Smoking with the Enemy
Bill had Cuba in his blood. He loved salsa music, the Caribbean Sea, Cuban people, Cuban rum and, especially, Cuban cigars. But he never thought his visits there, or his habit of bringing back cigars, would put him on the block for hundreds of thousands of dollars in civil and criminal penalties and a protracted stay at Club Fed. After last year's Helms-Burton legislation called for stepped-up enforcement of the Trading with the Enemy Act, that's exactly what he'd be facing now if he hadn't turned government witness in an investigation of a nationwide cigar smuggling conspiracy.
Yet his cooperation could turn out to be more dangerous than taking the rap. The U.S. Customs Service says the domestic value of seized Cuban cigars increased from $142,014 in 1994 to $1,142,290 in '96. And rumors persist that Bill pissed off some of the "wrong people" who make a living selling what gets across the border. But in February 1996, he was a world away from such travails. Driving down the road from Havana to Pinar del Río, he passed through the Vuelta Abajo, Cuba's most famous tobacco fields. Bill pulled his rental car onto the rough and got out, clutching a bottle of Havana Club Anejo rum.
He was surrounded by the world's most aromatic cash crop at the peak of the harvest. Workers in the field were picking tobacco leaves and Bill walked over to share some rum. "They took me into one of these huts," he recalls. "It had the most unbelievable, pungent, tobacco kind of cedary smell to it. I was totally enveloped in it."
It was Bill's second trip to Cuba. The first was just a quick stopover the previous year, but that was enough to launch an obsession. Bill went home and read voraciously--literature, history, everything. This time he was back for 10 magical days of diving, fishing and boating in unspoiled blue waters, among other adventures. (As a condition of the U. S. Customs Service granting Cigar Aficionado an interview with Bill, certain details have been altered and his name has been changed.)
What Bill liked most about Cuba was that it was stuck in the 1960s. Clothes, cars and calendars are frozen at the height of the Cold War, when Fidel Castro and Jack Kennedy faced off over the Bay of Pigs invasion and the Cuban Missile Crisis. Castro's actions in the early '60s had prompted Kennedy to slap an embargo on Cuba. Together with the criminal penalties of the Trading with the Enemy Act, the embargo prohibits even the most minute business transactions with Cubans and makes an unsanctioned visit to the island or importing a Cuban cigar tantamount to sedition.
But prohibition is often counterproductive. Illegal moonshine poisoned casual drinkers and helped enrich bootleggers, while the war on drugs helped arm the inner city and made marijuana America's fastest growing cash crop. Likewise, the Cuba embargo has provided an opportunity for smugglers to become the exclusive U.S. importers of the world's most popular cigars. Moreover, Cuban cigar factories can't grow or roll tobacco fast enough to fill chronic back orders, while demand in Europe, Canada and Asia should account for future crops into perpetuity. So whether or not an American ever smokes another Cuban cigar will have minimal impact on the fiscal condition of the Cuban government.
"Can the Cuban economy survive without the United States?," asks William LeoGrande, professor of government at American University. "I think the answer is yes. If you look at use of economic sanctions around the world, they are only effective when almost everybody applies them. In the Cuban case we're the only ones applying them."
"We're not striking at the heart and muscle of the Cuban economy by going after cigars," he adds. "The cigar industry is much less important than sugar or tourism. They're just picking on a product that's sort of emblematic of Cuba."
In early 1996, however, the extreme fringe of the Cuban immigrant community was concerned that the White House was on the verge of overturning the 35-year embargo and that Castro was becoming a little too closely associated with the sweet smell of success. So the exiles made their move. In private planes, the exile organization "Brothers to the Rescue" conducted repeated overflights into Cuban airspace. When Cuban diplomatic overtures failed to stop the incursions, Castro's military advisers prevailed and shot the planes off the Havana skyline. After the kamikaze mission, President Bill Clinton signed the Helms-Burton Act.
