Officials say the dealer believed he was selling the weapon to a terrorist group bent on shooting down a U.S. airliner.
Shoulder-fired missiles are nightmare weapons - lightweight, portable, cheap and deadly, and there are thousands of them out there.
The military calls them MANPADS, and according to the nation's intelligence and security services, they pose a threat to everyone who flies.
When 60 Minutes first ran this story in March, there was real concern that one of these weapons in the hands of one terrorist could bring down an airliner in the United States.
This most recent arrest last week in Newark, N.J., only deepened the concern. Correspondent Morley Safer reports.
The shoulder-fired missile is a lethal blend of simplicity and sophistication. It's just five feet long and 35 pounds, like the Stinger missiles we gave the Afghans - and it can be aimed and fired in a matter of seconds.
Reaching altitudes of 15,000 feet, this heat-seeking warhead will chase a jet engine at Mach 2 - twice the speed of sound. That means a missile fired from one mile away will hit its target in three and a half seconds.
Senator Chuck Schumer of New York believes they pose an imminent threat for which we are unprepared: "What we know is that 27 terrorist groups, including al Qaeda, have these weapons. We know they fit in the trunk of your car. And so, someone could drive, get on a rooftop near an airport, go into a woods near an airport, and fire one of these. If I were a terrorist, this would be probably the easiest way to scare - to kill hundreds of people and scare tens of millions."
Al Qaeda's own tapes show terrorists training with shoulder-fired missiles, and security services believe the stage is set for an attempt against a U.S. commercial jetliner.
Last November, the Transportation Safety Administration summoned 25 airline executives to Washington for a secret briefing. They were told to prepare themselves for the unthinkable: There was growing evidence from intelligence agencies, including the CIA, that terrorists had plans to use shoulder-fired missiles against U.S. passenger planes.
"The atmosphere in the room was dead serious," says Admiral James Loy, who heads the Transportation Security Administration, part of the new Homeland Security Department.
They even brought samples in for the executives to see and touch, says Loy, "and the rapt attention shown by every member of that airline executive group was a palpable thing in the room."
If there were any doubters among the executives in that room, they were dispelled three weeks later when suspected al Qaeda terrorists fired two Russian-made missiles at an Israeli charter plane taking off from Mombasa, Kenya.
They missed their target, but made their point: Everyone is vulnerable.
60 Minutes asked Loy if he agrees with the American intelligence community that these weapons have likely already been smuggled into the country,.
"The likelihood, the possibility, of course is always there," says Loy. "But we simply do not have evidence that there's any kind of an imminent threat posed here in the United States."
There's not a specific threat, but there's plenty of potential.
"The evidence is a very real concern about the inventory of these things, worldwide," says Loy. "There are a lot of them out there loose."
Ironically, some of those rogue missiles were made in the USA.
In the late 1980's, the U.S. gave Afghan rebels almost 1,000 Stinger missiles. This high-tech gift to a low-tech army helped break the will of the Soviet occupation.
Those missiles, along with thousands of Soviet and Chinese copies, were available for as little as $5,000 each. And they've given terrorists a nasty advantage. So far, they've attacked passenger planes in Africa and Central America.
"Since 1978, there have been 35 attacks on commercial aircraft," says Loy. "In terms of the success rate, 24 of those aircrafts have actually come down, [with] the loss of about 640 lives."
Earlier this year, hundreds of armored troops swarmed London's Heathrow Airport following intelligence reports that a terrorist missile attack was in the works.
"If you had a weapons system like this, you don't even need to be near the airport to engage that target," says Jon Bearscove, who served on a Stinger team in the U.S. Army and has trained others to use the missile as well.
To us, it may look like a fairly sophisticated weapon. But Bearscove says it's incredibly simple: "It's a very simple weapons system to operate. It's very simple to train somebody how to use the weapon. And it's very easy to engage an aircraft and shoot an aircraft down with the weapon. It's not a complicated system."
The military has dealt with this problem for years by outfitting its aircraft with flare dispensers. The heat from the flares attracts the heat-seeking sensor on the incoming missile and throws it harmlessly off course.
Air Force One and some private executive planes are outfitted with more sophisticated countermeasures that use lasers to fool approaching missiles.
No U.S. airliners are equipped with them, but Israel's El Al passenger planes are.
In fact, several companies, including an Israeli group, Rafael, have begun to market competing versions of the anti-missile system. Given the speed of the missiles, the system must work automatically and instantly.
At Rafael, Patrick Bar-Avi says the anti-missile system not only bypasses the pilot, the aircraft's crew never even knows it happened: "We don't want them to know."
Bar-Avi, who is leading the project: "We sat down with pilots in Israel and asked them, 'Do you want to know while taking off there's a missile chasing you?' And they said, 'We don't want to know. We are so busy flying the aircraft, we don't want to know anything. And there's nothing we can do about it.'"
At more than a million dollars apiece, on-board protection is not cheap. Retrofitting all 6,000 planes in the American commercial fleet with electronic countermeasures could cost up to $10 billion.
And that's exactly what Sen. Schumer and some of his colleagues are proposing to pay for in a new bill.
"The airlines very much want the systems on board, but the airlines are nearly bankrupt," says Schumer. "And if we wait for them to pay for it, we'll wait too long."
That leaves just one alternative: taxpayers would have to foot the bill. But the Bush Administration has yet to commit any money to the plan.
Which leaves the question, is it going to happen in the real world, given the price tag?
"I don't know if it's going to happen," says Loy. "I think the right thing for us to do is to continue the methodical study process that has been undertaken by the National Security Council, not with years of study to come but with weeks of study to come."
For now, Homeland Security is working to secure the airport perimeters, in particular, take-off and landing zones. With its gradual climb and descent, a jumbo jet makes a fat target.
Steve Luckey, head of security for the Airline Pilots Association, says there are things a pilot can do to at least reduce the threat: "If we really want to put the power all the way up, you're going to increase that altitude ... and it's going to be out of that threat envelope much quicker, much sooner."
Luckey should know. He dodged missiles as a Vietnam fighter pilot, and says that, in the case of a jumbo jet, not every hit is necessarily fatal: "Large aircraft are fairly good at sustaining damage and still flying. I mean, they're made to fly on one engine, for example."
But that may be of little comfort. Sen. Schumer, and others in Congress, feel the flying public deserves the best defense that a lot of money can buy.
"It is a large expense," Schumer admits. "But just think of the expense if, God forbid, even one plane were shot down successfully by one of these missiles on American soil. People would stop flying. The economy would go right down into the clinker, and we'd lose that amount of money in a month or two."
And some of Schumer's Republican colleagues are equally concerned. In March, Congressman John Mica, chairman of the House Aviation Subcommittee, said that he went into a closed hearing with intelligence agencies skeptical about a possible missile attack.
What he heard in the hearing convinced him that "we cannot afford not to act."