Scams

by Tim Cushing


Filed Under:
atf, slush fund, smuggling, tobacco



ATF Ran Illegal Mixed-Money Slush Fund For Years With Zero Oversight, Auditing, Or Punishment

from the no-one's-more-above-the-law-then-law-enforcement dept

The ATF isn't restrained by oversight. It's hardly restrained at all. It's made a business of fake stash house sting operations, where downtrodden suckers looking for cash are persuaded to rob a ficitonal stash house of its fictional drugs. The problem is the government then bases its charges on the amount of nonexistent drugs sting victims were told the fake stash house contained. In no sting operation was the "amount" of drugs lower than 5 kilograms -- the amount needed to trigger a 20-year minimum sentence.

Why is the ATF involved? Because every sting operation involves fictional armed guards, necessitating the use of illegally-obtained weapons by sting victims. Bang. More charges with lengthy minimum sentences.

When not pushing people into fake robberies, the ATF regulates alcohol, tobacco, and firearms. (Also explosives, but it makes the well-known acronym more than a bit clumsy.) To facilitate maximum price gouging by state governments, the ATF tries to break up untaxed cigarette sales.

It's this simple work that has propelled an accountability-free explosion in the ATF, most of it traced back to a single office in Bristol, Virginia, fronted by a quasi-legitimate tobacco distributor. From there, an appalling amount of illegal activity was participated in by ATF agents and officials.

Matt Apuzzo has put together an amazing story for the New York Times, sourced from interviews and public records requests -- one that will cause your jaw to drop lower the further you scroll down the page. As Apuzzo puts it, the operation began as a way to bust black-market cigarette sales. It ended up as something much more sinister: an ATF slush fund that mixed public and private money with zero oversight or statutory authority. If any agent needed anything -- from vending machines with cameras in them to credit cards for unquestioned expenses -- they went to Bristol. It was done in the government's name, but plenty of agents personally profited from the operation.

The spending was not limited to investigative expenses. Two informants made $6 million each. One agent steered hundreds of thousands of dollars in real estate, electronics and money to his church and his children’s sports teams, records show.

Federal law prohibits mixing government and private money. The A.T.F. now acknowledges it can point to no legal justification for the scheme. But far from reining in the spending, records show that supervisors at headquarters encouraged it by steering agents from around the country to Bristol.

As the money mixed, the spending increased. ATF officials in Washington sent agents to Bristol to obtain equipment, supplies, and spending money in order to bypass red tape. So many vehicles were requisitioned through Bristol the office had to set up its own leasing company. Hotel bills and gas alone ran nearly $25,000 a month. And yet, the DOJ never looked into the ATF operation or its incredible amount of spending. With public and private funds overlapping, it would have been a nightmare to audit. How much of a nightmare, no one knows… because no one ever tried. Unbelievably, the "accounting" for the ATF's oversight-less, mixed cash operation was left to a single bookkeeper using Quickbooks on her own computer.

As part of the sting, two informants helped pad the ATF's secret account by purchasing cigarettes directly from US Tobacco at $3 a carton and selling them back to the ATF for $17 a carton. Rather than this being a losing proposition for the ATF, the difference in prices allowed the ATF to dump another half-million into its secret Bristol account.

The ATF office was basically housing gangsters with hearts of ill-gotten gold at this point.

[ATF agent Thomas] Lesnak said he set the prices, allowing his informants “customary and reasonable” profits. Mr. Carpenter and Mr. Small were paid $6 million apiece in less than two years, according to court documents. Such huge sums would normally require special approval. But since the money came from the secret account, the A.T.F. officially paid them nothing.

Those around Mr. Lesnak benefited, too. The old tobacco warehouse — a $410,000 repurposed candy factory — was given to his church, property records show. A half-million dollars from the secret account was donated to local law enforcement agencies. Thousands more went to Mr. Lesnak’s children’s school. Mr. Lesnak handed out Blu-ray players and Xboxes to his son’s baseball teammates, one player recalled. The donations, Mr. Small said, were made at Mr. Lesnak’s insistence.