The State Department says Helms-Burton was intended to expand the "government's ability to impose civil penalties against U.S. citizens who violate the U.S. embargo," and related laws. Asked what human rights or democratization aims would be met by enforcing these penalties, however, the National Security Counsel could not come up with any. A spokesman for Senate Foreign Relations Committee chairman Jesse Helms had nothing to add. Those opposed to the act claim that seeking favor with Cuban-American fund-raisers and swing voters in Miami can be the only reason for such strong, bipartisan support.
But Helms-Burton did not concern Bill either way. His time in Cuba was precious. He concentrated only on affixing his soul to the Cuban countryside. Although he couldn't carry the waves, the mountains or the people back home with him in his suitcase, he could easily bring back cigars. Cuban cigars that smelled like the tobacco huts. And no unreasoned law was going to get in the way of that. So he made a habit of stocking up on his favorites every trip.
He took home only as many cigars as he could give away or smoke. Customs doesn't suggest that his imports were for anything other than personal use. He knew he'd have to forfeit his prized smokes if he was nailed at the border, but personal-use smugglers are merely entered into the Treasury Department's TECS database (Treasury Enforcement Communications System). Bill had already brought back two or three boxes of Habanos three times now, always coming and going through a third country. Customs never checked.
He was lucky, but not exceptional. In general, it's hard to get caught if you stay cool.
"We develop somewhat of a sixth sense," says George Burns, a Customs inspector at New York's John F. Kennedy Airport. "You see something a person exhibits in conversation that isn't natural or normal. They can get nervous, like when they're stopped for a traffic ticket or dealing with an authority figure. Or when they're trying to hide something. Their perspiration and pulse rate increase with excitement. If they're lying, the rate goes up even higher. They avoid eye contact." In addition, the government sometimes uses dogs to sniff for contraband, and Customs inspectors randomly search people's luggage.
But even "if you happen to be the 'lucky' person who gets searched, you don't have to worry about that," says a Customs staff member at JFK. Unless, of course, the amount of cigars brought in exceeds what's considered by the Treasury Department to constitute importation for personal use (officials won't specify how many that is), in which case "the Treasury's Office of Foreign Assets Control gets notified." On the books, the civil penalty for violating the embargo is a fine of no more than $55,000 per count; criminal prosecution calls for penalties of up to 10 years in prison and up to $250,000 in fines, or both. Reggie Manning, a passenger service representative for Customs at JFK, explains that there's not too much inspectors can do when passengers are caught with unlabeled cigars in unmarked boxes. However, passengers showing up with, say, 10 unmarked boxes of cigars with no labels on them "may be detained for questioning, to determine possible Cuban origin," says Manning.
The majority of seizures are of labeled cigars in labeled cigar boxes, and loose ones stuffed under clothing, he says. Body cavity concealment, which is often used to smuggle narcotics, is "still too extreme for cigars," he adds. "When cigars are detected during a search, inspectors look for brand names. The country of origin of the cigar is written right on the box." If you do get caught, your name may be entered into the TECS database and you'll be subject to a physical inspection every time you cross a border into the United States.
"I can't understand why people still keep bringing these cigars into the country," says Manning. "Like they don't know. They even come back a second time, and do it again. They know what the law is, yet they don't comply."
Bill was one of those people. Long before he ever tasted a Cubano, he was already the prototypical cigar aficionado. His father had taught him the virtues of a good cigar, showing Bill how to clip the cap, how to light it, how to savor it and how to blow smoke rings. By the time he was in college, Bill was smoking on a regular basis, though mostly Garcia y Vega or Antonio y Cleopatra. "Hated the green wrappers," he recalls, "loved the dark ones."
He smoked his first premium cigar at a fraternity party freshman year, a Macanudo Portofino in the protective tube. Partly because the tube ensured a good clean smoke when he pulled one out of his golf bag, the Portofino became a favorite. On occasion he'd light up at study sessions, meetings or formal functions.
Years later he stopped in a California tobacco store and bought a box of Honduran Hoyo de Monterey Double Coronas and his first copy of Cigar Aficionado. Using the magazine as a reference, he began sampling various sizes of Dunhill, Ashton, Arturo Fuente, La Gloria Cubana and Cuba Aliados. Before long he was smoking four or five premium cigars a week.
