How a Spy Shop Owner Led a Double Life...as a Spy

UNCORRECTED PROOF of FORTHCOMING ARTICLE

In April of 2002, as workers continued to haul away rubble from the September 11 terror attacks in New York City, a mysterious private company decided to go public, offering its shares on the New York Stock Exchange. Communication Control Systems was the world’s largest supplier of spy gadgets. In cities across America, it operated Counter Spy Shops, which featured secret sales rooms hidden behind bookcases. They sold anti-bugging equipment, bulletproof clothing, and night-vision goggles to jealous spouses and paranoid businessmen. The owner of CCS was even more intriguing. Benjamin Jamil was a former Brooklyn taxi driver with a long scar beneath his left eye, who the New York Times described as “the outfitter to the suspicious.”

In August, Times reporters had visited Jamil’s headquarters in New Rochelle, just north of Manhattan. He showed them fountain pens that recorded conversations, teddy bears with spy cameras for eyes, and other devices that were cutting edge at the time. Jamil, the son of Yemeni immigrants, proudly posed for photos with his wife, Marsha, who was the firm’s marketing director, and his glamorous daughter Arielle, head of public relations.

The Jamils had taken the business public after two passenger planes destroyed the World Trade Center, Jamil explained, because Americans needed to feel safe again. “The rose-colored glasses are being taken off,” Jamil said, dressed impeccably in a suit and tie. “There’s public acceptance that the good days are gone and that there are serious people out there who hate us. The technology that we have developed is giving us a serious advantage.”After CCS had opened a store on Madison Avenue selling hazmat suits, gas masks, and bulletproof leather jackets, sales of personal security equipment shot up from $2.25 million to $4 million.

Jamil had designed many of the gadgets himself, and was cagey about his client list. “Confidentiality is the cornerstone of our business,” Arielle interjected, carefully.

Investors might have wondered how this family company, nestled in suburbia between a Chevrolet dealership and a Pizza Hut, boasted revenues of $350 million. Like his teddy bears and fountain pens, there was more to Benjamin Jamil than met the eye. 

Not included in the Times profile were suspicions published by Britain’s New Statesman that Jamil had once been mixed up with the Mafia, or any mention that his company had once pleaded guilty to selling dangerous equipment to foreign powers, including Syria. The newspaper also failed to report that in the late 1980s Jamil had become a government informant, and turned his stores into spy traps. 

Jamil’s undercover exploits, in which he set up sting operations posing as “Hugo Black,” are now told for the first time through interviews with his former staff, rivals, court documents, and declassified CIA documents. It’s a true story of American espionage that, as one judge put it, has “elements of mystery and double-dealing that would be quite at home in a John Le Carré novel.” 

It all began in a vintage furniture store in Manhattan in the late 1950s. Benjamin Jamil was a 26-year-old salesman surrounded by broken nicknacks and unpaid bills. Then, one day, a sailor walked in carrying a box of antiques from his travels. Among the junk was a vintage Scandinavian “cradle” telephone. It was tall, elegant, and sold immediately, firing up the money-making synapses in his head. Jamil flew to Denmark and bought every cradle telephone he could find. As the ’60s dawned, the off-beat phones quickly became a hot item in Manhattan, and then America. He sold thousands to high-end department stores, and one to Mrs. Kennedy for the White House. He would never have to drive a taxi again.

One afternoon a woman arrived at his store carrying a tall, French telephone with two earpieces. The idea of two people listening to the same call intrigued Jamil, as did the owner, Marsha Pearl. “I tried to buy it and kept staving her off for three years. She’s now Mrs. Ben Jamil,” he later said. He soon had a thriving business, a glamorous wife, and a child on the way. The telephone, an object that had come to define human connection, had completely rewired his life. 

Next, Jamil figured out how to rig telephones to intercept conversations. When a customer asked if he could check if his girlfriend was two-timing, Jamil invented the first commercial phone “tap.” Next developed a line of bugging equipment to help companies spy on their rivals. His business, Continental Telephone & Radio Supply Co., had offices on West Forty-sixth Street, and placed adverts in newspapers that asked: “ARE YOU BEING BUGGED?” 

