BY KYM LIEBLER
The Cincinnati Enquirer
Randall Neuhausser, 44, a Warren County real-estate developer, is shown after his arrest on April 17.
(Gary Landers photo)
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LEBANON -- Inside a garage around the corner from this city's upscale boutiques and antique shops, James A. McCarty and friends packaged pot and cocaine to feed a thriving drug market in Southwestern Ohio.
The drug ring funneled as much as 720 kilograms of cocaine and 3 tons of marijuana into the region since 1993, according to an unidentified informant who helped the Drug Enforcement Administration dismantle the ring earlier this year. In plea agreements with the U.S. Attorney's Office in Cincinnati, Mr. McCarty and three others have admitted their roles in the drug network that collapsed April 17 after five people were arrested in a series of pre-dawn raids.
Unsealed affidavits in the case reviewed by The Cincinnati Enquirer provide a behind-the-scenes look at how family men, with children and large suburban homes, ran one of Greater Cincinnati's largest drug rings in relative obscurity.
Using confidential informants, the DEA infiltrated the enterprise and documented how a loosely connected cast of characters used cars with secret compartments to haul marijuana and cocaine into Warren County and distribute the drugs on the streets.
One of the DEA informants said the middle-level dealers supplied lower-level dealers with roughly 12 kilograms of cocaine and 100 pounds of marijuana a month.
With a kilogram of cocaine worth $3,000 and a pound of marijuana selling for $1,200 -- the enterprise amounted to a $160,000-a-month business.
"It's a huge amount of drugs to move," said Warren County Prosecutor Tim Oliver, whose office has brought drug charges three times against Mr. McCarty since 1982.
"If anyone thinks Warren County doesn't have a drug problem, they are living in a dream world. Nobody should be surprised. Drugs know no geographic boundaries."
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DRUG PLEAS
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In separate deals with the U.S. Attorney's Office, four of six defendants indicted April 17 on federal drug trafficking charges out of Warren County have pleaded guilty:
Doug Burgess, 35, of Fairfield, pleaded guilty May 8 to conspiracy to distribute marijuana, which carries a maximum penalty of five to 40 years in prison, a $2 million fine and four years of supervised release.
Scott Myers, 31, Price Hill, pleaded guilty May 29 to one count of interstate travel to facilitate a business enterprise involving marijuana, which carries a maximum penalty of five years in prison, a $250,000 fine and three years of supervised release.
James A. McCarty pleaded guilty May 29 to one count of conspiracy to distribute cocaine and marijuana. The offense carries a maximum penalty of 10 years to life in prison, a $4 million fine and five years supervised release.
Ted Dunlap, 38, of Morrow, pleaded guilty May 8 to conspiracy to distribute cocaine and marijuana, punishable by five to 40 years in prison, a $2 million fine and four years of supervised release.
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Despite the break-up of the drug ring, the volume of street-level drug dealing in Warren County has neither slowed nor dropped, said John Pennington, a Lebanon police officer and coordinator of the Warren County Task Force.
"Not as far as I can tell," he said. "A lot of the dope them guys was handling wasn't distributed in Warren County. Some of it stayed here, sure, but that's an awful lot of drugs."
Details of the drug ring coincide with Warren County's rapid transformation from a predominantly rural county known for festivals and farms to one teeming with economic development and residential growth. It is the second-fastest growing of Ohio's 88 counties and obviously not immune to drugs.
The DEA began investigating the drug network in October 1997, a month after a Cincinnati man was stopped outside Lincoln, Neb., with 123.5 pounds of marijuana in his trunk.
When questioned by the Nebraska Highway Patrol, that man, 31-year-old Scott Myers of Price Hill, started naming names. One of the names he dropped was Randall Neuhausser, a 44-year-old real estate developer from Warren County's Union Township, according to the affidavits. With cursory knowledge of how the group operated, DEA agents met with an informant in October to learn more about the operation's inner workings.
During that initial meeting, the informant -- who said he had been buying cocaine from Mr. McCarty since 1995 -- described Mr. McCarty and Mr. Neuhausser as "major" cocaine and marijuana distributors in Warren County.
The informant agreed to help the investigators, and, from October 1997 through January 1998, bought 11 ounces of cocaine from Mr. McCarty. Each exchange of money and drugs took place at 13 N. Cherry St. in Lebanon, records show. That's where Mr. McCarty operated a construction company, Pyramid Builders.
The fruits of the six-month investigation were realized April 17 when four men and one woman were roused from their beds and hours later appeared in federal court on drug trafficking charges.
Mr. McCarty, 39, was arraigned on a slew of serious drug charges two weeks later.
Since then, four defendants, including Mr. McCarty and Mr. Myers, have pleaded guilty in U.S. District Court for the Southern District of Ohio to conspiracy to distribute drugs. All have agreed to cooperate with the DEA. They will be sentenced later this year. The remaining defendants, Mr. Neuhausser and his ex-wife, Sheila Neuhausser, 34, pleaded not guilty. They will be tried together Sept. 28.
As part of his deal, Mr. McCarty agreed to forfeit his Cherry Street property, a 1998 Chevrolet Yukon and several investment accounts.
Other charges against Mr. McCarty -- five counts of distribution of cocaine and money laundering -- were dropped.
It is clear from the content of the four plea agreements that federal investigators are relying on Mr. McCarty and the other co-defendants to cement their case against the Neuhaussers, who were the alleged ringleaders.
"He (Mr. Neuhausser) was a kilo dealer," Mr. Pennington said. "He was two or three steps up the line."
Mr. McCarty was not as high up on the drug-dealing food chain, added Mr. Pennington, who has arrested Mr. McCarty three times on drug charges.
