by Jason Ryan
Sanders roared with laughter.
The officers were less than amused and soon left the house.
It wasn’t long before they did loosen up, though. They had just made one of the largest hash seizures in the nation’s history and arrested eight men. As they filled out reports at the U.S. Customs House in downtown Charleston, they made use of some of the smugglers’ groceries found in the vans. While newspaper headlines announced the officers’ success over the next few days, the escaped off-loaders cautiously emerged from the woods, hitching rides to Charleston and Atlanta.
As if things could not get any worse, a majority of the hash from the Sea Scout was still at sea, transferred to a scallop boat that was cruising up the East Coast from Virginia, its crew getting more nervous by the day. Every time they were told to bring it in, something went wrong. About twenty-five thousand pounds from the Sea Scout had gotten in successfully through the Chesapeake Bay, but another eighteen thousand pounds had been busted in Virginia. Now this scallop boat had thirty-seven thousand pounds, and no one was coming to get it. After ten days of sailing up the coast with it and no one able to claim it, the scallop boat crew dumped the hash overboard somewhere near Massachusetts.
So the massive hashish flotilla ended in disaster, with two boats busted, one boat at the bottom of the ocean, and more than one hundred thousand pounds, or $50 million, lost. Hash was washing ashore on New Jersey beaches, initiating a DEA investigation. South Carolina authorities were quizzing all the men they rounded up on Edisto Island. People were unhappy and looking for their money, from the First National Bank of Chicago to those who had invested in the hash. The product that did make it in was of poor quality, derided as “camel shit.” Hertzan, the owner of the Sea Scout and the inspiration for John Belushi’s proposed Kingpin movie, was eventually shot dead by an unknown assailant on February 3, 1982, plugged execution-style as he entered his East Village apartment in New York. Riley was fishing, and the rest of the gentlemen smugglers were taking a breather, too, unused to failure, and unsure about their next move.
PART II:
OPERATION JACKPOT
Chapter Eight
On January 20, 1981, nine months before the bust at West Bank plantation, Ronald Reagan greeted Americans as the fortieth president of the United States. In his inaugural address from the U.S. Capitol, the former Hollywood actor and two-term California governor expressed optimism that America was on the brink of a rebirth, ready to reclaim a glory that had faded in recent decades. He declared that the country’s stifling malaise, which former President Jimmy Carter had detailed eighteen months earlier in an unexpected televised address, could be overcome, and he challenged his constituency to help America regain its footing.
That same day, fifty-two American hostages were released in Iran after being held for 444 days. The Iranian hostage crisis had damaged the reputation of Carter’s leadership, contributing to his defeat. Reagan also capitalized on Carter’s alleged mishandling of fuel crises and a slumping economy. Americans were ready for a change, with Reagan winning the electoral votes in forty-four states. Carter, a Georgia native, fared best in the South. Although Carter lost South Carolina, Reagan’s margin of victory there was less than twelve thousand votes out of nearly nine hundred thousand cast—a difference of just 1.3 percent.
The new president’s folksy appeal and cowboy swagger appealed to many South Carolinians. Years later, when speaking at a fundraising luncheon for South Carolina gubernatorial candidate Carroll Campbell, he had an easy way with the crowd, boasting of his good fortune to visit South Carolina twice in two months. Then he told a joke about a Southerner outwitting a Yankee before praising the state and its people some more. Coming from the mouth of a less-talented politician, the remarks might have seemed blatantly patronizing:
Now, I’ve come to Columbia on serious business, but first I want you to know that these last couple of days we’ve been doing the kind of thing that I like best: getting away from Washington and getting out among the American people. As [White House Chief of Staff] Don Regan said to me when we got on the plane yesterday, he said, “Leaving the beltway; now we’re going out where the real people are.” Well, yesterday it was Texas and Florida, and Senator Paula Hawkins there. And today, it’s a land of mountains and plains and broad, sandy beaches; of people who look to the future with confidence and to the past with pride. Texas and Florida were just grand, and yet nothing could be finer than to be in Carolina. And I know I shouldn’t say this, but I ain’t whistlin’ Dixie.
