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Smoking with the Enemy

As One Cigar Aficionado Discovered, U.S.customs is playing hardball with smugglers of Cuban cigars
Matthew Reiss
From the Print Edition:
Pierce Brosnan, Nov/Dec 97

(continued from page 2)

"He is a connoisseur of cigars," says Assistant U.S. Attorney Johnny L. Griffin III. "Loved them all his life. I won't say he's addicted, but some guys love women. He loves cigars."

Back in Havana in June 1996, sitting by the pool at the Hotel Nacional, Bill met Joe Hybl, whom law enforcement officials have targeted as the chief defendant in the cigar smuggling conspiracy. "We talked about many things," Bill says. Hybl told Bill that he was there to explore business opportunities before the embargo was lifted. "We talked about cigars, and I told Joe I had some friends in the factories and offered to set him up for a tour," says Bill. Since it turned out they were both from the northern California area, they exchanged numbers and agreed to keep in touch.

A month later he rang up Hybl to shoot the breeze and to see how Hybl made out in Cuba. Hybl said he and a friend were already packing up for another run to Havana. "I went down there for a lot of reasons," says Bill. "But he was there primarily for business." Bill rated Hybl a novice when it came to discerning cigar quality. "His whole thing was price. It was pure, pure business." And it was good business. According to seized documents, Hybl's markup ranged from about 200 to 300 percent on high-priced Cohiba Esplendidos to around 800 percent on Fonseca No. 1s.

If that kind of markup makes you cringe, then Hybl's alleged sale of counterfeits at an even higher margin should convince his lawyer to keep cigar lovers off the jury. Bill says Hybl found a Havana counterfeiter who could deliver 100 boxes of cigars for about $60 to $80 per box. They were good quality fakes, fetching about $400 for a box of 25. Even after $20 per box for the fake receipts needed to get them past Cuban authorities, these profit margins are, according to Customs, higher than cocaine.

In a lengthy affidavit on Hybl's operation, Bill provided the details of what a Customs agent calls its "first big ongoing kind of conspiracy" cigar prosecution in history. One of Hybl's partners, a Mexican with U.S. citizenship named Xavier Abrego, helped get up to 100 boxes out of Cuba each trip. According to the affadavit, Hybl and Abrego packed seven or eight close friends like rented mules and put them on short flights to Mexico. Since Cuba allows individuals to leave the country with up to $1,000 worth of cigars (roughly four boxes of Cohiba Robustos or 10 of Fonsecas), carrying 10 or 12 boxes per person is stretching it. Hybl explained to Bill that he and Abrego learned how to push the Cuban limits with a few bucks to the border guards.

Bringing cigars into Mexico worked much the same way. Mexico limits the import of cigars for personal use to only one box per person. Abrego claimed that contacts with Mexican senators and other politicians helped grease the wheels.

Once on his home turf, goes the story, Abrego or an associate would drive the cigars overland to a safe house--a Roman Catholic church in Tijuana. His connection was a priest who appears to have understood the meditative qualities of a good smoke. The priest allowed Abrego to put the goods in his rectory for an undisclosed consideration. But the real key to the operation was getting the stuff across the U.S. border. Smugglers know that the heavy cross-border traffic in Tijuana makes it impossible for Customs to inspect each vehicle thoroughly. But rather than attempt risky sorties with tons of valuable cargo, Abrego arranged with a friend at a Tijuana moving company to take only two or three boxes per truck per day into California for just $20 a box. According to the affidavit, Hybl bragged he'd only lost three boxes out of a thousand.

In the fall of 1996, Hybl reportedly told Bill that his cigar business was booming and his list of customers was growing. Among them were high-end tobacconists in Las Vegas and the San Francisco Bay area, a major hotel in Vegas, a private cigar club in Beverly Hills and a fancy five-star restaurant around San Francisco. New customers were taking UPS shipments all the time. Hybl could go door-to-door to top-of-the-line places all over the West Coast, name a price, and they'd pay it. No haggling. At $20 per cigar, Customs estimates Hybl was grossing about $500,000 a year. The Cigar Association of America in Washington, D.C., says the sale of legal premium smokes in the United States reached about $700 million in 1996 and is still rising. At the same time, the prohibition of Cuban cigars has made smuggling Habanos increasingly attractive--CAA values illegal imports at $75 million to $100 million per year. Their forbidden nature, high quality and scarcity push prices to the ceiling.

Market growth doesn't appear to be slowing. Shortly after the enactment of Helms-Burton, "there was a price revolution right before my eyes," Bill says. "Prices for Churchills went from $9 to $18 [in Havana]. A Montecristo A went from $11 to $25." Bill got wind of it and stocked up, keeping his humidors full until he became a key player in the cigar bust, dubbed "Operation Smoke Ring." Smoke Ring was run out of the Sacramento office of U.S. Customs Service Special Agent Marshall Heeger. Assistant U.S. Attorney Johnny L. Griffin III from California's Eastern District is scheduled to prosecute the case later this year or early 1998.

Heeger has been a criminal investigator with Customs since 1987. He's worked on investigations of importation, production and distribution of child pornography, illegal eavesdropping equipment, narcotics and weapons, and on money laundering cases. After the Helms-Burton Act, Treasury instructed Heeger to bone up on Cuban cigar smuggling, he says, so he read back issues of Cigar Aficionado very closely. Then he started hanging around the cigar haunts of Sacramento and the Bay Area looking for someone with a steady supply of Habanos.

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