Government Betrays Inspector Who Went Undercover for U.S. Customs

He Is Forced to Return to Border Town with His Cover Blown

By Bill Conroy
Special to The Narco News Bulletin

May 10, 2004

Several years ago, in the Arizona border town of San Luis, a U.S. Customs inspector was convinced by Internal Affairs to go undercover to sting an alleged narco-trafficker.

The inspector was recruited by Internal Affairs because he reported that he had been approached by the suspect and offered an opportunity to “make some money,” according to law enforcement sources.

It was an extremely dangerous assignment, particularly for a green Customs inspector with no previous training in undercover work. He played the role of a crooked inspector, often wore a wire, and was even required to invite the alleged trafficker into his own home as part of the sting. The inspector wasn’t allowed to tell his family about his undercover activities, creating yet another layer of stress in his life.

Somehow, the inspector pulled the mission off. The narco-trafficker, ringleader of a group that was smuggling drugs into the country via truck, was eventually arrested in 2002. He was later convicted of conspiracy to bribe a public official and of attempting to import a controlled substance into the United States.

That same inspector now works for the U.S. Bureau of Customs and Border Protection (CBP)—a Department of Homeland Security agency that replaced the U.S. Customs Service. After the successful undercover sting in San Luis, the inspector was transferred to another border town, Nogales, Ariz. Soon after that, he once again was thrust into another high-stakes undercover assignment.

Only this time, in the wake of completing the sting in Nogales, he was allegedly put in harm’s way by the very government that had enlisted his help, law enforcement sources contend.

On Monday, May 3, the inspector was transferred back to San Luis, with his role in the prior undercover sting there by now completely exposed to the narco-trafficker he helped to bust — as well as to the convicted smuggler’s circle of family and friends on both sides of the border. To make matters worse, the narco-trafficker had allegedly ratted out one of his accomplices, a federal immigration officer who worked at the port of entry in San Luis. The immigration officer wound up getting 30 months in prison for his role in the smuggling operation.

The convicted narco-trafficker, court records show, was slated to be released from prison sometime this spring.

Given that backdrop, it is not surprising that the very day the inspector showed up for work at the San Luis, sources say, he was warned by another employee at the port that he “better watch his back.”

Nogales Blues

The inspector’s most recent nightmare journey into the world of undercover had its genesis in early 2003, while he was working in the Export Office at the Customs and Border Protection port of entry in Nogales, Ariz. The Export Office deals with, among other things, processing the paperwork for vehicles being exported from the United States into Mexico. Among the rules in place for such exports is that the paperwork for the vehicles must arrive in the Export Office at least 72 hours in advance of the vehicle being moved across the international border. This gives Customs inspectors at the port the opportunity to verify they are not dealing with stolen vehicles.

After the waiting period, assuming everything checks out, an employee in the export office signs off on the paperwork—using a government stamp.

However, the inspector noticed something funny going on in the Nogales Export Office. It appeared that at least one individual in the office was taking bribes from individuals who wanted to by-pass the 72-hour hold period on vehicle exports.

In this case, that individual was a “public official” who was not a U.S. government employee, but rather a private-sector employee of an insurance-industry-funded group called the National Insurance Crime Bureau (NICB).

The NICB is a private investigative agency that works closely with law enforcement, often through contracts with government agencies such as the FBI, in battling insurance fraud and vehicle theft. The NICB maintains a major database that can be used to track stolen vehicles.

In this case, the NICB employee working at the Nogales Export Office was charged with conducting computer checks to verify that automobiles presented for export were not stolen. In addition, the employee, through an agreement between the NICB and the government, was empowered to sign off on the paperwork of vehicles in line to be exported. It was that stamp of approval that the NICB employee was allegedly selling, for bribes ranging from $100 to $350.

The inspector reported his suspicions about the bribery scheme to his superiors.

After a number of months had passed, he was approached in the fall of 2003 by agents from the Department of Homeland Security’s Office of Inspector General (OIG)—which is charged with investigating allegations of corruption within the department. The agents asked the inspector to help out with their investigation of the alleged bribery scheme—specifically, they wanted the inspector to go undercover again.

So for some seven months, the inspector, wearing a wire, again played the role of a government employee on the take, attempting to needle his way into the alleged bribery racket underway at the Nogales port of entry.

In March of this year, the sting paid off. A total of 18 people were indicted on bribery charges and are now awaiting trial in federal court in Tucson. The individuals were business owners or employees of companies that helped people export used vehicles to Mexico. The maximum penalty for bribing a public official is up to 15 years in prison, a $250,000 fine, or both.

