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© 2008 by Lawrence Delevingne, All Rights Reserved

The Bronx Smoke Out HaulFor the Bronx District Attorney’s office, September 1, 2005 was a big day. In a conference room at One Police Plaza, New York City Police Department headquarters in southern Manhattan, $500,000 in cash lay in thick bundles on the table, along with two nine-millimeter handguns and thousands of fake red cigarette tax stamps, worth approximately $150,000 on the street. To the left of the table were big boxes full of Newports, Marlboros and Kools, 1,800 cartons in all. Some of them were counterfeit Marlboro Lights from China, “China Ceramics” written in characters on the side of the brown cardboard, apparently an attempt at concealment in some long-gone ship’s cargo.

Kristen Bowes, petite but forceful, stood behind all this, a serious, satisfied look on her face. An assistant district attorney in the Bronx DA’s Rackets Bureau, she had spent 18 months waiting for this moment. Operation Bronx Smoke Out, the year-and-a-half undercover investigation of a large network distributing black market cigarettes, was her “baby,” and lying in front of her were the results of her late nights writing multiple wiretap extensions, three indictments containing 1,237 counts – 470 pages of text – and finally, 28 arrest warrants.

Bowes, then 29, stood behind the podium, shoulder to shoulder with eight other law enforcement officials representing the six agencies that had worked together on the investigation: the NYPD, New York State Police, ATF, Suffolk County Police Department, State Department of Taxation and Finance and the Bronx District Attorney. Together, they had shut down a cigarette bootlegging ring that was selling 25,000 cartons a week to hundreds of bodegas and delicatessens, mostly in the Bronx and East Harlem, a estimated $38 million tax revenue loss for New York state and city annually, according to Bronx DA Robert Johnson. The 28 men indicted, mostly Jordanian nationals, were netting at least $10 million a year in profits from $24 million in gross sales.

“This ring engaged in the wholesale diversion of millions of dollars worth of cigarettes from Indian reservations to undermine legitimate commerce through tax avoidance, money laundering, and the sale of both counterfeit cigarettes and counterfeit tax stamps,” said Police Commissioner Raymond Kelly at the press conference. “Detectives and prosecutors are to be commended for their tenacity in identifying the suspects and bringing them to justice.”

Next, Johnson spoke, making reference to the needs of Hurricane Katrina victims and New York City school children: “Every time somebody diverts tax revenue to their own purpose, there is a burden placed on all of us,” he said. “We need to understand that and not minimize this because it’s non-violent. It has an impact to the citizens of this city, this state and this nation.”

One by one, officials at the press conference spoke, calmly describing the criminal operation and how various agencies had worked diligently to end it. But the real action had already taken place. Together, 28 arrest and 30 search warrants had been executed across the city that in the previous 48 hours. At 6 a.m. that morning, more than 150 officers from the NYPD, state police and state tax department had raided most of the targets, resulting in 20 arrests and the seizure of $737,147 cash, 15,200 cigarette cartons and $150,000 worth of counterfeit stamps.

At 12 Old Soldiers Rd. on the Shinnecock Indian Reservation in Southampton, Long Island, dozens of Native Americans watched as more than a dozen state troopers and other police searched the home of Brian Bess, then 30, a member of a prominent Shinnecock family. Using a rented Ryder truck, they seized 8,640 cartons of cigarettes, $48,711 in cash, black .40 and silver .357 caliber handguns – one of them with the serial number defaced – and business records.

At 2936 Hone Ave., officers found Bess’s alleged co-ringleader, Emad Al-Naimat, at home with $214,630 in bundles of cash. When officers entered the apartment, Al-Naimat’s wife was throwing money out of a back window.

At 1669 Holland Ave. in the Bronx, police found men ironing counterfeit tax stamps onto packs of cigarettes and seized 30,000 fake stamps, 1,087 cartons of cigarettes and $171,520 cash.

And on across the Bronx, storage facilities, commercial establishments and residences were searched, yielding more cash, cigarettes and counterfeit tax stamps.

* * *

For making $25,000 to $35,000 every week, the scheme was remarkably simple. According to police surveillance, GPS tracking and phone taps, Faiz Haddad, a tall, thin-faced Christian Jordanian with a long mustache, 34, would drive a beat-up Dodge Caravan every day 82 miles east to the Shinnecock Indian Reservation on Long Island.

At 12 Old Soldiers Rd. in Southampton, he would pull in next to the garage of Brian Bess, the owner of the nearby True Native Smoke Shop, one of several tobacco retailers on rural Montauk Highway. There, Haddad would purchase 1200 cartons of Marlboro Lights, Pall Malls, Kools and other brands for between $20.15 (Newports) and $22 (Marlboros) apiece from heavy-set 29-year-old Bess, a Shinnecock Indian. 1200 cartons were the most Haddad could fit in the minivan without the black plastic-wrapped cases visible through the van’s windows. After loading up, Haddad would drive back west to the city to a storage location at 3018 Barnes Ave. in the Bronx.

