FOXNews.com: US: ATF misplaced 420 million cigarettes in stings

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US: ATF misplaced 420 million cigarettes in stings Sep 26th 2013, 09:58 Published September 26, 2013 Associated Press B. Todd Jones of Minnesota, President Obama's then-nominee for director of the Bureau of Alcohol, Tobacco, Firearms and Explosives testifies on Capitol Hill in Washington.AP WASHINGTON –  Government agents acting without authorization conducted dozens of undercover investigations of illegal tobacco sales, misused some of $162 million in profits from the stings and lost track of at least 420 million cigarettes, the Justice Department's inspector general said Wednesday. In one case, agents for the Bureau of Alcohol, Tobacco, Firearms and Explosives sold $15 million in cigarettes and later turned over $4.9 million in profits from the sales to a confidential informant — even though the agency did not properly account for the transaction. The ATF's newly appointed director, B. Todd Jones, said the audit covered only selected, "historical" ATF investigations between 2006 and 2011, and said the agency had tightened its internal guidelines since then. The audit described widespread lack of ATF oversight and inadequate paperwork in the agency's "churning investigations," undercover operations that use proceeds from illicit cigarette sales to pay for the ATF's costs. The audit came as a new blow to a beleaguered agency still reeling from congressional inquiries into the ATF's flawed handling of the Operation Fast and Furious weapons tracking probes in Mexico. "ATF's guidance regarding churning investigations lacked breadth and specificity, and managers at ATF headquarters as well as managers and special agents at ATF field offices often disregarded it," Inspector General Michael E. Horowitz wrote in the 53-page audit. The inspector general recommended tightened ATF procedures for documenting, tracking and reviewing proceeds from its undercover tobacco stings. Jones said the agency has adopted most of those guidelines. While accepting responsibility for "management and oversight lapses that allowed those deficiencies to develop," he insisted that "the report's findings do not reflect current ATF policy or practice in this area." In a written response, Horowitz approved the ATF's moves in April 2013 to tighten its standards. Horowitz cautioned that his office "has not been provided evidence to verify the sufficiency of actions taken." Reviewing three-dozen ATF undercover cigarette stings between 2006 and 2011, the inspector general found that none of those income-generating probes had been given proper prior approval by an internal ATF review committee, as required by agency policy. One of those sting operations did not have any approval, either from the ATF or the Justice Department. In that 2009 case, ATF officials allowed a tobacco distributor working as an ATF confidential informant to keep $4.9 million in profits from cigarette sales to criminal suspects. ATF officials justified the move by explaining the $4.9 million covered the informant's expenses. But the inspector general said the agency failed to "require the informant to provide adequate documentation to support or justify those expenses." The remaining profits were used by agency officials to pay for a separate ATF cigarette smuggling sting — which the inspector general said violated ATF rules that profits from a "churning investigation" could only be used to fund that specific operation, not other cases. The inspector general said shoddy documentation and inventory controls made it impossible to account for more than 2.1 million cartons of cigarettes — totaling 420 million cigarettes — during at least 20 separate ATF sting operations. The watchdog estimated the retail value of those items at $127 million. An ATF spokeswoman disputed the inspector general's 2.1 million carton tally for cigarettes that could not be accounted for during the inquiry. "In contrast to the OIG auditors' numbers, ATF's reconstructive inventory showed only 447,218 cartons that were not reconciled because of insufficient documentation," said ATF spokeswoman Ginger Colbrun. The inspector general noted the ATF's different cigarette inventory numbers in its report, but added that "we do not believe the results of the ATF's review are comparable to the OIG review."

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