Typical of their indifference to public affairs, the gentlemen smugglers seemed to pay little attention to the change in presidency. The same month Reagan entered office, Warren “Willie Frank” Steele sailed Bob “The Boss” Byers’s luxury sailboat La Cautiva to Hilton Head and unloaded hashish at the Sawmill Creek oyster factory. If the gentlemen smugglers had ever taken a break from tossing bales and paid closer attention to Reagan’s rhetoric, they might have found some of it alarming. While campaigning for the White House, Reagan appealed to conservative voters in part by demonizing drugs, especially marijuana. Reagan had put fellow Republicans on notice: We need to toughen anti-drug law enforcement in the Unites States.
Seizing on that crime-fighting momentum, U.S. Senator Strom Thurmond nominated thirty-three-year-old Henry Dargan McMaster to become South Carolina’s U.S. attorney just days after Reagan’s inauguration. The Columbia lawyer had worked for the senator as a legislative aide for nearly a year after graduating from the University of South Carolina School of Law in 1973. After that stint in Washington, McMaster moved back to South Carolina, working alongside his father in the law firm of Tompkins and McMaster. Upon his nomination, McMaster echoed Reagan and wasted little time in outlining a change in direction for the office, declaring his intention to curb drug smuggling into South Carolina.
“The drug problem is an insidious one that causes problems in the schools and destroys families,” said McMaster. “It’s a terrible thing and I’m going to do everything I can to solve that problem.”
Since Thurmond was chairman of the U.S. Senate’s Judiciary Committee, there was little doubt McMaster would be confirmed by the Senate. The selection of McMaster found local support, too, from the editorial board of Columbia’s the State newspaper, which praised the choice of the “tall, personable” and “bright and hard-working young lawyer” with strong familial and professional ties to the state of South Carolina.
“Mr. McMaster has the credentials and the potential to be a firstrate and, we trust, nonpartisan chief federal prosecutor for South Carolina,” said the State. “Although Mr. McMaster has limited criminal law experience, we are confident that he will carry forward the forceful tradition of some of his able predecessors.”
McMaster was to replace forty-nine-year-old Thomas E. Lydon Jr., an energetic prosecutor appointed by Carter who prioritized the prosecution of white-collar crimes and political corruption during his tenure as South Carolina’s U.S. attorney. Lydon pledged to help McMaster make a smooth transition into the U.S. attorney’s office, but suddenly collapsed and died of an apparent heart attack on February 21, 1981, while vacationing on the island of St. Martin. As McMaster waited to be confirmed, an assistant prosecutor served as interim U.S. attorney. Meanwhile, he gave interviews, including one with reporter Holly Gatling of the State where he spoke of his conviction that local drug smuggling could be curtailed. He also revealed a softer side, speaking with Gatling, a fellow animal lover, about a dog his family owned and how striking animals’ intelligence can be. The conversation endeared the reporter to McMaster, and he soon asked for her assistance. He needed help coining a name for a drug sting he was planning. Gatling, drawing on recent headline-writing experience, suggested “Jackpot.”
“Jack for money, pot for drugs,” she explained.
McMaster liked it. Gatling wrapped up the interview and wrote an article about the young politician, describing how, in his office, McMaster “stretched his long, well-jogged legs and ca
st a thoughtful, brown-eyed glance at the ceiling.” McMaster, she added, has “an accent blending the most genteel of Southern tongues,” and his “South Carolina roots run as deep as the Pee Dee River.”
Some found the article a bit fawning. Soon after its publication, Gatling’s mother, who held a doctorate in comparative literature, called to tell her daughter that she bet “Mrs. McMaster was very pleased with that article.”
If McMaster’s brown eyes, curly locks, trim build, easy smile, and thick Southern accent endeared him to a certain population, his tough talk on crime appealed to those unmoved by his youthful looks and personality. His attitude toward criminals was straightforward: “If you break the law, you ought to be punished.” His public comments made clear he intended to vigorously prosecute anyone who dared cross Uncle Sam.
