Between 1997 and 2000, David and Carl Pasquantino and 17 other suspects conspired to smuggle large quantities of distilled spirits purchased from U.S. retail dealers into Canada. Their scheme was not sophisticated but very effective, defrauding Canada of $5.8 million in tax revenue.
During a routine inspection, ATF Inspector Mike Fronczak noted suspicious liquor purchases. ATF special agents worked with the Royal Canadian Mounted Police (RCMP), U.S. and Canadian Customs and the Niagara County (New York) Sheriff’s Office to investigate. They learned that New York residents were purchasing liquor in Maryland, transporting it via automobile to self-storage sites in Upstate New York, and finally smuggling the liquor into Canada.
ATF special agents arrested the Pasquantinos and five co-conspirators, while the RCMP arrested five more in Ontario, Canada. Records recovered during the arrest revealed that over 39,000 cases of liquor had been smuggled across the border. The remaining suspects cooperated with ATF and were not charged.
All defendants pleaded or were found guilty. Sentences ranged from 6 to 57 months imprisonment, with David Pasquantino receiving the longest jail term. He later appealed to the U.S. Supreme Court, but his conviction was upheld.
The Crime and Investigation
Recognizing the potential profits in trafficking contraband cigarettes between North Carolina and Michigan, brothers Mohamad and Chawki Hammoud invested $8 millions and began illengal operations in 1996. A percentage of the profits went to the Lebanese-based terrorist group, Hizballah.
In 1997, ATF and the Iredell County (North Carolina) Sheriff's Office initiated a joint investigation of the Hammouds. Evidence and intelligence revealed a complicated web of additional defendants and crimes, including money laundering, terrorism support, immigration violations, wire fraud and mail fraud.
The Immigration and Naturalization Service, Charlotte-Mecklenburg (North Carolina) Police Department, Internal Revenue Service, Royal Canadian Mounted Police, Federal Bureau of Investigation, Diplomatic Security Service, (North Carolina) State Bureau of Investigation and Canadian Security Intelligence Service, along with several other local authorities assisted in this complex, multi-year investigation.
The defendants relied on counterfeit credit cards, fraudulent checks and stolen or counterfeit Social Security cards to make purchases and conceal their identities.
Brothers found guilty of plotting to aid terrorists
Between 2000 and 2002, 25 defendants were indicted and arrested in North Carolina and Michigan for various crimes, e.g., contraband cigarette trafficking, providing support to a terrorist organization, money laundering, violations of the Racketeer Influenced and Corrupt Organization Act (RICO) and immigration violations.
Sentencing ranged from deportation to 155 years imprisonment. This was the first case to include a conviction for providing material support to a designated terrorist organization.