Federal prosecutors are charging nine longshoremen from the Port of New York and New Jersey, and thirteen others, with trafficking drugs and defrauding investors.
Tuesday at the Manhattan headquarters for the United States Attorney Southern District, US attorney Prett Bharara said cocaine was being loaded onto container ships in Panama by a drug trafficking ring there and offloaded by longshoremen at the port.
Bharara alleges the longshoremen were paid between $50,000 and $100,000 per duffel bag that was offloaded from the container. A longshoremen could potentially make as much for offloading a single duffel bag as he might earn in an entire year.
Drug trafficking charges were brought against eight longshoremen and two others and 1.3 metric tons of cocaine destined for New York City and beyond was intercepted.
In addition, one longshoremen and ten others were charged in a scheme to defraud investors. Federal prosecutors allege the charges stem from a classic pump and dump scheme with modern twist. The defendants used social networking sites like Facebook and Twitter to spread false information about thinly traded stocks to pump up the price. Then, when the misinformation campaign was complete, they dumped those stocks for a pretty profit and left innocent investors holding the bag, said Mr. Bharara.
It is estimated the defendants earned $4 million from the scheme and defrauded investors of $7 million. Investigators discovered the alleged fraudulent trading while conducting the drug trafficking probe at the port.
The involvement of longshoremen in both alleged operations raises security concerns. Mr. Bharara said that by law, longshoremen have special access to restricted areas of the port, which enabled them to offload narcotics away from law enforcement.
"The public places great trust in the longshoremen who work at our ports and that's because we have no choice. But their integrity is all that stands between our border and those who would seek to bring contraband and worse into our country," said Bharara.
The port is the third largest in the country and Bharara said no one wants to see it return to the days when it was a hub of criminal activity.