“Violent crime offends me more than white-collar crime, but I wouldn’t lessen the effort being spent on white-collar crime. Whitecollar criminals ought to be in jail along with bank robbers and murderers,” said McMaster. “When I hear somebody say, ‘Please don’t send him to prison—it’s such a terrible place,’ I turn a deaf ear. The idea of somebody stealing something makes me furious.”
Drugs, in particular, riled the lawyer. For McMaster, drugs were at the root of nearly all major crimes, as he painstakingly explained in an interview for the July 1985 issue of the Carolana Magazine.
Some people don’t think we, as a society, really have a drug problem. They say that if a grown man wants to ruin his health with drugs, that’s his problem, not ours. But that is wrong, and here’s why: If you’ve ever known a lady who has been knocked down and had her pocketbook yanked off her arm in a grocery store parking lot, then we’ve got a drug problem. Why? Because that thief was probably looking for money to buy drugs with. If you know someone who returned home to find their house ransacked—the television gone, silverware gone, stereo gone, jewelry gone—then we’ve got a drug problem. Why? Because the thief was probably stealing something to sell so he could get money to support his drug habit.
For the same reason, if you know someone who has had their car window bashed in and things stolen out of the car, we’ve got a drug problem. If you know a child who all of a sudden in school seems to have drifted away, who is not interested in the usual things anymore, who has lost his or her natural curiosity and energy, then we’ve got a drug problem. Why? Because that child has probably been talked into taking some sort of drug by his friends. And finally, if you know someone who has been raped, beaten or murdered, usually by one or more strong, young men, then we’ve got a drug problem. Why? Because if you follow those stories in the news long enough, you will usually learn that the attackers almost always were on some sort of drug. It might be cocaine, heroin, or marijuana and corn liquor, but it’s always something. Those are the plain facts that any lawman in the state will tell you.
On May 21, 1981, the Senate confirmed McMaster as the U.S. attorney for the District of South Carolina, making him Reagan’s first appointee as U.S. attorney. On June 5, 1981, McMaster stood with his blond and beautiful wife, Peggy, and father, John Gregg McMaster Jr., as he was sworn in at the federal courthouse in Columbia. More than six hundred people listened to Thurmond speak of his nominee, calling him a compassionate man capable of fearlessly prosecuting the guilty. Moreover, he does not “fail to see the forest,” said Thurmond. “He is not obstructed by the trees.”
For his part McMaster said he felt everyone has a civic duty, and that as the state’s top federal prosecutor he could significantly do a lot of good for South Carolina.
“Some people may think that’s corny,” he said, “but that’s how I really feel.”
Whether he realized it or not, McMaster’s pledge to combat drug smuggling in the state would pit him against some familiar faces. At the University of South Carolina School of Law, he graduated with Tom “Rolex” Rhoad. As an undergraduate history student and Kappa Alpha fraternity brother at the University of South Carolina, McMaster’s peers in the Greek system included Lee Harvey and Les Riley, who were both members of Sigma Alpha Epsilon. Riley, in fact, had known McMaster since he was a kid growing up in Columbia, seeing him at a country club or around town, almost always hanging out with the same two buddies. Riley’s father, the furniture-chain executive, spoke well of McMaster’s father, too. Riley’s acquaintance with McMaster and their mutual friends would have little bearing, however, on McMaster’s upcoming assault on drug smuggling in South Carolina and his plans to enlist the help of a number of the twenty-two lawyers and fifty-five staff members under his control in the U.S. attorney’s office.
The same year McMaster became U.S. attorney, a veteran IRS investigator from Los Angeles named Brian T. Wellesley became chief of criminal investigations for the IRS in North Carolina and South Carolina. Knowing the new U.S. attorney’s desire to nab drug kingpins, Wellesley mentioned to McMaster how federal authorities in Southern California recently used an innovative approach to capture elusive drug criminals, creating task forces composed of investigators from a variety of federal agencies, each bringing unique expertise to the team. Just as important, Wellesley told McMaster, were financial investigations by the task forces that identified suspects through the discovery of large unexplained incomes and the purchase of expensive assets. Tax evasion cases had been used to nab well-known but slippery organized crime figures before, most famously against the Prohibition-era gangster Al Capone. But in this new strategy, the financial investigation was as critical to finding faceless suspects as it was to collaring them. One of the most successful cases made through this approach was the conviction of California heroin kingpin Jaime Araujo.
