TORPEDOED G-MAN UNIT RISING LIKE PHOENIX FROM ITS ASHES

A former Internal Affairs agent for the U.S. Customs Service has come
forward to shine a light on a sordid tale of alleged law-enforcement
corruption, cover-ups, drug trafficking and suspected murder.

The former agent, Steven Shelly, is going public with his story because, he
claims, no one in a position of power within law enforcement is listening.

Shelly's story sounds like a bad rerun of history -- a repeat of the
rampant police corruption that wracked gangland Chicago during the height
of Prohibition. In fact, Shelly traces his troubles to his involvement in a
corruption-busting task force whose members were dubbed by its founder as
modern-day "Untouchables."

In Shelly's version of the story, though, it is the G-men, not the crooks,
who take it on the chin.

The Customs Internal Affairs Special Agent in Charge (SAC) who spearheaded
the formation of the task force, John William Juhasz, claims that it was
shut down abruptly because it got too close to the truth. The task force,
called Firestorm, included members of the U.S. Customs Service, the
Department of Justice's Office of Inspector General, the IRS, the FBI and
the U.S. Attorney's Office.

Firestorm, prior to being dismantled, was actively investigating some 19
cases of alleged law-enforcement corruption in Arizona, according to public
records obtained by the Business Journal.

Juhasz asserts in a statement made under oath during a legal proceeding
that all of the key players in the torpedoed Firestorm task force were
subsequently targeted by the government for retaliation and had their
careers ruined -- including Shelly.

Shelly's story begins in early 1990 in Arizona, with the inception of the
Firestorm task force. Although rooted in history, the tale has an edge to
it that cuts a direct path into the present. Shelly claims that the
corruption uncovered by the Tucson, Ariz.-based task force, which he
asserts has been left unaddressed for years, now poses a real threat to our
national security in the wake of the 9/11 terror attacks.

Shelly alleges that a former Customs Internal Affairs supervisor committed
perjury as part of the effort to silence him in the wake of Firestorm's
demise in late 1990. Shelly was forced to resign involuntarily in 1994, he
contends, and has been seeking ever since to reclaim his job and to spur
the government to clean up the corruption.

However, Customs argues that Shelly resigned from his job due to personal
factors and that there is no evidence that he was subjected to reprisal by
supervisors for whistleblowing activity. The judge hearing a legal
challenge Shelly brought against Customs agreed.

Shelly maintains that justice has not been served in his case or in the
case of the task force, which has led him to step forward as a whistleblower.

Documents provided to the Business Journal by Shelly show that the
Firestorm task force had unearthed evidence linking two Customs inspectors
working along the Arizona border to drug traffickers. The documents also
allege that a supervisor with the Department of Justice's Office of
Inspector General (OIG) -- who was suspected of having ties to drug
traffickers -- worked to derail the investigation into the inspectors'
activities.

Both the Customs inspectors and the OIG supervisor still work for the
government, according to Shelly and other sources.

Also outlined in the documents obtained by the Business Journal are the
details of the task force's investigation into the mysterious death of a
former Customs supervisor in Douglas, Ariz., who Juhasz suspected might
have been "involved in a circle of corruption in Douglas. ... ," according
to an affidavit Juhasz submitted to the Department of Treasury's OIG.

The documents obtained by the Business Journal include testimony, notes and
records provided to the House Commerce, Consumer and Monetary Affairs
Subcommittee in 1992.

Other documents include workers' compensation hearing testimony, Merit
Systems Protection Board depositions, internal reports of investigation,
various legal affidavits, statements and Customs Service memorandums.

The story that follows is based on those documents, which total hundreds of
pages, as well as interviews with numerous former and current Customs agents.

Border Politics

In the drug trafficking game, death is not a random card, explains one
Customs agent who did his time on the border. In the wake of one seizure of
drug-cartel assets in Arizona, the agent recalls, 18 people were murdered;
13 of the bodies were discovered at the bottom of a well -- some with a
finger missing.

"They (the drug traffickers) were trying to find the informants," the agent
explains. A missing finger is a sign of a snitch.

The investigators on the case also received death threats, the agent says.
"These people play for real," the agent stresses.

In that context, it is not surprising that Juhasz and the Firestorm task
force in Arizona would cross paths with a case involving a suspicious death.

