The Caviar Kings

Plants & Animals / by Simon Cooper /

Inside the cartels that built empires and destroyed species.

OCTOBER 28, 1998—WARSAW
Just before their trip, Koczuk and the Lepkowskis met to go over the final details of the smuggling operation. Katarzyna brought detailed lists of what caviar was being smuggled by whom, and scribbled down notes and prices, logging the amounts of caviar against the names of the mules. They were going to be traveling with 16 suitcases in all, packed with as many tins of caviar as would fit.

Andrzej Lepkowski left Koczuk and set out for Warsaw Okecie airport to meet his smuggling team, which for that trip was composed of one of Andrzej’s fellow police officers and his wife, Koczuk’s cousin, and three of Katarzyna’s LOT air-stewardess colleagues. The mules and Lepkowski rendezvoused. Lepkowski gave each mule an airline ticket, obtained for free by Katarzyna from her airline contacts. Lepkowski walked the mules and the luggage through customs, having already used his contacts to ensure they would pass through unmolested. His job was then to babysit the mules until they delivered their cargo at the other end. Once in New York, the mules would be met at JFK by Koczuk’s “marketing director” Rozbicki and given $500 cash, a hotel room, and a day to sightsee before boarding the flight home.

After the long trans-Atlantic, Lepkowski and the others stepped off Flight 003. They filed through the lines at immigration, collected their heavy baggage from the carousel, and headed for the customs checkpoint just inside the arrivalsarea doors. Lepkowski approached the checkpoint carrying three suitcases; the mules held the remaining 13 among them.

Thanks to the tip-off, Ed Grace and a phalanx of federal customs and FWS Special Agents were waiting at JFK for the shipment to arrive. As Lepkowski and the mules handed over their declaration forms and passports, the agents pulled them aside and asked them to open their luggage. As the suitcases were unzipped and opened one by one, the size of the shipment became clear: 499 tins—almost 1,000 pounds of caviar, mostly beluga—were jammed inside. And that’s all the luggage contained: There was not a scrap of clothing, not a single toothbrush or a pair of shoes. Just tin after tin of caviar—almost $2,000,000 worth. The tins were marked “Russian Caviar,” the lids decorated with jaunty pictures of a sturgeon apparently leaping for joy. The entire haul was without any kind of refrigeration, and some of the tins were weeping salty brown fluid from the warm eggs inside.

Just a few feet away, in the arrivals area, Rozbicki and Koczuk’s wife, Helena, waited, their impatience turning gradually to nervousness. Inside Rozbicki’s denim jacket pocket were envelopes containing thousands of dollars in cash—payoffs for the mules. Helena’s handbag contained a similar stash. Eventually, Lepkowski and two mules walked through the arrivals-area doors. Rozbicki approached them, shooting a relieved glance at their bulging suitcases. They chatted for a few minutes in Polish.

“Where are the others?” asked Rozbicki.

“They’re still back there,” Lepkowski replied, pointing back through to the customs hall. Rozbicki nodded towards the elevator. “The van’s up there. Go and wait in it, and I’ll be along when the others come out.”

Rozbicki had no idea that Lepkowski had been busted or that, in turn, he had agreed to cooperate with the FWS’s investigation. Standing next to him, posing as a mule, was a Polish-born undercover customs agent; and in the milling crowd around Rozbicki were undercover FWS Special Agents. Rozbicki and Helena Koczuk, along with the mules, were arrested and taken away for questioning. The mules quickly gave up their story and were deported. All except Lepkowski, who Grace correctly believed was part of the senior leadership of the smuggling operation.

Koczuk was still in Poland but learned of the disaster the next day from Rozbicki. Evidently in a panic, Koczuk immediately dashed off a fax to a legitimate US shipping broker he had previously worked with. “URGENT URGENT URGENT URGENT,” it read across the top. The fax asked the broker to help him out by pretending the shipment was legal and that there had only been a paperwork mix-up. “Let’s say it was Polish company mistake that the docs were not faxed to you [sic],” wrote Koczuk. The broker refused to help.

Following the JFK seizures, the FWS searched Koczuk’s home, which also served as headquarters for Gino International. Right there in his garage, next to the household detritus, were numerous refrigerators and freezers in which FWS and customs agents found another
1,000 pounds of illicit caviar, most of it stored inside a large, walk-in commercial refrigerator. Dozens of other tins were jammed into another freezer, and there were still more in the Koczuk’s home refrigerators, stuffed haphazardly among packs of steak and cans of beer.

