Scam, Like A Nesting Doll, Hid Even More
Cigarette Probe Found Sweatshop

By Tom Jackman
Washington Post Staff Writer
Sunday, January 11, 2009

The small white bungalow on Backlick Road, near a major Fairfax County intersection, seemed like an unlikely spot for a sweatshop. But when police and federal agents burst in, they found several women hunched over industrial sewing machines, cranking out counterfeit designer clothing, working off the debt they owed for passage to America.

The astonishing discovery came during a two-year investigation into a Korean organized crime ring based in Annandale that trafficked in untaxed cigarettes. Undercover officers and agents started off making $5 million in sales of contraband cigarettes. That led to the crime ring's money laundering and numerous financial schemes. There was even a murder-for-hire plot.

A tip from an informant helped break open a criminal enterprise that stretched from Northern Virginia to New York City, according to court records in U.S. District Court in Alexandria. Seventeen people have been sent to federal prison.

Although their focus was untaxed cigarettes, police also uncovered the sweatshop, rampant identity theft and mortgage fraud. Concerned that the same tools could be used by terrorists, federal authorities are now looking for ways to plug those potential security gaps.

Lt. John Piper of the Fairfax police criminal intelligence division said that in 2006, police began investigating a possible Korean crime ring in Annandale. Police agreed to talk about the investigation, which is continuing, only after their major targets had been convicted.

"We could not crack it because the Korean community was afraid of these individuals," Piper said of the crime ring. "And their culture back home is they don't trust police. We got lucky with one individual wanting to turn over some information."

That informant, developed by Fairfax street officer Pat Dittmer, helped shut down the lucrative operation run by Jung Ho Cho. The 53-year-old Cho didn't wear flashy jewelry or run with a large entourage. He lived in a nondescript apartment in Ravensworth Towers near Columbia Pike in Annandale.

But when Cho and his associates walked into a restaurant or nightclub along Little River Turnpike, "you knew they had the respect of the community," Piper said. "People bowed when they walked in. These were definitely not street-level operators."

Concerned that Korean criminals would be suspicious of any Korean not already in their community, two white men -- an ATF agent and a Fairfax sheriff's deputy -- were tapped to be undercover operatives. Word spread that the two men were linked to a vast crime group, Special Agent Darin Ramsey said.

The goal was to set up large cigarette deals with Cho. Cigarettes are hugely profitable because they are taxed so heavily in New York City -- $4.25 a pack compared with 30 cents in Virginia. There is a cap on cigarette sales in Virginia, but agents put out the word that they could get cigarettes in bulk that could be sold with counterfeit tax stamps.

The cigarette tax loss to the states alone is enormous. "States are losing billions," ATF spokesman Mike Campbell said.

Before the agents could line up cigarette sales with Cho, they were approached by two other Korean entrepreneurs, court records show. Jong Woo Cha called an undercover Fairfax officer in October 2006 and said he and his partner, Jin Woong Lee, needed a firearm with a silencer -- a firearm "capable of killing someone," according to a court affidavit.

Cha and Lee told the officer that they were being threatened by a man named "Thunder," a reported enforcer for Cho. They were also looking for someone to kill Thunder, court records say. The undercover officer quickly offered to find a hit man and then introduced Cha and Lee to another undercover officer. A price was set: $2,500.

Cha and Lee pointed out Thunder to the "hit man." On Nov. 4, the phony hit man provided a phony photo of a Korean man lying in a pool of blood, court records show, and told them it was Thunder. Cha and Lee handed over an envelope with $1,000 cash with "Thank You" written on it. They were arrested, and both later pleaded guilty and were sentenced to 10 years in prison.

Meanwhile, the cigarette business took off. Court records show that Cho would regularly meet the undercover officers with backpacks stuffed with $100 bills, in amounts ranging from $140,000 to $700,000. By summer 2008, Cho and his associates had bought $5 million worth of untaxed cigarettes in less than 18 months.

The agents would then drive rented box trucks stuffed with cartons of cigarettes to Queens, N.Y., where Chinese and Korean crews would monitor the neighborhood while others unloaded the trucks into warehouses, according to an affidavit written by ATF Special Agent Jeremy Witkowski.

As the investigation raked in the cash, Cho told the undercover agents that he could help them launder the money without having to report it to authorities. In 2008, the agents returned their cash to Cho in exchange for cashier's checks or personal checks, court records state.

The agents then met a friend of Cho's named Dong Young "Dereck" Shin, 47, who was in the business of selling Social Security cards, court records say. The cards were issued to Chinese nationals in the Mariana Islands to allow them to work, Ramsey said, but recipients were selling them, sometimes with passports of family information.

The Social Security cards were then used in the continental United States to obtain driver's licenses and credit cards. And then mortgages. Special Agent Ashan Benedict said people were able to establish good credit scores by making timely payments for months or years, all under false identities.

The investigation also uncovered a Department of Motor Vehicles employee in Illinois who was knowingly providing fake driver's licenses to people, often from Virginia. Those people would then trade the Illinois license for a legitimate Virginia license.

"Identity fraud really is a national security matter," Benedict said. "They're living here as a normal citizen. Is that the only thing they're going to do? Or are they a sleeper cell, are they up for criminal activity?"

The operation was broken up in a series of raids in July, including one on Shin's home at 5020 Backlick Rd. Investigators were stunned to discover "a mini-factory," as Benedict called it. They found shelves full of counterfeit sports clothes and crack pipes that police think were used to keep workers addicted and subservient.

All those arrested in the ring pleaded guilty to fraud counts. Cho was sentenced to 42 months, with the provision that he would be deported at the end of his prison term.

"We still don't have the trust of the community," Piper said. "It's going to take time." But police think they have made inroads. After the roundup in July, residents approached Fairfax officers and said, "Thank you, you got the right people."