Authorities say drug rings are made up of several layers. At the bottom are the street dealers, who sell drugs to individuals. They are supplied by low-level dealers who buy drugs in larger quantities from middle-level dealers, who make their purchases from wholesale dealers throughout the country.
Mr. McCarty and Mr. Neuhausser were considered middle-level operators.
Mr. McCarty was convicted of trafficking in drugs in January 1982, and drug abuse in January 1988, in Warren County Common Pleas Court. He was acquitted of third-degree felony drug abuse and permitting drug abuse in the 1993 case after two hung juries.
"Jimmy'd go both ways. He was a multi-ounce dealer, but he'd get down to the street level from time to time," Officer Pennington said.
"Jimmy's a very personable guy. You'd arrest him, and you'd see him on the street and it'd be, "How ya' doin'?' the next day." Despite the plea agreements, Assistant U.S. Attorney William E. Hunt said earlier this month his office and the DEA are "still looking at aspects of illegal activity in Warren County." He would not elaborate.
Trafficking documented
What prompted the DEA investigation is unclear.
But the first incident referred to in the federal documents that links drugs to the Warren County ring is a routine traffic stop Sept. 1 on Interstate 80 outside Lincoln, Neb.
During that Labor Day stop, Nebraska State Patrol Sgt. Russ Stancyk pulled over an eastbound 1994 Ford Taurus driven by Mr. Myers for going 72 mph in a 65-mph zone.
"The sergeant talked to him a little bit and the stuff he (Mr. Myers) said didn't make sense," said Jeff Hanson, spokesman for the Nebraska State Patrol. Sgt. Stancyk asked and received Mr. Myers' permission to search his car.
"He found 123-and-a-half pounds of marijuana in the trunk," Mr. Hanson said. Mr. Myers was detained in the Lancaster County Jail where, according to affidavits, he told police he was delivering the drugs to Lebanon for Mr. Neuhausser.
DEA agents and federal prosecutors built their case this fall using informants active in the drug ring who could document a pattern of large-scale drug trafficking.
Working for the government, the informants bought drugs from Mr. McCarty and, on at least one occasion, ferried drug proceeds to Mr. Neuhausser's $250,000 suburban home in Warren County's Union Township south of Lebanon.
Most times, the informant said, deals happened at the Cherry Street address. It was there, one informant said, that he met Mr. McCarty's lower-level distributors.
From his vantage as an insider, the informant told DEA agents Mr. McCarty's drug supplier was Mr. Neuhausser.
Mr. Neuhausser, who has roughly $4 million in real-estate holdings in Warren and Hamilton counties, is the only defendant jailed without bond.
Merlyn Shiverdecker, Mr. Neuhausser's Cincinnati lawyer, would not discuss his client's defense.
"I don't think it's appropriate at this time to make any public comment on it," he said.
The DEA's priority was to establish relationships among the alleged members of the drug ring.
The Nebraska police stop helped connect the dots among at least three of the defendants: Mr. Myers, Mr. Neuhausser and Douglas Burgess, 35, of Fairfield.
Questioned by the Nebraska State Patrol, Mr. Myers said Mr. Neuhausser owned the 1994 Ford Taurus he was driving. He said he had been instructed to contact Mr. Burgess upon his return to Ohio. Mr. Burgess would then take the car and marijuana to Mr. Neuhausser. Back in Lebanon, DEA agents on Feb. 2 searched the Lebanon home of Mr. McCarty's mother, Geraldine McCarty, and seized Mr. McCarty's drug ledger. The ledger allegedly listed the amount of marijuana and cocaine Mr. McCarty received from Mr. Neuhausser, and how much money Mr. McCarty owed Mr. Neuhausser.
On March 5, Mr. Neuhausser's home was searched.
Agents seized his 1990 Mercedes Benz 300 SL, a 1997 Ford F-150 pickup truck, phone records, an address book, tax documents and credit cards.
According to the affidavit supporting the search, a "narcotic-detecting K-9 dog alerted on the tailgate portion of the Ford F-150 and on the trunk area of the Mercedes." Both vehicles also had been altered to create hidden compartments.
During the probe, a second informant -- who said he had bought drugs from Mr. McCarty for 15 years -- told DEA agents he was present on several times, from February 1989 through June 1992, when Mr. Neuhausser and Mr. McCarty were "cutting up" kilogram quantities of cocaine.
Drug dealers routinely cut and grind rock cocaine into the powdery substance that is sold on the street.
Meanwhile, a third unidentified informant told DEA agents he and Ted Dunlap, 38, of Morrow delivered money from drug trafficking to Mr. Neuhausser's home several times since 1993.
The third informant said the last money drop was in October when he brought $54,000 to Sheila Neuhausser at the Union Township home. According to the third informant, he, Mr. Dunlap and Mr. Neuhausser "would distribute approximately 12 kilograms of cocaine and approximately 100 pounds of marijuana every month."
He said the last shipment occurred Jan. 30 when the second informant and Mr. Dunlap delivered a kilogram of cocaine and 27 pounds of marijuana to Mr. Neuhausser's home.
Mr. Shiverdecker has filed a motion in U.S. District Court Southern District of Ohio asking that Mr. Neuhausser be released on bond so he can help prepare his defense. The motion is to be heard Aug. 13. Meanwhile, Mr. Pennington and Mr. Oliver would welcome similar large-scale drug busts.
"The feds have the ability to start at a higher level," Mr. Oliver said. "What would really make a difference is if they'd make a number of the same quality type busts at the same time."
Mr. Pennington agreed. "The DEA did a good job on this," he said. "Don't get me wrong. They got a break on it and I'm glad, but we're still seeing the same level of drugs out there we saw before. You got one (drug dealer) down, you got two to take his place."
Accused dealer lives in upscale suburb
Drug-crime cycle targeted
