It is an unlikely fundraising scheme for terrorists, in which U.S. prosecutors say Canadian and American suspects smuggled cigarettes and sold fake Viagra to raise money for Hezbollah.
When authorities south of the border bring the alleged ringleaders to trial in January, they will argue that 19 people - five of them Canadian - also sold other counterfeit goods, including Zig-Zag-branded cigarette papers, to help raise money for the Lebanese terrorist group.
Among officials' suspects: Theodore Schenk, a 73-year-old Jewish widower from Miami Beach and one of his alleged accomplices, Abdel-Hamid Sinno, a 53-year-old Quebecker who once worked as an imam in Montreal.
"Hezbollah has significant numbers of supporters in North America . . . and a good number of those supporters commit crimes to produce money," said assistant U.S. attorney Kenneth Chadwell, who is prosecuting the case.
But defence lawyers say that terrorism links are overblown, and are being used by prosecutors to inflate an otherwise mundane criminal case. "Hezbollah doesn't need money from mom-and-pop operations in Dearborn [Michigan] they get enough from Syria and Iran," said lawyer Mike Rataj.
His client, Mr. Schenk, has pleaded guilty.
"A lot of these people were just greedy."
U.S. prosecutors allege crime syndicates concentrated on cigarette smuggling, which reaped the most profits, but also sold fake Viagra and counterfeit Zig-Zag cigarette papers. Some members of the syndicates have already admitted to selling tens of thousands of herbal-based placebos masquerading as Pfizer's trademark blue Viagra pills.
A cut of the profits is alleged to have flowed across the ocean and into the hands of Hezbollah -- all the way back to families of Lebanese "martyrs" who died in terrorist attacks against Israel, according to a criminal indictment unsealed this spring in Detroit.
Many of the 19 suspects hail from Dearborn, an Arab enclave in suburban Detroit. Five Canadians from Windsor and Montreal also stand accused.
Ten of the suspects in the racketeering case have been arrested so far by U.S. authorities, who last month named Mr. Sinno among the nine suspects "currently wanted as fugitives." Neither the Canadian nor U.S. government will comment on their efforts to locate the four Canadians who have gone unarrested in the case.
Mr. Sinno, a Quebecker also known as Haj Abdullah, is still being sought by the United States.
"On or about Aug. 25, 2003, Abdel-Hamid Sinno possessed 50,000 tablets of counterfeit Viagra in Montreal, Quebec, Canada," reads the Detroit indictment. According to a newspaper article in the mid-1990s, Mr. Sinno served as an imam at a small Montreal mosque and described himself as the head of a Quebec socio-cultural Islamic association. In 1998 he declared bankruptcy, stating he had a negative net worth of about $25,000. Five years later, he was apparently caught with tens of thousands of fake Viagra pills, which could have been worth hundreds of thousands of dollars on the street, as bona fide versions of the pills typically sell for $10 each.
Criminal records filed in Quebec show that Montreal police laid a single charge of trafficking in a controlled substance against Mr. Sinno following that Aug. 25 seizure. The imam pleaded guilty. He was fined $1,000 and placed on two years' probation.
As far as the Canadian criminal-justice system was concerned, that was that. North of the border, there appears never to have been any allegation that Mr. Sinno was part of a larger conspiracy with links to Hezbollah.
The U.S. takes another view: In the Detroit indictment unsealed this spring, they say Mr. Sinno was working at the behest of the racketeering ringleaders in Dearborn.
The alleged scam was mostly a straightforward cigarette-smuggling racket: Group members stand accused of driving hundreds of cartons at a time off native reserves and low-tax states and trucking them to Michigan and New York, where taxes are considerably higher. The U.S. government was bilked of around $200-million in tax revenue, according to prosecutors.
But there were other schemes too. Some suspects stand accused of dealing in black-market socks, toilet paper, even infant formula. One accused was allegedly buying fake Zig-Zags by the case from a company that mass-produced counterfeit rollies. Most people buy a dollar's worth of cigarette papers at a time; this suspect was paying up to $50,000 at a time for bulk shipments of the fake Zig-Zags.
A common thread was found in all the rackets, according to the Detroit indictment. The ringleaders were all "avid supports of Hizballah," it says.
"Persons critical of Hizballah were confronted and expelled from the conspiracy. Portions of the profits made from the illegal enterprise were given to Hizballah."
Some suspects "celebrated Hizballah operations," according to the indictment. Others urged friends to "contribute money to the orphans of martyrs program run by Hizballah in Southern Lebanon to support families of persons killed in Hizbollah suicide attacks and other terrorist operations."
Mr. Schenk is a widower who devotes much of his time to looking after his daughter, disabled in an car accident three decades ago. He never had a criminal record, until this June.
"He's the nicest guy in the world," says lawyer Mr. Rataj, who describes his client as a hapless dupe.
"He just had no idea what he was getting into," the lawyer said. "He had nothing to do with any money going over to the Middle East or anything like that. He was just trying to help out an Arabic fellow he was doing legitimate business with."
Mr. Schenk now says he knows what he was doing was wrong. He pleaded guilty to trafficking fake Viagra this summer. According to his brief plea statement, the Viagra scheme worked as follows:
Viagra is the most counterfeited drug in the world, and Dearborn ringleaders wanted a piece of the action. So they began importing knockoff pills from the Middle East and China.
But then they approached Mr. Schenk in 2002 after learning he knew someone who could produce the pills onshore, in Florida. Tens of thousands of Viagra look-alike pills were manufactured, if slightly misbranded. They were stamped "Pfizen," instead of "Pfizer," according to Mr. Schenk's guilty plea.
The pills themselves were different too: the "herbal-based" medication lacked Viagra's active ingredient, sildenafil citrate.
But only the conspirators are alleged to have known that. In 2002, Mr. Schenk met some of the scheme's ringleaders in a hotel parking lot in Atlanta "to sell 15,000 Viagra tablets," according the guilty plea.
The next year, the Miami Beach septuagenarian was allegedly in contact with Mr. Sinno in Montreal, instructing him to e-mail funds to his bank account in Florida. Mr. Schenk "sold 25,000 counterfeit Viagra pills to Abdel Hamid Sinno," reads the guilty plea.
Five months later, Mr. Sinno was caught in Quebec with thousands of Viagra pills. Mr. Schenk was arrested two weeks later, with 700 Viagra pills in his possession.
Three of the 10 arrested suspects have now pleaded guilty to racketeering, though none have admitted links to Hezbollah. They are expected to inform on the other suspects when they go on trial in January.
"He'll co-operate and testify, if necessary," said Mr. Rataj about his client, Mr. Schenk. "If some of these guys want to go to trial."
Colin Freeze