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City detectives moved in after seeing Tony Williams, 23, sling bags of crack at Godwin Avenue and Summer Street, Public Safety Director Jerry Speziale said.
They seized 147 bags of the drug and $179 in proceeds, he said.
Several victims have been shot dead or wounded -- including four in the past seven months -- in the neighborhood.
The violent 42-50 street gang have controlled the area amid frequent gunfire. Reputed ringleader Marvin Goodman was wounded in a drive-by shooting last year.
Goodman and 14 reputed members and associates of the 42-50 crew put 50,000 doses of lethal heroin and over two pounds of crack a week on the city's streets, an indictment returned three months ago alleges.
SEE: KILLER HEROIN: 15 Members, Associates Of Violent 42-50 Paterson Drug Gang Indicted
The heroin was linked to eight overdose deaths and 14 nonfatal overdoses, state Attorney General Andrew J. Bruck said.
Williams was booked into the Passaic County Jail to await a first appearance on drug possession charges.
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