for big stakes in narcotics, with connections in many countries; a manipulator who usually remained in the background.

Charles Bourbonnais, thirty-nine, a slender, dapper steward for Trans World Airways, who had an eye for a pretty girl when his wife was not looking; often seen in the company of Tarditi when in Paris, and a liberal spender for a salaried man; the messenger and fixer for the ring.

Nicholas Calamaris, forty-seven, a powerful man with a huge nose, jug ears, skull-like face and long arms which reached almost to his knees; employed as a New York longshoreman, but this job was merely the front for his nighttime operations as a big-time dealer in narcotics; a cautious, secretive man with few close friends.

In the winter and spring of 1960, Federal, state and city police agencies were at a loss to explain the source of heroin which was at times available in almost any quantity desired. Agents canvassed their underworld tipsters with little luck. The informers knew only that at intervals the word would spread that another large load of heroin had arrived in New York and was available. Where it came from and how it entered the country none could--or would--say.

It was not until June that Narcotics Agent Paul Knight picked up the first clue of substance in Beirut, which had become an important listening post for the Narcotics Bureau.

A tipster whispered to Knight that heroin processed in Beirut from a morphine base had been sent to a smuggling ring in Paris. The reputed leader of the ring was a man named Etienne Tarditi. He had, the tipster said, smuggled as much as 40 to 60 kilograms of heroin from Beirut to France, and, according to rumors, it had gone from France to the United States. The carrier was said to be a Spanish-speaking diplomat.

This was the first break. The information from Beirut was passed on to the French Sûreté Nationale with a request that the Narcotics Bureau be informed of Tarditi’s movements and his associates.

In August, the Sûreté informed the Bureau that Tarditi had returned to Paris from a trip to New York. His plane companion on the trip, and on several previous trips, had been the Spanish-speaking Guatemalan ambassador, Mauricio Rosal. The Sûreté added that Tarditi also had been seen in Paris in the company of a TWA steward named Charles Bourbonnais.

From this time forward, Tarditi, Rosal and Bourbonnais were under almost constant police surveillance on the Continent. When Bourbonnais returned to the United States on August 24 he was placed under surveillance by Narcotics and Customs agents.

Bourbonnais, the agents found, was married to a TWA hostess. He lived on Long Island and in recent months had sold a residence for $40,000. He always seemed to have plenty of money, and he was something of a playboy when his wife was away from home or when he was in Paris.

Agents trailed Bourbonnais when he drove from the airport. He drove a devious route to an apartment house in Queens. He stood at the entrance of the building looking furtively about before entering.

“That guy is really jumpy,” an agent remarked to another. “Do you think he knows we are on his tail?”

“I don’t know,” was the answer, “but we’d better drop the surveillance. He’s suspicious of something. He could have spotted us.”

The surveillance was called off temporarily. It wasn’t until later that the agents learned that Bourbonnais’ wariness had nothing to do with narcotics peddling. On this particular occasion he was on his way to a rendezvous with a girl friend--and he merely wanted to be certain that he wasn’t being followed by private detectives hired by his wife.

At the same time, Customs agents began checking into the background of Mauricio Rosal, who they found had been a frequent visitor to the United States. Leafing through old files one day, Agent Mario Cozzi found a report showing that almost twenty years earlier Rosal had been under investigation for alleged smuggling, although nothing had ever been proved against him.

He had arrived in New York City aboard the SS _Nyassa_ on August 9, 1941, carrying papers which identified him as a Guatemalan chargé d’affaires. He had claimed--and been granted--diplomatic courtesies when passing through Customs with his wife. His declaration showed that he was enroute from Lisbon to Mexico City on his way to Honduras.

The Rosals had remained in New York only a few days and then had departed with their seventeen pieces of luggage, none of which was subjected to Customs examination.

A few days after their departure, Customs agents were informed by a tipster that Rosal had carried essential oils worth $40,000 and diamonds worth $37,000 into the city. A diamond dealer was found who admitted that Rosal had brought the diamonds to him and offered to sell them.

“I refused to buy unless Rosal could produce receipts showing he had paid the customs duty,” the dealer said. “When he could not show me a proper clearance from Customs, I turned down his offer.”

Customs, however, had reason to believe that Rosal had disposed of the essential oils and the diamonds before he left the city. Months later, Customs Agent Salvador Pena had interviewed Rosal in Mexico City, inquiring about his reported failure to list the dutiable imports on his declaration.