The Cuban Missile Crisis intensified America’s Cold War paranoia in 1962, the same year the first James Bond movie, “Dr. No,” hit theater screens. Americans became obsessed with espionage and national security. “Especially when the first rash of hijackings to Cuba began to hit American airlines,” Jamil later recalled in an interview with Wall Street Transcript. In Manhattan, next to a religious book store, he opened the world’s first dedicated spy shop. There he sold exotic counter-surveillance doodads like spectrum analyzers, domain reflectometers, and night-vision goggles. 

Inspired by 007, Jamil invented an “olive-in-a-martini transmitter” that eavesdropped on cocktail conversations (the antenna was the toothpick). Like Bond’s “Q,” he hid cameras in cigarette packets, and microphones in sugar cubes. Jamil looked like he belonged in a spy movie, too. The long scar beneath his left eye (from a childhood accident) leant his face a sinister look, and he spoke with customers in English, French, Arabic, and Russian. As America entered a new era called the “Big Snoop,” newspapers started to call Jamil “the bug man.”

“Business keeps going up like a Coney Island sky ride,” he boasted in one interview. “If you’re not bugging this year or being bugged, you’re not in.” It was true. The FBI bugged gamblers in Las Vegas, the IRS listened in to tax cheats, and gangsters eavesdropped on their rivals. 

Soon Jamil had rivals of his own. Emmanuel Mittleman, of Lower Manhattan’s Wireless Guitar Company, soon expanded his range of musical gadgets to include spyware. He invented a “harmonica bug” with a hidden transponder that activated when the owner blew a certain tone. The Wall Street Journal called Mittleman “the Henry Ford of bugging,” and soon Mittleman and Jamil were shaping up for a dirty battle to become the King of the Snoopers—until lawmakers stepped in. 

In 1966, both men, and other smaller rivals, were indicted before a grand jury investigating potential bugging offenses. The jury was hung; charges were dismissed. Then, two years later, during what the Boston Globe called a “bugging hysteria,” lawmakers enacted the 1968 Omnibus Safe Secrets and Crime Act, making bugging illegal, with a sentence of up to five years in prison or a $10,000 fine. 

Jamil’s rival, Mittleman, was arrested after being caught selling bugs in Akron, Ohio. An assistant district attorney described him as “a national menace,” and sentenced him to six months in prison. Jamil? He simply pivoted to selling anti-bugging equipment. In the game of are you being bugged? (a game that Jamil invented), the poacher had turned gamekeeper.

Jamil dreamed of opening spy shops in major cities all over the world. If Mittleman was the Henry Ford of bugging, he would be spycraft's Neiman Marcus. According to the New Statesman, he turned to an unusual source of financing: Jerry Daniels, aka “the Sex King of Eighth Avenue.” The magazine alleged that Daniels introduced Jamil to his financiers, Ben Cohen and Matthew “the Horse” Ianniello, members of the Frank Tieri Mafia family. They allegedly funneled cash from illegal massage parlors to help him open more spy shops. This marriage of spycraft and sex became visible in Jamil’s catalogs, which read: “TO SATISFY THE SPY IN YOU.”

Inside a flashy new CCS store in Manhattan, Jamil built a large display room that boasted a glistening array of spyware and gadgets. He sold telephone scrambling devices disguised as cigar humidors, bulletproof vests that looked like tuxedo shirts, and cigarettes with a hidden homing device. A journalist who toured the store wrote that Jamil’s eyes glowed as he showed off his “gee-whiz marvels,” including an electronic hanky that turned a woman’s voice into a man’s; a wristwatch that squirted tear gas; and bullet-proof underwear. The store became a source of national curiosity, and Jamil appeared on “The Mike Douglas Show.” Jamil even claimed to have worked on equipment which “aided and supported the successful Apollo 11 moon landing.”

By 1979, Jamil had opened offices in New York, Miami, Los Angeles, Seattle, Washington, and London. “Five years ago I started out so broke that I needed a co-signer at Chase Manhattan for a $100 loan,” Jamil told Esquire. “Now we gross four-and-a-half million a year in security equipment alone. In this business I’ve found everyone wants to snoop on his brother.”

