By midsummer of 1957, Battaglia and Guarna were convinced that the U.S. Customs Service was riddled with corruption and that there was no further need to worry. They were so certain that their system was foolproof that Guarna went to Italy and arranged the purchase of $41,000 worth of merchandise, which normally could be imported only with the payment of $13,325 in duties. The partners were not worrying about the duties because they had received a communication from Lev that when Guarna returned “everything will be all right.”
But everything was not “all right.” Earlier in the year a dapper, dark-haired man had called at the Varick Street headquarters of the Customs Special Agency Service and asked to see Agent Dave Cardoza, the big, amiable veteran of a thousand investigations, who headed the Bureau’s New York Racket Squad.
This man, whose identity has never been disclosed by Customs, had an interesting story to tell Cardoza. He was a competitor of Battaglia and Guarna and he had become extremely curious about their sudden rise in the merchandising field. He also was intrigued by their peculiar ability to shave prices below a reasonable competitive level.
He had been making his own inquiries and observations over a period of many months. He knew the names of some of the people who had carried merchandise into the country for the partners. He had seen Customs inspectors visit the partners’ place of business—and on one occasion he had seen Battaglia pass money to an inspector whom he identified from a picture as being Lev.
On the basis of this information, which was supported by names, places and dates, the Service opened a formal investigation. Agents sifted through thousands of declarations, seeking the names of the carriers for Battaglia and Guarna, and the names of the inspectors who had signed the suspect declarations.
A study of the declarations convinced the agents that Lev’s name appeared far too frequently on the documents relating to the partners’ travels. And there were too few imports recorded for a firm as obviously prosperous as Battaglia & Guarna, which dealt exclusively in foreign haberdashery.
This investigation was underway when Guarna left for Europe in July. By mid-August, Cardoza had decided the time had come to crack down on the partners—and the best time would be when Guarna returned from the Italian trip. He was reasonably certain that if Guarna were engaged in smuggling, he would return from Italy with a load of merchandise which he would try to slip through Customs. For this reason it was important to know when and how Guarna planned to return to the United States.
The time of Guarna’s return was learned by a telephone call to the office of Battaglia & Guarna, where a secretary—told that an old friend from Chicago was calling—disclosed that Guarna was due to return on October 1 aboard the Italian liner Cristoforo Colombo.
With more than a month in which to set his trap, Cardoza began making plans to keep Guarna within sight of a Customs agent from the time he set foot on the pier until he cleared his baggage with an inspector. But this surveillance had to be done in such a manner that it would not arouse the suspicion of Lev or any other inspector who might be involved in the smuggling.
Finally, it was decided to use a “zone defense,” in which three agents would be stationed at strategic points commanding a view of the pier and the baggage examination area. No one was to leave his post and follow Guarna or show any undue interest in his movements. One out-of-town agent—unknown to any of the inspectors—was to be stationed on the pier under the baggage collection point “G” in the role of a visitor come to meet one of the passengers.