Chapter IX: Part 9

Colonel Durant arrived at Westover Field by plane on March 12, 1946, aboard ATC Flight 9076, which had originated in Paris. He wrote on his customs declaration that he carried one watch worth $60, perfume worth $83, a $2.50 purse, and two cigarette lighters worth $17. He stated he had no other articles on which he should pay duty.

No one questioned the colonel’s declaration and within a short time he was on his way to Washington, D. C., to visit his brother, James E. Durant, who lived in Falls Church, Virginia.

Colonel Durant showed his brother a good many of the unset stones and articles which he had brought back from overseas, and his brother helped him remove several diamonds from two tubes of shaving cream. Durant explained that while travelling to Italy a German had sold him more than one hundred diamonds for 3,000 German marks.

Durant gave one of the diamonds to a Washington, D. C., automobile dealer--a diamond appraised at $500--as part payment for a Hudson automobile. Another automobile dealer in Falls Church, Virginia, purchased two of the diamonds for $400, and Durant--using the assumed name of J. W. Gable--disposed of three of the diamonds to a jewelry firm in Washington for $357. Then he drove to Chicago to meet Kathleen Nash.

A few days after arriving in Chicago, Colonel Durant put in a call for his friend, Dr. Reuben Mark, at the Embassy Hotel. Dr. Mark was a dentist who had struck up a friendship with Durant a few years earlier in Washington, D. C. As Dr. Mark related the story of their meeting later:

“It was around April of this year. One evening he called and he said, ‘Ruby, this is Jack.’ I said, ‘When did you get in?’ He said, ‘Just today.’ I asked him how long he was going to be in town and he said he did not know. He was on thirty days leave and he had already spent a few days.

“Then he asked when we would get together. That was on Saturday night. He said something about a girl friend of his coming in from the coast. He said it was a girl that had been overseas with him and she was a divorcee. He said she was pretty and had been married to a wealthy man in Arizona and had just joined the WACs to get away.

“We arranged to meet in a day or so. A couple of days later we met after office hours at Isbell’s restaurant on Diversey. That was the night I first met his girl. Katy, as I began to call her, was a nice girl. Nothing unusual.

“It was there that Jack asked me, ‘Ruby, do you know any jewelers?’ I said, ‘Sure, I know some jewelers.’ Just about that time he pulled out a tissue paper. He opened it up and I saw three stones. I asked, ‘Where did you get them?’ He said he picked them up overseas in Frankfurt.

“At that time nothing occurred to me about anything being wrong. I know lots of boys who brought things from overseas and I felt, well, so what, he was overseas. I said, ‘Yes, I know some jewelers.’ And he said he would like to call them. I told him I would call the following day.

“I called a Mr. Horwitz, whom I had known for some time, and I asked if he was interested in buying some diamonds. He said yes....”

Dr. Mark accompanied Durant to the jeweler’s place of business and introduced him. Durant took a small cloth sack from his pocket and when he upended it, a shower of diamonds cascaded onto the desk. There were 102 stones in the lot.

Horwitz looked at the stones under a magnifying glass, examining each of them carefully. Finally he said, “These are fine stones, Colonel. We don’t see diamonds like these very often. They’re beautifully cut.”

Durant explained he had been able to get them at a bargain price from a German badly in need of cash. “How much do you figure they are worth?” he asked.

“I’ll pay you $125 a carat,” Horwitz said. “It’s a fair price.”

“That’s okay,” Durant said. “But there’s just one thing. The deal can’t be made in my name. I’m in the Army and I’m not supposed to transact any outside business. It will have to be a cash transaction.”

Horwitz shook his head. “I’m sorry,” he said. “We only make purchases by check. In buying outside the regular channels I would have to call the police to make certain there is no violation of regulations.”

“That’s all right,” Durant said quickly. “Go ahead and call.”

Horwitz made a telephone call and then said, “The police say there’s nothing wrong with making a purchase from an Army man who has returned from overseas--provided the customs duty has been paid. Has the duty been paid on these stones?”

“I mailed them into the country,” Durant said. “All the boys were mailing stuff back and I did too.” Then Durant added, “But, look, I’m not here for business particularly. I’m going to take a trip to Mexico. If it’s only a question of duty, I’ll stop off someplace and take care of the duty part of it and I’ll see you when I get back.”

