For six months in 1984, dozens of burglars, drug dealers and assorted other criminals streamed to the Florida Avenue Gold and Silver, a rundown store in Northwest Washington that was doing a brisk business buying thousands of dollars worth of stolen computers, fur coats, bicycles and other items, according to authorities.
Occasionally, one of the store's owners introduced his unsavory customers to a new-found partner, who seemed eager to become known as a mover and shaker in Washington's underworld of drug dealers, fences and other operatives.
Yesterday, authorities revealed that the shadowy partner was in fact an undercover FBI agent and that his involvement in the fencing operation served as an entree to a two-year odyssey that led from the streets of Washington to New Jersey, Florida and Amsterdam. Along the way, according to FBI and D.C. police officials, the agent dealt with street junkies, lawyers, international gamblers and organized crime figures.
The investigation has resulted in the arrest of 28 persons, including 21 who were taken into custody yesterday, on charges including burglary, receiving stolen property, distribution of cocaine and carrying a concealed weapon, FBI and D.C. police officials said at a news conference. Warrants have been issued for the arrest of 38 others, officials said.
Authorities said said the 2 1/2-year joint investigation also turned up evidence of a Washington area drug ring orchestrated by a prisoner in a federal prison in Lewisburg, Pa., the sale of counterfeit video games and the illegal use of gambling machines in the District.
The undercover agent's partner in the Florida Avenue store was identified by authorities as Louis Rubenstein, a businessman who owns Royal Vending Co., 2615 Evarts St. NE. Rubenstein, 60, was arrested yesterday on charges of theft of government property and conspiring to receive stolen goods.
Rubenstein, who was released on his own recognizance after a brief bond hearing yesterday, introduced the undercover agent to others allegedly involved in illegal activities, according to sources, but the agent also went on to make his own contacts.
Rubenstein could not be reached for comment.
"When we got involved with the criminal element on the street level . . . we came across a lot of deals that we couldn't turn down," said Special Agent Norman A. Zigrossi, head of the FBI's Washington field office. "Business was outstanding."
Zigrossi said that some unidentified people the undercover agent had dealings with "indicated to us they were involved in organized crime."
"That's what they told us," he said. "Beyond that I can't make any statement. The investigation is continuing."
Other officials said that investigators are also looking into the involvement of well-known figures in Washington's underworld and their alleged involvement in distributing counterfeit video games.
Counterfeit video games are identical to the legitimate video games that are popular in bars and arcades across the country. The counterfeit machines often are made overseas with pirated parts as a way of circumventing U.S. copyright laws and royalty payments to the legitimate manfacturers of the machines.
Federal officials have said that the Mafia and other criminal elements have become involved in distributing counterfeit video machines and video gambling devices.
According to a police affidavit filed in D.C. Superior Court last Friday in connection with the investigation, an undercover FBI agent had dealings with the operator of a New Jersey electronic games firm named Myron Sugarman, identified in the affidavit as a reputed New Jersey gambling figure.
Sugarman has not been charged in the investigation here. He recently was indicted in New Jersey on a charge of conspiracy to engage in illegal gambling, according to an Essex County, N.J., prosecutor. Sugarman has denied the charge.
Sources also said that the investigation uncovered a heroin ring operating in the District that allegedly is being supervised by a convicted murderer who is incarcerated at the federal prison in Lewisburg.
The murderer was an inmate at the District's Lorton Reformatory and is the "contact point" who allegedly arranges for "virtually pure heroin" to be shipped to the District from northeastern cities, sources said. The drugs are then distributed by former inmates the murderer met while in prison who are now living in the area, according to sources.
No charges were filed yesterday against the murderer, whose identity was withheld. Sources said that evidence about the ring will be presented to a grand jury here.
Zigrossi said the FBI had alerted prison officials to "make sure they are aware of what's happening."
In a separate drug case that grew out of the undercover investigation, Ernest M. Cohen, 40, an Alexandria lawyer, was arrested yesterday on a cocaine sale charge and later released on his own recognizance, according to authorities.
Last month, Harry Ira Barnett, 49, a disbarred D.C. lawyer and a former boxing promoter who now lives in Florida, also was arrested on cocaine sale charges, authorities said. Barnett pleaded guilty here in 1979 to three counts of mail fraud in a scheme to defraud insurance companies through inflated medical claims.
The Florida Avenue store operation, code-named "EIDOLON," ran between May and October of 1984.
The video investigation was code named "VIDGAM." Last month, an undercover FBI agent introduced Sugarman, a New Jersey video game distributor, to the operator of the Les Nieces nightclub at 4622 14th St. NW, where they allegedly discussed placing gambling machines in the club, according to a police affidavit.
Sugarman and an employe of his company, Monti-Video Inc. of Hillside, N.J., are facing trial in April in New Jersey on a charge of conspiracy to engage in illegal gambling, said George Schneider, the Essex County prosecutor. Schneider said that in a raid of a Monti-Video warehouse last March investigators removed more than 150 electronic machines.
FBI agents staged another raid at the business earlier this month and removed documents and some machines, Sugarman said in a telephone interview yesterday.
Proving that these video machines are being used for illegal gambling can be difficult, because their machinery can be modified to change the type of play and the manner of operation, according to Sugarman and New Jersey officials. The machines include electronic poker and horse-racing games.
Sugarman said that his company sells legal, nongambling machines to businessmen who then place them in bars and restaurants. Sugarman added that he does not know what electronic changes the businessmen or bar owners make to the machines. Sugarman said charging him is like arresting an executive of a company that manufactures playing cards because the cards are used in illegal gambling.
"The machines can be used for all different types of purposes," Sugarman said. "The laws governing the machines vary not only from state to state but from municipality to municipality."
Sugarman said the machines are harmless, "the working man's entertainment."
Each machine can generate from $1,000 to $2,000 a week, which is often split between the individuals who place the machines and the club owner, Schneider said.
Last March, New Jersey State Police and Essex County officials charged 50 persons, including Sugarman, in connection with alleged illegal gambling with such machines. Authorities said that the arrests uncovered organized crime rings active in the video machine industry.