The Dallas Morning News

ATF secret funds paid for NASCAR suite, Vegas trip

ETHICS SCANDAL Justice Department investigat­es bureau’s off-the-books account

- Alex Brandon/The Associated Press Matt Apuzzo, The New York Times

WASHINGTON — Agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives used a secret, offthe-books bank account to rent a $21,000 suite at a NASCAR race, take a trip to Las Vegas and donate money to the school of one of the agents’ children, according to records and interviews.

Agents also used the account to finance undercover operations around the country, despite laws prohibitin­g government officials from using private money to supplement their budgets, according to current and former government officials and others familiar with the account.

The revelation­s highlight the lax oversight at the ATF that allowed agents and informants to spend millions while avoiding the normal accounting process. The Justice Department’s inspector general, who is investigat­ing the secret account, criticized

the ATF recently for mismanagem­ent and said the agency did not know how many informants it had or how much they were paid.

The New York Times revealed the existence of the bank account in February, prompting an investigat­ion by the House oversight committee. The Justice Department, which oversees the ATF, has denied any wrongdoing, and the department has refused to say whether the bureau continues to operate such secret accounts, which the government called “management accounts.”

The ATF has also refused to say who authorized the account, which was created by agents based in Bristol, Va., who were investigat­ing tobacco smuggling. One government official said the bureau regarded the account as a hybrid of government funds and private money, a combinatio­n that is not authorized under federal law.

Ryan Kaye, an ATF supervisor, is quoted in public court documents as saying the agents received “verbal directives” from unidentifi­ed officials at headquarte­rs to open the account.

The arrangemen­t dates back at least to 2011, court records show. Records show that a pair of ATF informants who ran a tobacco warehouse in Bristol, Jason Carpenter and Christophe­r Small, opened the account. The informants helped the bureau’s investigat­ions into tobacco smugglers, who move cigarettes across state or national borders to avoid taxes.

Agent’s expenses

Sometimes, the ATF agents used the money for expenses that normally would be paid from the agency’s own budget, such as leasing cars and renting warehouses under fake names to conceal the government’s involvemen­t in undercover investigat­ions. The account also helped pay for a trip to a tobacco convention in Las Vegas in early 2012, according to a former law enforcemen­t official and a former industry official. The officials said the ATF supplement­ed its travel budget with money from the management account.

Current and former government and industry officials who discussed the case did so on the condition of anonymity because the Justice Department has argued successful­ly to keep nearly all the records in the case sealed. The Times has been fighting since last summer to make the documents public.

Other expenses, such as renting a 16-person suite at Bristol Motor Speedway in Tennessee, had no obvious connection to law enforcemen­t operations. ATF agents, along with some community members, used the suite in 2012 for the Irwin Tools Night Race, a NASCAR event, according to two people who worked closely with the bureau at the time. A receipt obtained by The Times shows the suite cost $21,000.

Agents also donated money from the account, according to documents and interviews, including thousands of dollars to the high school and volleyball team of the daughter of an ATF agent in Bristol. The agent, Thomas Lesnak, is now retired and did not respond to messages seeking comment. He has previously dismissed suggestion­s that anything was done improperly.

Credit card payments

ATF agents also had their credit card bills paid with money from the account, according to a former law enforcemen­t official and two former industry officials. It is not clear whether the bills involved personal credit cards or government-issued cards, but both possibilit­ies might violate federal laws.

Government spending typically requires a strict audit trail, but the money deposited in the bank account came from an unlikely source. ATF agents told the informants to buy untaxed cigarettes, mark up the cost and sell them at a profit. The sales made millions of dollars, which poured into the account. ATF agents concealed the scheme using phony shipping documents and middlemen. Those transactio­ns are at the heart of a federal racketeeri­ng lawsuit brought by a tobacco cooperativ­e, which says it was defrauded.

The ATF did not answer any of a list of questions about its policies and the expenses, not even whether management accounts remain in use and, if not, whether they were ever considered legal. The agency issued a statement acknowledg­ing problems with undercover tobacco operations, but only from 2009 until 2011.

“Since that time, ATF has implemente­d substantia­l enhancemen­ts to its policies, and has markedly improved leadership, training, communicat­ion, accountabi­lity and operationa­l oversight,” the statement read.

When it was pointed out that the Bristol account was opened after the new policies went into effect and continued at least until 2013, the ATF did not elaborate.

 ?? Rey Del Rio/Getty Images ?? ATF agents used a secret account to pad their budgets, including a $21,000 suite at a NASCAR race, undercover operations, agents’ credit card bills, school donations and other items.
Rey Del Rio/Getty Images ATF agents used a secret account to pad their budgets, including a $21,000 suite at a NASCAR race, undercover operations, agents’ credit card bills, school donations and other items.
 ??  ?? Acting ATF Director Thomas Brandon and the rest of the bureau face a new Justice Department investigat­ion over recent revelation­s of a secret, off-the-books account.
Acting ATF Director Thomas Brandon and the rest of the bureau face a new Justice Department investigat­ion over recent revelation­s of a secret, off-the-books account.

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