By ERIC LICHTBLAU and WILLIAM M. ARKIN
NOV. 15, 2014
WASHINGTON — The federal government has significantly expanded undercover operations in recent years, with officers from at least 40 agencies posing as business people, welfare recipients, political protesters and even doctors or ministers to ferret out wrongdoing, records and interviews show.
At the Supreme Court, small teams of undercover officers dress as students at large demonstrations outside the courthouse and join the protests to look for suspicious activity, according to officials familiar with the practice.
At the Internal Revenue Service, dozens of undercover agents chase suspected tax evaders worldwide, by posing as tax preparers, accountants drug dealers or yacht buyers and more, court records show.
At the Agriculture Department, more than 100 undercover agents pose as food stamp recipients at thousands of neighborhood stores to spot suspicious vendors and fraud, officials said.
Undercover work, inherently invasive and sometimes dangerous, was once largely the domain of the F.B.I. and a few other law enforcement agencies at the federal level. But outside public view, changes in policies and tactics over the last decade have resulted in undercover teams run by agencies in virtually every corner of the federal government, according to officials, former agents and documents.
Some agency officials say such operations give them a powerful new tool to gather evidence in ways that standard law enforcement methods do not offer, leading to more prosecutions. But the broadened scope of undercover work, which can target specific individuals or categories of possible suspects, also raises concerns about civil liberties abuses and entrapment of unwitting targets. It has also resulted in hidden problems, with money gone missing, investigations compromised and agents sometimes left largely on their own for months.
“Done right, undercover work can be a very effective law enforcement method, but it carries serious risks and should only be undertaken with proper training, supervision and oversight,” said Michael German, a former F.B.I. undercover agent who is a fellow at New York University’s law school. “Ultimately it is government deceitfulness and participation in criminal activity, which is only justifiable when it is used to resolve the most serious crimes.”
Some of the expanded undercover operations have resulted from heightened concern about domestic terrorism since the Sept. 11, 2001, attacks.
But many operations are not linked to terrorism. Instead, they reflect a more aggressive approach to growing criminal activities like identity theft, online solicitation and human trafficking, or a push from Congress to crack down on more traditional crimes.
At convenience stores, for example, undercover agents, sometimes using actual minors as decoys, look for illegal alcohol and cigarette sales, records show. At the Education Department, undercover agents of the Office of Inspector General infiltrate federally funded education programs looking for financial fraud. Medicare investigators sometimes pose as patients to gather evidence against health care providers. Officers at the Small Business Administration, NASA and the Smithsonian do undercover work as well, records show.
Part of the appeal of undercover operations, some officials say, is that they can be an efficient way to make a case. “We’re getting the information directly from the bad guys — what more could you want?” said Thomas Hunker, a former police chief in Bal Harbour, Fla., whose department worked with federal customs and drug agents on hundreds of undercover money-laundering investigations in recent years.
Mr. Hunker said sending federal and local agents undercover to meet with suspected money launderers “is a more direct approach than getting a tip and going out and doing all the legwork and going into a court mode.” “We don’t have to go back and interview witnesses and do search warrants and surveillance and all that,” he added.
But the undercover work also led federal auditors to criticize his department for loose record-keeping and financial lapses, and Mr. Hunker was fired last year amid concerns about the operations.
‘A Critical Tool’
Most undercover investigations never become public, but when they do, they can prove controversial. This month, James B. Comey, the director of the F.B.I., was forced to defend the bureau’s tactics after it was disclosed that an agent had posed as an Associated Press reporter in 2007 in trying to identify the source of bomb threats at a Lacey, Wash., high school. Responding to criticism from news media advocates, Mr. Comey wrote in a letter to The New York Times that “every undercover operation involves ‘deception,’ which has long been a critical tool in fighting crime.”
Just weeks before, the Drug Enforcement Administration stoked controversy after disclosures that an undercover agent had created a fake Facebook page from the photos of a young woman in Watertown, N.Y. — without her knowledge — to lure drug suspects.
And in what became a major political scandal for the Obama administration, agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives allowed guns to slip into Mexico in 2011 in an operation known as Fast and Furious that involved undercover operations.
In response to that episode, the Justice Department issued new guidelines to prosecutors last year designed to tighten oversight of undercover operations and other “sensitive” investigative techniques, officials said. Before prosecutors approve such tactics, the previously undisclosed guidelines require that they consider whether an operation identifies a “clearly defined” objective, whether it is truly necessary, whether it targets “significant criminal actors or entities,” and other factors, the officials said.
Peter Carr, a department spokesman, said that undercover operations are necessary in investigating crime but that agents and prosecutors must follow safeguards. “We encourage these operations even though they may involve some degree of risk,” he said.
Those guidelines apply only to the law enforcement agencies overseen by the Justice Department. Within the Treasury Department, undercover agents at the I.R.S., for example, appear to have far more latitude than do those at many other agencies. I.R.S. rules say that, with prior approval, “an undercover employee or cooperating private individual may pose as an attorney, physician, clergyman or member of the news media.”
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An I.R.S. spokesman acknowledged that undercover investigators are allowed to pose in such roles with approval from senior officials. But the agency said in a statement that senior officials “are not aware of any investigations where special agents have ever posed as attorneys, physicians, members of the clergy or members of the press specifically to gain information from a privileged relationship.”
The agency declined to say whether I.R.S. undercover agents have posed in these roles in an effort to get information that was not considered “privileged,” meaning the type of confidential information someone shares with a lawyer or doctor.