"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.
It may have been at one of these establishments that Heeger came into contact with one of Bill's business clients. Heeger asked the client to get Bill to buy 15 boxes of Cubanos from Hybl, and Bill obliged. Bill figured that providing the cigars would stop that particular client from continually bumming smokes from Bill's own private stock. "It was not a source of income, and I was not making a profit," says Bill. "People wanted cigars, I knew this guy who had cigars, so I said, 'OK. I'll get them to you.' "
On Nov. 24, 1996, Bill drove to Hybl's house--maybe an hour away--where Hybl kept hundreds of contraband cigars in plastic coolers, plastic bags and various rooms. Bill loaded the 15 boxes into the trunk of his car and wished Hybl well. When Bill got them home, he called the client to tell him he could get them anytime. He might as well have been signing his own search warrant.
The next day was a workday. On the drive home, Bill opened his car windows and lit up an Esplendido. It'll be a long time before he lights another. As his family was sitting down to dinner that evening, there was a knock on the door. Bill opened it to a half dozen men in street clothes and Customs raid jackets with 9mm automatics drawn. Heeger, five Customs agents and Griffin walked in.
"We effected a nonforcible entry," says Heeger. Asked about the heat, Heeger is defensive. "We don't want this to come across as the 'heavy-handed government thugs.' We treated this as a normal search warrant. You've got to take precautions. You never know what's awaiting you on the other side."
What awaited was Bill's own stash of about 20 boxes of mostly Cuban cigars, nicely arranged, and also the boxes he bought from Hybl. His private collection would not have induced Customs to carry out such a bust, says Heeger. But Bill's "involvement with Joe [Hybl] took it to new levels. Bill was not a doper," Heeger explains. Nor did he sell contraband cigars to make his living. As a result, Heeger says Customs treated him with "kid gloves."
By the time the Feds got finished hauling out his prized humidors, his Cohiba paraphernalia, his Cuban ashtrays and every cigar in his suburban home, Bill knew his life would never be the same. The Feds then made him an offer he couldn't refuse: become a government informant against your friends or we'll ruin your life.
Heeger and Griffin sat Bill down with his lawyer and explained what he'd have to do to avoid felony charges. Bill would have to wear a wire, record telephone calls and get Joe Hybl to spill his guts about the scope and nature of the alleged conspiracy. He'd have to introduce Hybl to a Customs undercover agent. Then, once the government had enough on Hybl and company, Bill would have to testify against them in open court.
But the law under which the case is being prosecuted is ripe for constitutional challenge. The elements of the trade embargo that prevent Americans from spending money in and traveling to Cuba were narrowly upheld by the Supreme Court on national security grounds in 1984, says Columbia University professor Peter Kornbluh, director of the Cuban Documentation Project at the National Security Archives in Washington, D.C. Yet the Bush and Clinton administrations have not prosecuted those who have traveled to Cuba since, perhaps to keep the law out of the Supreme Court for fear the embargo might be overturned.
Some attorneys think it can be overturned. "It sort of depends on the jury and whether or not they want to buy into this facade," says Frederick Reemer, attorney for Hybl. "I don't think it is constitutional to declare somebody an enemy without a declaration of war."
The act's threat of massive penalties against inherently law-abiding citizens is called into question as well. Says Harris Taback, attorney for Hybl's girlfriend and alleged bookkeeper, defendant Julie Chatard, "The government likes to flex its muscles in a manner that is threatening in the hope that the person will cave in to that show of force and not be able to stand up to the power of the government."
By caving in, Bill may face even greater dangers from those he helped expose on Hybl's long list of clients, than from the government. The word on the streets of Sacramento is that by compelling Bill to become an informant, the government may have made him the enemy of "the wrong people." "Any time an individual is cooperating and assisting in providing evidence against other individuals involvedin criminal activity, there is always an element of risk and danger," says Heeger. Enough danger, in this case, to ponder sticking Bill and his family in the witness protection program.