The NICB employee, Jesus Alvarez, also was indicted on three counts of “accepting money in exchange for stamping the automobile ownership documents with the … export stamp, allowing those automobiles to circumvent the mandatory 72-hour waiting period,” according to a press release issued by the U.S. Attorney’s Office for the District of Arizona. The maximum penalty for accepting such a bribe is up to two years in prison, a $250,000 fine, or both.

Shortly after the indictments came down, the inspector who went undercover to work the sting was transferred to Tucson temporarily to help the OIG agents assist with case preparation for pending trial, according to documents obtained by Narco News.

That’s when his troubles began.

The government informed the inspector that he was to be sent back to the Nogales port of entry in April, after his work in Tucson was wrapped up—despite the fact that all 19 of the individuals he helped to get indicted have been released on bail. As a result, the inspector wrote a letter to his supervisor, dated March 18, expressing his concern about the danger he would be exposed to if he was forced to return to Nogales.

Narco News obtained a copy of that letter:

I hereby would like to request a transfer out of the Nogales Port of Entry in Nogales, Arizona. I know it would be a safer initiative due to my recent undercover participation in a internal investigation conducted by the Department of Homeland Security, Office of Inspector General. This successful operation led to nineteen indictments and arrests of subjects involved with the bribery of a Federal Officer. I believe it would be in my best interest to transfer because many of the subjects arrested have friends and relatives in the immediate area that may try to threaten or intimidate me. I’m certain many of them know of my involvement and may think their family member or friend may have been falsely accused of wrongdoing.

I am interested in a transfer to Calexico, California POE (port of entry) due to the reason I have listed. The transfer will not require the Government to pay for moving expenses. … Your help and assistance with this matter is appreciated.

The inspector apparently was not the only law enforcement officer involved in the Nogales bribery case who was confronting transfer issues.

The OIG agents who oversaw the investigation of the case also were informed that they are to be transferred out of state, according to several law enforcement sources. The reason, according to those sources, is that the OIG agents made the mistake of messing with the FBI’s turf by failing to include the bureau in their investigations. As a result, inter-agency pressure is allegedly being exerted to move the OIG agents out of Arizona.

One of those OIG agents, Phil VanNimwegen, when contacted by Narco News, declined to comment on the case or the allegation that he was being threatened with a transfer.

“I can’t say anything,” he said. “But I can direct you to someone who can.”

That someone was his supervisor, who failed to return a phone call from Narco News.

Into the Fire

The government responded to the inspector’s plea to be relocated to another duty station besides Nogales by asking him to choose between two equal evils, according to law enforcement sources. The inspector, according to sources, would get a transfer to the San Luis port of entry, but only if he agreed to sign a letter stating that he “felt it would be safer to return there than to go back to Nogales.”

Despite the fact that the inspector knew his undercover activity in San Luis was now an open book, with great reluctance, the inspector signed the letter, sources say. The inspector felt he had little choice but to do so, short of losing his job, law enforcement sources familiar with his case contend.

When contacted for comment, Roger Maier, a press officer for the Bureau of Customs and Border Protection, said he would look into the inspector’s case, but indicated that he probably would be precluded from commenting do to “privacy issues.” Maier never got back to Narco News with a comment.

Although it may be admirable that the government is concerned about respecting the inspector’s privacy rights, it is puzzling as to why it does not show the same concern for the inspector’s life, which now is in jeopardy in San Luis, according to several law enforcement officials.

The inspector’s assignment to the San Luis port of entry is considered “temporary,” but sources familiar with his case indicate he is likely to be stuck there for four to eight months, maybe longer.

The government’s treatment of the inspector and OIG agents seems even more bizarre, given what the U.S. Attorney’s Office has said about their work in the Nogales bribery case.

Jeffrey Jacobson, the Assistant U.S. Attorney in Tucson who is handling the Nogales bribery case, confirmed that the inspector played an important role in the investigation that led to the indictment of the 19 individuals involved in the bribery racket.

“I am extremely confident and satisfied with the work the inspector and the OIG agents did in this case,” he said.

Jacobson adds that the case is still in the discovery stage, with trials not slated to begin until this summer – assuming plea deals aren’t cut with some of the defendants.

So if the inspector and OIG agents are key to the success of a major federal prosecution, and the U.S. attorney handling the case is happy with the work they did on the case, then why are they being retaliated against, as some law-enforcers claim is the case?

Do-gooders

Despite the mystery behind the source of the retaliation, if that is indeed what is going on, one thing does appear to be clear in this case: The inspector and OIG agents caused more than a bit of embarrassment for the NICB by snaring one of its employees in a bribery sting.

NICB’s reputation is built, in no small way, on its claim to be a major do-gooder in the international fight against insurance fraud and vehicle theft. That fight is carried out, the NICB boasts, through a close working relationship with law enforcement – particularly the FBI.

