Road of tobacco led to recent raids
The case reads like a spy novel, complete with undercover agents, monitored conversations and confidential government informants in fear for their lives.
What began as a simple cigarette smuggling case in Statesville five years ago led to a massive investigation involving seven federal and local agencies. Even the Canadian Security Intelligence Service lent its expertise.
Last week, federal authorities in Charlotte announced that 18 people have been charged in connection with an investigation into cigarette smuggling, money laundering, immigration violations and possible ties to Hezbollah, identified by the U.S. government as a Lebanese terrorist group.
Government agents outlined their case in court papers used to obtain search warrants to raid residences and businesses in the Charlotte region. They are examining evidence for possible links to the Lebanese group.
The 115-page affidavit, made public after the arrests, lays out how agents cracked the case.
U.S. Attorney Mark Calloway wouldn't talk about the investigation, but he said the success of the 3Â½-year investigation was due to the combined expertise of the many agencies involved.
"It was one of the most well-planned and smooth-running operations I've been associated with in the 6Â½ years I've been the U.S. attorney," Calloway said.
The investigation began in early 1995 when an Iredell County sheriff's detective spotted people driving vehicles with out-of-state license plates making large cash purchases of cigarettes. In the next year or so, authorities followed the suspected smugglers and their contraband cigarettes into Kentucky, West Virginia and Michigan.
In an interview this week, the detective, who is still working undercover on the case and did not want to disclose his identity, talked about how he became suspicious of possible cigarette smuggling.
He said he was working security at JR Tobacco in Statesville when he noticed large cash purchases of cigarettes.
"When somebody walks in with $20,000 to $30,000 in cash to buy cigarettes, the red flag goes up," he said. "You take notice."
The sheriff's detective said he was assigned to the U.S. Bureau of Alcohol, Tobacco and Firearms in September 1996 to help in the investigation. The officers took photographs and videos of vehicles being loaded with cigarettes.
"It wasn't unusual for them to buy 1,000 to 3,000 cartons at a time," he said of the suspected smugglers. "They'd buy 10,000 cartons a week."
The detective, along with ATF agents, followed vehicles loaded with contraband cigarettes to storage warehouses in Charlotte, and then to Michigan. Sometimes agents in as many as five vehicles tracked the suspects. Other times, officers flew in a plane or helicopter, watching suspects drive to Michigan.
Federal agents used confidential informants to infiltrate the suspected cigarette-smuggling organization.
The government informants led police to believe they were dealing with criminals with ties to the militant organization in Lebanon.
Hezbollah, whose name means Party of God, is one of 28 foreign organizations Secretary of State Madeleine Albright designated as a terrorist group in 1999.
It is against the law to provide funds or material support to the 28 organizations. Among the other terrorist organizations: Hamas, the Japanese Red Army, al-Jihad, the National Liberation Army, the Palestine Liberation Front and the Revolutionary Armed Forces of Colombia.
As the investigation progressed, agents used people referred to as "cooperating witnesses" and "confidential sources" to help build their case. To keep their identities secret, court papers refer to them as CW-1 and CW-3 and CS-2 and CS-4. Some of the informants' conversations with suspects were monitored and recorded.
Some of the cooperating witnesses have testified before a federal grand jury. The affidavit said the confidential sources are too fearful to testify.
One cooperating witness, in an electronically monitored and recorded telephone call, placed an order for 1,080 cartons of cigarettes to be picked up the next day, according to the court papers.
The following day, with agents watching and listening, the federal witness met with one of the suspects. The witness paid $12,798 for the cigarettes.
The government informants had first-hand knowledge of the suspects and their activities.
"A confidential source, referred to as CS-5, is a contraband cigarette trafficker who as a result of personal observations, experiences and conversations with co-conspirators, knows about who are involved in criminal and terrorism-related activities at Charlotte, N.C.," the affidavit said.
The informants also told investigators how suspects met Thursday nights in Charlotte, talked about criminal activities and listened to speeches by Ayatollah Ruhollah Khomeini, Iran's deceased ruler, and Hezbollah General Secretary Sheik Nasserallah, according to court papers.
A confidential informant learned that one suspect paid $8,000 to an official at the U.S. Embassy in Cyprus to obtain visas for his brother, the affidavit said. The suspect also offered a $10,000 bribe to get his brother into the country, according to the court document. The meeting was electronically monitored and taped.
Federal agents also got help from the Canadian Security Intelligence Service. The Canadian authorities helped provide evidence that at least one suspect was involved in purchasing technical equipment for Hezbollah in Lebanon, according to court documents.
Investigators obtained bank and credit card records and income tax returns. They tracked the financial transactions of Mohamad Youssef Hammoud, identified as the leader of Hezbollah in Charlotte, and Angela Tsioumas, whom he married in 1997, noting there was $285,000 in cash assets in banks. The court documents said the couple reported a total income of $25,564 on their joint income tax return in 1997.
The investigators also looked at marriage licenses and conducted surveillances to determine whether some of the suspects arrested last week were actually living together.
The investigation is far from over.
Authorities are sifting through the documents and other evidence confiscated last week during the raids. They are looking for ties to Hezbollah.