U.S. CUSTOMS DERELICT ON POLICING ITSELF, LEADING TO ABUSES

U.S. Customs' failure to punish employees in scores of corruption cases has
allowed tons of illegal drugs to enter the country, let billions in illicit
cash back out and jeopardized hundreds of criminal cases, according to
records obtained in an eight-month Herald investigation.

Aided by more than 500 interviews and six dozen frustrated Customs veterans
around the nation who risked careers to provide thousands of internal
documents, The Herald found widespread incompetence and dereliction of duty
within the frontline agency in the nation's war on drugs.

In one 1995 case, Customs botched a promising internal investigation of a
"fraternity of corrupt inspectors" who several informants said were taking
millions in bribes to allow cocaine across the Southwest border.

No action was taken against the suspects after a probe in which senior
managers denied investigators' requests for video surveillance equipment and
unmarked cars, and refused to authorize undercover agents to approach the
suspects with bribe offers.

Slow, haphazard, often nonexistent response to internal allegations of
wrongdoing -- including bribery on the border, rampant cargo theft in New
Orleans, disappearing property in Miami, embezzlement, fraud, rape, even
pedophilia -- has led to breakdowns in Customs' broad mission to collect
money, enforce trade laws and stop contraband from penetrating the nation's
borders.

"When you have people who are getting away with things, when you have the
low morale that comes with that, logic tells you it has to affect the
mission," said Carol Hallett, a former Customs commissioner whose reforms
were dismantled in the early 1990s.

Customs administrators -- facing Senate hearings starting Thursday to
examine management shortcomings -- acknowledge failures, but argue that the
agency's overall mission is affected only in isolated cases.

However, some critics, including one past Customs commissioner, say internal
problems and weak management have so affected Customs that it may be time to
cut back on the agency's role in major criminal investigations.

New Commissioner Raymond Kelly, appointed in August after two years
overseeing Customs as undersecretary of Treasury, says sweeping reforms
under his management have begun to repair Customs' battered image.

"Customs has continued to do a good job in a difficult situation," Kelly
said, citing thousands of honest employees who remain proud of their
accomplishments. "But it's clear internal affairs has been ineffective. It's
clear employees here deserve a more fair organization.

"The bottom line is it all gets back to whoever is in this seat.
Accountability stops with me."

The Herald found dozens of instances in which Customs' failures were treated
leniently. They demonstrate a widespread inability to cope with problem
employees.

In New Orleans, tens of thousands of dollars in uninspected imports were
stolen in 1996 from a private storage company that gave gifts to and
received favors from the chief Customs inspector. The company remains a
bonded warehouse, and the chief inspector kept his job.

In Miami, seized knives allegedly disappeared from a property room overseen
by a Customs supervisor who rose to the position despite lying on his job
application about previous arrests, alcoholism and three previous firings.
He has since been promoted.

In Chicago, hundreds of child pornography cases were jeopardized after a
regional commissioner there was accused by male subordinates of forcing
himself on them sexually in 1991. He retired without charges.

In Minneapolis, child pornography cases could be endangered because an agent
was allowed to keep his job after he acknowledged to police in 1995 that he
solicited underage boys for oral sex. More allegations of child molestation
surfaced against the agent last year. Following Herald inquiries, Customs is
moving to fire him.

In Washington, an agent accused internally of embezzling nearly $20,000 was
given only a letter of reprimand, in part because the problem was so
widespread in the agency and no one else was being punished.

Customs administrators decline to discuss specific cases, but argue that for
every anecdote of wrongdoing, they can show five of exceptional work.

It is nearly impossible to gauge Customs' performance in any systematic way.
A criticism from federal auditors has been the agency's failure to develop
ways to measure its own performance.

For the past decade, dozens of whistleblowers -- federal prosecutors,
agents, inspectors, even Customs managers -- have reported mission failures
based on what they say is the agency's unwillingness to aggressively
investigate internal corruption.

"It does not matter whether this is due to bribes, sexual favors, real or
threatened blackmail, or just plain fear of standing up and being counted,"
wrote John J. Juhasz, former special agent in charge of internal affairs in
Arizona, in a 1991 letter to the commissioner. "It places our entire system
of law enforcement in jeopardy."

Congressional orders to fix the problem have gone unheeded in large part.

Customs' defenders portray the problem as more a culture of whiners than a
culture of favoritism.

"I don't think there is a huge problem with Customs," said Michael Lane,
Customs second-in-command for 10 years until he left in 1996.

"These employees come forward with issues of their own, and they say there
is systemic corruption," he said. "Well, I can't tell you how many outside
agencies have looked for it and cannot find it."