Deliveries were next. Usually, Haddad had communicated with each buyer on his cell phone – 917-701-3991 – to establish price, quantity and rendezvous details. Every day, Haddad made between at least 20 deliveries to individuals and businesses, mostly in the Bronx and East Harlem, according to police surveillance. Regular customers included Triangle Convenience Store on University Avenue in the Bronx; S&N Deli Grocery on 125th Street in East Harlem; Castle Hill Deli on Castle Hill Avenue in the Bronx; Katonah Deli on Katonah Avenue in the Bronx; and Eddie’s Mini Market on Lexington Avenue in East Harlem.

Typically, buyers chose between a carton of untaxed cigarettes with counterfeit tax stamps on each pack for $30 to $35 per carton or an unstamped carton for $24 to $26. Long-time customers got a small discount, usually $1 per carton. A legal carton typical cost $60 wholesale at the time.

In Bodegas, untaxed cigarettes were either sold at market price ($6.75 to $8) or for $5 to known customers who asked for untaxed packs specifically. Sometimes, the untaxed packs were hidden in secret compartments behind the counter.

Haddad also delivered cigarettes to individuals, like Jon Thomas, a Melrose, Bronx resident, who then resold cartons to street vendors, who in turn hawked packs for $5.

Sometimes, Haddad’s daily pick-ups were not enough. “The customers were begging for more,” said Bowes, the lead prosecutor, explaining how Al-Naimat and Haddad would sometimes “go double,” with Al-Naimat driving a beat-up Blue Dodge Caravan to Bess’ home a few times a week to double the amount. Between them, approximately 10,000 cartons were bought from Bess every week.

Haddad also purchased “Chinos,” counterfeit American-brand cigarettes from China, to enhance supply. Chen Xin Zeng, then 27, a Queens man born in China, sold cartons of fakes to Haddad, which Haddad took to his regular customers. Chinos, however, were unpopular with smokers – the taste was usually too harsh, especially with fake Newports – and Haddad sometimes had trouble selling the counterfeit cigarettes, even though he bought them from Zeng for $10 to $16 per carton. Nonetheless, Haddad bought approximately 30,000 cartons every month, mostly fake Marlboros.

“They were like worker bees,” said Eric McCartney, 42, a state police investigator who tracked the ring. “Faiz would wake up at 10:00 a.m., go to the island, get back in the early afternoon, drive around all day, working until 10:00 p.m., seven days a week. They never took a day off.”

For months, the GPS on Haddad’s Caravan, wire taps on Haddad and Lababneh’s cell phones and some in-person surveillance told investigators the same story: daily trips to Bess and roughly 20 deliveries in and around the Bronx. During the 18-month investigation, Haddad went through three Dodge Caravans – Green, Maroon and Red – because he put so many miles on them.

* * *

The men involved in the Bronx smuggling and distribution ring were a mix of illegal and legal residents with varying criminal backgrounds. Most were involved in some type of illegal activity before the Bronx Smoke Out arrests; few had legal work while they sold cigarettes. “That was their full-time job,” said McMahon. “None of them had legitimate jobs.”

“I came to this country in 1990 to go to school, to find a living and to help my family back home in Jordan,” said Haddad in a letter, noting his lack of felonies before being arrested. Haddad entered the U.S. legally on a student visa, according to Bowes, but far overstayed it.

State police investigator McCartney said Haddad’s intentions were not so simple. “He had those beady eyes…you look at him and you don’t trust him,” he said. “He kept lying to us and wouldn’t help us out.”

Indeed, Bowes said that Haddad was caught in 1997 for selling untaxed cigarettes, for which he received a tax judgment from the state tax department that he never paid. In 2003, Haddad was arrested in Maryland, again for possessing untaxed cigarettes. He had purchased cigarettes in Delaware and was bringing them back to New York for resale.

Zeng, who supplied the ring with counterfeit cigarettes from China, had a history of arrests for related offenses. A 30-year-old legal permanent resident from China, Zeng, was arrested twice in 2004 for the transpiration and possession of untaxed cigarettes.

Lababneh, a stocky 42-year-old Jordanian, was an associate and customer of Haddad and Al-Naimat. He sold roughly 1,200 cartons of untaxed cigarettes every week out of the Stop & Go Deli he co-owned in Peekskill, New York. Lababneh, a U.S. citizen, came to America in 2001 and married Ivette Cruz. He lived with her and their four children at 267 E. 202 St. in the Bronx.

