TIME: Almanac 1993/TIME Almanac 1993.iso/time/060490/0604207.000

Text File | 1992-08-28 | 6.2 KB | 137 lines

                                                                                BUSINESS, Page 68

Mountains of Vile Vials


The U.S. tries to crush the lucrative trade in drug
paraphernalia

By RICHARD BEHAR


    Shortly before dusk on April 23, three young agents from the
U.S. Customs Service were about to hit the jackpot of their
careers. Sitting in a car outside a warehouse in the Greenpoint
section of Brooklyn, the men were looking for Huan ("Danny")
Teng, 38, a Taiwanese believed to be one of America's kingpins
of drug paraphernalia. They never found Teng, but what they
discovered inside the building left them breathless. It was a
vast, dungeon-like factory filled with machines for injecting,
cooling and grinding plastic. Three Chinese workers in ragged
garb glanced at their visitors just once before getting back
to the business at hand: running an around-the-clock assembly
line capable of producing 2 million crack vials a day, worth
an estimated $73 million a year.

    The Greenpoint operation was the biggest crack-vial factory
ever discovered. Only two months earlier, Customs agents had
found several warehouses in New York City linked to Teng and
his cronies that were stocked with some $28 million worth of
paraphernalia, much of it hauled there from Seattle and Los
Angeles. The stash was so vast -- 107 million vials, 1.9
million crack pipes, 178 million polyethylene bags for heroin
-- that 25 Customs agents took three days just to count and
load the items into eleven 50-ft.-long tractor trailers. "That
was more paraphernalia than we'd ever even conceived of running
into," says Richard Mercier, chief of the New York Customs
office. "Previous seizures had been only 10 million to 15
million vials."

    With the U.S. deluged by drugs, the accessory trade has
become a multibillion-dollar industry. The profits are high --
a crack pipe that costs 3 cents to produce can retail for $8
-- and the risks of jail are low. Though a 1986 federal statute
makes it a felony to import, export or conduct interstate trade
in paraphernalia, no federal law bans its manufacture.
Moreover, while all states except Alaska have passed laws to
control the sale of paraphernalia, the crime is typically a
loosely enforced misdemeanor. "These guys simply do not face
an equivalent risk for the harm that they are producing," says
Richard Wintory, director of the National Drug Prosecution
Center.

    Even so, the federal statute has been used to score some
noticeable gains against merchants who deal in everything from
"bongs" (water pipes for marijuana) to the spoons used to
shovel cocaine into a user's nostrils. One such businessman,
Stephen Pesce, is essentially a vile version of a Horatio Alger
hero. Pesce, now 34, apparently made pot pipes as a teenager
in the 1970s for a Long Island, N.Y., paraphernalia distributor
now known as Main Street. He eventually took charge and built
the business into one of the largest head-shop suppliers in the
U.S., grossing more than $10 million annually, some experts
believe. In 1988 federal agents seized $10 million of Main
Street's inventory and arrested Pesce, who awaits trial on 25
felony counts.

    The public used to be more tolerant of paraphernalia. In the
1970s it was sold openly in record stores and marketed in
magazines and on radio. "Paraphernalia," noted the New York
Times in 1976, "is no longer a hippie phenomenon, but a
business for young capitalists." By 1980 some 15,000 head shops
in the U.S. were doing at least $1 billion in sales. Meanwhile,
vials and pipes made in Pacific Rim countries were imported
with relative impunity.

    All that has changed, thanks to America's harsher attitude
toward drugs. Paraphernalia kingpins must now resort either to
clandestine domestic production or to smuggling their goods
into the U.S. In December officials found 9.5 million crack
vials hidden in a shipment of cast iron from Taiwan. Some vials
have been shipped to New York labeled falsely as "computer
packing material," with their harmless-looking caps routed
separately through Chicago. On the retail level, paraphernalia
items can still be purchased in many convenience stores, but
they are now more likely to be kept hidden behind the counter.

    Since 1988, under Operation Pipe, the Customs Service has
seized nearly $300 million in paraphernalia. One side effect
of the crackdown, however, has been to drive the trade further
into the hands of organized crime. Alleged vial king Huan Teng
and his cohort are reputed members of the Fook Ching, a Chinese
gang notorious for heroin smuggling. Teng is at large, but U.S.
agents in February nabbed his two partners, armed with
semiautomatic pistols and carrying $14,000 in $1 bills.

    On the positive side, paraphernalia busts are boosting costs
in the drug world. The price of crack pipes has climbed from
$5 to $8 in  some cities. Shortages of vials have prompted
distributors to offer 5 cents "rebates" to dealers and street
children who pick empty vials up off sidewalks and return them.
Even more important, U.S. attorneys are increasingly willing
to prosecute paraphernalia cases. "The standard questions at
press conferences used to be, `What, no drugs? No dope? Just
vials?'" recalls Victoria Ovis, a Customs Service official.
"Now, with the size of recent seizures, that perception is
changing."

    Prosecutors are using money-laundering statutes to pursue
stiff jail terms for paraphernalia kingpins. In one such case,
several large manufacturers were indicted in Virginia last week
on 301 felony counts. Also charged: Robert Vaughn, 39, an
attorney who runs the Nashville-based American Pipe and Tobacco
Council. Vaughn claims the council is a legitimate trade group
with more than 300 members, but Assistant U.S. Attorney
Lawrence Leiser says Vaughn's true mission is to help steer the
drug paraphernalia trade. "The prosecutor is real crazy,"
complains Lisa Kemler, one of Vaughn's lawyers. "He's on a real
crusade. He calls these things `instruments of death.'" In
fact, paraphernalia peddlers are no less than subcontractors
to the drug trade, and the U.S. could use plenty more
crusaders.