This was Zhadanov's attitude in the summer of 1990, when he got a call from an engineer he had known in Russia. The acquaintance said his son-in-law, Henry Belkin, and Belkin's partner, Leonard Edelson, had an item they wanted to manufacture. Zhadanov agreed to meet with them at his Metuchen, New Jersey, factory. They brought samples of cylindrical, clear plastic containers with colored tops, which they said were used for perfume. Each of them owned an electronics and general-merchandise store in Philadelphia, and they had found that the containers were very popular. They had decided to become wholesalers and were looking for a manufacturer who could make the containers cheaply enough. Zhadanov agreed to study the problem and eventually told them Vortex could do the job. Belkin and Edelson hired him, and by January 1991 Vortex was producing the containers on a regular basis.
Under instructions from Belkin and Edelson, Vortex packed the containers in clear plastic bags bearing the image of a partially unpeeled banana and the phrases "For perfume sample use only" and "Made in Taiwan." (Belkin and Edelson said they were copying a product made in Taiwan, and they later told Zhadanov they did not want competitors to know the location of his factory.) The instructions read: "Fill up the bottom part with scented oil or perfume. use the screw-on top as a tester." Belkin and Edelson wanted to pay for the containers in cash, but Zhadanov insisted on checks. The two businessmen formed a trading company called Tri-State General and paid Vortex out of its account. But they were chronically behind on payments, and Zhadanov says he felt compelled to accept cash in addition to the checks. He had the impression that Belkin and Edelson were trying to use up unreported income from their stores.
Although a chart accompanying a recent Wall Street Journal article on "Russian organized crime" alludes to their operation, the fact that Belkin and Edelson would agree to pay for the containers even partly by check suggests that they were not exactly professional criminals. Similarly, an incident that occurred soon after Vortex started making the containers indicates a lack of savvy in dealing with the police. On February 6, 1991, Edelson was driving a rented van loaded with the containers on the New Jersey Turnpike when he was pulled over by state police for changing lanes without signaling. Edelson and his passenger, an employee named Zachria Gispan, seemed nervous, and their stories about the cargo were inconsistent. So the troopers asked Edelson for permission to search the van, which he granted--an odd decision for an experienced criminal. "Through my training and experience I immediately identified the items as 'crack' vials," one of the troopers later reported. He and his partner arrested Edelson and Gispan for possession of drug paraphernalia with intent to deliver. They pleaded guilty and were sentenced to probation. Edelson and Belkin concealed the incident from Zhadanov, afraid that he would stop producing the containers.
It may have been obvious to the state trooper that Edelson's cargo was illegal, but it appears that not all of New Jersey's police officers were up to speed on the state's drug-paraphernalia law. On May 9, 1991, the Metuchen Police Department received a phone call from someone who reported that crack vials were being manufactured at Vortex. The police declined to investigate. Today Sam Zhadanov wants to know why he is being punished for a crime the local police didn't even consider worth looking into.
The event that ultimately led to the downfall of what investigators dubbed the Belkin Crack Vial Organization occurred that same month in Pennsylvania. State law-enforcement agents raided two general-merchandise stores in Philadelphia that, like many other stores in Philadelphia and New York, openly sold the plastic containers. The owner of the stores, Roni Moshe, was Belkin and Edelson's biggest customer. Facing the threat of a stiff prison sentence, Moshe agreed to help build a case against Belkin, Edelson, and their associates by continuing to purchase their containers and secretly recording conversations with them.
The government claimed that, following the raids on Moshe's stores, Zhadanov must have known that he was engaging in illegal activity, since "Belkin and Edelson told Zhadanov what had happened." But this doesn't make sense: Moshe could not have informed Belkin and Edelson that he had been arrested on drug-paraphernalia charges without blowing his assignment as an informant. Judging by a recorded conversation that Moshe had with Belkin and Edelson on July 18, 1991, his cover story was that he had gotten into trouble with the Internal Revenue Service.
During the conversation, the three men discuss accounting procedures and mention the seizure of money and financial records. Belkin says: "You didn't learn yet how to do it.... You've been in business for two years....You have to speak the truth: 'I'm sorry. I didn't know. You got all my money now. Take the taxes, take everything.'" Assistant U.S. Attorney Paul Gray, the lead prosecutor in the case, concedes that Moshe did not tell Belkin and Edelson the whole truth about the raids. "He said stuff like, 'Yeah, I had a tax problem,'" Gray says.
The Zhadanovs say Belkin and Edelson told them they had disbanded Tri-State General because of its close association with Roni Moshe. Since this meant Belkin and Edelson would no longer pay by check, Sam Zhadanov decided to drop the job. But Alex Srebrianski, a former Russian dissident whom Zhadanov employed as a plant manager, proposed leasing the necessary equipment from Vortex and taking on the job himself. He said he had become comfortable with Belkin and Edelson while overseeing production of the plastic containers, and he had no problem taking cash from them. Zhadanov agreed to this new arrangement, and on July 10, 1991, he and Srebrianski signed a lease agreement for the equipment.
Srebrianski paid $8,000 a month for the equipment with checks drawn on the account of his U.S. Alexander Trading Company. Since he did not have enough regular work to hire full-time employees, the Zhadanovs say, he continued using Vortex employees, and since he had trouble getting credit, he obtained his supplies through Vortex as well. He reimbursed Vortex for these expenses in cash.
In September 1991 Pennsylvania drug agents found a scrap of paper outside a storage locker used by Belkin and Edelson. On the paper was the logo of D-M-E, the company that had produced the molds that Vortex used to make the plastic containers. Through D-M-E, the agents identified Vortex and, together with the U.S. Drug Enforcement Administration, started to watch the factory. "The government for two years was watching our factory, and they say in their reports that everything was open," says Anna Zhadanov. "If you want to hide something, you don't leave the door open....They knew that we didn't know. They never came to us....When we asked an agent why they did this, he said, 'We wanted to find drugs.' For two years they waited for drug dealers, and they do not have any."
The Zhadanovs say they became suspicious when Belkin and Edelson started using transfer locations instead of picking the containers up at Vortex. In late 1991, the Zhadanovs asked Belkin and Edelson what was going on. This was the first time, the Zhadanovs say, that they learned the containers could be used for drugs. But they say Belkin and Edelson assured them that it was legal to make and sell the product.
Indeed, a conversation recorded on October 23, 1991, suggests that, despite Edelson's arrest, he and Belkin were confused about the meaning of state and federal paraphernalia laws. Roni Moshe's sister, Sigy, asks Belkin, "Is there a law against it?"
He replies: "You know, with the law is. You coming from an interstate, you know, from one state to the next....That's where they were coming, from Pennsylvania to New York back in Jersey."
Sigy Moshe presses him: "But I'm talking about, is there any law against it? To sell it?"
Her brother, Roni, interjects, "No paraphernalia."
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