Authorities in California first got wind of possible impropriety regarding Araujo in October 1977, when a customs agent working in a currency analysis unit in Washington noticed a small bank in San Ysidro, California, reporting regular deposits of more than $300,000 to a customer’s account. Scrutinizing the bank’s records, the agent discovered that nearly $1.5 million had been deposited into the account in two months. Further investigation revealed the customer was said to be a Mexican architect in nearby Tijuana named Pedro De La Cruz-Alvarez. In the sixteen months the architect had the account, investigators discovered more than $13 million had been deposited, each chunk delivered to the bank via an associate of the architect, the cash packed into cardboard boxes. Yet, upon searching, Customs agents could not find any architect in Mexico or the United States by the customer’s name.
Investigators determined that before being deposited, the money was being picked up at a home in Bonita, California, outside San Diego. For the next year a team of Customs and DEA agents followed the comings and goings from the house, identifying a group of suspects who transferred money and drugs, mostly cocaine and heroin, between Southern California residences. Agents placed a surveillance camera in a doghouse on property neighboring the Bonita home, obtained wiretaps, and eventually identified Araujo as the mysterious architect. But while the government had evidence that tied Araujo to narcotics trafficking and the massive currency transactions, it was weak and indirect. Araujo went to great lengths to insulate himself from the drugs and money. After a year’s worth of work, the investigation lost steam and was in danger of being abandoned as agents focused on more promising leads.
Salvation came in the form of IRS agents. A year into the sputtering investigation, more than twenty agents began interviewing witnesses and served more than three hundred grand jury subpoenas to banks, car dealers, real estate agents, travel agencies, and others as they ferreted out information on Araujo, detailing his purchases of automobiles and real estate in recent years. Investigators also obtained Araujo’s bank records from Mexico and established that money being deposited in the San Ysidro bank was often transferred to a Mexican bank before being sent back to the United States for real estate purchases. With this money laundering evidence and the other financial information, the government was able to strengthen their case against Araujo and his criminal netwo
rk, indicting the kingpin for drug and income tax evasion charges. Araujo pleaded guilty and was sentenced in November 1979 to thirty-five years in prison and ordered to pay a $1.2 million fine—the largest income tax evasion fine in U.S. history.
Wellesley suggested to McMaster that a similar multi-agency financial investigation might be successful in South Carolina and the perfect way to catch elusive drug smugglers. McMaster latched onto the idea immediately and convened a meeting between himself and the U.S. attorneys in North Carolina, inviting experts to explain the mechanics of a financial investigation. He advised his North Carolina counterparts that it was a technique he would try.
McMaster soon planned another meeting, inviting the assorted local supervisors of federal law enforcement agencies. He asked them to send a representative to Columbia for a conference about investigating drug trafficking in the state.
Wellesley appreciated McMaster’s earnest initiative, but he cautioned his new friend that his audience would likely be reluctant to participate, unwilling to cede control of manpower to a prosecutor’s office and unwilling to share informants and information with other agencies. Additionally there was the issue of sharing credit for any successes. Wellesley advised McMaster to emphasize that with a big case, every agency could reap rewards. For example, uncovering a drug smuggling conspiracy might yield income tax evasion charges for the IRS, racketeering charges for the FBI, drug seizures for the DEA, and large currency violations for U.S. Customs.
The South Carolina supervisors accepted McMaster’s invitation, either showing up themselves at the U.S. attorney’s office in Columbia or sending a subordinate in their place. Driving up from Charleston came Special Agent Claude McDonald, representing U.S. Customs. From the IRS came Special Agent David Forbes. Along with representatives from the DEA and other federal offices, they gathered in the U.S. attorney’s downtown office in an old federal courthouse on Laurel Street, wondering exactly what the newly appointed McMaster wanted them to do. Little did McDonald and Forbes know they would be given an assignment that would last the next four years.