Many interviewed are less certain.

"It's like taking a metal detector to the beach," a high-ranking Customs
employee said. "You cannot say there are no gold coins if the detector
you're using is broken."

Commissioner Kelly acknowleges that the detector has been ineffective for
years.

BRIBERY ON THE BORDER? Investigation fizzles

Consider Operation Unknown Inspector. From any perspective, the case was
bungled.

In 1994, two brother-and-sister drug traffickers looking to buy time off
their sentences came to internal affairs offering to identify more than a
dozen corrupt Customs inspectors and agents on the Southwest border who had
taken millions in bribes to allow drugs in and cash out.

They said inspectors were taking $500 to $1,000 per kilogram of cocaine, and
a percentage of billions in cash stuffed inside shipments of hollow doors
allowed to pass through inspection lanes.

The brother said he had made bribe payments. The sister, who is still
working with Customs as an informant, had close ties to Mexican government
officials suspected of drug trafficking. They were believed by Customs from
the start, records show.

Several independent, confidential informants corroborated the allegations.
Allegedly corrupt inspectors were picked out of photo lineups by the
sources. Supporting information came from more than a dozen other sources,
including Customs employees and Mexican police.

Computer checks showed that agents and inspectors had passed suspect
vehicles without inspection, including one in which a load of cocaine was
lost inside the United States. An agent suspected of taking bribes ordered
border inspectors to ignore a computer warning labeling the vehicle "armed
and dangerous."

Several of the inspectors had been subjects of previous internal
investigations, including one accused of skimming marijuana from a seizure
in Miami.

One confidential source, 54-year-old Benjamin Gildardo Bojorquez -- sent in
by internal affairs to infiltrate the drug organization and identify corrupt
inspectors -- was murdered in Mexico with a bullet to the back of the head
within days after he telephoned internal affairs in Calexico, Calif., with
promising new information.

Customs considered the possibility of a leak.

Records show that the investigators on the case -- Special Agent Bruce
Durbin and Inspector Charles Mazon -- were denied requests for video
surveillance, citizen-band radios, increased outside help, and integrity
tests in which sources would make direct approaches to suspect inspectors.

When they complained to higher-ups and outside agencies, matters got worse,
they later wrote in an internal complaint.

"We feel that we are being chastised for pursuit of our administrative
privileges and for reporting improprieties within the office of internal
affairs," they wrote in an August 1995 internal memo.

In the end, Customs supervisors ordered the investigation closed, referring
to the case as a paper tiger and calling Mazon and Durbin incompetent and
"amateurs" more prone to filing complaints than investigating corruption.

Prior to his complaints, Durbin received high praise from supervisors,
Treasury records show.

In 1995, Customs turned the case over to the multi-agency Border Corruption
Task Force, after most confidential sources involved in the case "expressed
concern that if they were introduced to a task force, then their safety
would be jeopardized," reports said.

The investigation fizzled.

Durbin and Mazon, both still Customs employees, declined to discuss the
case. Customs managers interviewed agreed they erred in giving such an
important case to allegedly inexperienced agents.

None of the agents and inspectors targeted in Operation Unknown Inspector
was disciplined or transferred. Those contacted by The Herald declined to
comment.

CARGO THEFT PROBED Focus turned to gifts

In New Orleans, Customs and the Treasury Department investigated 1996
allegations surrounding rampant cargo theft at a Customs examination
station. Entire cargo containers were stolen, as well as a pallet of VCRs,
T-shirts, household goods, tons of copper scrap and aluminum ingots, stereo
equipment and Beefeater gin.

"Security was literally nonexistent at the CES," wrote Clyde McCoy, a senior
special agent investigating the fraud allegations, in a May 29, 1998, memo.

In 1996, records show, Customs Chief Inspector Robert Galloway initiated an
investigation of the five Customs employees assigned to the station. But the
investigation eventually turned back on Galloway and his relationship with
the private company that owned the examination station.

Records and interviews show:

Galloway accepted expensive gift baskets sent to his home and fishing trips
from executives of Gallagher Transport & Storage, which ran the troubled
facility.

Galloway attempted in 1995 to acquire for the company several hundred feet
of concrete barriers from Louisianna transportation officials.

Galloway's brother-in-law, Customs Inspector Joseph Nuccio, waived a
required background investigation when Gallagher Transport applied for a
Customs permit in 1991.

"It was very unusual, definitely. It was a required thing. I didn't waive it
on my own," Nuccio told The Herald. "I think my supervisors told me to go
ahead and waive it."