To keep his warehouse workers happy, records show, Mr. Lesnak handed out envelopes of cash — $500 to $700 a month, tax free. On an office casino trip, Ms. Davis testified, he provided money for gambling. Employees were given DVD players, televisions or freezers that arrived in the warehouse, records show.

The ATF's operation finally ran into trouble when US Tobacco began taking an interest in purchases tied to the agency. Concerned it was being used to facilitate something resembling a criminal operation (but run by law enforcement personnel), US Tobacco began looking into activities at its Bristol warehouse. This led to one of the greatest moments of combined irony and schadenfreude in human existence.

The operation ran until Stuart Thompson, a bookish Manhattan native, took over as chief financial officer at U.S. Tobacco. He repeatedly pressed the warehouse manager to explain the unusual supply of Palermos. No market existed for that many cigarettes, he said.

On March 8, 2013, the warehouse manager called Mr. Thompson. “He started telling me that A.T.F. was doing operations in our warehouse,” Mr. Thompson recalled.

Company lawyers descended on the warehouse, seizing everything. A tobacco company had just raided the A.T.F.

Despite all of this, no one involved has been prosecuted. The DOJ still hasn't attempted to audit the funds the ATF worked with, even while declaring the operation to be highly problematic. Everyone involved walked away unscathed. Even Agent Lesnak, who spearheaded the operation and set up the mixed-money slush fund, never received so much as an oral reprimand. I suppose the DOJ felt the 100 or so arrests resulting from the operation outweighed the illegal activity that went on for years under its nose.

The whole story is worth reading. It shows the ATF has the DEA's mentality: nothing matters but the job. Any and all illegal operations are forgiven in advance (and often in arrears) because doing the government's version of God' work involves breaking laws like omelet eggs and keeping oversight as far away as possible from day-to-day activities.


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  • icon
    aerinai (profile), 14 Sep 2017 @ 11:44am

    Drain the swamp?

    There are just no words to describe how corrupt this is. This is the kind of thing that happens in 3rd world countries ran by dictators.

    You know there is no accountability when not a single person is charged, multiple people are STILL promoted, and dirty money flying everywhere...

    Congress should investigate each and every officer and official that contacted or used Bristol and fire them on the spot for gross negligence.... but instead... expect more promotions and more kickbacks and another Bristol to spring up in a couple months (if there isn't one already out there).

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 14 Sep 2017 @ 12:21pm

      Re: Drain the swamp?

      Yeah, I don't understand how all this can come out and there's no other agency like the FBI that can step up and arrest these other LEO's. Or I guess they could but they're just unwilling?

      reply to this | link to this | view in chronology ]

      • identicon
        jedgar, 14 Sep 2017 @ 3:31pm

        Drain the LEO swamp?

        .

        "...FBI that can step up and arrest these other LEO's .."


        Wow -- the naivete is really deep here.

        The FBI is even more corrupt than ATF -- just who is gonna arrest the bad guys in the FBI ? (FBI has been corrupt since its inception)

        This type of corruption is inherent in government. Bigger the government -- the bigger the corruption -- and it's much easier to hide from the sappy public in all these vast, powerful sub-agencies of bureaucracy.

        Smaller government is the ONLY possible solution. But who in Washington D.C. is seriously calling for smaller government or reducing ATF/FBI power (?) -- NOBODY (... not Trump, Schumer/Pelosi, Ron Wyden, or even Rand Paul).

        reply to this | link to this | view in chronology ]

        • identicon
          Wendy Cockcroft, 15 Sep 2017 @ 5:56am

          Re: Drain the LEO swamp?

          All attempts to "Make government smaller" tend to have the opposite effect. More accountability is the answer.

          reply to this | link to this | view in chronology ]

        • icon
          Uriel-238 (profile), 15 Sep 2017 @ 6:09pm

          No one's tried for decades.

          To be fair, neither Bush nor Obama nor Trump have sought to reform law enforcement in the United States. There have been only modest steps back of extensions of power that were set in place by the same guy(s), usually after some Loose Cannon Cop embarrassed agencies for counties around.

          We've not tried draining the LEO swamp.

          But smaller government only lifts those who remain beyond the reach of the law and accountability. Nice try, but we've already experienced millennia of tyrannical kings.

          reply to this | link to this | view in chronology ]

    • icon
      Anonymous Anonymous Coward (profile), 14 Sep 2017 @ 12:24pm

      Re: Drain the swamp?

