Agents used slush fund to live a life of luxury

UNITED STATES: A US government bureau operated a secret bank account that agents and informants used to buy luxury cars, property and trips to casinos.

Officers for the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), who investigate smuggling and gun crimes, built up a slush fund worth tens of millions of dollars through illicit cigarette sales, ostensibly as part of an operation to catch traffickers.

Legal documents unsealed last week revealed how the secret account was set up as part of an operation to investigate cigarette smuggling, a booming crime in US states where taxes on tobacco have been raised.

The secret account is at the heart of a federal racketeering lawsuit brought by a collective of tobacco farmers who say that they were swindled out of US$24 million (NZ$33M).

Cash from the slush fund generated at an ATF field office in Bristol, Virginia, was given out to agents for undercover assignment expenses, but also funded activities such as a trip to Las Vegas, donations to agents’ children and the booking of a US$21,000 suite at a Nascar race.

Criminals have taken the opportunity to create a black market, buying cigarettes in places with low taxes and selling them at a mark-up across state lines.

Thomas Lesnak, a senior ATF investigator, began the scheme in which he convinced tobacco distributors to turn informant to infiltrate smuggling rings.

The distributors would report would-be smugglers to agents, and sometimes set up meetings with traffickers in sting operations.

The partnership led to more than 100 arrests with the help of the FBI, the Drug Enforcement Administration and also British intelligence, Lesnak said in a deposition.

The money generated through the agents’ smuggling activities was hidden from the Department of Justice, which controls the ATF. – The Times