In fact, the NICB, in essence, operates as a private-sector sister organization of the FBI in many respects. The NICB even has agreements in place with the FBI that outline its relationship with the bureau.

In addition, Michael Kirkpatrick, an assistant director with the FBI, serves on the NICB’s board of advisors, according to NICB’s 2003 annual report.

The president and chief executive officer of NICB, Robert Bryant, is a former deputy director of the FBI. As deputy director, Bryant held the second-highest ranking position in the bureau and managed the day-to-day operations of the FBI.
NICB’s chief operating officer, Eugene Glenn, also is a former FBI employee whose 26-year career with the bureau included serving as special agent in charge of the Salt Lake City Division.

The Chicago-area based NICB operates as a nonprofit, boasts a staff of more than 300 (a good share of them former law enforcement officials), and recorded 2003 revenues in excess of $30 million—funds raised primarily from dues paid by the 1,000 or so insurance companies NICB counts as its members.

Some law enforcement sources question whether the alleged retaliation against the inspector and OIG agents might be the result of pressure exerted by NICB through its law-enforcement connections, specifically through its ties to the FBI. Such retaliation certainly would serve to create a chilling effect on future investigations of NICB employees, they add.

At least one civil rights organization, the League of United Latin American Citizens (LULAC), has raised similar concerns about the NICB’s relationship with the government, alleging that the privately funded investigative group has misused its ties to law enforcement.

Narco News contacted the NICB’s media spokesperson, Judy Fitzgerald, for comment for this story, leaving a message on her answering machine. Fitzgerald did not return the phone call. In addition, phone calls to NICB employee Alvarez’ attorneys were not returned.

In the past, NICB officials have stressed that their relationship with government law enforcement agencies is guided by high professional and ethical standards and structured in strict accordance with the law.

The legislative counsel for the FBI’s Office of Public and Congressional Affairs, in an Aug. 7, 2000, letter drafted in response to a congressional inquiry, described the bureau’s relationship with the NICB as follows:

The NICB is a not-for-profit organization which is funded by approximately 1,000 property and casualty insurance companies. The NICB serves as a conduit between the insurance companies and law enforcement agencies to “facilitate the identification, detection and prosecution of insurance criminals.” The NICB accumulates and analyzes insurance-claims data from insurance companies it works with to identify and forecast fraud and theft activity and trends. This information is shared with the law enforcement community.

Although the extent of the NICB’s involvement in the individual FBI investigations varies, the NICB has commonly provided personnel, insurance industry expertise, and liaison contact with the victim insurance companies. In these cooperative investigations, the FBI always maintains the responsibility of leading, directing and administering the criminal investigation.

….NICB’s degree of involvement in the individual investigations varies widely from providing data analysis support to providing investigators to work with the FBI on the investigation on a full-time basis. The NICB agents are commonly used as valuable resources in assisting the FBI in auto accident investigations. ….

A. Robert Walsh
Legislative Counsel
Office of Public and
Congressional Affairs

Cozy Relationship

Although the FBI may see its partnership with the NICB as a valuable resource, the Hispanic civil rights group LULAC views NICB’s cozy relationship with law enforcement as a source of potential civil rights abuses.

Last month, LULAC held a press conference in the border town of El Paso, Texas, to bring its concerns about the operations of the NICB into sharper focus for the public. A press release issued by LULAC spells out some of those concerns:

LULAC has received several complaints from persons who wish to remain anonymous for fear of retaliation. They claim that NICB, with the assistance of law enforcement, has targeted minority-owned businesses and individuals for investigation and prosecution. They have also complained that NICB’s relationship with law enforcement authorities in El Paso has resulted in an abuse of that law-enforcement power. The retaliation they fear is an arrest, even though not supported by evidence.

Among the specific charges raised by LULAC, according to its press release, are that the “FBI office in El Paso … has allowed NICB employees to participate in law enforcement activities”; “an NICB employee was allowed to interview suspects in the Police Department, in cases where NICB had brought the complaints to the police department”; and “NICB employees have also been given access to confidential law enforcement information that is not available to the public.”

For his part, the inspector who went undercover in the Nogales bribery sting has no clue why he is being treated so poorly by the government after putting his life on the line, law enforcement sources indicate. When contacted, the inspector declined to comment for this story, because he feared the government would retaliate against him for talking to the media.

Ironically, the inspector has been placed in harms way in San Luis by the very government that less than two years ago informed him that he had been selected for a Commissioner’s Award for his undercover work in that same border town.

Now, according to law enforcement sources, the inspector goes to work each day in San Luis hoping that he won’t be recognized by someone who wants to get even with him because he did his job.

The inspector “is legitimately afraid for his life,” one law enforcer stresses.

For more Narco News, click here.