Key to his success was a high-performing sales manager he had found in Paterson, New Jersey. Carmine Pellosie had only scraped through high school, but had parlayed a career as a bail bondsman into a job as head of security for a local bank. Pellosie, who wore a thick black beard and aviators, was an honorary member of the International Brotherhood of Mercenaries. He carried an air of mystery and a membership card printed with his next of kin, “in case of death.” He was a born showman. “I was great. I was dynamite,” Pellosie says. 

Pellosie had fallen in love with spy gadgets after spotting an ad in the New York Times for a voice stress analyzer. He tracked down the inventor, requested in-person training, then broke out on his own as a one-man lie detector. “Carmine Pellosie,” said one Las Vegas casino owner at the time, “can do things James Bond never heard of.” 

Pellosie agreed to work for Jamil on one condition: that after a year of service Jamil would award him five percent of the business. “I don’t want to work for you. I want to be a partner, even a small partner,” Pellosie recalls telling him. 

Pellosie says that Jamil had been up front about his trouble with organized criminals. According to Pellosie, Jamil admitted that one time, back in 1968, shortly after lawmakers made bugging illegal, Jamil had over $200,000 of bugs waiting on the dock in New York. “Customs sat there for months waiting for somebody to come and claim them…You know, he borrowed the money to buy the shipment. And then he couldn’t take the shipment. They were after him…he disappeared for a while. They were gonna shoot him.”

Pellosie says that “most” of Jamil’s business was legitimate. “He had an engineer that had a master’s from MIT. They designed a product that tells you when there’s a bug in your presence. And the device cost—the parts and components together—maybe $30. But he sold it for $2,000. Guaranteed for life. Because if it broke, we’d just send another one out.”

CCS charged up to $20,000 for a bug sweep, and $5,000 for voice stress analysis, plus travel. They soon boasted a client list including the United States Navy, Xerox, and various Fortune 500 companies. One day, the Osmond family called, after competitors had seemingly stolen their unique idea for a game show. The family were convinced their office was bugged. (It was.)

Recalling his life working for CCS, Pellosie says: “A lot of it was comical.” The store became a magnet for spies, spooks, and soldiers of fortune. “It was like ‘The Sopranos,’” he says: Every week there was a new drama. “Whack jobs” came in off the street claiming they were bugged by ray beams from Mars. “We had a lot of politicians we used to take care of with anti-wiretapping, debugging,” Pellosie says. They sold products to John Connally, the one time governor of Texas who was shot while riding in President Kennedy’s car when the president was assassinated.

One day a man wearing an eye patch arrived at CCS, flanked by Uzi-toting bodyguards. Pellosie recognized him as Moshe Dayan, Israel’s infamous former defense minister. Jamil framed his check. Everything was about optics and public relations, Pellosie says. They supplied gear to the cops in “Miami Vice.” Author John Gardner, authorized by Ian Fleming’s estate to pen a new James Bond novel, wrote that CCS equipped Bond’s Saab Turbo with special gadgets. Other clients included actor George Hamilton, who played the lead role in a television series called “Spies.”

But behind the scenes, Jamil had started to violate U.S. export-control laws, the Washington Post later reported. Pellosie says those allegations were unfair. “Jamil, I can tell you, never wanted to get arrested, because he had too much to lose.” When suspicious characters asked for bugs and didn’t pass Pellosie’s sniff test, he says he pulled out a framed display of beetles and insects and asked them to choose one.

“I’m a disabled American veteran,” Pellosie says. “So anybody who had any truck with the American government…they didn’t even get into my office. They brought a guy from the IRA to my door. And I just said, ‘hit the road, get out of here.’” Ideologically Jamil was the same, Pellosie insists. “He was a black belt Jew…he wouldn’t drive a Mercedes German car.” 

Soon Jamil and Pellosie were building automobiles of their own. “For $300,000, I can build you a car that will deflect a .20 millimeter rocket,” Pellosie liked to say. One night he stood outside Jamil’s house in White Plains, New York, and fired a machine gun into one of their armored cars, just to test it out. “The beauty of this business,” Jamil liked to say, “is that if you can imagine a device, it can probably be built.”