      While I would love nothing better than to see Congress occupied with something other than making up more stupid senseless laws, I am not sure that investigating agents is in their purview. Now going after the head of ATF might be another story.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 14 Sep 2017 @ 7:17pm

        Re: Re: Drain the swamp?

        Congress is perfectly able to hold hearings about this sort of thing. Congress can't force anyone to be prosecuted, of course - but they do control whether the ATF gets a budget next year.

        reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 14 Sep 2017 @ 12:43pm

      Re: Drain the swamp?

      "This is the kind of thing that happens in 3rd world countries ran by dictators."

      The level of development of a nation has nothing to do with corruption.

      "Congress should investigate each and every officer and official that contacted or used Bristol and fire them on the spot for gross negligence."

      I am pretty sure you could not get even 20 people in your local area to hold congress responsible for anything the next election. They will be too busy voting for trump so that hillary does not get into office or voting for hillary so that trump does not get into office.

      The parties have effectively rendered "the peoples voice" impotent, and the people don't even understand how or why this is the case.

      reply to this | link to this | view in chronology ]

    • icon
      Stephen T. Stone (profile), 14 Sep 2017 @ 1:10pm

      Re: Drain the swamp?

      Do not fool yourself into thinking the United States is above this kind of corruption because it is a “first world country”. If anything, you should feel surprised that we actually know more about this kind of corruption than ever before.

      reply to this | link to this | view in chronology ]

  • identicon
    David, 14 Sep 2017 @ 12:48pm

    Problematic?

    Despite all of this, no one involved has been prosecuted. The DOJ still hasn't attempted to audit the funds the ATF worked with, even while declaring the operation to be highly problematic.

    The word you were looking for was "criminal".

    reply to this | link to this | view in chronology ]

  • icon
    tom (profile), 14 Sep 2017 @ 1:08pm

    There were no penalties of any consequence over the Fast and Furious debacle years ago and many people have been murdered from that mess. Why would simple financial gain be any different?

    reply to this | link to this | view in chronology ]

  • identicon
    Chris Brand, 14 Sep 2017 @ 1:15pm

    Acronym

    How about Firearms, Alcohol, Tobacco and Explosives ? I'm sure every employee would love to be an "Agent of FATE"...

    reply to this | link to this | view in chronology ]

  • icon
    OA (profile), 14 Sep 2017 @ 1:38pm

    I suppose the DOJ felt the 100 or so arrests resulting from the operation outweighed the illegal activity that went on for years under its nose.

    There is a metric ton of circumstantial evidence that law enforcement doesn't actually care about the law. So what, precisely, do they care about?

    reply to this | link to this | view in chronology ]

  • icon
    Bamboo Harvester (profile), 14 Sep 2017 @ 1:40pm

    "Unbelievably, the "accounting" for the ATF's oversight-less, mixed cash operation was left to a single bookkeeper using Quickbooks on her own computer."

    I can just imagine the Quicken ads coming this tax season...

    "....you can even run a multi-million dollar black bag operation with our software!...."

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 14 Sep 2017 @ 2:29pm

      Re:

      What was the need for accounting software? No one CARED where the money went. Maybe it was only to make sure that they didn't overdraw the account?

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 14 Sep 2017 @ 2:23pm

    Well you all failed after the civil war

    America was never envisioned to have a permanent military or police force by the founders, we can only surmise that Lincoln would have disbanded it and done the publicus thing except that he was assassinated by and replaced by slavers, oh well hundred of thousands died for nothing, and here we are

    reply to this | link to this | view in chronology ]

    • identicon
      jedgar, 14 Sep 2017 @ 3:47pm

      Re: after the civil war

      Lincoln was a tyrant who forcibly destroyed the constitutional republic of the united states. He eliminated the sovereign power of individual states and is primarily responsible for the behemoth, corrupt central government that rules America today.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 14 Sep 2017 @ 9:12pm

        Re: Re: after the civil war

        But he gave a really nice speech and was the National champion wrestler. He was the Undertaker of his day.

        reply to this | link to this | view in chronology ]

      • identicon
        Wendy Cockcroft, 15 Sep 2017 @ 6:00am

        Re: Re: after the civil war

        jedgar, how do you refer to the events of 1861 to 1865?

