March 23, 2000

U.S. Cracks Down on Rise in Appalachia Moonshine

By PETER T. KILBORN

ROCKY MOUNT, Va., March 16 -- Grinning seditiously, a prominent citizen of this Blue Ridge foothills town takes from his kitchen refrigerator an illegal gift from a moonshiner friend: a syrupy red liquor in a quart jar packed with grapelike damsonberries. He offers a taste to his visitor. It is a brandy, sweet and silky.

"Damson's the best," he says.

WHATEVER THE WORD, IT'S AGAINST THE LAW

Hardscrabble farmers and mountaineers, primarily in the forested hills of lower Appalachia, have been making whiskey illegally since the earliest days of the Republic, when the government began taxing it. Tax collectors call this illegal whiskey non-tax-paid liquor. Those who produce and consume it call it white lightning, rotgut, skull cracker, happy Sally or stump, but most often moonshine. Of unknown authorship, the word "moonshine" has applied for more than two centuries to whiskey produced in the light of the moon, out of sight of government agents. The Oxford English Dictionary traces its etymology to 1785, citing a reference that says, "The white brandy smuggled on the coasts of Kent and Sussex is called moonshine."

Next he selects a half-gallon jar of heart-stopping white lightning, as clear as vodka. Shaking it, he points to the "bead," or head. Bubbles that form a thick, beery bead indicate toxic contamination from sleazy stills that use old car radiators to condense the vapors from cooking and fermentation.

But this bead is wafer-thin. "Look," he says. "No lead."

It might all seem a quaint act of hospitality merely appropriate to this town of 4,400 that likes to boast of being "the moonshine capital of the world," here in a southern Appalachian region that over the last two centuries has produced more moonshine than any other in America.

But to a task force of state and federal agents brought in to fight it, the illicit whiskey of Rocky Mount and the surrounding area is little other than the work of big-time criminals -- a new generation of moonshiners who in many cases have transformed the smoky little woodsmen's stills of legend and song into efficient distilleries, some capable of producing thousands of gallons of liquor a week.

The task force, applying the muscle of federal law rather than weaker state anti-moonshine statutes, made its first arrests earlier this month.

Three people were charged with illegally distilling alcohol, and many more arrests are expected.

Rocky Mount is the hub of the trade, which investigators say operates here in Franklin County, in three or four nearby counties in south-central Virginia and just over the line in North Carolina.

Most of the illicit brandy is the work of exacting hobbyists, and seldom leaves the area.

But moonshine whiskey, mass-produced at as much as 150 proof or even more and with little attention to health or safety, is growing as a product of interstate commerce.

Even after a decade of unmatched national prosperity, resilient pockets of poverty provide ready markets -- in this case, throughout much of the East -- for a low-priced, illegal high.

Once a sideline of dirt-poor farmers who made whiskey in 50-gallon stills to get by, moonshining is now carried on here with 800-gallon stills, sometimes 5 or 10 linked like railroad cars, in a well-organized, high-profit business. Government investigators say hundreds of thousands of gallons of moonshine a year flow over the highways from Virginia and North Carolina, free of all state and federal taxes or regulatory scrutiny.

Moonshiners produce whiskey for as little as $3 a gallon, the investigators say, then package it in six-packs of gallon plastic jugs, a thicker-gauge variation of milk containers, and sell it, unlabeled, for $10 or $12 a gallon to nip joints, shot houses and the back rooms of bars in Philadelphia, Richmond, Washington and Baltimore. The bars then sell it for as little as $1 a shot, much less than the price of lawful whiskey.

Though the investigators do not know how much the moonshiners as a whole earn from their activity, the business here has grown big enough to draw a response from the Federal Bureau of Alcohol, Tobacco and Firearms.

About two decades ago, the bureau, turning more of its attention to the control of guns and explosives, largely abandoned its pursuit of untaxed liquor, an effort that had dated from the 1920's and Prohibition, when organized crime delivered vast amounts of moonshine to the nation's speakeasies. Two years ago, however, the bureau was called in by the alcoholic beverage control agencies of Virginia and North Carolina, bodies long frustrated by public tolerance of bootlegging and by local courts that treated moonshining much like speeding violations.

Together, the bureau and the two state agencies organized Operation Lightning Strike, to fight moonshiners unlike those of decades past.

"What you've seen over the years," said Bartley H. McEntire, the federal agent in charge of the investigation, "is a shift in how they operate." Rather than selling their liquor themselves, Mr. McEntire said, "these organizations use hired hands and hired transporters," or bootleggers. "They aren't your good ol' boys." Wily and resourceful, this new breed of moonshiner tends to be armed with night-vision goggles and two-way radios to help stay a jump ahead of the law.

Federal agents' past efforts to fight moonshining in cooperation with state regulators have been largely fruitless.