Next to the fridges and freezers was a rough wooden bench that served as Koczuk’s packing “factory”—hardly what could be called hygienic.

The agents recovered dozens of documents detailing the suitcase-smuggling scheme masterminded by Koczuk. Grace, who led the FWS’s investigation into Koczuk, spent the next few weeks piecing together the puzzle. What he was able to deduce was astounding. Koczuk had, in just under a year, sold at least 28,000 pounds of illicit caviar—more than Gino International had ever declared to the FWS. Between April 1, 1998—the date CITES had come into effect—and November 3, 1998, Koczuk had made 36 trips to JFK to pick up mules. Those trips accounted for 19,000 pounds of the year’s 28,000-pound total. Yet he’d declared just 88 pounds to the FWS and customs.

In November 1999, almost a year after being charged, Koczuk and Rozbicki were convicted of six counts of smuggling and conspiracy to smuggle endangered wildlife products. The case was prosecuted by Assistant US Attorney Cynthia Monaco, who would later try
Panchernikov. One of the key pieces of evidence against the pair was Lepkowski’s testimony, which revealed the extent of the conspiracy starting in Poland and ending all those thousands of miles away in Connecticut. Koczuk was sentenced to 20 months in jail. Rozbicki got five months.

Panchernikov’s instinct for the caviar business was remarkable, and he had worked tirelessly for his success. Despite the flood of cheap black-market caviar threatening his wholesale business, and the extra costs and difficulties posed by the CITES regulations, his business continued to grow; Caspian Star eventually posted gross sales of around $12.5 million annually, making Panchernikov the largest importer and exporter of caviar in the US. He continued to expand his business despite being investigated by the FWS. At the height of his success, he managed average sales of 30,000 kilos of caviar a year; in 2001, he took delivery of the entire Kazakhstani annual caviar yield—some 26.5 metric tons, the largest single shipment of caviar ever made to the US.

He rejected suitcase smuggling as a distasteful and altogether too risky means to get his hands on his precious caviar. Besides, there were other ways of staying under the radar of the FWS—methods far less risky and where, if things went wrong, there would always be someone else to blame.

Following the arrest and indictment of Koczuk, Rozbicki, and Lepkowski in November 1998, a gaping hole was left in the supply of caviar to the US market—and Panchernikov was eager to fill it. He and Munnix agreed to an exclusive supply arrangement. Munnix would supply Panchernikov, and only Panchernikov, with caviar in the US. Over the next year,
Panchernikov took delivery of 13 (declared) shipments from Poland to his warehouse at JFK.

DECEMBER 4, 1999—KOCZUK’S WAREHOUSE, BROOKLYN, NEW YORK
Koczuk had been convicted just a month earlier, almost a year to the day after his arrest. He had been remanded to home detention while he waited to begin his sentence. In the meantime, the judge had given him permission to leave his home on “legitimate” caviar business on condition he inform Special Agent Grace every time he did so and that he submit receipts to Grace for every tin or jar of caviar he sold. Koczuk was soon sending Grace receipts for hundreds of pounds of caviar he’d bought and sold.

But there was a problem: Virtually all of Koczuk’s caviar had been seized after his arrest, and he had not imported a single ounce since. Grace eventually tracked Koczuk to the source of the caviar, in a warehouse in Brooklyn, and confronted him: “I need to know where that caviar came from, Eugene.”

Koczuk tripped over himself to prove the caviar he had there was not illegal. “Here,” Koczuk said, indicating a pile of invoices. “I got it from Panchernikov.”

Panchernikov and the FWS were not exactly strangers to one another. Four times in 1998 alone, Panchernikov had forfeited caviar shipments totaling 764 kilos for various import violations. Just a week or so before Grace’s December 1999 confrontation with Koczuk, the FWS had seized a massive 500-kilo shipment of sevruga caviar—the lowest grade of Caspian Sea caviar—that Panchernikov had been desperate to get into the US in time for the millennium celebrations.

The shipping documents Koczuk handed Grace indicated the caviar had come to New York via the United Arab Emirates and Turkey; like Poland, wellknown laundering points for illegal caviar. The FWS flagged the shipment for closer inspection and began opening the caviar tins. They discovered that under a thin top layer of cheap sevruga, the tins of Panchernikov’s shipment were actually filled with the more expensive oscetra. This, according to the FWS, is one of the oldest caviar-smuggling methods in the book. It also gives the importer an excuse if caught: Blame everything on the overseas supplier.

