Fast and Furious has produced charges against 20 gun traffickers, 14 of whom have pleaded guilty so far.
One of those criticized in the report, former ATF acting director Kenneth Melson, who headed that agency during the Fast and Furious investigation, retired upon release of the report.
"Melson made too many assumptions about the case," the report stated. "Melson should have asked basic questions about the investigation, including how public safety was being protected."
Melson responded in a written statement: "While I firmly disagree with many of the speculative assumptions, conclusions and characterizations in the inspector general's report, as the acting director of the agency I was ultimately responsible for the actions of each employee."
Another of those criticized, Justice Department career attorney Jason Weinstein, resigned. Weinstein was a deputy assistant attorney general in Justice's criminal division in Washington.
"Weinstein was the most senior person in the department in April and May 2010 who was in a position to identify the similarity between the inappropriate tactics used in Operations Wide Receiver and Fast and Furious," the report said. ATF agents in Arizona conducted Wide Receiver in 2006 and 2007 and began Fast and Furious in October 2009.
Weinstein's lawyer, Michael Bromwich, called the report's criticism "profoundly wrong" and "deeply flawed."
The report said that a cover memo reviewed by Weinstein for a wiretap application in Fast and Furious "clearly suggests" that ATF agents had allowed a known illicit gun purchaser to continue his illegal activities for a gun-trafficking ring selling weapons to a Mexican drug cartel.
Weinstein's review of the cover memo should have caused him to question operational details of Fast and Furious, the report stated.
In response, Weinstein's lawyer said that before reviewing any Fast and Furious wiretaps, Weinstein had been assured by ATF Deputy Assistant Director William McMahon that guns were being aggressively interdicted.
Among others the report singled out for criticism were former acting Deputy Attorney General Gary Grindler; Assistant Attorney General Lanny Breuer, who heads the criminal division; Arizona U.S. Attorney Dennis Burke; and Holder's own former deputy chief of staff, Monty Wilkinson.
The report said:
—Wilkinson should have promptly informed Holder of the fact that two guns found at the scene of Terry's slaying were among the 2,000 illicitly acquired weapons in Operation Fast and Furious.
—Grindler relied on the FBI to investigate the Terry killing. That reliance was misplaced, given that the bureau did not have the responsibility to determine whether errors in ATF's investigation led to the weapons ending up at the murder scene.
—Breuer should have promptly informed Deputy Attorney General James Cole or Holder about the gun-walking problems in the earlier gun probe, Operation Wide Receiver.
The inspector general said he found no evidence that former Attorney General Michael Mukasey, who took office late in the Bush administration after Wide Receiver was ended, was ever informed that it used gun-walking.
Once allegations of gun-walking surfaced, the Justice Department waited 10 months before withdrawing an incorrect letter to Iowa Sen. Chuck Grassley in early 2011 denying that gun-walking had taken place. Grassley is the ranking Republican on the Senate Judiciary Committee.
A May 2011 Justice Department letter to Grassley said that "it remains our understanding that ATF's Operation Fast and Furious did not knowingly permit straw buyers to take guns into Mexico."
The inspector general said that by May, senior department officials knew or should have known that ATF had in many instances allowed straw purchasers to buy firearms knowing that someone else would transport them to Mexico. The report also found that the department should not have provided testimony in June 2011 before Issa's committee that created ambiguity over whether the department was still defending its Feb. 4 and May 2 letters.