Sometimes Pellosie and Jamil bickered like a married couple. “He would nickel-and-dime you to death,” Pellosie says of Jamil. “If you ordered 2,000 resistors he would count them.” Resistors were sixty cents each, he adds. Yet, when Pellosie’s father got lung cancer and the engine blew on his car, Jamil loaned him $16,000 for a new Cadillac. “Now, what boss does that?” Pellosie asks.

In the late 1970s, Jamil struck up a relationship with the Shah of Iran, one of the world’s richest men, and the survivor of a recent assassination attempt. A bomb planted by Soviet spies had failed to explode beneath his car. The detonator, controlled by a TV remote, had malfunctioned. Jamil sold the Shah security equipment and in return was introduced to arms dealer Adnan Khashoggi.  

At just over five-feet tall, the mustachioed Saudi was Jamil’s ideal customer: paranoid and rich. Khashoggi had a personal bodyguard nicknamed Mr. Kill, and lived aboard the world’s largest private ship, a bulletproof 281-foot yacht called Nabila. Below deck, the yacht boasted an owner’s suite with a ten-foot-wide bed, and a secret passageway to smuggle in his “pleasure wives.” But Khashoggi’s wife, Sandra Daly, had hired a private detective to catch him cheating. Khashoggi wanted to monitor her calls. That was when he and Jamil hit it off.

In 1977, Khashoggi leased Jamil an office in ritzy Belgravia, London’s Beverly Hills, for a CCS store. Jamil hired a manager from New York to run the store. Joanne O’Neill was an unassuming blonde who wore a pearl necklace as she described CCS products, including a light gun that caused “temporary blindness for three to four hours.” One of O’Neill’s first duties in October 1977 was to field questions from journalists after the store was raided by Britain’s Special Branch police and Anti-terrorist squads. 

For the Shah of Iran, Jamil designed and built a bullet- and bomb-proof Cadillac that could repel attackers with a machine gun mounted in the dashboard. The back seats were booby-trapped with shotgun shells, which could blow up beneath an unwanted passenger. During a car chase, the rear bumper could spill 30 gallons of slippery diesel fuel. “If all else failed,” Jamil said, “there was a mini motorbike in the trunk capable of 65 mph.” 

“This car could drive through hell,” Pellosie told reporters at the time. Even though the Shah pulled out of the purchase, the press coverage for CCS was priceless.

“Ben was in a really good spot,” Pellosie recalls. Together, the two men liked to sail off the coast of Long Island in Jamil’s customized, bulletproof sailboat. They caught lunch from the shimmering schools of migrating bluefish that Marsha served with fresh salad. “He was living the dream,” Pellosie says, a dream that he extended to other, less fortunate immigrants. 

As part of a government program that gave businesses a tax break to hire foreign workers, Pellosie says, Jamil brought 30 talented workers to the United States. “One guy had worked on nuclear submarines. They had audio engineering degrees and electronic engineering degrees. And next thing we know NSA walks in. Hired two people away from us.” Jamil helped another employee start a taxi cab business.

By now, Jamil’s children were showing a keen interest in the business. Lydia, who studied design and fashion in Italy, invented a $5,000 necktie with a hidden camera; Elan focused on product development.“His son was being groomed to take over the business,” says Pellosie, adding that he had not inherited his father’s gift for sales.

But there was trouble brewing with some unhappy customers. Jamil had sold anti-bugging equipment to the Greek government, who were furious when it didn’t work. He sold telephone scrambling equipment to an Italian gentleman representing customers in Libya. When the Libyans also discovered their equipment didn’t work, the middle-man, Francesco Bilotta, 41, threatened to sue Jamil. 

CCS soon had other problems. A rival company was ripping off their gear, swapping out the CCS logo on a bugging kit and advertising it as their own in Playboy. A furious Jamil filed a lawsuit. He fiercely defended his company’s reputation as the world’s number one spy shop, and sought to become the go-to spokesperson for security matters in the media. 

As the U.S. prepared to host the 1980 Winter Olympics in Lake Placid, fears were growing about a potential security breach after a terrorist attack at the 1972 Summer Games in Munich left 17 dead. Jamil donated $100,000 of security equipment and took out full-page newspaper adverts calling CCS the “official security supplier to the Olympic Games.” But as the games drew nearer, the U.S. government started to take a closer look at his operation.

