Until last year Ramanik Patel seemed the archetypal Indian immigrant. Having come to the United States in the mid 1980s from Gujarat, he had toiled his way to success. Patel, 57, owned a $230,000 home in upscale Colonia and had interests in a clutch of businesses in a bustling retail enclave on Oak Tree Road, which spans Edison and the Iselin section of Woodbridge, N.J. The businesses included two convenience stores — Mayur Cash & Carry and Ajay Cash & Carry — and Patel Vasan Bhandar, which sells stainless steel utensils. That is all most people might have known about Patel had Robert Palka not come calling at his home on July 28 last year.

Palka is an agent with the Somerset County division of the FBI. He arrived early in the morning at Patel’s home at 730 Wood Avenue and announced that he and his 27-year-old son Ajay were under arrest. Both father and son were charged with running an illegal money-transmitting operation and also with smuggling people into the United States from India. The same morning, another federal agent in Irvington arrested Ramanik’s partner Kanu Patel, 60, former president of the Iselin Chamber of Commerce, for smuggling aliens from India. Ramanik’s brother Hasmukh was also indicted, but he escaped arrest because he was in India.

Court documents show that Ramanik, Hasmukh and Ajay Patel ran a business transmitting money to India, which is illegal in New Jersey unless a firm has a license from the state’s Department of Banking. They collected dollars from Indians in the United States who wanted to send money to their families back home. As these dollars accumulated, the Patels bought gold and sent it to India via couriers. The gold was resold in India at a massive profit, and then rupees were distributed to those for whom they were meant. Between 1994 and 1997, the Patels sent more than 380 kilograms of gold — worth just under $4 million — to India.

In addition, the Patels — jointly with Kanu Patel, who is not a relative — hatched a scheme to smuggle Indians into the United States for a fee of $20,000 a person. Their modus operandi was to sponsor Indian music and drama troupes to perform at functions like the annual Navratri festival in Edison and smuggle in their clients by falsely claiming they were members of these cultural troupes. When the performers returned to India, the contraband, as it were, stayed back.

Today, eight months after these arrests, Ramanik, Ajay and Kanu Patel have all plead guilty. Ramanik Patel, after a period of house arrest, is in prison in Essex County. He has lost weight because he dislikes jail food and subsists mainly on bread. Ramanik Patel plead guilty on Dec. 4, 1998, to "conspiring to operate an unlicensed money remitting business and conspiring to bring aliens into the U.S., to transport them and to receive fraudulent visas." Eleven days earlier, Ajay Patel accepted that he had conspired "to engage in an illegal money-remitting business." Kanu Patel plead guilty on Jan. 7, acknowledging his role in a conspiracy "to bring aliens into the U.S. illegally and to procure visas by false claims."

When Judge Walls of the Federal District Court in Newark sentences these men on April 22, they face maximum sentences ranging from five to 10 years in prison and between $250,000 and $500,000 in fines. Since none of them has a criminal record, however, the actual sentences could be much lighter. According to one source, they could get just a few months in prison or even house arrest. Deportation is another possibility, because Ramanik and Ajay Patel are not U.S. citizens; they are permanent residents. Kanu Patel, however, is a U.S. citizen.

Indians in the United States should pay attention to this case for at least three reasons. First, it demonstrates that smugglers breaking immigration laws don’t necessarily operate through huge multinational rings — they also work through small businesses, as the Patels did.

Second, this is the dark side of immigrant entrepreneurship — and must be faced as squarely as successes in fields such as software and medicine. Unfortunately, the Indian community is often reluctant to do this. While many immigrants do take legal risks, a small number cross the line into illegality. This can easily happen to those used to India’s hyper-regulated business environment, who believe that tap-dancing around onerous regulations isn’t necessarily wrong. But when they are caught here, they pay a heavy price and their actions affect the community’s credibility.

And third, this case points to the need for Indian business organizations to educate their members in the American way of business. When in America, it is prudent to do business as the Americans do.

