An audit released Wednesday by the Inspector General’s Office shows ATF agents lost track of 420 million cigarettes and misused nearly $162 million in profits from sting operations.

Report: ATF Misused $162 Million in Sting Operation Profits

Inspector General's audit pokes holes in faulty ATF policies that do not properly account for funds.

An audit released Wednesday by the Inspector General’s Office shows ATF agents lost track of 420 million cigarettes and misused nearly $162 million in profits from sting operations.

An audit released Wednesday by the Inspector General’s Office shows ATF agents lost track of 420 million cigarettes and misused nearly $162 million in profits from sting operations.

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Federal agents conducted dozens of sting operations between 2006 and 2011 on illegal tobacco sales that resulted in nearly $162 million in mishandled profits and 420 million lost cigarettes – worth more than $127 million – without proper authorization, according to an audit released Wednesday by the Inspector General's Office

The audit looked into 36 "churning investigations" in which the Bureau of Alcohol, Tobacco, Firearms and Explosives purchased cigarettes from manufacturers to be sold through agents or informants to criminal targets at or below their wholesale value. According to the audit, none of the investigations received had been reviewed by the bureau's committee that approves sting operations.

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In one instance, ATF agents generated $5.2 million in profit from selling $15 million worth of cigarettes, but allowed a confidential informant to pocket $4.9 million without documenting the transaction or requiring the informant to provide documentation to support the claim that the money was meant to cover business expenses.

The audit found the informant profited $2.3 million from the ATF's negligence.

ATF director B. Todd Jones said in a memo to Inspector General Michael Horowitz, that ATF administrators had recognized issues with undercover operations as early as March 2011, and took "remedial measures to correct operational deficiencies."

Nearly all of the Inspector General's recommendations have already been addressed, according to Jones.

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However, the audit states the ATF has not addressed the Inspector General's request to update policies that allow funds from one operation to offset expenses for multiple investigations.

The audit comes as the bureau tries to clean up its image after agents allowed an estimated 1,400 weapons to cross over into Mexico from 2009 through 2011, during its Fast and Furious operation. Jones expressed his concern that the audit did not present a full picture of the bureau's values of safety and accountability.

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