By foisting the blame onto the supplier, the smuggler effectively ties the hands of investigators. To make a case, the investigators would need to show what was actually paid for the shipment, which requires the original shipping document from the overseas supplier— something often impossible to acquire. Of course, it is hard to believe a supplier would ship expensive high-grade oscetra if he is really being paid for cheaper low-grade sevruga. But without an expensive, and often futile, international investigation, the investigators have no proof that the buyer—in this case Panchernikov—actually paid for oscetra knowing it would be imported as sevruga. So the FWS takes the only available option—confiscation.

After blaming the overseas shipper,Panchernikov nevertheless petitioned to have the caviar released and provided a Turkish CITES permit. The FWS refused the request and kept the shipment confiscated. Later, DNA testing would verify the presence of eggs from another critically endangered caviar sturgeon, the Ships sturgeon.

But a key question still lingered for Grace—how many times before had illegal shipments of caviar come in from Turkey undetected?

Eight months before Koczuk’s caviar stash was discovered in Brooklyn by Grace, Panchernikov discovered that a Miami dealer named Victor Tsimbal was getting his caviar from Munnix, in violation of Panchernikov’s exclusive agreement. Furious, Panchernikov confronted Munnix. He had just taken delivery of his fourteenth Munnix shipment—declared and imported on CITES certificates—comprising 400 kilos of beluga, 500 kilos of oscetra, and 300 kilos of sevruga, and worth about $2 million on the retail market.

The shipment arrived in the US and was awaiting distribution from Caspian Star’s warehouse at JFK. During a telephone confrontation, Panchernikov told Munnix they could take back their caviar. He said he had other suppliers he could count on… those in Turkey, for instance.

Munnix contacted Koczuk and asked him to intervene. Koczuk offered to go one better. He would take the caviar himself, he said, as it provided him with caviar stock to sell without involving CITES or the FWS. Panchernikov agreed to let Koczuk buy the shipment from him on one condition: Because of Koczuk’s recent conviction, he didn’t want Koczuk’s name on any of the documentation connecting him to the shipment. So Koczuk arranged for a friend, a carpenter named Witali Mienko, to stand in for him as Munnix’s “representative” in the US. Mienko rented a truck and drove it down to JFK from Connecticut, with Koczuk following closely in another vehicle. Mienko met with Panchernikov and signed the Munnix agreement authorizing him to take custody of the caviar. Then, both Mienko and Panchernikov counted the tins. Together they loaded up the truck while Koczuk waited outside. Once the transfer was over, Mienko and Koczuk drove the caviar to the warehouse in Brooklyn. Later Koczuk would start to move the caviar back, bit by bit, to his home in Connecticut.

But the shipment handed over to Koczuk was missing one important component—the original CITES permits it had been imported under.

Koczuk supported his claims to Grace that the caviar in his warehouse was legal by showing him the Munnix document, namely the agreement that had been faxed from Poland authorizing transfer of the caviar to Mienko. Grace went back to Koczuk’s home and discovered a portion of what appeared to be that shipment stored in the fridges and freezers he had previously raided.

Satisfied Koczuk was telling the truth, Grace began to wonder why on earth Panchernikov would enter into such a deal with someone as unappealing as Koczuk. Why not just send the shipment back and be done with it?

Russian border officials chased down and detained three boats in the Caspian Sea carrying about one ton of stolen caviar-producing sturgeon. The three boats, carrying 11 poachers, were stopped by a Russian border-guard vessel on Saturday off the Caspian’s northwest coast. Poaching of sturgeon in the Caspian has skyrocketed since the 1991 Soviet collapse. The poaching, following decades of pollution and overfishing, means the sturgeon that produce the best caviar face extinction.—Associated Press Worldstream

DECEMBER 13, 1999—CASPIAN STAR HEADQUARTERS, BROOKLYN, NEW YORK
One thing Special Agent Ed Grace wasn’t expecting to find in Panchernikov’s office was a gun. Grace led a raid of Caspian Star’s headquarters at JFK, on a warrant to search for evidence that Panchernikov might be involved in smuggling. During the initial search, an unlicensed .25 mm Beretta pistol was found in Panchernikov’s desk. He was arrested immediately and taken away by Port Authority Police. Later he pled guilty to disorderly conduct and was sentenced to one year conditional discharge and a $100 fine.