On March 7, 1979, at New York’s Kennedy airport, special agents from the United States Customs Service crowbarred open several wooden CCS boxes bound for Beirut in Lebanon, via London. Inside they found a number of counterespionage devices and learned that the sender had not filed the required paperwork. 

Jamil’s lawyers said the shipment contained innocent tools used by television repairmen repackaged as “bug detectors,” but U.S. Customs claimed the boxes contained 40 sniper scopes destined for the Palestine Liberation Organization. A CCS spokesman suggested that a “jealous competitor” might have planted them. “We’ve never made guns of any kind,” the company insisted. But the heat was now on.

The next day two U.S. Customs special agents banged on the door of the CCS office in Manhattan, flashed a search warrant, and turned the place upside down. Jamil and Pellosie could only watch. Jamil hastily arranged a meeting with his Lebanese buyers and, in his attorney’s office, Jamil protested that he believed the final destination of the equipment was London.

“To Beirut,” argued the buyer, in Arabic.

“You never said that,” Jamil insisted, as tempers flared. A U.S. Customs agent had hidden a wire on the Lebanese gentleman, and Jamil found himself at the center of a major investigation. A government audit threatened to lay bare all aspects of his business, which, according to his 1979 tax return, was enjoying revenues of $18 million. 

The rumors that Jamil had sold products to Libya was particularly troubling to the Olympic Committee, who tore up his contract. An attack on the U.S. embassy in Tripoli that December had prompted the American government to designate Libya as a “state sponsor of terrorism.” Then, in January of 1980, the New York State Select Committee on Crime published a report that dragged up Jamil’s past links to organized criminals, making headlines around the world. “He was pissed, like you couldn’t believe,” Pellosie says. “It was really journalism that did it to him.”

In a letter to the Washington Post, Jamil’s attorney insisted that CCS had “absolutely no organized-crime connections,” and “never knowingly” dealt with terrorist groups. Pellosi agrees that the government’s allegations were “horseshit,” explaining that Jamil was not a member of the Mafia, even if its members were clients. “Did they invest money? Yes, they did,” he says. “Did they buy from CCS? Yeah.” 

A damning exposé in a 1981 edition of Britain’s New Statesman titled “Spooks, Crooks, and Bunglers,” portrayed Jamil as a blundering fraud. A security expert told the magazine that his gadgets were bunk, and that the best anti-bugging tool was the “Mark One eyeball—second to that, a screwdriver.” The article concluded: “British and American security authorities now consider CCS to be a menace.”

By then, a grand jury in Brooklyn had investigated whether CCS had violated export control laws, and charged Joanne O’Neil, the American manager of the London store, with perjury and obstruction of justice. By March of 1981 she had vanished, pearl necklace and all, with international police hot on her heels as a fugitive. Eventually she was seized and had her passport confiscated, recalls Pellosie. “I was there one night when she was crying,” he says.  

The U.S. government slapped Jamil with an indictment accusing him of “selling military and counterespionage devices to foreign interests in violation of U.S. arms and export-control laws.” This came with the threat of decades in prison. Desperate to escape prosecution, Jamil contacted the U.S. Customs agent in charge of his case, Special Agent Romeo, and agreed to become a government informant. 

Later in 1982, Jamil allowed government agents into the Manhattan office where they installed hidden video cameras and bugs. Jamil hid this from his staff, even though he employed the world’s leading bug detectors, and his customers were paranoid, unpredictable men. New York City arms dealers were not the type of guys you wanted to cross. One local gunrunner had been indicted for selling a torture rack to former Ugandan dictator Idi Amin.

Around that time, Francesco Bilotta, the Italian middle-man who had sold Jamil’s goods to Libya, filed a lawsuit against CCS claiming that its scrambling equipment didn’t work. Jamil had found his first victim. In 1983 he invited Bilotta to the office and discussed selling him an anti-tank device, a computer-controlled tank, and a naval patrol vehicle, all for an attractive price of $10 million. While the tapes rolled, Jamil handed Bilotta a free sample of camouflage netting, which he knew was illegal to ship to enemy countries. U.S. Customs special agents tailed Bilotta to Libya. When he returned to his sublet apartment on East 83rd Street in New York, they burst in and arrested him.