Rosal blandly admitted he had carried the oils with him in a wooden box. “I brought them over from Vichy for a friend,” he said, “and delivered them to his brother at the Waldorf-Astoria. I was assured the duty had been paid and I never dreamed, of course, there was anything irregular.”

As for the diamonds, Rosal admitted he had approached a dealer and offered to sell him several diamonds. But he insisted that when no agreement was reached, he had taken the gems on to Venezuela, where he had disposed of them. Had he made the sale in New York, he added with a shrug, he would naturally have paid the required customs duty.

There was nothing further that Customs could do about the matter and the case was closed. The report was filed away to gather dust until Rosal’s name was linked with that of Tarditi.

On September 30, six weeks after Cozzi had found the old report, the Sûreté advised the Narcotics Bureau that Rosal and Tarditi had purchased tickets for a flight to New York and it was suspected they would be carrying narcotics. Tarditi was booked to arrive at Idlewild International Airport on October 1, and Rosal was due to arrive a day later. Bourbonnais was scheduled to leave Paris a short time after Tarditi as the steward aboard TWA’s Flight 801.

As the original tip on the case had come to the Narcotics Bureau, the investigation was in the hands of District Director George H. Gaffney, a veteran agent, with Customs playing a supporting role.

Thus began one of the most remarkable cases of Federal agency cooperation in the war against smuggling. Gaffney laid his plans well, and when TWA’s Flight 801 touched down at Idlewild at 5 P.M. on October 1, a squad of Narcotics and Customs agents was waiting to place Tarditi under surveillance. Customs inspectors had been alerted to signal an identification when Tarditi handed over his baggage declaration, and to make only a cursory examination of a single piece of his luggage.

Tarditi stepped from the plane wearing a trench coat and a pork-pie hat set jauntily at an angle. He seemed unconcerned when the inspector asked him to open the single bag he carried to the inspection station. The inspector noted on his declaration that his destination was the Sherry Netherlands Hotel.

And so it was that Tarditi passed through Customs with no hint given that several pairs of eyes were watching every move he made. A porter carried Tarditi’s luggage to a waiting taxi while a radio message was flashed from Idlewild to a squad of agents in midtown Manhattan that the suspect was enroute to the Sherry Netherlands. Agents were instructed to keep him under surveillance when he reached the hotel.

The taxi driver stowed Tarditi’s bag into the trunk of his cab and slid behind the wheel. He said, “Where to, sir?”

Tarditi replied, “To the Savoy Hilton.”

The driver noted the destination on his trip sheet. He also scribbled the words “Savoy Hilton” on a piece of paper which he wadded into the palm of his left hand. The driver was Narcotics Agent Francis Waters.

As Waters drove from the loading platform, he placed his left hand carelessly on the doorframe and dropped the piece of paper from the car window. He noted with satisfaction in the rear-view mirror that the car behind him stopped suddenly and a man jumped out to pick up the note.

At the Savoy Hilton, Tarditi was given Room 1337. The guest in 1339 was a Narcotics Bureau agent.

Bourbonnais arrived on schedule about an hour after Tarditi.

The next afternoon, Sunday, agents were stationed at strategic points when Rosal walked from the Pan American jet and made his way to the Customs barrier where Inspector Pasquale Cammello had been assigned to weigh and clear his luggage.

Discreet inquiries at the State Department in Washington had disclosed that Rosal was not accredited in any way as a diplomat to the United States, and, further, that the Guatemalan embassy knew nothing of his trip to this country.

Under these circumstances, Rosal was travelling as a private citizen with no legitimate right to the courtesies usually accorded visiting diplomats. Nevertheless, he boldly claimed the privilege of immunity for the four suitcases which accompanied him and Inspector Cammello gave no hint that the claim was anything but routine.

Cammello noted that the bags weighed 19, 25, 50 and 52 pounds when he placed them on the scales. He chatted pleasantly with the diplomat and then waved Rosal on his way. A Pan American passenger representative was waiting to drive the Ambassador to the Plaza Hotel near the Savoy Hilton.

Rosal registered into Room 1205 at the Plaza, where agents had arranged to occupy an adjoining room. He had a leisurely dinner in the hotel dining room and then he strolled to the nearby Savoy, where he met Tarditi in the lobby. The men kissed each other on the cheek and then sat in a secluded corner in animated conversation. It was almost midnight when they parted and went to their rooms.

