Black marketing - price too high
Submitted by: MCAS Iwakuni
Story Identification Number: 2003924201211
Story by Cpl. Robert W. Wynkoop

MARINE CORPS AIR STATION IWAKUNI, Japan(Sept. 25, 2003) -- Military authorities recently apprehended the former manager of a Korean Army and Air Force Exchange Service shopette for his role in a two-year smuggling ring that moved more than 62,000 cases of beer and wine through a tunnel underneath a base wall.

Although not as severe, Iwakuni has seen its share of black marketing, according to Quan Smith, Criminal Investigations Division, criminal investigator.

Recently, Station authorities arrested two Marines in connection with black marketing. The tax-free goods they provided Japanese nationals were not prescription drugs or alcohol, but rather large quantities of consumable items.

Large quantities in this instance were 12, 20-pound bags of white rice along with butter and chicken.

Buying items on a military installation and taking them off-base for resale violates the Merchandise Control Order, Smith said. Ordinary items, like laundry detergent and perfume, have been the tax-free items confiscated the most from black marketing investigations.

These items might not seem like the evidence of a crime, but according to Neal Van Lieu, Defense Commissary Agency, grocery manager, the average savings over off-base groceries is 31.5 percent.

The savings are meant for members under the Status of Forces Agreement (SOFA), and those who are not in SOFA status are in violation of Japanese customs law.

Having the customs law prevents damage to the Japanese economy, Smith explained.

The current regulations forbid gifts to Japanese nationals with a value of $25 or more. Anything in excess of that price is punishable under the Uniformed Code of Military Justice, for service members.

Smith said, however, service members are not the biggest offenders.

"In my experience," Smith stated, "it has been mostly family members who try to purchase things for local nationals."

If a civilian dependant is apprehended he must see the Station inspector. A temporary identification card will be issued, and his driving, commissary and exchange privileges will be revoked. In addition, if a vehicle was used in the transfer of tax-free goods it will be impounded until the case is resolved.

Furthermore, Smith added that Japanese authorities can also prosecute the individuals involved. Commissary employees stay on the lookout for suspicious activities, Van Lieu said.

"If we see someone purchasing quantities of items that couldn't be consumed by a large family in a month's time, we report it to the Provost Marshal's Office," Van Lieu said.

Smith, who also served as an investigator in Okinawa, said black marketing can come in many forms. While in Okinawa, he observed people using a technique called circumvention to try to beat the system already in place.

"Stores use an overpurchase record slip when someone buys five cases or more of beer. This slip helps them keep track of suspicious activity, but by using circumvention the black marketer goes from base to base buying four cases of beer at a time leaving no record of their purchase," Smith explained.

This can be easily accomplished on an island like Okinawa where there are many bases with many places to buy alcohol from, Smith said.

This is where CID takes a proactive approach combining witnesses and
surveillance to catch perpetrators in the act of exchanging the tax-free items.

Catching black marketers, however, isn?t all that difficult, according to Smith citing an incident he observed in Okinawa.

This blatant attempt at resale of tax-free alcohol occurred when a woman drove a van without any seats, stopping at every seven-day store in Okinawa. After every purchase she would cover the cases of beer up with a blanket. CID followed her off the base and apprehended her once the illegal transaction was made.

For Marines, Smith said, love and affection sometimes has a lot to do with this illegal activity.

"Service members start dating a Japanese national and want to help the family by buying groceries at a reduced price. It seems innocent, but it's illegal," Smith said. "My best advise to Marines who want to help out a Japanese family financially is to help them shop outside the gates."

All confiscated merchandise is held for evidence by Station authorities. Once the case is prosecuted the goods are destroyed.

Smith said Marines who are black marketing will eventually get caught, regardless of how sneaky they think they are. The rules are in place for a reason, he said. If you suspect someone is involved with black marketing contact the Provost Marshal's Office at 253-3303.

Twelve bags of white rice sit in the Criminal Investigations Division's evidence room, here, as its original owner faces charges of black marketing. Once the case is concluded this evidence will be destroyed.
Photo by: Cpl. Robert W. Wynkoop