Meanwhile, Pellosie started to notice strange things at work. His bug detectors kept squealing. In addition, “there was one room that I could never get in,” he recalls. Not even with his master key. “I always wondered, what the hell is in that room?” 

One night, Pellosie, a talented lock picker, jimmied open the door. He says he knew government equipment when he saw it. “Our stuff was a lot better,” he says. When Jamil found the door open, he confessed. “So Ben said to me, ‘Carmine, we’re gonna inform to the government on everybody that buys products that could be illegal,’” he recalls.

“This is the most dangerous thing you can do in the world,” Pellosie recalls telling his boss. Weird things had started to happen at Pellosie’s home, too. “I got a call at my house at my unlisted number,” he says. “And the voice said to me, ‘We know who you are, and where you are.’” Murder for hire plots were common among arms dealers. Pellosie says he once received a threatening holiday card with a picture of a machine gun decorated like a Christmas tree. 

Pellosie says he refused to participate in the sting, and his relationship with Jamil soured. “I said, ‘I’m sorry. But I’m not going to take that course, these people are too dangerous. I got a family, a wife, and a kid. I’m not gonna do it.’” He says Jamil refused to give him the five percent stake in CCS, and offered him a new role holding sales seminars in Toronto, Miami, and London. He was being ushered out of the way. 

Pellosie didn’t mind, and focused on making his seminars legendary, he recalls. “The assistant attorney general from one of the states was sitting right next to one of the presidents of a motorcycle gang…I would have the whole homicide division of a police department in my class, and then sitting right next to them is a guy who owns fifteen acres in Maui who grows grass… Maui Wowee.”

Meanwhile, the U.S. Customs agents were listening to every word of Jamil’s business conducted in the conference room. They watched as he sold a briefcase with a hidden bottom to an international currency smuggler. Jamil was knowingly photographed, filmed, and recorded making deals. Then he handed over the tapes to Agent Romeo, slowly buying his freedom. But to escape prosecution, protect his legacy, and his childrens’ futures, the agents urged him to reel in a bigger fish. 

“I saw what was going on with Ben Jamil,” Pellosie recalls. “They were crucifying the poor bastard. I mean, they don’t play fair. Do you think the American government plays fair?”

Jamil's next target was a 49-year-old arms dealer who wore a deerstalker hat and a mustache that recalled Inspector Clouseau in “The Pink Panther.” As a child Solomon Schwartz had fled Austria with his family as the Nazis closed in. In the 1960s, he attended school in Cuba, which by then was a hotbed of spies. After that, not much is known about his life until the 1980s, when he emerged as an advisor to HLB Security Electronics Ltd., a shadowy cabal of New York-based arms dealers that comprised Leonard “Lenny” Berg, Leon Lisbona, and Grimm Depanicis. Depanicis tells me that HLB was a direct rival to Jamil, who he describes as “a strange guy.” Jamil was ruthless in business, he says. “You know, anything to make money.”

U.S. Customs had become aware of Schwartz in the summer of 1982, when they investigated HLB for selling guns and ammunition to the Iraqi National Police. Soon, investigators discovered that HLB had sold $7 million worth of night-vision devices to an Argentine businessman, which were used against the British in the Falkland Islands War. “These people are in it for the money,” added the U.S. District Attorney David Kirby, describing Schwartz and his colleagues. “They’re willing to sell to just about anybody.” 

In June of 1983, when an HLB executive approached Jamil about a business opportunity, Jamil saw a chance to sink a rival while appeasing his U.S. Customs handlers. HLB told Jamil that the company could supply military night-vision devices to any part of the world without U.S. State Department licensing. Soon Jamil was planning a sting operation.

Agent Romeo instructed Jamil to order 400 night-vision goggles from HLB. In his bugged conference room, Jamil told HLB that his buyers were in the Soviet Union or East Germany, communist countries to whom it was illegal to send arms. Jamil recorded numerous conversations between himself and Schwartz’s associate, Lisbona (who is now deceased). Lisbona told Jamil that there was “a way to do it legally.” U.S. Customs agents understood this to mean submitting false paperwork that stated the buyer was in West Germany, an American ally. 