Lababneh had several side hustles. Besides cigarettes, he also sold drug paraphernalia – glassine bags for heroin and crack – and “coke cut,” a cheap powder that is mixed with cocaine to increase profits, said McMahon. “He was into everything he could get his hands in,” said Bowes.

Bess has also been in trouble. He had been convicted of attempted gun possession, a felony.

“No one got into this from steady, normal jobs,” said Bowes. “All these guys were up to no good before, but the cigarettes were just too easy.”

* * *

For running an operation that netted at least $10 million a year, Haddad and Al-Naimat lived modestly. They slept in small apartments in the working-class Bronx neighborhoods of Edgewater and Bronxdale, respectively, drove unremarkable, utilitarian vans, and put in long hours working. “They lived in squalor,” McMahon said.

As police investigated the case, monitoring both men’s phone calls and driving patterns, it became clear that some of the profits were not staying in the country. Initially, an informant told New York’s Joint Terrorism Task Force, a collaboration between various law enforcement agencies led by the FBI, that Khaled Jilo, one of the ring’s customers, was smuggling money abroad. The Task Force approached McMahon, the Bronx Smoke Out lead investigator, to help. McMahon then started tracking Lababneh and Haddad in order to get Jilo on money laundering charges. The case, however, started to get more complicated.

A wiretap on Haddad’s phone led McMahon and Bronx Smoke Out investigators to the Ramada Hotel near John F. Kennedy International Airport in Queens. There, Task Force investigators installed a hidden video camera outside of Room 341 to monitor money drop-offs by Haddad and Lababneh. The two were giving cash to Jordanian air marshals to fly back to Amman with. The marshals, who were paid 10 percent of each delivery, used the same Ramada room almost continuously, so it was possible to track activity.

On his cell phone, Haddad spoke of sending money to “the group.” While investigators never determined who or what the “group” was, previous terrorism ties to cigarette smuggling were enough to get them worried. They called Task Force.

Suddenly, all activity stopped. The Task Force’s Amman bureau had brought the air-marshal issue to authorities in Jordan, said Bowes, and the two marshals identified by Bronx Smoke Out investigators never came back into the country, said McMahon.

Soon enough, the money laundering resumed, this time at different hotels and without air marshals involved, quickly providing Smoke Out investigators with damning evidence. Haddad and Al-Naimat were observed on five occasions delivering cash in plastic bags to two Royal Jordanian crewmembers, Omar Diab and Ghassan Sukkariah, at two Manhattan hotels, the Roosevelt at 45 East 45th St. and the Holiday Inn at 49 West 32nd St.

Close to the beginning of every month between March and August 2005, Haddad and Al-Naimat would collect money owed to them from cigarette sales, meet in the Bronx, and travel together to one of the hotels. There, they handed the crewmembers plastic bags of cash, which investigators believe Diab and Sukkariah placed in their personal luggage to sneak it back to Jordan, again for 10 percent of the amount smuggled. Additionally, on July 27, 2005, Haddad and Al-Naimat were set to give $65,000 to a woman named Tagreed Odeh, an RJA flight attendant, in Al-Naimat’s blue Caravan outside a Manhattan hotel. The delivery was thwarted, however, when a uniformed police officer searched the vehicle on orders from Smoke Out investigators, ostensibly because of parking in a no standing zone. Police vouchered the money, offering to return it if Haddad and Al-Naimat explained where it was from. They never did.

According to a motion filed by Elliot Fuld, Haddad’s former attorney, airline passengers also took currency out of the country at least once, and money orders, checks and wire transfers were other ways money got back to Jordan.

In all, investigators saw the cigarette ring send approximately $500,000 to Amman, although the District Attorney’s office estimated the figure was at least $1 million. Bowes said the amount was even higher. “They sent money once a month, every single month just while we had the wire tap,” she said, noting the operation had been running for months before investigators began tracking the case. “It must have been much more – that’s all we could prove.”

A confidential informant told Bowes that Al-Naimat had bought significant amounts of property and was investing in construction projects in Jordan. Bowes said the information was “very firm.” McMahon confirmed the same account, saying that the confidential information, one of the men who arrested in Bronx Smoke Out, had bought significant amounts of property. Nonetheless, McMahon also said Al-Naimat’s home in Jordan was “modest.”

“It’s a sum of money that they should be living like kings,” McMahon said. “We don’t know for sure where the money went.”

Bowes also said that Haddad spoke to his mother only once while the wire was up between January and August 2005. He obliged her request to send a small sum of money for a utility bill. Similarly, McMahon said that Haddad’s girlfriend routinely asked for small sums of money on the phone – such as for a ConEdison electrical bill – and that Haddad was typically evasive. In short, the money was not helping friends and family live lavishly, investigators said.