The following morning, Tarditi left his hotel and took a cab to an apartment building on East 79th Street. He remained in the building only a few minutes, and when he emerged he was carrying a parcel wrapped in brown paper. He went directly back to his hotel.

About 11 A.M., Tarditi left the Savoy Hilton, carrying in his hand the brown parcel, and he walked to the Plaza Hotel.

Customs Agent Mario Cozzi was one of those watching Tarditi. Cozzi never knew what it was that drew his attention to a battered 1957 Ford station wagon parked at the northeast corner of Central Park South. Perhaps it was the driver. He was a huge man with a skull-like face and large ears who seemed to be interested in Tarditi, too. From long habit, Cozzi made a mental note of the license number, New York LK8935.

Tarditi went directly to Rosal’s room, and left the brown parcel with the diplomat. Then he returned to his own hotel.

Narcotics Supervisor George Gaffney and Customs Agent-in-Charge Carl Esposita sat in a parked radio car near the Plaza Hotel entrance. They were reasonably certain that if heroin were being smuggled, then the contraband would be in Rosal’s luggage, for which he had claimed diplomatic immunity. If their suspicions were correct, the question was: Where would the delivery take place and to whom?

A dozen agents were dispersed throughout the area in radio cars, receiving their orders by radio from Gaffney. At noon an alert was flashed when Rosal called for a bellman to take his bags from his room to a taxi. He checked out of the hotel and the bellman placed his four suitcases in the trunk of a taxi.

Only a few minutes earlier, Tarditi had left his hotel. Agents reported by radio that he had gone to the corner of 72nd Street and Lexington Avenue, where he was met by Charles Bourbonnais, the TWA steward, and by a tall, gangling man with a skull-like face. The three men were still standing on the corner talking when Rosal’s taxi pulled away from the Plaza Hotel.

“This must be it,” Gaffney said to Esposita. The command car followed a discreet distance behind Rosal’s cab, which went directly across town to the corner of 72nd Street and Lexington Avenue. There the diplomat stepped from the taxi to be joined by Tarditi and Bourbonnais. Gaffney’s radio car continued on down the street to a vacant parking space.

From the shadow of a doorway across the street, Mario Cozzi snapped a picture of Rosal, Tarditi and Bourbonnais as they stood talking beside the taxi. Then he noticed a familiar-looking Ford station wagon parked nearby. The man at the wheel was the jug-eared driver he had seen parked earlier in the day near the Plaza Hotel, watching Tarditi. The driver was Nicholas Calamaris.

Rosal spoke to the taxi driver, who opened the trunk of the car. The three men looked into the trunk and for a moment it appeared they were going to transfer the luggage from the cab to the station wagon. But Bourbonnais suddenly strode toward the station wagon, while Tarditi and Rosal entered the taxi after the driver had closed the lid of the trunk.

In that interval of a few seconds, a dozen agents were prepared to rush the men if the luggage had been transferred to the station wagon. When nothing happened, Gaffney withheld his order.

Bourbonnais slid into the seat beside Calamaris, who drove toward Third Avenue with Rosal and Tarditi following closely behind in the taxi. At Third Avenue the two cars swung north and still the occupants were totally unaware that their cars were bracketed by the automobiles carrying Narcotics and Customs agents.

At 75th Street, the taxi was halted by a stop light while the station wagon continued on. Gaffney made a sudden decision. “Let’s not tail them any farther,” he snapped into the microphone. “Let’s get them now.” The control car quickly shot forward and swerved in front of the cab. Other cars closed in to block the station wagon.

Mike Cozzi leaped from his car to the taxi, jerked open the door and flashed his agent’s badge. “We’re Treasury agents,” he said. “Don’t make a move.”

“What is this?” Rosal exclaimed.

Tarditi protested, “Do you know who this man is? He is a diplomat! He is entitled to diplomatic immunity!”

The agents began firing questions at the two men.

“A diplomat to what country?”

“I am the Guatemalan ambassador to Brussels.”

“Are you on a diplomatic mission to the United States?”

“No.”

“Does your government know you are in the United States?”

“Well, no....”

At the station wagon, Calamaris was protesting, too. “Why are you stopping us? What’s going on?”

“Don’t worry,” an agent said, “just get moving. Drive off the Avenue onto 76th Street. Over there!”

“I don’t know nothing....”

“Get the car moving. You’re blocking traffic.”

Passersby gawked curiously as the four men were taken from the automobiles with a swarm of agents around them.

“What’s in the trunk of the cab?” Rosal was asked.

“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.