But this time, said Sharon Burnham, assistant United States attorney in nearby Roanoke, the investigation is much broader and tougher: for the first time, federal money-laundering statutes will be used as a weapon against moonshiners.

"Under the federal liquor laws, they're facing up to five years in prison," Ms. Burnham said. "Under the money-laundering laws, they're facing up to 15 years."

In Operation Lightning Strike's first arrests, early this month, the agents charged a man with operating a 1,000-gallon still. Also seized were his two employees: a Mexican couple, both illegal immigrants who lived and worked at the site with their three young children.

Profits from moonshining can be serious money here in Franklin County, where a waning of the textile industry and a decline in tobacco and dairy production have cursed the economy. Those profits have been a boon, too, investigators say, for a few enterprising and newly land-rich families whom the government has named, though not yet charged, as leaders of the local moonshine industry.

For the most part, residents of moonshine communities see still operators as good people, said Allen G. Hudson, deputy director of the Virginia alcohol agency's Bureau of Law Enforcement.

"It's an awkward situation," Mr. Hudson said.

"They are good for the economy. They hire people locally and buy materials locally. We don't get a lot of cooperation, because they see them doing more good than we can do them."

William G. Davis, a former assistant United States attorney in Roanoke, is the area's leading defense lawyer for people charged with moonshining.

Like many others in town, he acknowledges that illegal liquor is produced here. But the government, he says, has exaggerated the extent of it.

What is worse, Mr. Davis said, is the investigators' manner. "To me, it's the hobnail-boot approach," he said.

"They're riding roughshod over people, calling them liars. They are mean."

In one instance, agents shut down the Helms Farmers' Exchange, a farm and garden business that was one of Rocky Mount's biggest retail and wholesale concerns.

It was owned by Ramsey and William Helms, brothers in their 50's, and it included a warehouse two miles outside of town on busy Route 40 West and an imposing red-brick store on Main Street downtown, just a block from the county courthouse and the sheriff's office. Agents say the brothers had a sideline in moonshine supplies that dwarfed their legitimate commerce.

The government confiscated from the store and the warehouse 9,648 one-gallon jugs, 32 100-pound bags of sugar, 4 bags of rye and 14 boxes of Mason jars, and from Ramsey Helms's home a gun, radio scanners and a family photo album. Nine days after the raid, Ramsey Helms put a gun to his chest and killed himself. Since then, the agents have frozen $86,442 in William Helms's checking accounts and made a claim on 113 acres of his land, in effect a lien so that the government can sell it if Mr. Helms is charged and found guilty of ill-gotten gains.

Stripped of their money, business and personal vehicles, and livelihood, William Helms and his wife, Bonnie, are living on the charity of friends, Mr. Davis says. In answering the government's court requests to search and seize property, the Helmses told the court that all the property ultimately taken from them had come from inheritances and from income earned through legitimate commerce.

But the investigators' leading targets are 60-year-old Ralph D. Hale and several members of his family. The agents say that from 1990 through 1998, Mr. Hale and his wife, Judy, filed tax returns showing annual joint income ranging from $21,149 to $33,139.

Yet, the government maintained on March 6 in an affidavit related to its request for a search warrant, Mr. Hale is the person code-named Hat Man in the journals of the Farmers' Exchange. According to the journals, Hat Man bought 17,925 100-pound bags of sugar, paying close to $700,000, and 2,710 bundles of one-gallon containers for which he paid $42,000. With the sugar, the affidavit said, he could have produced 179,250 gallons of illegal liquor, worth $1.8 million at $10 a gallon.

The Hales have also amassed many assets, including land on which illegal stills have been found. Holdings that the government has frozen are mostly in Mrs. Hale's name, with the rest in the names of family members other than Mr. Hale. They include nearly 400 acres worth $681,900, $59,405 in mutual fund accounts and $54,991 in bank accounts.

[Mr. Hale, reached by telephone on Monday, declined to comment.]

Though choosing not to comment on those figures, Mr. Davis, who expects to represent the Hales in any criminal case, said, "A whole lot of that information" is "incorrect." The allegations attempt to portray the Hales as "monsters," he said, "and it's not true."

In fact, in the minds of some, even admitted moonshiners are far from monsters, instead little more than a link to a proud tradition. Even as the government crackdown continues, Rocky Mount's business people are divided over whether to shun or celebrate the area's historic bond with moonshine.

Brian G. Duvall, executive director of the Franklin County Chamber of Commerce, says one contingent has proposed building a moonshine museum and even producing boutique liquor, in a legal still.

Ultimately, though, "we need to get away from it," said David Furrow, a prominent lawyer here. "It would be nicer if it were in the past, and we could say we used to be the moonshine capital of the world."