According to recently unsealed court documents, the Bureau of Alcohol Tobacco Firearm and Explosives (ATF) apparently outwitted its supervisors, auditors and competition to illegally traffic black market cigarettes, making millions of dollars in the process.
According to court documents, two veteran ATF agents, Thomas Lesnak and Ryan Kaye, convinced a little-known Alabama tobacco distributor to open a new franchise in Bristol, VA so the senior ATF agents could operate and fund millions in off-the books government operations without any supervision. Ultimately, the ATF operation defrauded state and federal governments of millions in cigarette taxes by, buying low in Virginia and selling high in New York via the black market.
It was a gold mine.
“We basically merged ourselves with a tobacco business,” Lesnak said last year in a confidential Department of Justice deposition. “It got to the point where we were, you know, warehouse workers as opposed to criminal investigators.”
The ATF agents’ creative thinking turned into the “go to” source for other ATF operations looking for quick cash, fast cars and luxury items without the usual government requisition forms.
Of course, the original operation was premised on a so-called “real investigation” looking to nab criminals making money in the lucrative cigarette black market. The newly disclosed court documents put the spotlight on a little-known illicit market making smugglers multi-millionaires. The money comes easy, as many states have taxed smokers with sky-high taxes, opening up a need for cheaper tobacco. The ATF used two methods to enrich themselves and traffickers: buy cigarettes tax-free outside the US or buy them in low-taxed states (like VA $3 per carton) and move them to over-taxed states like New York ($ 43.50 per carton).
The conduits for the ATF were shady entrepreneurs, Jason Carpenter and Christopher Small who provided the Bristol “ATF satellite office” with the product and ultimately earned more than $6 million as so-called ATF informants working hand-and hand with federal agents.
“The idea was, ‘If you build it, they will come,’” Carpenter said in court documents. “And lo and behold, they came.”
They also set up a car business. “We had so many vehicles that we actually set up a company just for leasing,” Small said in a deposition. “Agents relied on the management account for routine expenses, and Mr. Small said hotel bills and gas alone could run to $23,000 a month. ‘We had 14 or 15 agents carrying American Express cards that we paid the bill on.’”
According to court papers, the operation that ended in 2013 netted approximately 100 arrests over the seven-year operation. In the end, the ATF acknowledged both agents with awards in 2010 that said: “Your efforts have helped to revolutionize the way we do business.”
You can’t make this up!
Court documents also revealed that a single transaction where the informants acted as both the buyers and the sellers, earned them a whopping $600,000. The email chain read: “I smell cash??” Small said. “Ka-Ching!” Carpenter responded.
To ensure the warehouse ran smoothly without questions, the ATF agents paid workers hush money, approximately $500 to $700 in cash each month.
Once the profits grew, the agents who have never been administratively or criminally charged established a private bank account and distributed the cash according to their scheme, without congressional scrutiny. As the successful “off the books” operation spread within the ATF ranks, agents throughout the country knew they could gain access to money and bling, without the typical government approval, to fund their ATF undercover programs.
Last year Agent Kaye testified that he had no idea who ran the Virginia tobacco smuggling operation. “I do not recall exactly who authorized that. I wouldn’t call it ‘authorization.’ I would call it an ‘understanding…’ I don’t know of a specific law that authorizes those specific activities.”
Yet the operation remained intact, in the light of day without interruption for seven years.
It finally ended in 2013 when the warehouse manager Stuart Thompson blew the whistle on the ATF agents when they refused to provide lawful information regarding the excessive tobacco sales. Shortly thereafter, ATF headquarters raided the warehouse, seized everything, fired the employees (not the agents) and promptly covered up the embarrassing episode.
To this day neither of the ATF “operating” agents nor their “customer” agents have been reprimanded; in fact, Kaye was promoted!
The ATF’s “fog of war” approach on recordkeeping is not new. In a November 2010 a Department of Justice report, Office of Inspector General highlighted ATF’s incompetence regarding record keeping. “Discrepancies were caused by incomplete data in ATF’s N-Force and N-Spect databases, inconsistent coding of work activities by ATF, errors in ATF’s description of the data, unsupportable data entries by ATF, and variations in the time frame covered by ATF’s data.”
The exploits are legendary. Both DOJ and ATF played major roles in the “Fast and Furious” gun walking program that left at least two federal agents murdered and a number of other deaths south of the border in Mexico. The Brouhaha eventually led to the suspension of the program but after months of investigations, no one was fired from either agency.
Instead of firing ATF supervisors for the ill-fated gun program, ATF brass also promoted key players in the “fast and furious” debacle. The “screw-up, move-up” position is nothing new for the federal government. ATF’s William Newell, who played a key role, was promoted to Special Assistant to the Assistant Director for ATF’s Office of Management in DC. And, Arizona’s “Fast and Furious” ground supervisor, David Voth moved to Washington DC to oversee ATF’s Tobacco Division as Branch Chief.
In a similar “boneheaded” move, ATF set up the controversial “gun walking” program (Fast and Furious) to nab cartel gun buyers (straw purchasers), but, the failed program allowed known-criminals to purchase firearms without any beacon-type devices to follow the weapons as they made their way to cartel henchmen. Fast and Furious gained media notoriety and added a notch to the agency’s belt, but for the wrong reasons. However, according to ATF agents, there are more than 4,000 open investigations operating under project gunrunner.
Two federal law enforcement agents are dead and documents showed Jamie Zapata (ICE agent murdered in Mexico) found guns that were allegedly discovered at slain Border Patrol Agent Brian Terry’s crime scene that came from a gun-walking program in Texas.
In a letter dated March 16th, 2011 from Senator Grassley to Customs and Border Patrol (CBP) Commissioner Alan Bersin, the senator demanded answers regarding the facts in which a straw purchaser Jamie Avila was pulled over by CBP agents that summer along the US border with dozens of weapons in his vehicle but was eventually released by (ATF) with an Assistant US Attorney General’s blessing. This letter also confirms that multiple government agencies knew about the gun-walking program long before it went astray.
Nevertheless, one thing is clear, ATF requires a heavy-dose of housecleaning. Despite the litany of scandals, the continuation of “business as usual” in Washington DC reaffirms accountability within federal agencies is hard to come by.
theKDreport.com 