Part 47

“What is this all about?” she asked. “What is in the package?”

“Diamonds,” Smith said. “Smuggled diamonds. I’m afraid you are in trouble.”

Mrs. Michelson was permitted to call her husband, and when he arrived, the agents explained the situation. The couple readily agreed to cooperate in helping trap the receiver who would call for the gems.

For two days, Agents Abe Eisenberg and Harold Smith remained at the Michelson apartment, waiting for the telephone call from the receiver. But no call came and no one knocked at the door asking for the package.

Late in the third day the telephone rang and Mrs. Michelson answered. The caller asked if she were holding a package for him and she replied that she was. “I’ll be around for it tomorrow morning,” he said.

At 10 A.M. the Michelson doorbell rang. Mrs. Michelson went to the door and admitted a short, plump, well-manicured man dressed in conservative clothes. As he entered the living room he must have sensed the nervousness of Mrs. Michelson because he suddenly turned and started toward the door. But Eisenberg and Smith stepped from a bedroom doorway and halted him. He was Samuel Liberman, a Fifth Avenue dealer in diamonds.

Julius Falkenstein was arrested at his place of business and taken to headquarters on Varick Street to be questioned. He confessed his smuggling role. He admitted he had gone to Canada in July to receive a shipment of diamonds. Something had gone wrong and the diamonds were never delivered to him. He had been hurrying back to New York to meet Captain Deppe when he was halted at the border. It was this delay which had prevented him from meeting Deppe and reporting to Antwerp the safe arrival of the diamonds. After the experience at the border, he had been afraid to try to get in touch with Deppe.

Deppe also confessed. He told agents he had carried diamonds into the United States on six occasions. He told them of the diamonds hidden in the shoe box which he had left in the Sabena baggage room. He was supposed to have delivered it to Falkenstein as he had the others--but when he found the Customs agents searching crew members he made no effort to retrieve the box. Later, he said, he had asked another Sabena pilot to pick up the box and make the delivery to Mr. X.

Deppe was deported for his role in the smuggling operation and turned over to Belgian authorities who were investigating the smuggling ring. Julius Falkenstein and Samuel Liberman were fined $2,500 each and sentenced to one year in prison. The sentences were suspended because of their cooperation with Customs agents.

Before the investigation ended, others involved in the United States and Belgium included a chauffeur with the French Consulate in New York, a French Diplomatic courier, an employee in the French Foreign Office, and an officer in the Belgian air force.

As for Mr. X, Customs agents know that he was successful in smuggling three shipments of diamonds into the United States even though they have no proof other than the word of informers. Mr. X is on their list, and one day, they are certain, he will make a false move that will land him in prison.

* * * * *

Diamond smuggling is one of the most lucrative of the illicit operations because diamonds are so easy to dispose of and so easy to conceal. Diamonds are found hidden in hollowed-out heels of shoes, in the running boards of automobiles, in rubber contraceptives inserted into body cavities, in false bottoms of suitcases, in fountain pens, in hollowed-out books, in women’s corsets and brassieres, and in toy animals. They come by plane and they come by ship. Communications between the contact man in the United States and the syndicate in Europe is so swift that often the syndicate knows within minutes what has happened to a shipment.

Such was the case when the Racket Squad began a surveillance of Reginald John Morfett of Rainham, England, who was the purser and chief steward of the liner Assyria. Morfett was fifty-eight years old and looked more like a Bond Street merchant than an inveterate smuggler. He was a slender man with thin, black, wavy hair brushed back from a high forehead. He wore his clothes well.

Agents were watching Morfett when he left the Assyria early in the evening of October 16, 1955, and stepped onto the North River pier at 95th Street. An informer in London had reported that Morfett was carrying eighteen pieces of platinum and gold jewelry, set with diamonds, rubies, sapphires and jade, in addition to 34.41 carats of cut and polished diamonds. The jewelry had a total value of $48,135. Delivery was to be made to two brothers in a hotel room in New York City.

Morfett rode buses from 95th Street to Seventh Avenue and 50th Street, where he left the bus and walked to the Taft Hotel. He went into a drug store to a public telephone booth and made a telephone call.

A short time later, Morfett was joined in the lobby of the Taft by an attractive, black-haired woman who greeted him warmly. He took her into a bar where they had a drink, and then they left the Taft and began strolling up Seventh Avenue.

Agent John Rainey, a ten-year veteran with Customs, was in charge of the surveillance. It had become apparent to him that Morfett did not intend to make delivery of the diamonds on this night. He would not be walking around the streets carrying gems worth more than $48,000. He reasoned that the jewelry was still aboard the Assyria.

“Let’s grab him,” he said, and he signalled to other agents nearby.

Morfett’s frightened companion was released when agents were satisfied that she was only his date for the night. Morfett was taken back to the Assyria, where the agents began a search of his quarters and the other places aboard the vessel to which he had easy access.

Throughout the night the agents searched without finding the gems. The next day a fresh squad took over the search, which was continued in relays until a short time before the Assyria sailed for Baltimore in the early morning hours of October 18.

The Assyria was hardly three hours out when the New York Customs office received a trans-Atlantic call from London. The Customs representative in London said his undercover source had advised him that the search of the Assyria had failed--and that the gems were still aboard the vessel.

The Assyria returned to New York on October 27 and docked at Pier 90 on the North River. Racket Squad Chief Tom Duncan led a squad of agents aboard to continue the search--they knew this was their last chance because the ship was due to sail at 7 o’clock that evening.

The search was continued until late in the afternoon. Duncan finally said wearily, “It’s no use. We might as well knock it off.” He asked one of the agents to call Tom Rainey and tell him to drop the surveillance of the brothers to whom Morfett was supposed to deliver the jewels.

“Tell Rainey we’ll wait for him here,” Duncan said. “Then we’ll all go to dinner together.”

It was 6:30 P.M. when Rainey walked into Morfett’s quarters. Morfett sat in a chair looking bored with the whole proceedings. Duncan said, “The ship sails in thirty minutes. Let’s go and get something to eat.”

Rainey said, “Mind if I take just one more look around?”

“No,” Duncan said. “Go ahead, if it will make you feel better.”