Sometime during the warm summer night of July 31, Pete (The Pilot) Royanne, Tony Romano and a man known as "Mr. Skeeball" took Paul Sjeklocha to a house in Altamonte Springs, Fla., that they told him was Romano's home.
There they showed Sjeklocha and his business associate, Fadel N. Fadel, two TOW antitank missiles and an KA90B reconnaissance camera for F4 fighter jets. The two men inspected the items, which they believed were part of a shipment of 1,140 TOW missiles they were buying from Skeeball and his friends for $9 million and shipping to Iran as "water purificators."
But when they returned to their hotel in Orlando, Fla., that night, Skeeball pulled out his FBI badge, halting the arms deal and revealing "Operation Hookah." Sjeklocha and Fadel were arrested, along with five others, including an Army weapons specialist stationed in Alexandria and an Iranian said by government investigators to have high-level access in his native land.
All seven were indicted yesterday by a federal grand jury in Orlando on charges of conspiring to violate U.S. arms-export laws and to prevent the U.S. government from carrying out its foreign policy. The 17-count indictment also includes 14 charges of wire fraud; Sjeklocha and Army Lt. Col. Wayne G. Gillespie of Fairfax County, were also charged with bribery.
The account of what allegedly happened on July 31 is based on FBI affidavits and court testimony in federal courthouses in Alexandria, Orlando and Los Angeles, where the "Hookah" case has been playing out this month. The undercover sting operation is part of a stepped-up effort by the FBI and the U.S. Customs Service to halt what officials say is a concerted effort by Iran to acquire badly needed arms on the international weapons black market for its war against Iraq. In the last year, there have been nine other cases involving the illegal shipment of arms to Iran that have been exposed, according to Customs figures.
Officials say this latest case is significant because of the alleged involvement of the Army's Gillespie and the Iranian, Hossein Monshizadeh-Azar. According to FBI testimony at a Los Angeles court hearing last week, Monshizadeh-Azar allegedly was the person who was to pay for the missiles in Iran.
Far from the smooth-running, sophisticated deals one may imagine in the underworld of illegal arms brokering, the accused "Hookah" conspirators were a group plagued by internal bickering, facing difficulties in raising money and harboring suspicions they were dealing with Mafia arms traffickers or government agents, according to FBI affidavits and evidence filed in an Orlando court.
At one point, Skeeball, who was actually FBI agent Richard Witkowsky, was asked outright by the suspicious alleged conspirators if he worked for the government, the FBI affidavit states. When he assured them he did not, they continued with the deal.
Despite their problems, the group allegedly pressed on and, in the end, inspected what they thought were samples -- actually TOW missiles provided to the FBI by the Army and a reconnaissance camera supplied by the Air Force -- while Witkowsky and Royanne, who is also an FBI agent, looked on, according to FBI testimony.
Attorneys for some of the alleged conspirators are challenging FBI tactics in the undercover operation. They have charged in court that Romano, posing as a friend of Skeeball who had access to arms, according to one defense attorney, coerced their clients into going along with the deal by "holding a gun" to their heads and threatening their families.
Sjeklocha attorney Stanley Rozanski said that while in custody his client was shown newspaper pictures of a man known as Tony Romano, with alleged Mafia ties. Sjekloha identified the man in the pictures as the man who allegedly threatened him. Xerox copies of the those photographs were entered into evidence in court in Orlando recently in support of Rozanski's contention that the FBI may have worked with alleged underworld figures in the operation. The photographs were placed under seal by U.S. Magistrate Donald P. Dietrich.
"As of this moment, we don't know" the identity of Romano, said Fadel's attorney Alan Ross. "But the government . . . intentionally created an atmosphere such that anyone who would come into contact with agents would have felt severely and acutely threatened," he said.
FBI agents involved in the case have refused to say who Romano is and have testified that they know of no pressure on anyone to cooperate in the alleged deal.
An FBI spokesman in Washington said there is no FBI agent with the name Tony Romano, but declined to elaborate further on his identity.
"Operation Hookah" allegedly began March 11 when Witkowsky met Charles Miseroy St. Claire at Orlando International Airport, according to an FBI affidavit. FBI officials decline to say how the meeting was set up.
A hookah is a large pipe with a long, flexible stem common in the Middle East; FBI officials say the word was chosen at random.
St. Claire told Witkowsky he had clients interested in buying arms for Iran, including TOW missiles, F4 jet engines and jet parts, a mobile hospital and Harpoon missiles. He identified Sjeklocha as his partner, according to the FBI affidavit.
