At that time, U.S. Customs had been seizing the Lius' cargo at the Port of Los Angeles with increasing regularity. The couple was eager to find a cleaner way to smuggle the smokes into America. That's where Garcia came in. He gained weight, greased his hair back, and posed as an emissary from the Italian Mob. Garcia told the Lius he knew a dirty customs official in New Jersey who would guarantee their cigarettes made it through in exchange for $60,000 per container.

"They thought we were wise guys, no questions asked," Garcia says. "May took an instant liking to me."

That meeting was just the beginning of a massive six-year operation. Garcia would eventually infiltrate the highest levels of the Lius' international smuggling network, a staggering chain involving nearly 100 people in China, the United States, and Canada. Garcia eventually learned that the operation had ties to North Korean weapons smugglers.

Before he and Calvarese sprang a final trap on the Chinese gang, two other major cases tying cigarette smuggling to international terrorism unfolded in the United States.

One involved two Lebanese-Americans, Mohamad Hammoud and his brother, Chawki. By exploiting differences in state tax between North Carolina, where they lived, and Michigan, where they sold cigarettes, the pair raised nearly $8 million for Hezbollah. In 2002, a federal jury convicted them under a 1996 law banning material support to terrorist groups. "That case opened a lot of eyes to the links between cigarettes and terror groups," says Sharon Melzer, a professor at American University who studies the role of black-market smokes in funding terrorists.

In a second 2002 case, the European Union filed suit in New York against R.J. Reynolds, the North Carolina firm that makes Camels, Winstons, Dorals, and Kools. The allegation: Company executives collaborated with criminal mobs to smuggle cigarettes into Eastern Europe and Iraq — in the process funding the Iraq-based Kurdistan Workers Party (abbreviated PKK because of its Kurdish name). The PKK is a listed terrorist organization that wants an independent Kurdish nation in southern Turkey and has killed nearly 6,000 civilians since 1984.

The scheme, according to the suit, continued from 1992 well into 2003, when America again declared war on Iraq. The lawsuit is still being argued in court today.

By the time the suit against Reynolds was filed, Garcia and his partners were closing in on the Lius' cigarette smuggling operation. The FBI had set up two stings, one in California and one in New York, titled "Smoking Dragon" and "Royal Charm." Garcia had won the couple's trust. Their operation was staggeringly profitable — they'd clear more than $1 million on each shipment successfully smuggled into the States.

But Garcia and Calvarese had begun to realize that the Lius' ambitions lay beyond bringing cigarettes into the United States. With Garcia's prodding, the couple promised to arrange shipments of counterfeit Rolexes, Gucci and Versace products, and "supernotes" — North Korean-made $100 bills nearly impossible to prove as fakes. They also casually mentioned that their connections could bring loads of North Korean weapons into the United States.

"This group could get anything through our borders," Calvarese says. "Anything."

In July 2004, Calvarese traveled to the remote Thai island of Phuket to meet with the Lius' weapons contact. He promised to deliver $1 million in supernotes, as well as 1,200 AK-47s, 75 anti­tank rockets, 50 rocket launchers, and 100 machine guns from North Korea.

The FBI decided it was time to bring down the gang. In August 2005, Garcia and Calvarese told the Lius that Calvarese was getting married. They mailed invitations to all the smuggling chain's top bosses, who'd begun to think of their "Italian Mob" connections as good friends after six years of fruitful partnership.

When the smugglers piled into limos outside the Trump Taj Mahal Casino Resort in Atlantic City, the "drivers" — FBI agents in disguise — arrested everyone inside. Across the country and in Canada, the feds picked up 59 suspects in 11 cities. It was the largest cigarette smuggling bust in history. "Cigarettes are just a tremendous black market," says Garcia, who recently published a book about his time in the FBI. "People who smoke need them, and if you open up a way to offer them decent prices, you've got a gold mine. This isn't going to be the last time you see this kind of giant operation. Not by a long shot."

Sunshine State Smuggling

Wearing a neatly pressed dark suit, Roman Vidal walks out of a courtroom into the huge atrium in the middle of the Wilkie D. Ferguson Federal Courthouse in downtown Miami.

He joins his wife, Delia, on a bench with near-panoramic views of Biscayne Bay through the windows. But the two stare at their feet, quietly awaiting a public defender.

It's April 14, and Judge Alan S. Gold has just granted a delay of the trial. Federal prosecutors say they need more time to translate the reams of taped conversations between Vidal and his contacts in Spain and Panama. The first hearings have been rescheduled for late July.

Vidal has been charged with four counts of fraud and smuggling — but not under the 1996 statute forbidding material support of terrorism. That's probably because prosecutors would have to demonstrate that Vidal knew that his European partners were using the black-market cigarettes to support the Real IRA.

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