Chills, Inc. Paraphernalia Bust Puts Big Chill on Industry, Pipe Makers Caught in Legal Netherworld 1/25/02

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On September 21, Chris Hill was the All-American guy, a young, determined Florida entrepreneur who had turned a shoe-string operation into a small business success story. His firm in Sarasota employed 35 people, he had been nominated for the "Small Business of the Year" award by the county Chamber of Commerce, and he was an honorary co-chairman of the National Republican Congressional Committee's Business Advisory Counsel. He was even considering a run for the local Republican congressional nomination. The next day, he was an indicted criminal looking at a potential stay in federal prison. A bevy of armed federal agents bearing a warrant from Des Moines, IA, ransacked his home and business, padlocked his warehouses, seized his house, business, and vehicles, and dragged him off to jail as his two daughters, ages one and three, looked on. And, says Hill, to add insult to injury, the raiders also stole $900 in cash.

(Mark Hein, the resident DEA agent in charge in Des Moines did not return DRCNet calls seeking comment on that allegation or Hill's allegation that 10 DEA agents from Iowa used his arrest as an excuse for a 10-day vacation in the Sunshine State.)

So, what was Hill making? Crack cocaine? Automatic weapons? Bioterror compounds? No, pipes. Big pipes, little pipes, glass pipes, water pipes, dugouts, hookahs. Those devices that people use to smoke dried herbal matter. Some smoke tobacco, some smoke exotic herbal blends, others have been known to smoke currently prohibited substances. Hill was a pipe-maker, and his business, Chills, was one of the nation's largest distributors of pipes. He says his business was legit.

"We're the most conservative manufacturer in the country," Hill told DRCNet. "Our customers have to be licensed tobacconists. We do our own investigations of our customers," Hill said. "If we type in 'bong' on the web and their name pops up, they won't be selling our products any longer. But the government doesn't give a shit about the steps we've taken."

Al Overbaugh, spokesman for the US Attorney's Office for the Southern District of Iowa, where the indictment was filed, scoffed at Hill's protestations of innocence. "The indictment speaks for itself," he told DRCNet. "He'll have his day in court."

DRCNet has obtained a copy of the 16-count indictment against Hill and two former employees. Count 1 charges the trio with conspiracy to sell drug paraphernalia, and there are 12 counts of paraphernalia sales, each based on an invoice sent to a Des Moines store that was raided at the order of the same Assistant US Attorney last year. (Although Overbaugh refused to identify the drug paraphernalia specialist, DRCNet has learned from other sources that he is Assistant US Attorney Lester Paff.) Then, just for good measure, the feds threw in an additional two counts of using the phone to conduct the business. The final count of the indictment authorized asset forfeiture against Hill's home and business and his business vehicles. As a final touch, the indictment allows for the seizure of Hill's personal vehicles if the feds feel the other items "have been substantially diminished in value."

Hill is scheduled for trial in the first week of February. He told DRCNet that government lawyers have threatened to charge him with money laundering and operating a continuing criminal enterprise if he doesn't accept a plea bargain. The latter charge, designed for drug kingpins, carries a 20-year mandatory minimum sentence.

Overbaugh denies this is the case. "We don't threaten defendants," he told DRCNet.

Hill is the only pipe manufacturer and distributor facing felony charges, but he is not the only one who has been raided in recent months, and the industry is running scared. Barmes Wholesalers of Vincennes, IN, was also raided in September and large parts of its inventory seized. Others have gotten out of the business or diversified. No one DRCNet spoke with in the industry wanted to be identified by name.

One online retailer told DRCNet that between the forced closure of Barmes and Chills and the loss of other distributors who have fled the business, they had lost 30% of their product line. "We can't find replacements," he said. "I think it's time to get out of this business altogether. We'll be out as soon as we can find a buyer."

As for getting out of the pipe business, attorney Robert Vaughan thinks that isn't a bad idea. Vaughan, perhaps the nation's leading defense attorney on drug paraphernalia charges, told DRCNet that given the current state of federal law, manufacturers and retailers will be found guilty. Under current federal law as interpreted by the Supreme Court, merely making, distributing, or selling non-traditional pipes is considered objective evidence of violating the drug paraphernalia statute.

"If it isn't corncob or briar, it's paraphernalia in their view," said Hill.

"I may not like the law as it is," said Vaughan, "but I can't lie to these people. You don't have a chance of winning unless you have a bad search and seizure. And if you challenge that and are unsuccessful, you'll really be pissing into a fire then. That means cutting a deal. And with these guys, you have to give up your mother, where she was born, and her maiden name," he said.

"I am not taking any more of these cases," he told DRCNet. "You can't win."

Hill and other manufacturers whose products sometimes end up in the "head shop" market get no support from the tobacco retailing establishment. Don Fader, executive director of the Retail Tobacco Dealers Association, told DRCNet he had worked with US Customs and testified against manufacturers in paraphernalia cases. "We don't want any part of this," he said. "I can't stop people from selling this stuff, but I can make it as difficult as possible to do under my auspices."

As for Chills, said Fader, "I have no sympathy for them. They sent in an ad for our trade almanac which promotes their Survival Kit [a case containing smoking accessories] and I accepted it against my better judgment. I suspect it is being used for other purposes than smoking tobacco. That turns my stomach," he said. "If someone is raiding these guys, what's wrong with that?"