Horwitz then said to Mark, “Why don’t we make out the check in your name, Doctor? You can cash it and give the money to the colonel.”

Mark hesitated. “I suppose the check could be made out to me on a tentative basis,” he said. “But I’ll have to call my auditors and see that I don’t get fouled up with them.”

Horwitz had his secretary draw a check for the purchase of the diamonds. When Durant and the doctor had left his office, he called his lawyer. He explained the situation and asked his advice.

“There’s nothing wrong about buying diamonds from a member of the armed forces,” the lawyer said, “but you’d better be certain the diamonds were declared and duty paid on them when they were brought into the country. If they were not declared, it is not a proper transaction and I’d advise you to stop payment on the check.”

Horwitz immediately called his bank and stopped payment on the check. The following morning he called Dr. Mark and advised him of what he had done on the advice of his attorney. “I can’t go through with the transaction,” he said, “unless the colonel will produce a customs receipt showing the diamonds were declared and the duty was satisfied.”

Mark and Durant returned to Horwitz’s place of business to retrieve the diamonds and to hand back the check.

Horwitz suggested, “Why don’t you go to see Mr. Meiners at the customs house? He’s assistant collector of customs and he could clear this thing up for you. I’d even be willing to pay half of the duty.”

Durant mumbled something about having to hurry to the airport to make a flight. He said he would be back in Chicago in about ten days and he certainly would go and see Mr. Meiners at the first opportunity.

After the collapse of this deal, Durant and Captain Nash left Chicago by automobile for a vacation in the Southwest and Mexico. But even as they were leaving Chicago, Federal agents were on their trail.

The theft of the gems had been discovered by the Countess Margarethe in Germany. She had gone to the basement to check on the safety of the jewels. She had found the hole in the basement floor. The conspirators had not even refilled the hole or re-covered it with concrete. The theft was reported to Army authorities and the matter was turned over to the Army’s criminal investigation division.

The Army’s agents began questioning everyone who had been employed in any capacity at Kronberg Castle. Finally they came to the old janitor who told them of digging up the boxes in the basement coal room. He didn’t know what was in the boxes. He only knew they had been taken to Captain Nash’s quarters. He had never heard any mention of them again.

Customs agents were called in to help with the case. They traced Captain Nash’s movements from the time of her arrival in New York until she left Chicago accompanied by Colonel Durant. They learned of Durant’s visit with Dr. Mark to the jeweler, Horwitz, and the collapse of the diamond deal--because the customs duties had not been paid on the gems. But no one knew the destination of the couple when they left Chicago.

Through calls to friends and relatives, Dr. Mark located Durant in Texas--and advised him he was wanted by the Customs people for questioning. On April 19, 1946, Durant appeared at the office of the Supervising Customs Agent in Chicago with the air of an innocent man who was shocked that anyone should question his integrity.

“You did bring diamonds into the country without declaring them and without paying duty on them, didn’t you, Colonel?” an agent asked.

“Yes,” Durant said, “but I was doing only what everybody else in the armed services was doing. I didn’t know a declaration was required.”

“Where did you get the diamonds?”

“I bought them from a German civilian. I gave him my Elgin wrist watch and 3,000 German marks.”

The agent said, “How did you get them into the country?”

“I put them in a cigar box and mailed the box to myself in care of my brother in Falls Church,” Durant replied.

“Where are the diamonds now?”

Durant reached into his pocket and pulled out the sack of diamonds. “There they are,” he said, tossing the sack onto the desk. “That’s all of them.”

“We’re going to have to hold these diamonds until our investigation is completed, Colonel,” an agent said. “But of course you have the right under law to petition for a return of the diamonds and for remission or mitigation of any penalties.”

“I certainly do want to petition for their return,” Durant said angrily.

He was handed a blank petition. And he wrote: “I am the sole owner of said diamonds.... At the time I mailed these diamonds into the United States I assumed that it was not necessary for me to declare them to any governmental agency.... At no time did I intend to import into the United States and thereafter make any disposition of said diamonds in violation of any statute of the United States.... Therefore, I petition for (their return)....”

