A lawsuit announced this month has revealed illegal profiteering through a tobacco sales scheme by the Bureau of Alcohol, Tobacco, and Firearms, or ATF. The ATF utilized paid informants in an elaborate scheme which would use profits from cigarette sales to fund off-book operations. The lawsuit was brought by a group of tobacco farmers who allege that the ATF was a key figure in a scheme that defrauded them out of $24 million.
It sounds like a page right from the CIA black ops handbook. Generate profits from illegal drug sales – in this case tobacco – and pay for operations that wouldn’t look good on the federal balance sheet. According to the lawsuit, the owners of tobacco distributor Big South Wholesale were long time associates of the ATF who propagated an illegal tobacco smuggling scheme, which in part, funded a secret ATF bank account. The two men named in the lawsuit were Jason Carpenter and Christopher Small. After a judge reviewed documentation of their relationship with the ATF, the judge added the United States as a third defendant.
The idea was to set up dummy orders for tobacco, which would instead be filled with bottled water and snack food. The actual tobacco would remain in the company warehouse while a series of bank transfers would occur, each one a partner selling the tobacco for a slightly higher price. The tobacco would eventually be purchased by the US Tobacco Cooperative. The scheme netted the two defendants and the ATF millions of dollars. When the case was brought to the attention of the Justice Department, instead of cooperating, they decided to redact documents and seal records.
The records show that Carpenter and Small purchased the tobacco at $15 per carton and sold it to U.S Tobacco for $17.50. The $519,000 profit went into an account utilized by the ATF for their black-ops. Both Carpenter and Small received around $1 million each in kickbacks from the ATF. The ATF has defended their relationship with the defendants, despite refusing to clarify what exactly that relationship was. Instead of attempting to root out the corruption, the ATF has made little comment about the lawsuit except stating that it’s under current investigation.
The ATF has had a troubled past; with this latest incident bringing up memories of the Fast and Furious debacle which occurred only four years ago. In that particular incident, the ATF illegally allowed arms smugglers to purchase weapons in hopes that it would root out larger dealers. It backfired and US border agents were killed with the guns that were allowed over the border. In this case, ATF officials claim that the creation of the account and operation were done under “verbal directives,” meaning there would never be a paper trail and the game of he-said she-said can begin. Instead of working with the plaintiffs to find a resolution, the DOJ has opted to include them in their criminal inquiry, fundamentally victimizing them for a second time.
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