Officials Call Heroin Seizure a Major Victory : Crime: Record haul also suggests that the market for the drug is expanding.

Federal officials hailed the seizure of more than half a ton of heroin as a major victory in the war against illicit drugs but said the heroin haul--the largest in U.S. history--suggests that the drug’s market is expanding.

In a case that began with a routine U.S. Customs Service inspection and featured gift-wrapped heroin packages, a nearly blown surveillance, and connections to the “Golden Triangle,” federal agents have seized 1,080 pounds of 90% pure “China white” heroin.

U.S. Customs Commissioner Carol Hallett flew in from Washington on Friday and declared at a news conference that the seizure shows that the “war on drugs is not only on target, but is hitting the bull’s-eye.”

While the size of the Hayward haul is far less than amounts of marijuana or cocaine commonly seized, law enforcement and customs officials say the take is nonetheless significant.

They note the estimated value of the drug--$2.7 billion to $4 billion. By comparison, the 21 tons of cocaine seized in 1989 at a Sylmar warehouse had an estimated street value of $6 billion.

Also, the seizure rivaled the amount of heroin confiscated by Customs agents nationwide in all of 1990--1,497 pounds, Hallett said.

“We know the amount of heroin coming into the U.S. is on the increase,” Hallett said.

She said the amount seized was enough to supply each of the nation’s estimated 500,000 heroin addicts for a month.

Robert Bender, head of the Drug Enforcement Administration’s San Francisco office, proclaimed that agents had “ripped the heart out” of a major Asian smuggling ring.

The four suspects were being held without bail Friday.

Meanwhile, Hallett and other authorities gathered at the Customs Service headquarters in San Francisco’s financial district, and displayed the 59 boxes that had contained the seized heroin.

Labels on the cartons said they held plastic produce bags imported from Taiwan. In fact, the boxes contained heroin in cylindrical packages covered by brightly colored gift wrapping paper and masking tape, authorities alleged.

The heroin came from the so-called “Golden Triangle” of Burma, Laos and Thailand and was shipped to the Port of Oakland from Taiwan.

The size of the seizure calls into question estimates that overall heroin consumption in the United States is down. On Wednesday, the Office of National Drug Control Policy issued its latest estimate that heroin usage declined, saying its retail value slipped to $12.3 billion in 1990--from $15.5 billion in 1989 and $15.8 billion in 1988.

“Seizures of this size raise the concern that heroin traffickers may be targeting the U.S. market. We will be monitoring the situation,” a spokesman for federal drug czar Bob Martinez said Friday.

Bender said the large seizure was evidence of an increase in heroin shipments from Southeast Asia to the United States.

The biggest domestic heroin seizure previously was 820 pounds confiscated in New York in 1989. Authorities revised their original estimate of the Hayward haul from 1,200 pounds to 1,080.

Last October, 3,834 pounds were seized in Pakistan, according to the DEA.

The four people in custody were identified as Jim Chen, 39; his wife, Lucy Chen, 36; Kelly Paokui Chen, 37, wife of Jim Chen’s brother, Michael, and Lu Chin Sheng, 27. Michael Chen was at large late Friday.

In a brief court appearance before U.S. Magistrate William Garrett on Friday morning, Kelly Chen said: “It all happened too suddenly. I just went to translate.”

Authorities said the Chens are natives of Taiwan and resident aliens. They have neighboring homes in Blackhawk, an exclusive gated enclave where houses commonly sell for $1 million or more. Lu, who allegedly entered the country on a false passport, is from Bangkok.

The heroin arrived at the Oakland port May 15 in two containers aboard the vessel President Truman from Koahsiung, Taiwan, authorities said. The containers were consigned to the Chens’ company, Join Sun Corp., a firm that had leased space in a small warehouse in an industrial section of Hayward, southeast of San Francisco.

While the manifest said the containers held plastic bags, U.S. Customs Service agents and California National Guardsmen on a routine inspection discovered the drugs.

Agents took all but 10 pounds of heroin, and replaced the remainder with rolls of plastic bags. They also installed beepers in the cartons and a video camera at the Chen’s warehouse.

Authorities watched as the containers were trucked to the Hayward warehouse May 23. As the federal tape recorders rolled, the Chens were heard combing the pallets, going through cartons, and gradually coming to the realization that their cargo was not there, an affidavit signed by Customs Agent Peter Louie said.

“This is devastating,” one woman was quoted as saying.

“It is impossible,” one of the men said.

The surveillance was almost blown when Michael Chen noticed a van across from his warehouse. An undercover agent who was in the front seat pretended to be asleep, then jumped as if he had been startled when Chen approached.

As Chen turned and walked away, the agent called out to him. Chen assured him that he was simply checking the area, then shook the agent’s hand and told him it was all right to continue his nap.

The next day, the agents hid in a postal truck. When a passer-by noticed an agent inside the truck, they decided to stop using vans and began renting warehouse space next to Join Sun.

On Thursday, agents watched as the Chens and Lu set about opening the remaining boxes. Shortly after 1 p.m., authorities moved in.

Louie’s affidavit reported that there were dozens of calls between the Chens’ homes and businesses to Thailand. Forty-five of those calls came from a motel owned by Kelly and Michael Chen.

Times staff writer Ronald J. Ostrow contributed to this story from Washington.