Douglas, Ariz., is a desert border town of about 15,000 people located some
120 miles south of Tucson and just north of Agua Prieta in Mexico.

By all accounts, Jake Price was a well-known and well-connected public
figure who had lived in the small town for more than a decade. He served as
the resident agent in charge of the U.S. Customs Office of Enforcement in
Douglas before retiring in the late 1980s to become a city magistrate.
Among Price's connections was real-estate speculator and Douglas Justice of
the Peace Ronald J. Borane, according to documents provided to the
congressional subcommittee.

In February 1990, Price took ill, mysteriously. He was transported to
Tucson Medical Center after falling into a coma, congressional records state.

James "Breck" Ellis, a Customs Internal Affairs group supervisor and a
member of the Firestorm task force, was dispatched by Juhasz to investigate
the situation.

Ellis, who had worked in the Douglas Customs office with Price prior to
becoming a Customs Internal Affairs agent in Tucson, found Price at the
hospital under the watch of "two to three Douglas police officers" who
appeared to be guarding him and who had "apparently traveled with him,"
congressional records state. Price's son, Justin "Clay" Price also was at
the hospital.

Then, things got stranger.

Price died in the Tucson hospital. At the time, Price's son, Clay,
allegedly promised Customs agent Ellis access to his father's papers,
congressional records state.

But instead, Clay Price later hooked up with a Douglas Customs officer and
together the two burned Jake Price's papers in the furnace at the Douglas
Port of Entry.

Congressional documents indicate that those papers, "including probable
bank records, would have helped expose (words blacked out) involvement in
the drug trafficking and public corruption in Douglas."

When interviewed by DEA Internal Affairs about the destroyed papers, Clay
Price "reportedly told them that he just destroyed some of his father's
personal records, like checks, but nothing that was relevant to Customs,"
documents submitted to the congressional subcommittee state.

The records were not the only disappearing act associated with Jake Price's
death. His body was shipped to Texas, according to congressional documents.

No autopsy was performed.

Borane confirmed that he knew Price, when interviewed by the Business
Journal by telephone. However, Borane said he had never heard anything
about Price's death being "mysterious."

The strange circumstances surrounding Jake Price's death, though, led
Juhasz to a dark conclusion.

"I believe, that the former agent in charge of the Douglas office was
murdered by -- by political figures in the Douglas area. ... ," stated
Juhasz when queried about Price's death in a legal deposition related to a
workers' compensation case filed by Shelly.

Underground Economy

The trail of coincidences didn't end with Price. About three months after
Price died in February 1990, Customs investigators unearthed an underground
tunnel stretching from Agua Prieta in Mexico, to Douglas, Ariz. The tunnel,
it was ultimately discovered, connected a suspected drug trafficker's house
in Mexico to his warehouse in Douglas.

The land where the warehouse was located, according to Arizona Assistant
Attorney General John R. Evans, was sold by Borane to the suspected drug
trafficker, Mexican businessman Francisco Rafael Camarena-Macias. Evans
adds that Borane is the godfather of one of Camarena's children -- a fact
Borane confirmed as well.

Borane also rented space to Customs for its Douglas office while Price was
the resident agent in charge, according to congressional documents.

Borane explained that he owns a lot of real estate in Douglas. He added
that it was a real estate agency in town that actually handled the sale of
the land to Camarena.

"I owned the land and leased it to a ready-mix plant, and I think they had
a trailer on it," Borane said. "Later on the warehouse was built, if I recall."

In addition to the land acquired in Douglas by Camarena, he also owned a
residence in Agua Prieta. The tunnel connected his home in Mexico to the
warehouse on his Douglas property. According to a statement released by
Customs, Camarena is believed to have hired an architect to design the tunnel.

Sources within Customs told the Business Journal that the initial
investigation into the drug-running tunnel was launched in November 1989.
The concrete-lined, air-conditioned 200-foot-long tunnel, which was used to
smuggle tons of cocaine from Mexico into the United States, was finally
found and shut down in May 1990.

