Swept Under the Rug

Customs Internal Corruption Investigator: "We Were Getting Too Close"

By Bill Conroy
Chapter 10 of a Book Published by Narco News

April 18, 2004

Supporting Documents: Letter from commissioner of Customs concerning the transfer of John Juhasz, the head of the Firestorm corruption task force (744 kb PDF) Note: Acrobat Reader needed to view PDF documents

John William Juhasz’s efforts to expose law-enforcement corruption through the Firestorm task force sparked a major turf war among the federal agencies involved with the task force.

Juhasz, who founded Firestorm while head of Customs Internal Affairs in Arizona, was labeled “a loose cannon who was only trying to build an empire,” by the FBI special agent in charge in Phoenix, congressional documents state.

Juhasz retired from Customs in 1994, some four years after Firestorm was dismantled. He could not be located for comment on the fate of the task force. His statements have been drawn from public records.

Although Juhasz has his detractors, he is a bit of a legend in some corners of the Customs Service. One federal agent who knows him pointed to his handling of the Charlie Jordan case as evidence of Juhasz’s daring and brains.

Jordan was a Customs agent in South Florida who was allegedly corrupted by drug traffickers. When Jordan discovered he had been found out, he went on the lam, threatening never to be taken alive, according to the agent, who asked to remain anonymous.

Juhasz recounts the Jordan case in testimony he provided in former Customs agent Steve Shelly’s 1994 workers’ compensation hearing:

“I traveled to Colorado (in the summer of 1989) and conducted a manhunt that covered five Rocky Mountain states involving dozens of law enforcement from various agencies, and captured Charlie Jordan, one of America’s Most Wanted on Fox Television.”

According to the anonymous agent, Juhasz found Jordan in Wyoming.

“Juhasz taped a machine gun to his arm under his coat and knocked on the door,” the agent says. “He told Jordan he was having battery trouble with his car and asked him for help.

“Juhasz let Jordan get in front of him and then said, ‘I have a machine gun taped to my arm. If you don’t do exactly what I say, I’ll cut you in half.’

“Jordan surrendered,” the agent says.

Other former federal agents interviewed who know Juhasz describe him as an excellent agent of impeccable integrity who has no tolerance for corruption or political games—kind of like the Eliot Ness of Customs.

And it appears the comparison to Eliot Ness is not out of bounds, based on statements Juhasz himself made during the workers’ compensation deposition:

“As the depth and breadth of corruption (in Arizona) within the government agencies, and especially within Customs, was becoming in focus, being uncovered … I think that there were a lot of people that were very afraid of us—because we, in effect, were the untouchables.”

However, Juhasz would soon discover that he and the task force were far from “untouchable.”

The interagency tiff set off by the handling of the tapes exposing two Customs inspectors as being in league with drug traffickers, as well as other ongoing case-related tensions among the task force members, prompted the U.S. Attorney’s Office to withdraw from Firestorm in early December 1990, according to congressional documents. By the end of the month, the task force was dead in the water.

In February 1991, Juhasz was relieved of his duty as special agent in charge of the Customs Internal Affairs office in Tucson and subsequently transferred out of Arizona without explanation.

“It became quite evident that it was purely political (the task force being shut down), that we were too effective, that we were getting too close,” Juhasz states in the workers’ compensation deposition. “We’d already toppled the Justice Department’s Inspector General’s office for covering up drug trafficking by Customs Inspectors. And I think that they were terrified as to what we were going to find.”

According to the commissioner of Customs at the time, Carol Hallett, Juhasz was not removed from his position in Arizona, but rather reassigned “on a lateral basis.”

“Although there may be a question only of terminology, we would like to clarify the fact that Mr. Juhasz was not ‘removed’ from his position,” Hallett states in a 1992 letter to U.S. Rep. Doug Barnard Jr., D-Ga., chairman of the House subcommittee on Commerce, Consumer and Monetary Affairs. “His reassignment (to San Diego) was on a lateral basis [i.e., a transfer] from one position to another without a break in services. ... The decision to reassign Mr. Juhasz was made by (then) Assistant Commissioner for Internal Affairs, Mr. George Heavey.

“... We would also like to point out that during the first nine months of calendar year 1991, Mr. Heavey initiated numerous actions similar to the reassignment of Mr. Juhasz in order to realign and strengthen the staffing of Internal Affairs.”