Federal public documents and interviews with people familiar with the situation provide insights into how the Patels got into these activities and how they were caught. Ramanik Patel came to the United States around 1985 from Anand, an area of Gujarat best known for the success of its dairy cooperatives. He launched his businesses with support from friends and associates. Over time, he was running Mayur Cash & Carry, Patel Vasan Bhandar and Ajay Cash & Carry, which was earlier known as Hilltop Groceries. He was the model of a respectable businessman. He and his wife Kapila were proud of their two sons, who seemed to mirror their father’s success. One son, Vijay, was a doctor at a Brooklyn hospital. The other, Ajay, had a degree in chemistry from V.P. Science College in India.

In the early 1990s, Ramanik Patel and his brother Hasmukh — who continued to live in Anand — got into the money transmitting business. Ramanik Patel, who is believed to be the brain behind the scheme, took dollars from Indian American clients who wanted to send money home. Hasmukh Patel ensured that their families got rupees in India. According to associates, it started out as a way of helping friends. Transmitting money internationally without a license is a crime in New Jersey, however, and breaking state law is a federal offense. Still, the Patels did not obtain a license.

"Many Indians seem to think that if the outcome is good, their actions are legal," says Paul Rajan, an Iselin-based attorney who initially defended Ajay Patel after his arrest. "That’s their cultural mindset. It is quite different from the Western concept where you are accountable for all your actions."

The money-transmitting business took off in 1994, when the Patels figured out a way to send money to India at a lower fee than a bank like the State Bank of India or a financial services firm like Western Union might charge for a wire transfer. Their twist was to make gold a part of their deal.

In the early 1990s the Indian government liberalized its trade policies, permitting non-resident Indians to bring in five kilograms of gold during visits. Customs duty had to be paid, but importing five kilos of gold was legal. As a restricted commodity in perennial demand, gold prices in India were much higher than in the United States. A kilo of gold worth $10,000 at the time in the United States sold for some $20,000 in India. This price differential offered the Patels an opportunity to profit through arbitrage.

The Patels hatched a simple plan and set it in motion. They would accumulate dollars and use it to buy gold-bars of one kilogram each — from precious metals dealers in New Jersey and New York. Ramanik Patel traveled frequently to India, taking five kilograms of gold each time. He then set up a courier service. Each courier got a free round-trip ticket to India if he or she agreed to carry five bars of gold, worth $50,000. The Patels also paid the Indian customs duty on the gold. But even with the air fare and customs duty factored into the price, the difference between gold prices in the United States and India was so great that the Patels made a substantial profit. With such margins, undercutting the rates of the likes of SBI and Western Union was easy.

The system worked smoothly, albeit with occasional bumps. Once, a couple that had agreed to act as couriers carried an additional five kilos of gold and tried to slip it undetected through the Indian customs. They were caught and the gold was promptly confiscated. Mostly, though, things went well. As the Patels’ customers discovered this inexpensive way to send money home, they flocked around. With Ramanik Patel handling the U.S. end and Hasmukh and Ajay Patel handling the Indian end of the operation, their business soared. It was a remarkably clever plan with one fatal flaw — it was illegal.

Legal or not, the business expanded rapidly. In 1994, Ramanik Patel received at least $205,000 in the U.S. for transmission to India. That year he bought some 50 kilos of gold to send to India. In 1995, he received $2.5 million and sent some 260 kilos of gold to India. In 1996, he received $1.2 million and bought 70 kilos of gold to send to India. In 1997 he shipped another 7 kilos of gold to India. In all, according to court documents, the Patels collected $3.9 million and shipped 387 kilos of gold to India. Holly Kulka, an assistant U.S. district attorney, estimates that the Patels netted some $2 million on these transactions.

Meanwhile, other developments were brewing. As the number of Indians living in Central New Jersey — specifically, in Middlesex County — expanded in the early 1990s, groups were formed to celebrate Indian cultural events and festivals such as Navratri.

Among those involved with these activities was a man named Kanu Patel. A 60-year-old with three sons, Kanu Patel knew Ramanik Patel well. Kanu Patel’s wife Prafulla was Ramanik Patel’s partner in a Piscataway-based warehousing company named Sayona Sales and Services. By the mid 1990s, Kanu Patel had become a visible presence among the Indian merchants in Edison and Iselin as president of the newly formed Iselin Chamber of Commerce, which represented South Asian merchants in their dealings with the Woodbridge municipality.