Immediately after this meeting with Customs agents, Durant and Captain Nash drove from Chicago to Washington, D. C. Durant hurried to the home of his brother in Falls Church. After nightfall, the brothers drove to a spot on a country road halfway between Lee Highway and Route 50.

They parked the car and walked into a woods to a large oak tree. At the base of the tree, Durant buried an ink bottle which contained fifty small diamonds and two large emerald-cut diamonds--together with a roll of gold wire which weighed 8 ounces.

“For God’s sake, don’t forget where we buried this stuff,” Durant said to his brother. And then the two returned to the car and headed back to Falls Church. A few days later, Colonel Durant began his terminal leave prior to being mustered out of the armed services.

Less than a month later, on May 18, Colonel Durant drove into Washington accompanied by Kathleen Nash. They went to a hotel and that night Durant again visited his brother James in Falls Church. Again the brothers drove to the woods on Lee Highway, where they walked to the big oak tree. Durant took a large jar from a leather handbag and buried it at the base of the tree. The jar contained loose amethysts and white envelopes which Durant told his brother contained loose diamonds.

As they drove from the woods, Durant said, “Don’t forget where we buried the jars. There’s enough in them to set us up for life. If anything happens, I want you to have what’s there.” The next day, Durant and Captain Nash left Washington and headed for Chicago.

Now the net was tightening and Durant sensed it. He had heard the disturbing news in Washington that his terminal leave might be cancelled--and this could mean only one thing: the Army didn’t want to lose its hold on him. Then he and Kathleen learned that she, too, might have difficulty in getting out of the Army.

Two weeks after burying the large jar in the woods, Durant telephoned his brother from Chicago.

“Listen, Jim,” he said. “Go to the big tree and get the large glass jar. Bring it to me in Chicago. It’s urgent.”

James Durant went to the woods and searched for the tree. But this night they all looked alike. He called his brother. “I can’t find it,” he said. “I can’t even find the tree.”

Jack Durant cursed softly. “I’ve got to have that jar,” he said. “I’ll have to get it myself.”

Durant caught a late plane from Chicago, arriving at the Washington International Airport at 4 A.M. He took a taxi to his brother’s home, awakened him, and they drove to the woods, where the colonel walked unerringly to the tree and unearthed the jar. Then he returned to the airport and bought a ticket for the 8 A.M. flight to Chicago. But before he left, he gave his brother two small packages containing $28,000 in cash--with instructions to place the money in a sealed jar and bury it at a place he wouldn’t forget. The brother buried the money that same afternoon.

During this frantic activity, the War Department cancelled the unexpired part of the colonel’s terminal leave and ordered him back on active duty. Similar orders went forth for Kathleen Nash.

It was after they received these orders that Colonel Durant and Captain Nash were married. Some cynics suggested later that the colonel married her because once the marriage vows were said, she could not be made to testify against him. But there was nothing in the record to indicate that the two were not in love and had not planned marriage all along.

Early in June, Army and Customs agents began questioning the couple in Chicago. For several days Durant maintained a stubborn silence, but finally he broke. He told of the gems and the money hidden near Falls Church--and he took full responsibility, clearing his brother of any complicity.

Agents found the hiding place in the woods. They dug up the money and the gems--but these were only a part of the treasure taken from Kronberg Castle. Durant was pressed to tell what had happened to the other gems.

“The situation is complicated,” he parried. “I might be able to get the stuff back if you will let me make some telephone calls--in private.”

Durant was permitted to make the calls. After each call he made excuses and talked vaguely of “complications.” He refused to disclose with whom he had talked.

On Friday, June 7, the agents permitted Durant to see his bride alone. What they discussed no one except themselves ever knew. When Durant came from this meeting he told the agents, “I’m sorry. I haven’t been trying to get the jewels. I’ve been stalling for time. But now I’ll try to get them for you.”

“Where are the jewels,” he was asked.

“They are in the hands of a fence. I think I can get them--but it will take some more telephoning. This time I’m not fooling.” He continued to insist that the calls had to be unmonitored.

Durant was permitted to make telephone calls from a public pay station--and to wait for a return call. The return call came within a few minutes, and when he had hung up the receiver, Durant said, “Everything looks all right. I think we can get the stuff this evening.”