But Juhasz was not the only Firestorm task force member to get his wings clipped. In addition to Juhasz, others on the task force also were subjected to retaliation by their employers in the wake of Firestorm’s demise, according to congressional documents. Those individuals included Steve Shelly, his wife (also a Customs agent and task force member), DEA Agent Vasquez, an unnamed FBI agent, a special agent with the Department of Justice’s Office of Inspector General (OIG) in Tucson, and the assistant U.S. attorney who served as coordinator for the Firestorm task force.

“The careers of all the people on the task force have been either damaged or destroyed,” Juhasz states in the workers’ compensation deposition.

As for Javier Dibene—the man in charge for Justice OIG in Arizona who was suspected of complicity with drug traffickers—he, too, was transferred out of state. Dibene ultimately took a job with the Immigration and Naturalization Service (INS) in California, according to congressional records. As of late 2001, he was still working for the federal government in the investigations division of the San Diego District of INS. After that time, his whereabouts could not be confirmed.

And what happened to the two Customs inspectors fingered on tape-recordings for allegedly allowing loads of dope to cross the border on their watch? According to Shelly, as of January 2004, they were still on the job, patrolling the same stretch of border in Arizona. The irony of that fact is not lost on Shelly, who considers the inability or unwillingness of the government to address the issues of alleged corruption uncovered by Firestorm as a serious threat to national security.

“If I wanted to sneak some kind of bioterror or other weapon into the country, I’d go to the dope smugglers to get it across the border, because they have the connections,” Shelly explains. “The individuals involved in the smuggling don’t know what’s in those cars or packages, and they don’t care.”

The fallout

With the demise of the Firestorm task force in December 1990 and the jettison of Juhasz about a month and a half later, Group Supervisor James “Breck” Ellis took on the lead role in the Customs Office of Internal Affairs in Tucson. At that point, Shelly says, the cases opened by Firestorm were allowed to go cold.

Juhasz claims that Ellis used his newfound power to undermine investigations that had been launched by the task force.

“Now from the point—the time that I left, no significant investigation was conducted. And I believe, based on what I’m aware of, that it was sabotaged from within and principally—starting with Breck Ellis,” Juhasz states in the workers’ compensation deposition provided in Shelly’s case.

Ellis reportedly retired from Customs in 2001. He could not be reached for comment.

Customs insiders familiar with the task force’s operations in Arizona in 1990 say the whole affair was effectively buried by the agencies involved.

Juhasz did file complaints through Treasury Department channels. They went nowhere. Juhasz even testified in 1992 before the House Subcommittee on Commerce, Consumer and Monetary Affairs about the circumstances surrounding the demise of the task force.

But the congressional investigation was never crystallized into a final report for the full House committee.

A letter signed by the chairman of the House subcommittee was delivered in November 1992 to Warren Christopher, head of President Bill Clinton’s transition team. The letter—also co-signed by Charlie Rose, D-N.C., of the House Committee on Agriculture—urged that a special prosecutor be appointed to look into alleged law-enforcement corruption within Customs and Treasury.

An investigation never occurred because the enabling legislation for special prosecutors had already lapsed when Clinton took office.

An agent with Treasury OIG did attempt to probe the Arizona corruption charges, but “his investigation was shut down by the U.S. Attorney’s office in Phoenix, as well as the (Treasury) Inspector General’s Office in Washington,” Juhasz states in testimony at Shelly’s 1994 workers’ compensation hearing.

Juhasz adds in the same testimony that President Bill Clinton did, as requested by the House subcommittee, remove the Commissioner of Customs, the Assistant Secretary of Treasury and the Inspector General for the Department of Treasury.

“The day he took office, they left,” Juhasz states in the workers’ compensation testimony.

Following is the text of the Nov. 18, 1992, letter sent by congressmen Rose and Barnard to Warren Christopher and Susan Brophy—who was assistant director for congressional relations for then President-elect Bill Clinton’s transition board.

The letter

Dear Mr. Christopher and Ms. Brophy,

We are writing to direct the Transition Board’s attention to serious problems which have arisen in the Customs Service and Treasury’s Office of the Inspector General during the previous Administration and to urge that your team docket the Service and the OIG as a high priority area for corrective treatment. Our reasons for pressing such action are as follows.

