Working from an office suite in southern Virginia, agents of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives used a web of shadowy cigarette sales to funnel tens of millions of dollars into a secret bank account, the New York Times reports. The operation, not authorized under Justice Department rules, gave agents an off-the-books way to finance undercover investigations and pay informants without the usual cumbersome paperwork and oversight. The secret account is cited in a federal racketeering lawsuit filed by a collective of tobacco farmers who say they were swindled out of $24 million. Two ATF informants received at least $1 million apiece. The scheme relied on phony shipments of snack food disguised as tobacco. The agents’ job was to catch cigarette smugglers, so they knew exactly how it was done.
After the Times began asking about the operation last summer, the Justice Department referred it to its inspector general, which “expressed serious concerns.” It is unclear how broadly ATF adopted this practice and whether it continues. The case will bring renewed scrutiny to ATF, which has been criticized for its botched gun-tracking operation known as Fast and Furious and its mismanagement of undercover investigations. Members of Congress have assailed the agency for decades, and the National Rifle Association has lobbied to limit its authority and funding.