Unable to spend appropriated funds on some agency priorities, agents ran an operation, under direct verbal control of headquarters, to sell off stolen property (cigarettes and tobacco). They didn’t do this as a smuggling sting as they have done before, but to raise money secretly for further clandestine, off-the-books and outside-the-law operations. The New York Times received the leak (probably as a result of the Mob War of Succession between the Ron Turk and Tom Brandon “families” in ATF HQ):
How that arrangement began is unclear. Ryan Kaye, an A.T.F. supervisor, testified that the [slush fund] was created “as a result of verbal directives from the A.T.F. program office and other headquarters officials.” Mr. Kaye’s full statement is sealed, but excerpts are cited in one publicly available document.
Verbal directives, i.e. “commit nothing to writing,” are not a standard or remotely legal way of doing any undercover operation. They are, in fact, a crime.
We smell the Chief Counsel’s Office, ATF’s equivalent of the Ninth Ring of Perdition. The only other ATF agent publicly identified as involved in the years-long fraud is one Thomas Lesnak, since retired, but dozens of ATF officials seem to have been involved — and, possibly, to have profited.
The operation came to light because the ATF and its informants cheated a group of tobacco farmers out of $24 million, for which the victims are now suing. At least $1M of the farmers’ money was skimmed by the ATF on behalf of each of two of the ATF’s paid informants, Jason Carpenter and Christopher Small. The whereabouts of the other $22 million are unknown at this time — spent on undercover operations, pocketed by agents or supervisors, or some combination of the above, most likely.
The Obama Justice Department fought a battle to keep the corruption trial out of the press, and until something happened in January, the New York Times went along.
It gets better… the government denies all wrongdoing, and have gotten a rubber-spined judge to seal nearly all documents in the case. But somehow the IRS has decided that they ought to make an example of the cheated farmers in this case: by demanding they pay taxes on the money the ATF stole from them. Read The Whole Thing™.
It seems like this is a case made for the appointment of a Special Prosecutor.