After finding the gun, Grace and a team of FWS agents and inspectors searched Caspian Star, looking for evidence of illegal caviar dealing. They found it in records indicating Panchernikov had reexported the contents of the disputed Munnix shipment. But this seemed impossible, as many of the tins in Koczuk’s fridges matched those declared on the CITES permits they had been brought in on by Panchernikov.

This created a big puzzle—whose caviar matched the Munnix shipment? Grace went back over Koczuk’s records and became convinced the caviar at Gino International was the real Munnix shipment.

Which meant Panchernikov’s “Polish” caviar had actually come from somewhere else. Grace located a second set of books and records, which revealed that Panchernikov had imported far more caviar from Turkey than he had officially documented—an illegal practice known as “topping off,” whereby an importer declares tins weighing, say, 1.8 kilos, which in fact weigh more. This is significant because the undeclared kilos of caviar enter the country free of any tax and out of CITIES oversight.

At that point, the puzzle became clear: The real reason Panchernikov had agreed to Koczuk’s proposal was to get his hands on the CITES import certificates accompanying the Munnix shipment, which would then enable him to falsely claim that those certificates matched his undeclared Turkish caviar. This in turn would allow him to obtain the necessary reexport permits he needed from FWS to ship the illicit eggs to his clients.

Evidence began to accumulate that Panchernikov’s import-export managers, Ella Spivak and Lillya Margus, had been directed by him to “provide false documentation to the FWS and other government agencies which allowed caviar to be illegally exported from the United States” to his overseas clients, which included the airline Lan Chile.

In addition, the FWS discovered that Panchernikov had exported the roe of the protected American paddlefish by claiming it was lumpfish roe, which was unprotected, and that “fraudulent health certificates were manufactured and signed… to avoid detection during the exportation process.” Indeed, FWS agents found blank health certificates that Panchernikov’s employees were counterfeiting to accompany shipments. In addition, it was revealed that Panchernikov had falsely labeled tins of oscetra caviar as the more expensive beluga.

MAY 4, 2003—US FEDERAL COURT,BROOKLYN, NEW YORK
Overall, 120,000 pages of evidence were collected during the Panchernikov investigation, creating a pile of evidence seven feet high that resided in the FWS’s JFK office.

Panchernikov was initially charged with six counts connected to illegally exporting caviar in violation of CITES treaties and falsely obtaining export permits by using the Koczuk CITES certificates. He was also charged with two counts relating to false labeling, as well as two counts of shipping caviar obtained from protected American paddlefish.

Over the next three years Panchernikov vigorously protested his innocence, but eventually, when he was told the US Attorney planned to file additional charges against him in connection with other shipments, he agreed to plead guilty to the original six charges. He was sentenced to 21 months in prison on May 4, 2003, and fined $400,000. Panchernikov was also stripped of his FWS import-export license. Today, he’s an inmate at the Otisville Federal Detention Center. Because he was convicted in Federal Court, he will serve at least 85 percent of his sentence before becoming eligible for parole.

Since April 1, 1998, when all sturgeon were entered on the CITES list of endangered species, most of the major smugglers and dealers in illicit caviar in the US have been caught and successfully prosecuted.

Eugeniusz Koczuk and Wieslaw Rozbicki had their sentences increased to 48 months and 20 months, respectively, after the US Attorney for the Eastern District of New York appealed the leniency of the original sentence.

Victor Tsimbal, the Miami-based caviar importer who’d inadvertently sparked Panchernikov’s dispute with Munnix in the first place, was sentenced in November 2002 to 41 months in prison after being found guilty of smuggling. In 1999 alone, Tsimbal smuggled more illegally poached beluga caviar into the US than makes up the entire legal Russian beluga harvest.

Alfred Yazback, president of New York–based importer Connoisseur Brands, was jailed for two years in January 2002. Yazback not only bought “suitcase caviar” from Koczuk but also controlled a gang of poachers who plundered US rivers for paddlefish. Yazback would then sell the paddlefish roe as sevruga. He and Connoisseur Brands were fined nearly $200,000.

Grigori Oudovenko and Vladisalv Tartakovsky pled guilty to smuggling thousands of pounds of caviar into the US inside shipments of dried fish. Oudovenko is currently in jail, Tartakovsky is waiting to be sentenced.

Hossein Lolavar, president of US Caviar & Caviar in Maryland, was jailed for 41 months and his company fined a record $10.4 million for smuggling more than 32,000 pounds of caviar worth $24 million. Lolavar and his brother-in-law Ken Noroozi bribed CITES officials in the United Arab Emirates with prostitutes and cash to provide export permits for caviar smuggled out of Russia.

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