“But you know where they’re going,” Jamil said.

“No, I don’t want to know where,” Lisbona replied, as the wheels of a tape recorder quietly rolled. Jamil asked HLB to send a sample pair of goggles to an address in East Germany, purportedly to allow the buyers to examine them, but actually to catch the men in a crime. 

The goggles were safely intercepted by U.S. Customs agents, and Schwartz, Lisbona, Berg, and Depanicis were quickly arrested. The government also charged Schwartz with selling 1,300 night-vision devices to Argentina, attempting to sell 110 boxes of shotguns, handguns and ammunition to the Iraqi National Police, and selling 500 combat rifles and 100,000 rounds of ammunition to Poland.

In April 1986, Francesco Bilotta, the Italian arms dealer to whom Jamil had sold the camouflage netting, and two foreign associates, were found guilty of scheming to smuggle exotic military equipment worth more than $30 million from the U.S. to Libya. Bilotta’s attorney complained that the operation amounted to entrapment because the undercover informant, Jamil, had set up the sting in revenge because of the lawsuit Bilotta had filed against him. 

Two years later, Jamil testified during a four-month jury trial in Brooklyn, in which a prosecuting attorney described Schwartz and his colleagues as inhabiting “a shadowy world of intrigue and deceit, untrammeled by truth.” 

Then came a twist. In court, Schwartz claimed that he and his collaborators were secretly working for America’s Defense Intelligence Agency. The group’s arms dealing activities were part of an elaborate plan to obtain two Soviet T-72 tanks and anti-aircraft missiles and launchers on behalf of the Pentagon, he claimed. The tanks were the Russian’s secret weapon in a bid to win World War Three. Schwartz’s lawyer Lawrence Dubin told the court that Jamil’s sting had simply uncovered “a complicated series of transactions [designed] to help get Soviet tanks to benefit our government.”

Tellingly, when Schwartz provided bail, one of the people who backed his bond was Kevin Katke, a janitor at a Macy’s in New York. Katke was also a professed FBI informant and go-between to Oliver North, the former adviser to the National Security Council who was later found guilty of dealing arms in the “Iran-Contra” affair. And, while Schwartz was out on bail, he did not help his case by working on a plot to hire eight American mercenaries to overthrow the government of Ghana.

In court, Dubin said that the U.S. government was so desperate to obtain the tanks for study that it was willing to pay his client, Schwartz, $4 million to $6 million for each tank. This incredible claim was put to several government officials, who testified that they had met with Schwartz but denied encouraging or approving any illegal acts. The prosecutor, Larry Krantz, said the unsuccessful deal to acquire the tanks did not lessen the defendant’s guilt. At one point, the judge suggested that the defendants’ lawyers had read “one spy novel too many.”

Schwartz, Berg, and Lisbona were convicted of racketeering, wire fraud, and conspiracy to violate the Arms Export Control Act. DePanicis also was convicted of conspiring to violate the Arms Export Control Act. Pellosie tells me that Schwartz and Co. really were working for the U.S. government as civilian operatives, doing dirty work that could be plausibly denied. He says the CIA denied all knowledge, and watched them burn. Not knowing that this information had become public during the trial, Pellosie threatened that he would hit me in the knee if I wrote about it.

During the trial, Jamil’s testimony created over four hundred pages of trial transcript as he ratted out Schwartz and HLB in exchange for his freedom. He sank his business rivals and sent real arms dealers to prison. In a letter to the judge, the prosecutor noted that Jamil did this at “significant risk to himself.” The undercover stings, he added, led to at least six federal investigations into allegedly illegal exports of espionage equipment. According to one assistant U.S. attorney, Jamil’s incredible double life helped to stop attempts by enemy agents to purchase technology “critical to the security of the United States.”