One week later, Sjeklocha allegedly sent a long telex message to the Iranian Ministry of Defense, signing it with his professional pseudonym, "Prof. Paul S. Cutter."
Dated March 19, the telex, which is on file in federal court in Orlando, offered to sell Iran 5,000 TOW missiles for $50.3 million, to be paid within four days after their delivery in Iran by "four jumbo jets." It advised the ministry that "Tadarok Co. Ltd. under management of Mr. Hossein Monshizadeh, is our representative in Iran fully authorized to negotiate for EDA Europe Co."
Sjeklocha's telex informed the ministry that he was president of EDA Europe, located in Schaffhausen, Switzerland, and that EDA was licensed to sell the missiles. Max Reichlin was listed as vice president of EDA.
"That's brand new for me . . . . I never heard in my life that I'm vice president of EDA," said Reichlin in a telephone interview. Reichlin said he heads the export division of a metalworking firm called EDAK.
Reichlin said he had met Sjeklocha several times in the last few years on business matters. He "always seemed to me to be a man living a little bit in the clouds. You know what wishful thinking is? He's not a realist . . . . He has some high-flying ideas, but he never realized them . . . . I would never have dreamed to work for him . . . . " Reichlin has not been charged in the alleged conspiracy.
According to the FBI affidavit, Sjeklocha met Witkowsky during April and May for further discussions, telling the FBI agent that he had made more than $6 million selling arms to the Iranians and that "his main principal" was an Iranian-born California businesswoman, Farhin Sanai. Sanai's lawyer has said that St. Claire introduced her to Sjeklocha.
But Sjeklocha at times became frustrated with his "main principal." In a May 22 telex message to "Hossein Monshizadeh" in Tehran, Sjeklocha stated: "So far, at least, Farhin has compromised just about everything I have tried to do. Today, after we agreed to stop all the stupid phone calls, two minutes later she was again on the phone. It doesn't help to talk to her.
"I trust that both you and Farhin should realize that the U.S. business cannot be discussed and shopped around the way you have done it," according to a copy of the telex filed in an Orlando court. "You must, really, you must think about our security here in the U.S.A., and the security of the deliveries of goods to your country . . . . "I am through paying anything for anybody unless they have earned it."
At the same time, Sanai and Mostafa Moghadassi, a man she has identified in court as her son-in-law, were complaining about dealys on Sjeklocha's part, according to another telex message filed in court.
Meanwhile, the alleged conspiracy was coming to a head, according to the FBI's version in its affidavit. At a June 22 meeting in Calabasas, Calif., Witkowsky met Sjeklocha and Sanai and drew up a $9 million contract for the purchase of 1,140 TOW missiles.
A week later, Sjeklocha arranged for Army artillery specialist Gillespie to fly from Dulles International Airport to Orlando to inspect a specimen missile. Gilliespie inspected two TOW missiles for Sjeklocha, the affidavit states, and gave Witkowsky a business card with his office and home telephone numbers.
Later on, Sjeklocha told Witkowsky that "he had used Gillespie before in France and Germany to check items for him" and that he "would keep his mouth shut, and if he didn't he could really get hung, because he knew what was going on," the FBI affidavit said.
On July 14, Sanai, Fadel, Sjeklocha, Monshizadeh-Azar and Witkowsky met at Sanai's $670,000 Spanish colonial home in Calabasas, and in a conversation recorded by the FBI, Sanai described Monshizadeh-Azar as "a high-ranking Iranian government official," the FBI affidavit states.
The next day, Monshizadeh-Azar told the FBI agent that he would arrange for the plane carrying the missiles to land in Tehran. Witkowky said that "he steals the items and once he obtains them he can't put them back."
On July 25, Witkowsky was contacted by Sjeklocha, who said "he was still have trouble putting the money together." The next day, Sanai allegedly told Witkowsky that she would put up the money for the deal by selling her jewelry or giving him a deed to her home, and that she and Fadel would be in Orlando to close the deal on July 31, the affidavit states.
That same day, Sjeklocha sent Monshizadeh-Azar a telex in Tehran with details about a shipment of 1,140 TOW missiles and five KA90B reconnaisance cameras that were to leave Miami Aug. 3 by Cargo Lux Air International and travel via Luxembourg and Dubai to Iran's main airport, arriving Aug. 6, according to the telex filed in Orlando court.
On the same day, Sjeklocha sent another telex to the Cargo Lux office in Dubai addressed to "Mel" saying that Sjeklocha planned to be in Florida the next day to arrange for a shipment of "water purification units."
"I know what I am doing, and you are about to buy that California real estate/land," Sjeklocha's telex told "Mel," adding: "Remember: prosperity belongs to the patient."