ANATOMY OF A STING

By Michael S. Serrill

Maybe it was his Runyonesque swagger, or the 6-ft. 6-in., 350-lb. former football linebacker who served as his bodyguard, or his expert craft, which included hiding a key in a potted plant. Whatever the case, Gary Hipple, a U.S. Customs agent based in San Francisco, convinced a group of Chinese arms dealers that he was a Mafia big shot who was in the market to buy guns for drug rings and street gangs. By the time the undercover deal was over, Hipple and his partner, a Bureau of Alcohol, Tobacco and Firearms agent who also posed as a mobster, had persuaded the brokers to smuggle 2,000 fully automatic Chinese-government-made AK-47s into the U.S.

Last week the charade ended with an explosion of headlines, as Customs and ATF agents arrested seven people for illegal gunrunning. U.S. Attorney Michael Yamaguchi described the sting operation as the largest seizure of fully operational automatic weapons in U.S. history. The diplomatically sensitive source of the guns: two state-owned arms manufacturers in China, Poly Technologies and Norinco. The president of Poly Technologies, a defense corporation controlled by the People's Liberation Army, is He Ping, the son-in-law of Deng Xiaoping.

The operation began in 1994, when an informant told Hipple that a Taiwanese businessman named Hammond Ku was looking for ways to circumvent Customs. Hipple arranged a meeting and to impress Ku took along fellow agent and former Green Bay Packer Byron Braggs. Ku allegedly set up a test: he had a suitcase of weapons parts flown from China to the San Francisco airport. Hipple duly carried the case past Customs and stashed it in a locker, telling Ku he would find the key in a nearby potted plant.

With that, the sting was on. According to the 34-page criminal complaint filed in San Francisco's U.S. District Court last week, Hipple helped Ku smuggle in 20,000 machine-gun stands. Ku then told the agent to fax his weapons wish list to Ku's secretary, using code words: "apples" for automatic weapons; "Alpha Kings" for AK-47s; "poppers" for grenades. Later a Florida ATF agent was introduced to Ku as an arms dealer interested in machine guns. Eventually the undercover team negotiated an order for 2,000 AK-47s. They paid Ku and his associates $700,000 in cash and wire transfers to Beijing and Hong Kong bank accounts.

Ku made clear that he was acting as a middleman for Chinese arms dealers, including Robert Ma, head of U.S. sales for Poly Technologies, and Richard Chen, U.S. representative for Norinco. It was Ma, according to last week's complaint, who arranged for shipment of the rifles. They arrived in San Francisco aboard a Chinese freighter on March 18.

Once the transaction was completed, according to court papers, Ku reported that his contacts at Norinco were eager to continue. Customs agents say Ku offered a variety of larger arms, including surface-to-air missiles that he boasted "could take out a 747." Customs didn't have any more money to spend but delayed making arrests. "We were trying to lure the large business figures [in China] to the States," says Rollin Klink, head of Customs in San Francisco. Officials finally sprung the trap after learning that the New York Times and the Los Angeles Times were on to the sting. Still, one important figure, Ma, is at large and may have escaped to China. Ku and Chen are under arrest, along with several Chinese and American collaborators. And those amateur actors at Customs and ATF are still laughing at their successful masquerade.

--By Michael S. Serrill. Reported by David S. Jackson/San Francisco and Elaine Shannon/Washington

With reporting by DAVID S. JACKSON/SAN FRANCISCO AND ELAINE SHANNON/WASHINGTON