When Customs busted Hybl on April 17 of this year, agents seized his cigars and his records, including the names and addresses of client restaurants and tobacconists. Word filtered back to Heeger and Griffin that some of the proprietors were unhappy with Bill for mixing them up in the alleged conspiracy. As buyers of products that would lead to the enrichment of Cuba or Cuban nationals, the owners of these establishments would face the same $55,000 civil penalty, and 10 years and $250,000 criminal penalty, for each count of Trading with the Enemy as Hybl. Because modern-day organized crime often launders illegal profits through investments in legal businesses, mob money has been turning up in distributorships of all kinds. Persistent rumors about a Mafia-cigar connection, therefore, may not be farfetched.
"We believe that there's a connection between cigar smuggling and drug traffic," says Griffin. "This particular defendant [Hybl] was once involved in drug smuggling, so we conclude he's used the same dope smuggling connections for cigars. There's even some organized crime involvement [in cigar smuggling]."
Asked for specifics, Heeger is vague. "We've developed nothing additional in our investigation indicating that traditional organized crime is involved with this particular group of individuals," he says.
Still, Smoke Ring has given the U.S. Treasury Department the financial and political muscle to pursue every significant player in Cuba-U.S. cigar smuggling and significantly curtail imports into the States. The ease of turning cigar smokers into informants has made this investigation a potential drift net for Heeger and Griffin to cast across the country. Perhaps in preparation for expanding the case, Griffin has been kicked up to Washington for a nine-month gig at the Justice Department's home office. Asked if Justice is grooming him for Cigar Czar, Griffin says with a laugh, "You're not gonna print that, are you?"
Heeger and Griffin admit they've only uncovered the tip of the iceberg, but rest assured, they're not going away soon. The pair and their higher-ups are considering whether to use seized cigars as bait for further investigation.
The estimated $75 million to $100 million Cuban cigar smuggling business is hardly significant when compared to the Drug Enforcement Agency's seizures of drugs; estimates reached from the number of seizures and the average price and purity would place the value of seized coke, marijuana and heroin at $20 billion, $4 billion, and $300 million per year, respectively. Yet, no one at Treasury would comment on whether redirecting funds from drug interdiction to a year-long undercover cigar investigation is a prudent use of federal resources. Moreover, neither major party can be expected to risk losing anti-Castro votes by overturning the Trading with the Enemy Act.
A handful of convictions in the Hybl case might chill Cuban cigar imports and scare some premium cigar smokers away from Cuban cigars. All subsequent suspects to whom Heeger has offered Bill's rat-or-rot proposition have quickly agreed to cooperate, says Heeger. (At press time, Xavier Abrego pled guilty to all charges and is cooperating with the government.) And the potential for turning Hybl and company against even bigger fish cannot be discounted. How far this goes depends on how the government presents its case, and whether Griffin can obtain significant penalties. "No one's ever been prosecuted [for] an organized conspiracy with Trading with the Enemy," says Griffin. "We've never seen anything on this kind of scale, so there's no sentencing history."
Regardless of the outcome, Smoke Ring has made Bill more respectful of the law. He's dying to go back to Cuba, sure. But not without permission from the Treasury Department. And not to smoke cigars. "After all this," says Bill, "I kinda lost my hard-on for cigars."
But the government hasn't. Rep. George Miller, a California Democrat, has introduced a resolution calling for the exemption of cigars from the Helms-Burton Act, because of what he calls the circumvention of the law by members of Congress and the executive branch. Until some action is taken, however, little can be done to keep the government from confiscating the Cuban smokes.
"In some ways, I think that cigar smokers make a great constituency to end the embargo, not only on cigars but all other Cuban trade," says professor Kornbluh. "Cigars are a symbol of freedom, of power, of good taste, and those who want to smoke them see more clearly than anybody the ridiculousness and counter-productive nature of the U.S. trade embargo. And I would only say, 'Cigar smokers of America unite, to help lobby against the embargo and hasten the day when it's a lot easier to smoke a Cuban [cigar] in this country.' " If you do phone your congressman to protest, don't call after hours. You might disturb him and knock the ash off his Cohiba. *
Matthew Reiss is a freelance investigative reporter and a humor columnist for newyorkreport.com.