First, in September and August of this year, the General Accounting Office [GAO] issued two reports which were highly critical of the (Customs) Service’s ability both to collect duties due to the U.S. and to find violations of various import laws relating to unfair trade practices and unsafe goods.

Second, the Commerce, Consumer and Monetary Affairs Subcommittee [CC&MA]—chaired by one co-signatory of this letter, Congressman Doug Barnard of Georgia—has conducted a two-year investigation of serious misconduct and mismanagement by officials and employees of the (Customs) Service, and, in relation to that investigation, officials in its parent, the Department of Treasury. While the allegations, which we believe are supported by credible evidence, arising out of the investigation center around difficulties along the U.S.-Mexico border and have serious negative implications for the war on drugs, they also concern other parts of the country and non-drug related areas. As discussed in more detail at various points below, the misconduct and mismanagement have not been isolated to political appointees and encompasses senior career personnel.

Third, the Chairman of the Subcommittee on Department Operations, Research and Foreign Agriculture of the Committee on Agriculture [DORFA], Congressman Charlie Rose of North Carolina—the other co-signatory of this letter—has been extremely concerned about recent plans for moving certain Customs (Office of) Enforcement management at Washington Headquarters to field positions which have been recently upgraded to Senior Executive Service positions. Some of these personnel have been implicated in misconduct situations. Both signatories have reason to believe some such promotions may be a reward for “stonewalling” the Congress in connection with the Banca Nazionale del Lavoro [BNL] case. In review of recent developments concerning misleading information supplied by the CIA and the Justice Department to the court trying the BNL case in Atlanta, the allegations of a role by the Customs Service in this whole affair require some immediate probing.

(Note: BNL was an Italian bank that was accused of providing Iraq with billions of dollars in illicit financing in the 1980s. The Department of Agriculture, through an export credit program, had issued guarantees for a portion of the loans extended by BNL to Iraq. Just prior to the start of the 1990 Gulf War, Iraq defaulted on its foreign debt, triggering the U.S. guarantees—and giving the first Bush administration a bit of a political black eye. In 1995, according to the U.S. Department of Justice, the U.S. government agreed to pay BNL $400 million to settle the claims. BNL’s branch manager in Atlanta also pled guilty in 1993 to improperly lending to Iraq billions of dollars—most not guaranteed by the U.S. government—and was sentenced to 37 months in prison.)

Continuing the letter

Some special comment is warranted concerning CC&MA’s (the House subcommittee’s) aforementioned two-year investigation. Because of Chairman Barnard’s ill-health just prior to adjournment of the 102nd Congress and other extenuating circumstances at that time, the subcommittee was not able to perfect and consider a draft report prepared by the subcommittee’s staff. In turn, the Government Operations Committee was unable to vote on a report for presentation to the Committee of the Whole House. However, a lengthy hearing transcript on the subject of misconduct and mismanagement in the (Customs) Service has been printed. That transcript and appendixes of documents and other material [including a sworn statement by a Customs inspector indicating corruption] set forth a large body of evidence. This information in varying degrees substantiates serious mismanagement and misconduct within the Customs Service, the Treasury Inspector General’s Office and the Office of the Assistant Secretary for Enforcement of the Treasury Department. [CC&MA Subcommittee staff would be glad to make available to you or other transition board members this public transcript or any other relevant information in our possession.] This documentation and material discloses the following examples.

The evidence seems to indicate that Commissioner Carol Hallett has allowed officials in the Office of Enforcement—some of whom are implicated in gross mismanagement or misconduct—to interfere in Customs Office of Internal Affairs (IA). Further, there are strong indications the Commissioner’s office has allowed violations of Treasury and other regulations to occur without bringing to bear appropriate disciplinary measures. A significant factor in this lack of disciplinary action might well be laid to the existence of an “old-boy” network which a recent Customs Blue Ribbon panel found to exist, but which has proven remarkably resilient to effective control dissolution. We are concerned that this indicates a shortcoming of necessary management skills and the lack of an aggressive commitment to replacing or disciplining responsible individuals by the Commissioner.