The need for such an organization arose from the fact that relations between the merchants and municipal officials were growing acrimonious. As more and more Indian and Pakistani businesses opened along Oak Tree Road and its byroads, parking became a contentious issue. The township, bowing to complaints from local residents, adopted an ordinance that imposed tough penalties for parking violations. The merchants, who alleged that their customers were hit hard by parking tickets, went to court to challenge these regulations. The Iselin Chamber of Commerce, with Kanu Patel at its head, was at the forefront of this battle.

The problem was resolved when Woodbridge mayor James McGreevey proposed forming a Special Improvement District, or SID. Such public-private partnerships have sprung up all around the country in recent years, and they aim at developing downtowns in ways that promote retail growth in harmony with residential concerns.

Seeing Kanu Patel’s role in the Iselin Chamber of Commerce, Woodbridge officials supported his nomination onto the SID’s board. McGreevey also cultivated a relationship with Kanu Patel, perhaps with an eye to his own political interests. McGreevey planned to challenge Christie Whitman in the 1997 governor’s election and contacts with leaders among the Indian community would certainly help.

As Kanu Patel became powerful — with a seat on the SID board and access to McGreevey’s ear — he and Ramanik Patel decided to step up their involvement in community affairs. Among other things, this entailed sponsoring the cultural troupes that came to perform at Indian cultural events. Some of Kanu Patel’s associates say that his motive was primarily to promote his business. Whatever the reason, Sayona Sales decided to sponsor the visits of music and drama groups to the United States in 1995 and 1996. That opened the doors to the Patels’ involvement in smuggling Indians into this country.

In the summer of 1995, Ramanik Patel agreed to smuggle a person identified only as JSP in court documents into the United States. Ramanik Patel asked JSP to contact Ajay to prepare for the trip. Ajay arranged for JSP to join a music group named Soor Milan, which was supposed to perform in Edison that year. Meanwhile, Kanu Patel, on behalf of Sayona Sales, filed a petition with the Immigration and Naturalization Service, requesting that members of Soor Milan be allowed to perform in the United States.

Soor Milan’s members, including JSP, arrived in September 1995, and were met at JFK Airport in New York by Ramanik. Later that month, Ramanik Patel received four checks adding up to $15,000 from JSP’s father as payment for smuggling his son into the United States. JSP is still believed to be in this country.

Evidently emboldened by this success, the Patels stepped up their smuggling activities. By January 1996, Hasmukh Patel had found at least three other candidates who wanted to come to the United States. These people are identified in court documents as AP, DP and MP. Hasmukh and Ramanik Patel set a price tag of $20,000 per head to smuggle them in. In effect, for Ramanik Patel, smuggling Indians into the United States represented a new source of revenue with which to buy gold. He eventually used $25,000 of the proceeds of smuggling activities to buy gold and send it to India.

As he had done in the previous case, Ajay Patel was charged with getting these Indians into the cultural organization that was to come to the United States. This time, a drama troupe named Mars Communication was the vehicle. By February, Ajay Patel had installed AP, DP and MP as bogus members of the troupe. A month later Kanu Patel filed a petition with the Immigration and Naturalization Service requesting that Mars Communication be allowed to perform in the United States. Among those who received visas, based on fraudulent claims, were AP, DP and MP.

The plane bearing Mars Communication’s members landed at JFK Airport on April 12, 1996. This time, Kanu Patel was waiting for them at the airport. He drove them — including the smuggled members — from the airport to a motel in Edison. When Mars Communication’s members returned to India after their performances, AP, DP and MP were not among them. They disappeared, and are also believed to be still in the United States.

These visa violations tipped off immigration and other federal officials that something was wrong. That was the beginning of the end for Ramanik, Ajay and Kanu Patel. Like all government investigations, however, it took time. In the meantime the Patels continued with their gold deals. But official scrutiny of their activities had begun. The Patels got wind that they were under investigation when their bank informed them that it had been asked to turn over documents about their transactions to federal officials.

Even as the scrutiny continued, Ajay Patel got his green card in January 1997 and moved to the United States. He worked for his father in Ajay Cash & Carry and later became a partner in an Indian restaurant named Jhupdi on Oak Tree Road. Ajay Patel returned to India that summer to get married. His wife Dixita continued to live in India, waiting for her green card.

