|English | Español||May 21, 2018 | Issue #32|
U.S. Customs: "The More They Have on You, the More They Can Control You"
By Bill Conroy
Redacted memo on CNET activities (638 kb PDF)
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But some Customs officials familiar with the agent’s track record claim his advancement up the command chain epitomizes the dysfunctional management culture plaguing U.S. Customs. They point out that the Houston agent was promoted despite his past record of being the primary target of an Internal Affairs corruption probe in the 1990s and later being part of a bungled sting operation that cost the government some $600,000.
The agent in question was one of the targets of a corruption probe by Customs Internal Affairs in the 1990s, according to the sources. The probe centered on the Currency Narcotics Enforcement Team (CNET), an undercover unit tasked with setting up stings on money-laundering operations carried out by drug traffickers.
The suspect agent (who will be referred to as Mr. S) was never charged with a crime as part of the investigation. However, Mark Conrad, former resident agent in charge of Customs’ Internal Affairs office in Houston, contends that bureaucratic stonewalling at headquarters undermined the probe.
“Whatever investigation was done ultimately would never be fruitful because of (the overzealous) oversight from headquarters,” alleges Conrad, who oversaw the Internal Affairs investigation of CNET.
At the time of the probe, the Houston-based CNET, which was still in operation after Customs merger with the Department of Homeland Security (DHS), was part of Customs investigative arm, and included both Customs agents and local law enforcement officers.
Dean Boyd, a spokesman for Customs, dismisses the claim that headquarters thwarted the Internal Affairs investigation into CNET. He contends further that CNET has been an extremely successful undercover operation.
“If someone is of the opinion that the investigation (into CNET in the 1990s) was hampered or railroaded, we invite that person to bring forth hard evidence as proof,” Boyd says.
Despite the fact that, as part of the agency’s vetting process, Customs agents can be denied promotions based only on allegations of wrongdoing, Mr. S was put on a career fast-track, agency sources claim. He was later promoted to a supervisory role with Green Quest, a Treasury Department-sponsored task force.
Green Quest was established in October 2001 and charged with ferreting out illegal financial schemes used by terrorists groups. (However, shortly after the Department of Homeland Security was put in place in early 2003, the Green Quest task force was disbanded.)
Boyd stresses that no criminal charges or administrative sanctions have ever been issued against Mr. S.
While a Customs agent in Houston, the individual “was investigated thoroughly and there was no evidence found that (Mr. S) committed any wrongdoing,” Boyd adds.
Still, given the serious allegations that prompted the probe, some law-enforcement sources question the wisdom of promoting Mr. S to a supervisory position on a national counter-terrorism task force.
“It is ridiculous that we have an agent out there under this cloud of suspicion,” Conrad says. “The agent should be cleared or (forced to resign) from the service. The individual is entitled to resolution with finality.”
Customs spokesman Boyd counters that Mr. S has cleared every hurdle with respect to the allegations and that dragging the accusations up again only serves to unfairly “tarnish” the agent’s reputation.
“I’d like to think there is still due process in the world,” Boyd says.
The undercover portion of the investigation into CNET’s operations was in place for about two years, until the end of 1992, and involved a female undercover agent. The “overt” part of the case (ie. interviews and program audits) was not completed until 1997 or so, according to law-enforcement sources. The investigation was called “Operation Accountable.”
Those leading the investigation allegedly were hampered by Customs headquarters in Washington, D.C. Conrad claims that agency brass took too long to make decisions and that they over-scrutinized every level of the investigation.
“Our hands were tied until we got the approvals, and usually by then it was too late,” Conrad asserts.
Consequently, Conrad contends, the investigation of Mr. S could never succeed.
Customs sources confirm, though, that another agency employee was eventually convicted of bribery-related charges as a result of the investigation into the Houston CNET unit.
The CNET unit has an incentive to continue making cases as its operations are funded from money gathered through its stings, Customs sources explain. Drug money brought in the door as part of a CNET sting is deposited in a Houston bank, a cut taken by the government, and the balance moved into designated accounts that are controlled by the targets of the sting – such as drug traffickers. The goal is to follow the money trail and make cases against the kingpins.
Some sources contend that Customs’ leadership wanted the Internal Affairs investigation into CNET to fail. A successful probe would have been embarrassing to the agency and would have put in jeopardy a lucrative cash-cow operation that served to generate positive media coverage.
Boyd discounts such reasoning as idle speculation, adding that, “if someone does have hard evidence … we’d certainly like to see it.”
Regardless of why the probe failed, Conrad argues that there is no excuse for Customs’ failure to keep its promise to the agent who was put undercover to expose the alleged corruption within CNET.
That agent was brought on board by Internal Affairs with the guarantee that if the undercover operation, and her identity, were compromised, she would be transferred from the CNET unit to Internal Affairs. When the undercover operation was exposed in late 1992, however, Customs management dragged its feet on the transfer, according to sources familiar with the case. As a result, the agent found herself stranded in the CNET unit, exposing her to potential retribution from the targets of the Internal Affairs probe.
“She got shafted,” Conrad claims.
