BCCI Used Top Coffee Companies’ Checks to Finance Smuggling
MIAMI (AP) _ Postdated checks from top U.S. coffee roasters helped finance an alleged coffee-smuggling scheme linked to the scandal-plagued Bank of Credit and Commerce International, according to BCCI documents filed in a lawsuit.
The checks from Chock Full O’ Nuts Corp., Chase & Sanborn, and the now- inactive James W. Phyfe & Co. were dated a month or more in advance and made out to Munther Bilbeisi, who is accused of smuggling.
Bilbeisi, whose brother runs BCCI’s branch in Jordan, used the checks as collateral with BCCI to buy Central American coffee for sale in Jordan or Syria in 1985, according to the documents.
That coffee, which cost only a third the price set by treaty for legal U.S.-bound shipments, was then smuggled past customs in Miami and New Orleans and illegally sold to U.S. roasters, according to a racketeering lawsuit filed here last year against Bilbeisi by Lloyd’s of London.
His attorney, Arthur Koski, has denied his client took any illegal acts during his coffee imports.
Arthur Berman, president of Chock Full O’ Nuts when the checks were issued in May and June 1985, and earlier head of Chase & Sanborn, received $160,000 from Bilbeisi, according to the lawsuit, which names Berman as a co-defendant.
Berman, now retired from the coffee business, denied in an affidavit that the money from Bilbeisi was a kickback for buying smuggled coffee. He said it was a loan he used to support ″a young lady″ and to pay off gambling debts. Chock Full O’ Nuts and Chase & Sanborn have declined to answer questions from The Associated Press about Berman or whether they were aware their companies had financed or bought smuggled coffee. Phyfe owner Abba Bayer acknowledged that use of postdated checks was unusual, but denied knowing Bilbeisi was a smuggler.
The BCCI-Bilbeisi case is the subject of a federal grand jury probe in Miami, but U.S. attorney’s office spokeswoman Diane Cossin said she could not confirm whether the postdated checks are part of the investigation. Bilbeisi is now a fugitive in Jordan from separate U.S. tax evasion charges linked to the coffee scheme.
Bankers, importers and financial analysts question why reputable roasters would have given Bilbeisi postdated checks, which ranged from $150,000 to $750,000, to underwrite the coffee shipments. Most spoke on condition of anonymity because their companies did business with the roasters or did not want to be identified with BCCI.
″These were not kosher deals,″ said a coffee analyst for one of the world’s largest brokerages. ″That’s not the way you do business.″
A New York banker said normally a roaster would have given Bilbeisi a signed purchase contract for use as collateral at the bank - but that would require proof the shipments were legal.
Arthur Stevenson, a coffee analyst for Prudential Securities Inc., said while use of postdated checks was odd, the biggest question was why the roasters would be involved with coffee shipments that could not legally be imported into the United States.
″It could be considered unusual, but just because something is unusual does not mean its unlawful,″ Stevenson cautioned. ″That’s something the judicial system will have to determine.″
Bob Mitchell, a spokesman for New York-based Chock Full O’ Nuts, said questions about the checks had been passed on to management, but there was no response.
Susan Isphording, San Francisco spokeswoman for Nestle Beverage Co., which now owns Chase & Sanborn, said that company’s only immediate response was to note it bought the roaster some months after the checks were issued.
Phyfe’s Bayer called Bilbeisi ″a creep among creeps″ - but denied knowing the coffee he sold was contraband.
″It had all the proper markings on it and it was in a regular warehouse,″ said Bayer. ″We later found out it was sleight of hand.″
He agreed that issuing postdated checks to Bilbeisi - instead of a normal signed contract - to finance the coffee was unusual, but said Bilbeisi somehow talked him into it.
″He was very slick, very persuasive,″ said Bayer. ″He could convince you it was snowing in your own room.″
In the end, Bayer said, Bilbeisi cheated him out of 17,000 bags of coffee by selling it to Chock Full O’ Nuts, a case that Phyfe eventually won in arbitration.