The federal agency responsible for policing tobacco sales had a "serious lack of oversight" and couldn't provide proper records for $127 million worth of cigarettes used in undercover operations, according to a just released report from the Justice Department's Inspector General.
"(D)ue to inadequate documentation of cigarette inventories, when we reviewed records," said the audit of the Bureau of Alcohol, Tobacco and Firearms, "we were unable to reconcile the disposition of 2.1 million of the more than 9.9 million cartons … purchased for [those] investigations." The report estimated that the retail value of the missing cigarettes was $127 million.
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The report also alleged that local field offices often disregarded guidance about how to conduct undercover "churning" investigations, in which the ATF sold cigarettes to criminal targets, and sometimes "misused the proceeds." In one instance, said the IG's report, a confidential informant was allowed to keep more than $4.9 million of the $5.2 million generated by selling cigarettes as part of a churning operation.
"We found that the more than $4.9 million covered more than just the business expenses related to ATF activity," said the report, "including 100 percent of the confidential informant's total business operating overhead and more than $2.3 million in profit."