In 1993, Customs personnel in Houston—out of concern for the agent’s safety—ultimately intervened unilaterally and moved the agent over to the Internal Affairs unit.
The Internal Affairs probe in the 1990s was not the last time controversy would visit the Houston CNET unit. In 2000, the unit ran into another problem involving some $600,000 in third-party checks put into play as part of an undercover money-laundering sting, sources reveal.
Mr. S allegedly served as one of the undercover agents in the check case.
“The (Customs) agents were apprised that … an alleged money launderer residing in Buenos Aires, Argentina, was in possession of bank checks drawn on U.S. banks and that these checks were in some form or fashion proceeds of drug trafficking,” states an internal Customs memo. “(The individual) wanted these checks laundered and was willing to pay a fee for the laundering service.”
The checks, with the help of confidential informants, were deposited in a Houston bank as part of the money-laundering sting, according to agency sources.
“Once the checks were deposited in (the operation’s) undercover account, and after the checks cleared, funds were wire transferred to a bank account, in Miami, Florida, controlled (by the money launderer),” the internal Customs memo states.
However, after the sting was played out, checks started bouncing. According to the internal Customs memo, the checks bounced due to “insufficient funds, altered amounts, and/or altered endorsements, and stop-payment procedures.”
In the end, the government was stuck with the bill to cover the bad checks, sources familiar with CNET contend.
A Customs insider characterized the loss of the proceeds as “sheer stupidity,” but no criminal charges were brought against anyone.
Boyd says the incident was thoroughly investigated, adding that to “characterize it as ‘sheer stupidity’ or in any way criminally negligent is simply inaccurate.”
“It was a learning experience for (those involved), but there was no finding of any criminal or administrative wrongdoing,” Boyd stresses.
Mr. S, who was at the center of attention in both the CNET Internal Affairs probe and the botched check sting, was subsequently bumped upstairs, to a supervisory role with an national task force called Green Quest.
Boyd stresses that the agent was in no way “fast-tracked” into his post at Green Quest, but rather was chosen as the most qualified for the role after going through a competitive selection process.
Independent of the concerns raised about Mr. S’s promotion, some law enforcement sources question whether units like CNET should even exist. Sources familiar with the Houston undercover unit allege that a lot of money was churned through its sting operations in the 1990s, with little to show in the way of major seizures or cases being made against drug-cartel kingpins.
Backers of undercover units like CNET claim, though, that they play a key role in gathering intelligence on drug traffickers and in disrupting their money laundering schemes.
“It’s a controversial method of undercover work,” says Charles A. Intriago, a former federal prosecutor and director of Moneylaundering.com, an online publication. “... These operations (such as CNET) can result in money laundering going on longer than it needs to be.”
“If the money laundered by the government through these operations is buried in some foreign country, and there’s no chance of getting it back, then it becomes a legitimate concern.”
In recent years, however, sources stress that the CNET unit in Houston has operated with integrity and efficiency, as a result of staffing, bookkeeping and other operational reforms put in place following the scrutiny brought to bear on the unit in the recent past.
Still, CNET’s past woes and the promotion of the agent allegedly linked to those controversies prompts some observers to accuse Customs brass of fostering a double standard. They claim the management culture—even with Customs’ merger into the Department of Homeland Security—protects a chosen few, regardless of their actions, while penalizing others, regardless of their qualifications.
“I have seen this pattern over and over again,” alleges Washington, D.C.-based attorney Ron Schmidt, who has handled a number of lawsuits against federal law-enforcement agencies. “The motive is to protect the organization at all costs. To some degree, it seems, the more they have on you, the more they can control you. Some people who move up the ladder seem to have a lot of baggage.”
Schmidt is not the only attorney throwing darts at Customs’ management culture. Phoenix attorney Jeffrey Arbetman represents a Customs agent who claims he was removed from a counter-terrorism task force about a month after the Sept. 11 terror attacks. At the time, the task force was conducting a major investigation related to 9/11.
Customs asserts that the agent, who has years of counter-terrorism experience, was yanked from the FBI-led task force because he didn’t follow procedures—a charge Arbetman says is bogus.
“Customs claims he (the agent) broke some rules, but we have documentation and testimony that shows that is not true, including testimony from the FBI,” says Arbetman, who is a former federal prosecutor.
Arbetman contends the real reason the Arizona Customs agent was removed from the task force is because his supervisors were retaliating against him for filing an age discrimination complaint.
“Whatever Customs’ agenda was, the fact is that they took (this agent) off a critical counter-terrorism task force at a crucial time in this country’s history,” Arbetman adds. “It was wrong morally and legally.”
Next in Chapter 7:
A multi-billion dollar contract to upgrade Customs’ technology infrastructure is awarded to a group of companies that includes a private lobbying firm. The Customs executive heading the agency at the time the contract is awarded later takes a job with the lobbying firm—which also employs a number of other former high-ranking Customs officials.
Read the rest of Bill Conroy’s Borderline Security:
Bill Conroy has worked as a reporter or editor for the past eighteen years at newspapers in Wisconsin, Arizona, Minnesota and Texas. His investigative reporting over the past five years has focused on corruption and discrimination within federal law enforcement agencies.
- The Fund for Authentic Journalism