        How do you feel about Confederate iconography?

        Excuse me but my dogs are barking. It must be that whistle of yours.

        reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 15 Sep 2017 @ 8:04am

        Re: Re: after the civil war

        Lincoln, through the civil war, pretty much established by military force that "states have no right to secede from the U.S.." But that's about it for Lincoln's destruction of individual states' sovereign power.

        You may want to do some research into when the 14th Amendment was passed. Hint: Lincoln didn't sign it (in fact, no President signed it; it was vetoed and then the Presidential veto was overridden).

        Also, the text in question is: "No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws."

        Any power creep beyond that (which admittedly exists) is the result of later governments and later Supreme Court rulings. It seems unfair to attribute it solely to the existence of the 14th Amendment, as all that Amendment does is to say that individual States can't infringe upon their citizens' rights any more than the Feds can.

        Do you really want your individual states to have the sovereign power to abridge your privileges and immunities, to deprive you of life, liberty or property without due process, and to arbitrarily treat certain persons as being not protected by the law? Do you really want, say, CA, or MA, or NY, amending their own state constitutions to ban the Republican Party? Or for a state to actually implement Sharia law (which isn't actually happening)? Because the 14th Amendment is what prevents that from happening.

        Perhaps the 14th Amendment is the first stone, the cornerstone, that allowed the massive bureaucracy that is the U.S. Federal government to be built. I'm not enough of a Constitutional scholar to argue otherwise. However, attributing all of the blame to the man who didn't even lay that cornerstone, but merely (although, admittedly, by force of violence) zoned out the land for the building... it's just not historically accurate.

        reply to this | link to this | view in chronology ]

  • identicon
    dave, 14 Sep 2017 @ 2:48pm

    Updating my resume

    How do I get a job with them? F me. It sounds better than being in the mob! Same pay, less risk.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 14 Sep 2017 @ 9:14pm

      Re: Updating my resume

      With this level of corruption being known to the public, my guess would be you have to bribe your way in.

      reply to this | link to this | view in chronology ]

  • icon
    orbitalinsertion (profile), 14 Sep 2017 @ 6:45pm

    Grunka Lunka dunkety darmedguards ...

    reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 14 Sep 2017 @ 7:50pm

    eNTERTAINING..

    So they keep running fake senerios and reporting them as real..
    Making up all kinds of info and facts they JUST CANT BE SUPPORTED...and SOME idiot gets caught in the middle..

    Anyone ever wonder HOW/WHEN our police force becomes paranoid?? watching Videos, reading reports of all this MAJOR deals being captured and processed..
    I wonder how many FAKE dead agents their are..

    reply to this | link to this | view in chronology ]

  • icon
    scsam (profile), 15 Sep 2017 @ 4:35am

    Fake news

    Add this to our new reality everything now is officially designated as "fake" including our corrupt government so no one questions their authority.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Sep 2017 @ 7:30am

    no-one's-more-above-the-law-then-law-enforcement

    For shame, Tim.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Sep 2017 @ 12:25pm

    Thanks for the laughs

    It's stories like these that not only make reality seem unrealistic, but also make me extremely happy I'm not living in the ´MURICA.

    reply to this | link to this | view in chronology ]

  • identicon
    Starchild, 15 Sep 2017 @ 9:27pm

    Tell SF Board of Supervisors not to enable tobacco enforcement corruption

    This is the kind of corruption and abuse that is caused by drug Prohibition. Sadly, some agencies are still trying to expand the failed "War on Drugs". The San Francisco Board of Supervisors, of all entities, recently criminalized the sale of flavored tobacco and menthol cigarettes here in SF, despite being reminded of the murder of Eric Garner which happened because a black market for cigarettes had been created, giving rise to his being assaulted by police officers for selling them.

    If you think opening the door to more ATF schemes like the ones described here in which agency employees and informants get rich while other people are entrapped by government into serving years behind bars may not be the best idea, you can write and let them know:

    Board.of.Supervisors@sfgov.org.

    reply to this | link to this | view in chronology ]


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