Camarena was indicted in 1995 -- some five years after the tunnel was
discovered in the spring of 1990 -- but he soon disappeared in Mexico,
according to the Customs Service. The long arm of the law finally caught up
with him this past summer, when he was turned over to U.S authorities by
the Mexican government to face conspiracy and cocaine trafficking charges.
The Business Journal was unable to determine where Camarena is being held,
or the status of his case, at deadline.

Although law enforcement officials did investigate the property transaction
between Borane and Camarena after the tunnel was unearthed, no charges were
ever brought against Borane, according to Evans and other sources.

However, Borane was arrested years later, in 1999, on drug-running, money
laundering and traffic-ticket-fixing charges. Evans, who coordinated that
prosecution, says Borane was ultimately convicted of two felonies related
to the ticket-fixing charges and served 90 days in jail.

"He (Borane) is still on probation and is no longer a justice of the
peace," Evans adds.

Borane, for his part, said his three-year probation is nearly completed.
Although he is no longer the justice of the peace in Douglas, he said he
still owns a significant amount of real estate in the area.

"When you're in a small community and you're considered politically active,
which I was, and you own a lot of real-estate holdings, they (the
authorities) tend to look at you," Borane explained, when asked why he was
subjected to so much law-enforcement scrutiny.

Looking inward

Not all of the task force's cases revolved around mysterious circumstances
and missing evidence. Sometimes, the evidence became the problem.

Among the initial cases the Firestorm task force took up centered on one of
its own: Javier Dibene, special agent in charge of Arizona for the
Department of Justice's OIG. It is the OIG's job to investigate cases of
alleged corruption within the Department of Justice's ranks.

However, Dibene, who was based in the Tucson office, was himself being eyed
for having alleged links to drug trafficking operations.

"I suspect that ... Javier Dibene ... (is) involved in narcotics
activities," states Juhasz in a 1991 affidavit provided to a Treasury-OIG
investigator.

The FBI had investigated Javier Dibene in 1990 and cleared him; however,
the FBI agent on the case admitted, according to congressional records,
that he had been given such narrow investigative parameters by his
supervisors that the "investigation had no chance of success."

Further suspicion was drawn to Dibene when tapes surfaced fingering two
Customs inspectors in Nogales for allegedly allowing loads of dope to pass
across the border through an arrangement with a drug trafficker.

The tapes, which were in Spanish, were provided to the DEA initially
through an attorney for a defendant seeking to cut a deal for a client.

Congressional testimony from the assistant U.S. attorney who served as
coordinator for the Firestorm task force indicates that Dibene -- who
speaks Spanish -- was provided with copies of the tapes for review in the
fall of 1990. However, a few days later, DEA agent Alejandro Vasquez was
told that Dibene had found nothing of value on the tapes.

Vasquez, who also had listened to the tapes, became suspicious as "he
realized the tapes referred to large-scale narcotics trafficking ... "
congressional records state. The two tapes were made when one drug smuggler
kidnapped another drug smuggler and interrogated him at gun point to
determine how the competition was moving drugs across the border, Juhasz
states in the Treasury-OIG affidavit.

Several days after turning copies of the tapes over to Dibene's office,
Vasquez passed the original tapes onto Customs agent Shelly, who also
speaks Spanish. Shelly then brought the tapes to Juhasz' attention.

"The tapes contained the unequivocal identification and implication of
Customs border inspectors, by name, in corruption that involved the
deliberate 'passing' of large (600 pounds) and numerous periodic (alleged
to be weekly) loads of cocaine by the inspectors ... ," Juhasz states in a
letter sent to the Commissioner of Customs in 1991.

Dibene's lack of interest in the tapes also led Juhasz to begin to suspect
that Dibene was obstructing the investigation.

"To fully and properly evaluate Javier Dibene's actions and statements in
this matter, it is important to know that he was born in Mexico, moved to
Douglas, Ariz., at age 10, and later moved to Nogales, Ariz., where he grew
up with the Customs inspectors named in the tapes, and therefore arguably
knew them intimately," Juhasz writes in the letter. "For him to state that
there was nothing of value on the tapes was at best ludicrous, and more
probably criminally obstructive. I feel that Javier Dibene's actions
concerning the audio tapes serve to confirm my nagging fear that he was
actively suppressing corruption investigations."

