Tags: atf | lost | 420 million | cigarettes

ATF Lost 420 Million Cigarettes in Stings, Audit Finds

By    |   Thursday, 26 Sep 2013 02:32 PM

The federal Bureau of Alcohol, Tobacco and Firearms launched unauthorized undercover investigations into illicit cigarette sales, overpaid informants by millions of dollars, and lost track of 420 million cigarettes, according to a Justice Department audit covering investigations over a five-year period.

“We found a serious lack of oversight by ATF at both the headquarters and field office levels during the period of time covered by the audit,” the audit states.

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The audit noted that the ATF was granted so-called “churning authority” in 2004 to use proceeds from undercover operations to offset “necessary and reasonable operational expenses related to the same operations.” The ATF has used this authority only to investigate tobacco diversion, which involves efforts to evade state, local, or federal tobacco taxes, the report states.

The audit reviewed 20 of the 36 “churning investigations” between February of 2006 and June of 2011 that generated nearly $162 million.

Investigations were beset with problems.

“We found that ATF proceeded with churning investigations without proper approval, misused the proceeds from churning investigations, and failed to account properly for cigarettes and assets purchased during churning investigations,” the audit said.

“We also identified one churning investigation that was never authorized by ATF Headquarters or the Department. The unauthorized churning investigation sold approximately $15 million of cigarettes in an 18-month period.”

“In addition, due to inadequate documentation of cigarette inventories, when we reviewed records from 20 of the 36 churning investigations, we were unable to reconcile the disposition of 2.1 million of the more than 9.9 million cartons of cigarettes purchased for those 20 investigations. The retail value of those 2.1 million cartons of cigarettes (or 420 million cigarettes) was more than $127 million.”

Commenters on Twitter were having a field day with the news.







Cigarette smuggling has become big business, and states are losing billions of dollars in taxes when bootleggers sell cigarettes on the street.

“This is becoming the new organized crime, the new Prohibition,” ATF agent Rich Marianos told CBS News. “Every day we see more and more criminal organizations utilizing illegal cigarettes to facilitate their operations.”

One carload of cigarettes can net a bootlegger $30,000 in illegal profits, according to the CBS report.

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The federal Bureau of Alcohol, Tobacco and Firearms launched unauthorized undercover investigations into illicit cigarette sales, overpaid informants by millions of dollars, and lost track of 420 million cigarettes, according to a Justice Department audit.
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Thursday, 26 Sep 2013 02:32 PM
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