By then, federal agents were hot on the Patels’ trail. An unexpected windfall came the government’s way when, according to a source, an individual was arrested in 1997 for a different offense. This person, in an attempt to lighten his own punishment, allegedly sang like the proverbial canary, telling federal agents in some detail what the Patels were up to. This gave the government’s case a big boost.

Soon, grand jury hearings into the Patels’ activities began. The Patels’ business associates, including, their accountant, were summoned and their testimony recorded. As the paper trail grew stronger, the Patels took some defensive measures. For example, court documents show, Manubhai Patel, one of Ramanik’s brothers, who had been smuggled in, was hurriedly dispatched back to India. On their accountant’s advice, the Patels also paid income tax on their earnings from money transmitting.

By July 1998 grand jury proceedings had allowed the U.S. District Attorney’s office in Newark to collect enough evidence to proceed against the Patels. On July 23, Judge Dennis M. Cavanaugh ordered the arrests of Ramanik, Ajay and Kanu Patel. The arrests were made on the morning of July 28. Kanu Patel, who was not involved in the money-transmitting business, was granted bail the same day. Assisted by his lawyer, Lawrence Lustberg of the Newark law firm Gibbons, Del Deo, Dolan, Griffinger & Vecchione, he put up his home in Belville and another property — together worth $100,000 — as surety. Kanu Patel also had to surrender his passport and agree to restrict his travels to New Jersey and New York.

Three days later, on July 31, a hearing was held in the Newark courtroom of Judge Donald Haneke to decide if Ramanik Patel and his son should be freed on bail, or whether the risk of their escaping to India was so great that they needed to be imprisoned. The Patels, who had known about the investigation, were well prepared. Assisted by a New Brunswick-based attorney named Lawrence Bitterman, who represented Ramanik Patel, and Paul Rajan, who represented Ajay Patel, they presented a bail package worth some $400,000 to secure their release. The package was backed by the equity in Ramanik Patel’s home as well as those of other friends in Edison and Jersey City. Rajan later stepped aside as Ajay Patel’s attorney and was replaced by Barry Albin of the Woodbridge law firm Wilentz, Goldman & Spitzer.

Assistant U.S. Attorney Holly Kulka presented the case for the prosecution. She argued that the Patels might flee to India because they had been building up assets in India, rather than the United States. She argued that by sending gold out of the country, Ramanik Patel had been setting up a "retirement fund" in India. What if he decided to take early retirement? Bitterman and Rajan disagreed. They said that the Patels had known about their impending indictment and they were unlikely to run away and risk their own homes and those of their friends. "Winter does not come as a surprise every year," said Bitterman. "This indictment comes as no surprise to this defendant. If Mr. Patel was going to run, he would have run a long time ago. He knew about this."

Ramanik Patel, who took part in these proceedings with help from an interpreter — based on his claim that he did not know English — got lucky that day. The judge bought the argument that he did not represent a flight risk and agreed to free him on bail. The bail bond was set at $2 million, with $200,000 payable in cash. The judge said Ramanik Patel would have to face house arrest and surrender his passport. The judge also ordered electronic surveillance of his activities. Ajay, however, the judge felt, represented a greater flight risk because he had been in the United States for less than two years and his wife was still in India. So Ajay was sent to Union County prison, where he remained until mid September. He was then freed on bail but remained under electronic surveillance.

Ramanik Patel’s terms of house arrest were modified a couple of times in August and September to allow him to work at Patel Vasan Bhandar and Mayur Cash & Carry. But with the trial looming before him, it was no longer business as usual. Mayur Cash & Carry, which operated out of a strip shopping center off Oak Tree Road, was wound up, and Patel Vasan Bhandar was taken over by Ram Patel, a well-known motel and restaurant owner.

Later in the fall, however, Ramanik Patel did something that might qualify him for a slot on the TV show, "America’s Dumbest Criminals." Despite being under electronic surveillance, he made a phone call to a policeman’s wife, asking if he could get a bogus police report. He also spoke to her in English, after having claimed in court that he didn’t know the language. Two hours later, he was arrested. Today he remains in prison in Elizabeth.

By November, the Patels had decided to change their pleas from not guilty to guilty. The final chapter of this saga was to have been written on March 9, when they were scheduled to be sentenced. That date has now been moved to April 22.