Not everyone in the tobacco trade is as adamant as Fader, however. Chuck Stanchion, editor of the trade journal Pipes and Tobacco Magazine would not comment directly on the Chills case, but expressed sympathy for manufacturers caught in a legal netherworld. "Whether something is to be called paraphernalia or not should be based on the substance used, not the design of the pipe," he told DRCNet. "Trying to say one pipe or another is specifically for drugs is like saying this tumbler is for moonshine, not water."

That's music to Chris Hill's ears. "You have an item that can be used for smoking any organic material, that's the problem," he said. "It's like holding a cutlery company responsible if someone buys a knife and cuts somebody with it. The feds look at appearance alone. That's just ludicrous."

If Fader has no sympathy for people like Chris Hill, he also seems curiously out of date about recent trends in tobacco. He told DRCNet that against his better judgment he let Hookah Brothers, a hookah manufacturer and distributor, attend last year's trade show. "If I refused to let them in I'd get a lawsuit," said Fader, "but if someone tells you hookahs are used for smoking tobacco that's bullshit. I hope he doesn't come back."

Hookah Brothers may not need to come back. According to a profile of the company published in the Economist last May, the company is shipping 4,000-5,000 units a month, along with a ton of sticky, fruity tobacco. Those pipes and that tobacco are ending up in private homes and hookah bars in cities from San Diego to Jacksonville, Boston to Washington. And Hookah Brothers can also attend a competing trade show more sympathetic to non-traditional pipe makers.

Peter Gage is executive director of the Contemporary Tobacco Trade Association, which holds a trade show in Las Vegas each year. Although his show is filled with manufacturers who certainly wouldn't pass the Fader test, he trotted out the same defensive line used by every bong-maker in the country. "All these items are for legal purposes," he told DRCNet. "These are legal adult items that are restricted, outside the view of minors, and made for tobacco or legal herbs."

"They've got Tommy fucking Chong selling bongs there," moaned Hill. "They've got guys laughing about selling Phillies Blunts to inner city blacks. I boycotted that show because I thought it was too close to the edge," he said. "They called me anal and conservative. Are the feds going to bust a thousand bong-makers in Vegas next year?"

A spokesman for Chong Glass took umbrage at Hill's remark. "We just sell tobacco pipes," he said. "We play by the rules, we don't break the law, and we don't do business in Des Moines."

Herein lies a huge problem for what is clearly an industry devoted in large part to supplying the needs of marijuana smokers. Regardless of what people did with the pipes they bought from Chris Hill, many other manufacturers aim directly at the pot market, with ads in magazines such as HighTimes, Heads, and Cannabis Culture. When Furry Freaks Bongs claims its products are aimed at tobacco smokers, it participates in a charade that leaves people like Hill hung out to dry.

"Sometimes you have to embrace hypocrisy for awhile in order to survive until you can end it," said one industry insider. That may be a good short-term survival tactic, but it does nothing to alter the political calculus that results in prison terms for head shop owners or pipe makers. But again, given current legal realities, the paraphernalia industry is an industry that dare not speak its name.

In the meantime, said Gage, retailers and distributors must be aware of community standards. "If a community doesn't like your product, it can ask the federal government to help stop it from crossing state lines," he said. "It is incumbent on store owners and manufacturers to be aware of those standards."

Chris Hill thought he was aware. "I tried to stay in compliance with the law," he said. "If I want to change the law, I will do it through established means. I'm a short-haired Republican. How ironic. Now my pipe company is bankrupt, I've had to lay off most of my employees, I've spent $100,000 on legal expenses, they've been subpoenaing my former employees, making them fly up to Des Moines, and if I want to go to trial, I risk spending the rest of my life in prison," he said. "I thought they would investigate what kind of company I run. How naive."

Attorney Vaughan warned manufacturers and distributors to stay out the Southern District of Iowa, but also the Western District of Pennsylvania. It was the US Attorney there who brought down Barmes, Vaughan said. He also noted that both the Chills case and the Barmes case arose out of earlier busts of local head shops. And he had a chilling prediction. "Before Barmes and Chills, they always went after the retailers. Now they have shifted targets. But the mecca of contemporary pipe making is Southern California. My gut feeling is that in the next six or nine months, we will see some cases against California pipe-makers," he said. "If you have ever done business in Pittsburgh or Des Moines, you'd better be running scared."

-- END --
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Issue #221, 1/25/02 Editorial: Different Ways to Lie | New Afghan Government Reinstates Ban on Poppy Cultivation, Opium Dealers Cheer | Budget Woes Possible Wedge for Drug Reform, Some States Already Cutting Sentences, Prisons | Chills, Inc. Paraphernalia Bust Puts Big Chill on Industry, Pipe Makers Caught in Legal Netherworld | From Bad to Worse in Bolivia: Peasants Kill Soldiers, Government Sets Sights on Cocalero Leader Evo Morales | Two More European Voices Call for Reconsideration of Marijuana Laws | Electronic Music Organization Creating Anti-Rave Law Database | Commentary: State Department Offers More of the Same on Latin America Drug Policy | Alerts: HEA Drug Provision, Bolivia, DEA Hemp Ban, Ecstasy, Mandatory Minimums, Medical Marijuana | The Reformer's Calendar
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