Mountains Of Vile Vials

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.