ATF Is Yet Another Rogue Federal Agency
When I was a younger guy, back in the 1980s, it was the DEA that was the rogue agency of the federal government. Besides the usual corruption of shaking down low level dealers for drugs and money and then turning them into informers, some agents skimmed tens of millions from a money laundering operation while others actually stole drugs from the agency’s evidence vault and resold them for their own profit. And, of course, the agency was involved in the whole Contra wars under Reagan and killed many innocent people at home and abroad.
These days, under Trump, it is ICE and CBP that are the rogue agencies, acting with impunity, violating the law, and ignoring the courts, all under Trump’s imprimatur. But one constant throughout all the years has been the ongoing corruption at the ATF, the bureau of Alcohol, Tobacco, and Firearms.
A NY Times story today documents how the ATF ran a slush fund for many of its operations outside the control of Washington and the agency personnel assigned to oversee it. That slush fund ended up being used by agents all over the country, without any oversight. And, of course, a lot of that slush fund ended up in agents’ pockets.
It all began with an agent named Thomas Lesnak who had the brilliant idea that he could catch cigarette smugglers, not by setting up a front company like most ATF operations, but by actually partnering with a real company, Big South Wholesale. The ATF agents allowed the managers of Big South to conduct illegal tobacco sales so that they could catch smugglers and others who offered to trade weapons or stolen property for cigarettes as well.
The problem was that the operation was not technically legal. According to the Times, “Normally, undercover operations run entirely on government money, from a government account that is reviewed by government auditors. But Mr. Carpenter was running a real company. Sometimes he worked for the government, sometimes for himself, and it was not always clear where the profits should go”. The answer they came up with was to put that money in question into an account controlled by one of the owners of Big South, Jason Carpenter. Doing that kept it out of the view of the ATF and subsequently Congress. Mr. Lesnak, however, directed all the spending out of that Carpenter account, with “accounting” handled by Carpenter’s bookkeeper. Needless to say, this arrangement eventually led to massive corruption.
Lesnak’s money became know within the ATF as a “management” account where agents could go to get whatever they wanted or needed without authorization. According to Lesnak, he received requests for all sorts of items from credit cards to luxury cars to even a vending machine with a hidden camera. At one point the account not only owned a fleet of luxury vehicles, it was also paying the American Express cards of up to 15 agents.
The work with Big South did lead to hundreds of arrests but the ATF had its sights on an even bigger target, Tabesa, a Paraguyan tobacco company. In early 2011, Big South sold itself out to US Tobacco, but Carpenter and his partner, Christopher Small, continued to work as buyers and sellers for the larger firm. They used their position to buy untaxed Tabesa cigarettes and then mark them up massively and resell them to US Tobacco. In one such transaction, the ATF “management” account booked over $500,000 in profit. Carpenter and Small were paid $6 million each over a two year span. Workers in the Big South warehouse were given televisions, freezers and hundreds of dollars in cash payments. All of this was unreported and tax free income as the money didn’t exist as far as the government was concerned.
According to the NY Times, “Those around Mr. Lesnak benefited, too. The old [Big South] 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.”
In order to prevent the scheme at Big South from becoming public, it was important to make sure those the ATF eventually charged with crimes pleaded guilty. Sometimes that required Mr. Lesnak to bribe those pleas out of the defendant. One convicted defendant states that Lesnk paid for a first class plane ticket to his trial and paid him $100 monthly as well as picking up the rent on his home while he was in prison.
The scheme might have gone on forever but new management at US Tobacco began questioning what was going on at Carpenter’s and Small’s warehouse. After being notified that the ATF was running operation out of the warehouse, the company raided it and seized everything. US Tobacco then sued Carpenter and Small for $24 million, accusing them of fraud. The ATF operation against Tabesa disintegrated and its owner was elected President of Paraguay.
Once the scheme was exposed, the ATF essentially did nothing. That’s because management at the ATF was in on the scheme from the beginning. According to the Times, “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 [Big South]”. The Justice Department attempted to keep it hidden for years and Congress was never notified. Lesnak promptly retired and not one single person at the agency was ever reprimanded or prosecuted.
It seems that every federal enforcement agency in the federal government is a hotbed of corruption and abuses. The ATF has been like this for literally decades.