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The investigators watched Shantay Pittman, 35, sling MDMA at the corner of Broadway and East 18th Street before arresting her, city Public Safety Director Jerry Speziale said.
They stopped Pittman and found her carrying six bags and 43 vials of the drug, he said.
The corner has been the scene of several shootings in recent years as rival gangs battle over the drug trade. Police have also reported violent robberies and prostitution arrests there, as well.
Pittman, of East 19th Street, was charged with drug offenses and released pending court action.
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