A former Gallagher employee who spoke to The Herald on the condition of
anonymity said she told Treasury investigators two years ago about the
expensive gift baskets and fishing trips.

Customs policy prohibits gifts of anything more than nominal value.

Galloway, now director of drug policy enforcement in the New Orleans region,
listened to the allegations and declined to comment to The Herald.

Craig Maloney, the general manager at Gallagher Transport who employees said
ordered the gifts for Galloway, also declined to discuss the investigation
or his alleged relationship with Galloway. KNIVES AT ISSUE IN MIAMI Were
they missing?

Another case of missing property was alleged in Miami in 1996.

An accused switchblade smuggler fought Customs for the return of about 567
of more than 2,000 knives seized during a raid in North Miami Beach in 1995.
He won.

But when he went to retrieve the knives, 160 were not returned, court
records allege.

Customs spokesman Michael Sheehan said three separate counts were conducted
in 1996 in attempts to address the allegation. Following Herald inquiries,
Customs conducted a review of the counts and maintained that no knives were
missing or ever had been.

Following a request for the records, however, Customs opened an internal
affairs investigation into "discrepancies" in the counts, Sheehan said.

Citing the "ongoing internal affairs investigation," Customs declined to
provide the records.

In charge of the property room at the time was Mark Edwards, now 51, who was
promoted through the ranks after he was caught lying on his 1987 job
application regarding arrests for domestic violence, longstanding problems
with alcohol, being fired from three previous jobs, and denial of a military
security clearance.

He has since been promoted to the Customs officer in charge of the Fines,
Penalties and Forfeiture office in South Florida -- the custodian of
millions of dollars in seized property and cash.

The Herald has no evidence he was involved directly with the seized knives.
He declined to comment.

SEXUAL MISCONDUCT? Child porn cases affected

In 1991, hundreds of child pornography cases in the Midwest were jeopardized
when Assistant Regional Commissioner Donald Watson, now 62, was allowed to
retire without charges after four Customs agents he had recruited as college
interns signed sworn statements that he forced himself on them sexually
during business trips.

One said he had been drugged and raped by Watson, who oversaw investigations
in 18 Midwestern states.

Many child porn defendants negotiated more lenient sentences because of the
Watson investigation.

"That's when I really began to question this whole outfit," said one Customs
investigator on the case. "When they let the Watson case take a walk."

Said Watson: "It's been a tough number of years and I don't want to
resurrect it."

Customs may now be faced with a similar case.

Steven Suhr, 35, a Minneapolis agent who has investigated child pornography
cases, was allowed to remain on the payroll in 1995 after he acknowleged to
police that he tried to solicit underage teenage boys for oral sex. The boys
stabbed him in a Kettering, Ohio, park.

Last year, two other men accused Suhr of molesting them for money when they
were 10 to 12 years old.

After Customs found that Suhr had illegally used agency computers to
research the boys' backgrounds, he was put on administrative leave with pay,
where he has remained for more than a year. There are no criminal charges.

Following Herald inquiries, Customs has begun procedures to fire him. Suhr
declined to comment. How his criminal cases are affected is yet unknown.

LENIENCY OVER MONEY Overpayments tolerated

In 1993, Customs' top brass decided not to charge one of its agents with
embezzlement after he failed to report overpayments of $18,373 over a
two-year period.

There were essentially two reasons for the leniency, according to the June
3, 1993, final report. The first was that he promptly returned the money
after the error was caught. The second was that no one else was being
disciplined despite a widespread problem with similar overpayments.

Paul Chambers, since promoted to resident agent in charge in Cincinnati, was
initially given a 14-day suspension -- later mitigated to a letter of
reprimand for poor judgment. "There were far too many situations where
salary overpayments were permitted to exist beyond termination dates," wrote
John Eichelberger, a high-level Customs fact finder, citing a similar Miami
case in which Customs demanded a $10,000 repayment and "there was no
disciplinary action."

Commissioner Kelly will not discuss specific cases, but said he has
established a "cold case unit" to examine past failures in internal affairs.

In an April 29 speech to the U.S. Chamber of Commerce in Washington, he
talked openly about the agency's failings.

"While instances of corruption in the ranks of the Customs service are very
few, the agency's reponse to the problem has not always been good," Kelly
said. "Some thought that if we didn't look for the problem, it might just go
away.

"The problem didn't go away, however," he continued. "It stayed there and
continued to sap the morale of the vast majority of honest, hard-working
Customs agents and inspectors. . . . There was a failure to recognize how
dangerous the corruption threat was to the agency."

e-mail: dkidwell@herald.com