Preliminary evidence also indicates that Treasury Inspector General Donald Kirkendall and his former Assistant Inspector General for Investigations, Charles Fowler, prematurely killed uncompleted investigations of senior Customs officials. OIG also refused CC&MA Subcommittee requests for timely investigation of a senior Customs official in Texas and then provided highly inaccurate information about that investigative activity during a subcommittee hearing. OIG allowed others, including an Assistant Treasury Secretary, named below, to improperly obtain information on one of its investigations. Further, the OIG has refused to adequately staff its investigative unit by staying below authorized levels. In sum, investigations of Customs officials have been given low priority. One informant within the OIG told the Subcommittee that the Treasury Office Inspector General is repeatedly made “subservient” to the wishes of Treasury officials as to whom and what to investigate.

On another front, the CC&MA Subcommittee has amassed information, some of it by sworn statements and agency documentation, indicating that Assistant Secretary of the Treasury [Enforcement] Peter Nunez and/or his staff have interfered in one grand jury investigation of a senior Customs official [in Arizona] and improperly obtained information in another investigation in Chicago. There are also indications he used Government funds to travel to Chicago where Customs personnel and cars were employed to escort him to at least three sporting events in Chicago—which Treasury OIG refused to investigate until pressed by the CC&MA Subcommittee. Assistant Secretary Nunez may have unsuccessfully attempted to interfere in another grand jury investigation in Florida—which interference was partly prevented by the U.S. Attorney. He also apparently directed Customs Internal Affairs to cede some of its investigative jurisdiction in Customs corruption cases to Customs’ Office of Enforcement, even if Customs Enforcement agents might be involved, directly violating recommendations in a Treasury OIG audit report and the August 1991 Blue Ribbon Panel Committee Report concerning integrity of criminal investigations of Customs personnel.

If the subcommittee draft report had been considered and voted out of subcommittee and the full committee, it would have likely recommended further investigation by an independent counsel or, alternatively, a special prosecutor, to fully examine much of the preceding information.

Given all the foregoing, we believe there is a very serious situation in the Customs Service and Treasury OIG which needs early rectification in the new Administration. In a limited respect, we are writing this letter simply because of the importance of taking all appropriate corrective action with respect to the above named senior individuals as soon as possible. While persons at the assistant secretary level will undoubtedly terminate by Jan. 22, 1993, caretaker status for others should not, in our opinion, be permitted.

However, more importantly, the Customs Service as a whole is in bad need of attention. Not only is it a key component of the drug war, it is also the second most important revenue-raising unit for a strapped government.

In order to preserve the Customs Service’s integrity and effectiveness, President-elect Clinton needs to choose a new Commissioner of Customs capable of carrying out the dramatic internal reforms which are required and of holding individuals accountable….

Sincerely,

Charlie Rose
Chairman
Subcommittee on Department
Operations, Research and Foreign
Agriculture of the Committee on Agriculture

Doug Barnard Jr.
Chairman
Subcommittee on Commerce,
Consumer and Monetary Affairs
of the Committee on Government Operations

Next in Chapter 11:

A U.S. Senator is accused of protecting a target of the Firestorm task force, which was charged with investigating law-enforcement corruption along the border. A Customs whistleblower also alleges the senator torpedoed Firestorm after the task force begins to focus on him.

Read the rest of Bill Conroy’s Borderline Security:

Prologue

Chapter 1 – Investigation Derailed

Chapter 2 – The Belly of the Snake

Chapter 3 – Shooting the Messenger

Chapter 4 – “The Racist Manifesto”

Chapter 5 – The Hydra

Chapter 6 – Green Quest

Chapter 7 – Quid Pro Quo

Chapter 8 – Reckless Driving

Chapter 9 – Firestorm

Chapter 10 – Swept Under the Rug

Chapter 11 – Politically Connected

Chapter 12 – From the DEA to “Homeland Security”

Chapter 13 – Airline Passengers At Risk from DEA Drug Sting Shipments

Chapter 14 – The Dysfunctional Anti-Drug Agencies

Epilogue – At the Threshold of Conscience

Bill Conroy has worked as a reporter or editor for the past eighteen years at newspapers in Wisconsin, Arizona, Minnesota and Texas. His investigative reporting over the past five years has focused on corruption and discrimination within federal law enforcement agencies.

Read previous installments of Bill Conroy’s “Borderline Security”

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