How the ATF Lost 420 Million Cigarettes


The Bureau of Alcohol, Tobacco and Firearms is drunk. According to a scathing audit released Wednesday by the U.S. Office of the Inspector General, ATF misused hundreds of millions of dollars in profits and "lost track" of a jaw-dropping amount of cigarettes … at least 420 million of them. And worst of all, the ATF has been failing to carry out its mission for years without any significant reform efforts.

Okay, let's get a little history here. In 2004, the ATF was granted the ability to use profits from its undercover stings on large-scale tobacco transactions that evade taxes to offset expenses related to those stings, a right known as "churning authority." But today's report alleges that between 2006 and 2011, the ATF abused that authority by failing to properly document or get approval for many of these stings, often times allocating millions of dollars in questionable ways.

The $162 million that the ATF gained through involvement in these illicit tobacco transactions during these years was simply not monitored. This includes one instance where nearly all of $5 million in profit from a sting was paid to a single confidential informant. This lack of oversight probably also explains how the federal agency could simply lose hundreds of millions of cigarettes worth $127 million. The ATF is in desperate need of serious reform.

In response to this report, ATF's newly appointed director, B. Todd Jones, stated that the agency had tightened its guidelines since the period that the report covers and that "The report's findings do not reflect current ATF policy or practice in this area." But Inspector General Michael Horowtiz, author of the report released today, has cautioned that his office "has not been provided evidence to verify the sufficiency of actions taken."  And this is not the first time in recent memory that scandal has hit the ATF. Today's developments come only two years after it was learned that the ATF had knowingly allowed over 2,000 guns to be trafficked onto the streets, in what came to be known as the "gunwalking" scandal.

Now, it makes sense that the government should tax and regulate potentially dangerous things like alcohol, tobacco and firearms. That makes them safer for consumer use. But the federal agency responsible for that is clearly failing to regulate them, as the gunwalking incident shows. If the ATF can abuse its churning authority to make profits in ways that need not be documented, it's likely that they will have an incentive to perform more of these unmonitored stings. It would be one thing if the goal of these operations was to make consumers safer.

But these partially taxpayer-funded stings were of course only attempting to make more money for the government and the ATF through the taxation of tobacco. So why are taxpayers paying $1.2 billion per year to fund an agency that is acting as a collections agency for the federal government, abusing its authority, and failing to protect citizens? It's time for serious reform at the ATF.