Upon the NYPD’s request, the FBI began an investigation into the destination of the money in 2005. The Bureau, however, has not released any new information on the case since and did not respond to repeated requests for an update on the inquiry. It’s not clear if the investigation continues today.

The Jordanian Embassy was not aware of the specific Bronx Smoke Out case, but said that the country does “address any such cases with utmost seriousness and would deal with those concerned firmly and through the legal process,” said Merissa Khurma, the Press Attaché.

Royal Jordanian Airlines also did not respond to repeated requests for information; it is unclear what, if any, disciplinary action was taken against the employees involved.

Haddad said he had “no comment” on the money’s destination in a recent letter from prison.

“This case really disturbed me,” said Bowes, now Assistant General Counsel at the City University of New York. “What did he do with his money?”

* * *

Once Haddad, Al-Naimat and the Bronx-based ring had the untaxed cigarettes, they had two options for resale. The first was to sell the packs as bought with no proof of taxes paid to the city or state. Some of their customers did not care, or did not want to pay the extra cost of the second option: counterfeit tax stamps.

Haddad and Al-Naimat did relatively little with stamps, but others in the ring were heavily involved. Aly Alsyydy, a legal permanent resident from Yemen, rented unit E2006 at the Bronx Storage Deluxe to store cigarettes and affix counterfeit tax stamps. In a small built-in compartment in the storage unit, the fake stamps – called “butterflies” by the ring – were ironed on under a lamp.

* * *

In January 2007, Bowes and the Bronx District Attorney team were ready to go to trial for the ring’s leaders, Haddad, Bess and Lababneh. Just as they began assembling a jury, the men pled guilty.

Haddad is in the fourth year of a three-to-nine-year sentence at the Gowanda Correctional Facility in rural western New York. In January 2007, he pled guilty to one count of money laundering in the second degree, a “C” felony that was the top count of the indictment against him (there were 1,060 total). The maximum sentence for a “C” felony is 15 years. He also forfeited $100,000 cash that was seized during the course of the investigation.

“I have made the choice to no longer be in the United States after [prison],” Haddad wrote in a recent letter. “[I] am left feeling prejudiced against, too harshly punished and completely violated by the American justice system.”

Bess received a combined state and federal sentence of 16-month-to-four-year imprisonment. He forfeited the $60,000 that was seized by investigators and was assessed a tax penalty of $40,000. He was originally indicted for 80 counts of illegally possessing untaxed cigarettes, but pled guilty in January 2007 to one count of violating state tax law. He had argued that New York did not have the legal right to enforce its laws in Shinnecock land, but the motion was denied in Bronx County Court. He is likely to be released between May and August 2008, according to his attorney, Murray Richman.

Lababneh also pled guilty to the top count against him in January 2007, money laundering in the third degree, which is not a felony. There were 77 counts against him. He is at the Cape Vincent Correctional Facility in upstate New York, where he is serving a 16-month-to-four-year term, a sentence that includes time from a related federal cigarette case. Lababneh also forfeited the $8,000 in cash that was seized during the Bronx Smoke Out investigation and was ordered to pay the state $40,000. It is not clear if that money was paid.

Al-Naimat, was arrested on September 1, 2005 on a 90-count indictment. He pled guilty to the top charge against him on July 12, 2006: money laundering in the second degree for sending cash to Jordan. Judge Steven Barrett in Bronx County Court will sentence him on May 28, 2008.

The other 16 ring members arrested pled guilty to violating New York Stat tax law and received probation to 16 months imprisonment, forfeiting or paying a combined $422,500 to New York state in tax penalties. Together with the money from Bess, Haddad and Lababneh, New York State recuperated $670,000 from the Bronx Smoke Out players.

Eight were never apprehended. They are believed to have fled the country, at least two by way of Mexico to Jordan, said McMahon.

Several of the ring’s smaller players have been rearrested for the possession and sale of untaxed cigarettes, including Aly Alsyydy and Abdo Saidi in Suffolk and Nassau counties, respectively.

Chen Xin Zeng, who pled guilty in January 2007 to selling counterfeit cigarettes, has yet to be sentenced. On June 27, 2007, he was caught selling counterfeit Trojan Magnums from China, a “C’ felony which will be added to his punishment.

Bess, Al-Naimat and Lababneh did not respond to letters sent to them in prison.

Cigarette sales on Long Island’s Indian reservations continue today. Sales on the Poospatuck are especially strong, although the Shinnecock market share has fallen, according to McMahon, who continues to investigate major cigarette cases in the New York City area. The True Native Smoke Shop is still in operation.

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