Federal agents yesterday dismantled a major North Jersey drug trafficking ring authorities said flooded the streets with $2 million of heroin per month and then laundered the profits through Atlantic City casinos, sham businesses and the purchase of luxury cars and real estate. After a three-year investigation led by the Drug Enforcement Administration, authorities moved in yesterday morning to seize its assets and arrest its alleged leaders in Essex and Union counties. Chief among them was Rasheem "Rosco" Small, a 30-year-old Newark man who authorities say built the city's premier heroin ring in recent years to finance his taste for expensive jewelry, big-money gambling and the white Bentley he drove. Also charged were a Newark police officer who helped in the laundering operation and the ring's top lieutenant, a "five star general" in the Bloods gang who used drug money to purchase the comfortable home where he and his wife lived in suburban Cranford, authorities said. The organization laundered approximately $7 million in drug profits, authorities said. "Every business requires capital to continue and grow," said Gerard McAleer, Special Agent in Charge of the Drug Enforcement Administration's New Jersey Division. "We targeted their capital and profits and put them out of business." Small initially sold drugs in Pennsylvania, but saw an opening in the lucrative Newark heroin trade after the city's former top kingpin, Hakeem Curry, was arrested in 2004, authorities said. By the following year, the Small organization was distributing up to 2,000 "bricks" of heroin -- each containing 2.95 grams -- every several days, according to an affidavit signed by DEA agent Mike Rusciano and filed in federal district court in Newark. The crew allegedly had a supplier in the Bronx and used stash houses in Newark, Orange and Rahway. Small and his top lieutenant and "operations manager," Abdullah Meyers, 33, had no legitimate income, authorities said, but each had bank accounts that held millions of dollars. They allegedly used shell trucking and home improvement companies to purchase real estate in Newark and East Orange to launder their profits. They also relied on straw buyers, authorities said, including Michelle Davis, an 11-year veteran of the Newark police department who purchased a Range Rover for Small with his drug cash in January 2005. Both men, authorities said, had an affinity for flashy cars. Small drove the Bentley, while Meyers owned a $178,000 Lamborghini, a Dodge Viper and a Mercedes- Benz SUV, according to the complaint. Meyers planned to purchase a "James Bond Vanquish," a $480,000 sports car, according to a wiretapped conversation cited by investigators. Small, according to the complaint, was a "frequent visitor and 'high-roller' in Atlantic City," buying more than $3.1 million in casino chips between 2003 and 2006. He also handed cash to his deputies, authorities said, who would later cash the chips in as winnings to "wash" the drug money, authorities said. The Small organization's success and spending made it harder and harder for it to keeps its drug proceeds secret from federal agents, said William Offord, special agent in charge of the Internal Revenue Service's Newark division, which worked with the DEA. Investigators used wiretaps and five confidential informants during the probe, in which the State Police and Newark Police Department assisted. Small and Meyers were charged with conspiracy to distribute one kilogram or more of heroin, and conspiracy to conceal drug proceeds. They face potential life prison terms. Assistant U.S. Attorney Robert Frazer called both men flight risks and dangerous during a hearing yesterday, and U.S. Magistrate Judge Mark Falk ordered them held without bail. Davis was charged with conspiracy to conceal drug proceeds and faces up to 20 years in prison. The judge released her on a $150,000 bond. Henry Klingeman, the police officer's attorney, said he expects his client to be suspended without pay. "The allegations against her in the complaint are very thin, and they are merely allegations," he said. Newark Police Director Garry McCarthy called the officer's alleged conduct "disgusting." "It casts a shadow over the hard-working men and women of this agency," McCarthy said.