All charges against Jamil were dropped, but as part of the arrangement, CCS pleaded guilty to charges of illegally selling equipment to Syria, Guinea, Switzerland, and Greece. CCS was fined $10,000—less than a morning’s takings at the Manhattan store. His cover was also blown when a Washington Post headline screamed: “SPY-SHOP OWNER SAID TO LEAD DOUBLE LIFE.” Even Jamil’s employees couldn’t believe it.

“I was not aware that our conference room was wired,” said Carle Lande, who Jamil had installed as company president. “But if what you’re telling me about Mr. Jamil is true, I say, good for him. For an undercover operation to become public like this, I find it mind-boggling. Why would you want to expose such a thing?”

CCS carried on doing business, but without Carmine Pellosie. “We were enemies when I quit,” he says of Jamil. He also says he financially benefited from the demise of Schwartz and his colleagues. “When they went to jail, I bought their catalog and I reprinted it as mine,” he admits. After effectively stealing their business, he started selling spy gear to the El Salvadoran police force, and to Mafia boss John Gotti, he claims. 

By then spy shops had become the U.S. government’s secret window into the underworld. “Each one of us, no matter how you got into the business, had an FBI man assigned to us,” Pellosie admits. “I got a real nice guy that came to me when I opened my office.” But he soon became frustrated by the FBI’s involvement in his affairs. In 1996, the FBI arrested a former KGB spy named Vladimir Galkin, who was on his way to meet Pellosie in New Jersey to discuss selling bugs to Russian police forces. (Pellosie was not charged).

After Jamil’s spy shop sting operation hit the news, the Washington Post wrote that it was “not clear” if he was still working for the government. The CCS store in Washington, not far from the White House, boasted a serious collection of spy memorabilia, including gadgets that traveled aboard the Apollo 11 mission, night-vision goggles worn in “The Silence of the Lambs,” and surveillance equipment from the secret spy room in the 2000 movie “Meet the Parents.” How, I wondered, had this been possible? Was Jamil, at least at that time, in the government’s “circle of trust”? Clerks at a U.S. courthouse in New York told me that almost all the documents detailing the spy shop stings have mysteriously vanished. 

Until the turn of the century, Jamil’s spy shops still attracted mysterious people looking for something more serious than a trick fountain pen. In Beverly Hills, a West Coast salesman, Tom Salway, made this strange comment to a reporter: “If the biggest drug dealer in the area comes in, I will sell to him. It’s America and everyone has a right to own this equipment.” Clients were all ushered behind a fake bookcase and into a secret room, where America’s first spy family tried to figure out their intentions. In their interview just after the September 11 terror attacks, Arielle Jamil told a reporter, “We are the good guys.”

Her father added somberly: “We are at war.”

As times and technology changed, so did the spy biz, and not for the better. In 2002, not long after Jamil took CCS public, it lost its line of credit. This time he didn’t look for funding from organized criminals or Middle Eastern royalty. Instead he pumped $2 million of his own money into the business. A company controlled by his wife invested a further $660,000. But the gas mask panic after September 11 turned out to be short-lived, and for the next six years the store’s profits vanished like disappearing ink. “When the sales didn’t match the projections…the investors sort of cooled and went on the back burner,” Jamil admitted in an interview with Wall Street Transcript.

By then, the U.S. government had cracked down on the entire spy shop industry, arresting anyone selling illegal equipment to perceived enemies of the United States. The Internet also made spy gadgets cheaper and more accessible. By the end of 2005, Jamil had sold his retail network of spy shops. He focused on his corporate clients, but in March of 2008, a problem with export licenses left him in dire straits. Customers sued him for failing to deliver almost $1 million in orders. Owing $7 million to creditors, Jamil reluctantly filed for bankruptcy and admitted his spy shop dream was over. 

Jamil, who is 91, did not agree to give an interview, nor did his children. But I did discover that spycraft still runs in the family. Jamil’s son Elan works in cyber security, and Arielle has performed public relations for the same company. It’s satisfying to imagine the next generation of Jamils using decades of espionage experience to solve the high-tech crimes of today. In a text message conversation, Arielle refused to answer questions about her work, but I saw that she and her brother have worked for a company ​​that sells antivirus malware, spyware, and ransomware detection. It brings to mind their father’s newspaper adverts from sixty years ago, that asked: ARE YOU BEING BUGGED? ★