That evening the colonel’s mysterious contact called for him at the pay station. This time Durant said, “We can get the jewels any time we wish. They’re at the Illinois Railroad Station.”

Two agents accompanied Durant to the station. He walked to an electric wall fixture near the luggage lockers, reached up, and removed a key from the fixture. He opened a nearby locker and removed a package which he handed over to the agents. The package contained a large number of emeralds, sapphires, pearls, rubies and other stones.

Durant counted the gems carefully and then exclaimed, “Some of the stuff is missing. Let me make another telephone call.” Again he called his contact and this time he reported, “We can’t get the stuff until Monday.”

On the following Monday, June 10, Durant again called his unknown contact. This time he told agents the remainder of the jewels were checked at the North Western Railroad and the claim check was hidden in a telephone booth across from the parcel room.

When Durant and the agents reached the station, Durant searched the telephone booths without finding a claim check. “It doesn’t matter,” Durant said. “I got the number of the check in case anything should go wrong. It’s number 110.”

But there was no parcel numbered 110 at the North Western Station. Durant hurried to a phone booth and placed another call to his contact man. When he completed the call, he said, “I misunderstood the instructions. We should have gone to the LaSalle Street Station.”

At the LaSalle Street Station, Durant went to the sixth telephone booth and took from behind the instrument panel a slip of paper. He read it and handed it over to the agents. On the paper was a handwritten note which said: “Too bad. My hat knocked your ticket off. Guess I have a right to keep the baggage.”

An inquiry at the check room disclosed that a parcel had been left there the day before under the number 110--but it had been removed that morning by a man who had presented the proper claim check.

“I don’t remember what the guy looked like,” the attendant said. “I didn’t pay any attention. All I know is the guy had the right check and I gave him the package.”

At this point, Durant refused any further cooperation. He insisted that his mysterious contact had nothing to do with the missing jewels--and he refused to disclose the name of the contact or to make any further effort to locate the jewels.

The investigators had better luck with Kathleen Nash Durant. She admitted to officers the agreement in Germany between herself, Colonel Durant and Major Watson. She told of removing the numerous stones from their settings and sending a large number of them to her sister’s home in Wisconsin, concealed in boxes. Her sister was instructed not to release the boxes to anyone unless she heard or read the code word “Cemetery.” She turned over to Army officers the following note:

June 3, 1946

To Eileen, Jack, or David,

I have confessed to having the box of jewels, Bibles and fan that I
hid in the attic. Will you please give same to officer presenting
you this note, Major John D. Salb, our code “cemetery”--goes--sorry
to cause you so much grief and I don’t deserve you to worry over
me anymore.

Love,
_Vonie_ (_Kathleen B. Durant_)

When agents flew to Hudson, Wisconsin, and presented the note to Mrs. Lonergan, she readily turned over the boxes hidden in the attic.

Kathleen Nash Durant and her husband were sentenced by a military court martial to fifteen years in prison. Major Watson was sentenced to three years for his smaller role in the conspiracy.

Most all the jewels of the Hesse treasury found in old Kronberg Castle were returned to their rightful owners. But some of the priceless pieces still are missing. The settings--many of them fashioned by Europe’s greatest artisans--were lost forever. They had been cut to pieces and melted into gold wire.

16

THE CHISELERS

Chiselers are constantly seeking ways to avoid paying customs duties. And the female of the species is just as clever and persistent as the male--or, as is more often the case, just as dumb. In the early 1930s, the chiselers found it extremely profitable to smuggle watch movements into the United States from Switzerland. Smuggling reached such proportions that it helped to virtually destroy the American watch industry. The situation became so grave that the Federal government appealed to the Swiss government to cooperate in a program to control the illegal traffic in watch parts. An agreement finally was reached on a treaty whereby the Swiss devised a system of numbering the watch parts and assigning code numbers to importers as a means of discouraging illegal imports.

The treaty helped to wipe out much of the commercial smuggling of watch parts. Despite these efforts the traffic continued through the years to be a profitable venture for smuggling gangs who often persuaded housewives, businessmen, and tourists to act as carriers.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

* * * * *

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

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

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

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

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

* * * * *

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

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

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

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

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

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

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

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

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

* * * * *

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

* * * * *

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

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

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

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

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

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

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

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

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

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

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

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

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

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.”