José Marrero, a former I.R.S. supervisor in Miami, said he knew of situations in which tax investigators needed to assume the identity of doctors to gain the trust of a medical professional and develop evidence that is tightly held. “It’s very rare that you do that, but it does happen,” Mr. Marrero, who has a consulting firm in Fort Lauderdale, Fla., and continues to work with federal agents on undercover investigations, said in an interview. “These are very sensitive jobs, and they’re scrutinized more closely than others.”
Oversight, though, can be minimal. A special committee meant to oversee undercover investigations at the Bureau of Alcohol, Tobacco, Firearms and Explosives, for instance, did not meet in nearly seven years, according to the Justice Department’s inspector general. That inquiry found that more than $127 million worth of cigarettes purchased by the bureau disappeared in a series of undercover investigations that were aimed at tracing the black-market smuggling of cigarettes.
In one investigation, the bureau paid an undercover informant from the tobacco industry nearly $5 million in “business expenses” for his help in the case. (The agency gained new authority in 2004 allowing it to take money seized in undercover investigations and “churn” it back into future operations, a source of millions in revenue.)
Financial oversight was found lacking in the I.R.S.’s undercover operations as well. Detailed reviews of the money spent in some of its undercover operations took as long as four and a half years to complete, according to a 2012 review by the Treasury Department’s inspector general.
Across the federal government, undercover work has become common enough that undercover agents sometimes find themselves investigating a supposed criminal who turns out to be someone from a different agency, law enforcement officials said. In a few situations, agents have even drawn their weapons on each other before realizing that both worked for the federal government.
“There are all sorts of stories about undercover operations gone bad,” Jeff Silk, a longtime undercover agent and supervisor at the Drug Enforcement Administration, said in an interview. “People are always tripping and falling over each other’s cases.”
Mr. Silk, who retired this year, cited a case that he supervised in which the D.E.A. was wiretapping suspects in a drug ring in Atlanta, only to discover that undercover agents from Immigration and Customs Enforcement were trying to infiltrate the same ring. The F.B.I. and the New York Police Department were involved in the case as well.
To avoid such problems, officials said, they have tightened “deconfliction” policies, which are designed to alert agencies about one another’s undercover operations. But problems have persisted, the officials said.
It is impossible to tell how effective the government’s operations are or evaluate whether the benefits outweigh the costs, since little information about them is publicly disclosed. Most federal agencies declined to discuss the number of undercover agents they employed or the types of investigations they handled. The numbers are considered confidential and are not listed in public budget documents, and even Justice Department officials say they are uncertain how many agents work undercover.
But current and former law enforcement officials said the number of federal agents doing such work appeared to total well into the thousands, with many agencies beefing up their ranks in recent years, or starting new undercover units. An intelligence official at the Department of Homeland Security, who spoke on condition of anonymity to discuss classified matters, said the agency alone spent $100 million annually on its undercover operations. With large numbers of undercover agents at the F.B.I. and elsewhere, the costs could reach hundreds of millions of dollars a year.
In a sampling of such workers, an analysis of publicly available résumés showed that since 2001 more than 1,100 current or former federal employees across 40 agencies listed undercover work inside the United States as part of their duties. More than half of all the work they described is in pursuit of the illicit drug trade. Money laundering, gangs and organized crime investigations make up the second-largest group of operations.
Significant growth in undercover work involves online activity, with agents taking to the Internet, posing as teenage girls to catch predators or intercepting emails and other messages, the documents noted. The F.B.I., Department of Homeland Security and Pentagon all have training programs for online undercover operations.
Defendants who are prosecuted in undercover investigations often raise a defense of “entrapment,” asserting that agents essentially lured them into a criminal act, whether it is buying drugs from an undercover agent or providing fraudulent government services.
But the entrapment defense rarely succeeds in court.
In terrorism cases — the area in which the F.B.I. has used undercover stings most aggressively — prosecutors have a perfect record in defeating claims of entrapment. “I challenge you to find one of those cases in which the defendant has been acquitted asserting that defense,” Robert S. Mueller III, a former F.B.I. director, said at an appearance this year.
The Times analysis showed that the military and its investigative agencies have almost as many undercover agents working inside the United States as does the F.B.I. While most of them are involved in internal policing of service members and defense contractors, a growing number are focused, in part, on the general public as part of joint federal task forces that combine military, intelligence and law enforcement specialists.
At the Supreme Court, all of the court’s more than 150 police officers are trained in undercover tactics, according to a federal law enforcement official speaking on condition of anonymity because it involved internal security measures. At large protests over issues like abortion, small teams of undercover officers mill about — usually behind the crowd — to look for potential disturbances.
The agents, often youthful looking, will typically “dress down” and wear backpacks to blend inconspicuously into the crowd, the official said.
At one recent protest, an undercover agent — rather than a uniformed officer — went into the center of a crowd of protesters to check out a report of a suspicious bag before determining there was no threat, the official said. The use of undercover officers is seen as a more effective way of monitoring large crowds.
A Supreme Court spokesman, citing a policy of not discussing security practices, declined to talk about the use of undercover officers. Mr. German, the former F.B.I. undercover agent, said he was troubled to learn that the Supreme Court routinely used undercover officers to pose as demonstrators and monitor large protests.
“There is a danger to democracy,” he said, “in having police infiltrate protests when there isn’t a reasonable basis to suspect criminality.”
Michael S. Schmidt contributed reporting.