Turf war

Juhasz' efforts to expose the alleged corruption related to the tapes -- as
well as his pursuit of other cases -- sparked a major turf war among the
federal agencies cooperating with or participating on the task force,
according to documents submitted to the congressional subcommittee. Juhasz
was labeled by the FBI special agent in charge in Phoenix as "a loose
cannon who was only trying to build an empire," the congressional documents
state.

Juhasz retired from Customs in 1994; the Business Journal was unable to
locate him for comment for this story. His statements have been drawn from
public records.

Former federal agents interviewed by the Business Journal who know Juhasz,
though, described him as an excellent agent of impeccable integrity who had
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 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 tapes 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 documents submitted to the congressional subcommittee.
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."

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 documents submitted to the congressional subcommittee. Those individuals
included 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 OIG office in Tucson, and the assistant U.S. attorney who served
as coordinator for the 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 Dibene, he, too, was transferred out of Arizona -- ultimately taking
a job with the Immigration and Naturalization Service (INS) in California,
according to congressional records. The Business Journal attempted to
contact him at the investigations division of the San previously under
Juhasz as a group supervisor and as a task-force member.

Shelly is now alleging that he has uncovered evidence that shows Ellis
committed perjury in sworn testimony in a Merit Systems Protection Board
(MSPB) legal proceeding.

The case

Shelly sought to get his Customs job back by bringing suit in 1995 through
the MSPB, a quasi-judicial review body set up for federal employees.

In his MSPB proceedings, Shelly alleged that he was the victim of a hostile
work environment and that he was retaliated against because of his
whistleblowing activity -- which included cooperating with a congressional
investigation into the demise of the Firestorm task force.

Shelly claims his supervisor, Ellis, allegedly engaged in a pattern of
abusive behavior in an effort to drive him out of his job in the wake of
the task force being busted up.

Shelly's psychologist -- who testified in a workers' compensation hearing
on Shelly's behalf -- in a letter dated March 2, 1994, stated that Shelly
was subjected to "constant and unrelenting disparagement and belittlement
... by his supervisors. The psychologist added that "the criticism appeared
to be deliberate for the purpose of engendering constant anxiety."

"In short, exposure to these conditions ground down Mr. Shelly's morale and
coping resources to the point where he became so significantly depressed
that he could no longer function," the psychologist's letter concludes.

Shelly -- an 11-year veteran of the Customs Service -- ultimately had
little choice but to resign from his job, due to the psychological duress,
he says.

Customs, on the other hand, claims Shelly left his job in July 1994 of his
own free will due to "personal factors," which included concern for the
health of his parents and other family-related problems. The judge in
Shelly's 1995 MSPB case agreed with Customs.

Shelly appealed, and in 1996 lost again.

"What the evidence does reveal in this case ... is that at or about the
time preceding (Shelly's) resignation, he was undergoing significant
personal stress," states the judge's ruling in Shelly's MSPB appeal. "The
evidence of record does not support any findings that any agency officials
engaged in any reprisals against (Shelly) for any whistleblowing."

However, earlier this year, Shelly says he came across evidence that Ellis
committed perjury during a 1996 MSPB hearing. The alleged perjury, Shelly
claims, played a critical role in the judge's ruling against him.

Prior to resigning in 1994, Shelly says he attempted to get transferred out
of the Office of Internal Affairs in Tucson, Ariz., which Ellis oversaw.
Shelly claims Customs approved that transfer in 1991, agreeing to move him
to the Office of Enforcement (OE) -- which has since been renamed the
Office of Investigations.

In testimony from the 1996 MSPB hearing, Ellis denied, under oath, that he
had knowledge of any such transfer being approved.

"I never knew that OE had ... had accepted," Ellis states in the testimony
- -- in response to a question about Shelly's transfer. "This sounds like an
issue that that never occurred."

Shelly counters, though, that he has obtained a signed statement indicating
that Ellis in fact had a conversation with a senior special agent in
Customs about that very transfer.

"I recall speaking with ... Ellis regarding ... Shelly's release date (for
his transfer)," states senior special agent Louie R. Garcia in a signed
statement dated March 29, 2001. "... Ellis provided me with the release
date (for the transfer) ... and instructed me to call ... Shelly ... and
confirm the suggested release date recommended by Ellis."

Ellis stepped down unexpectedly from his Customs post this past spring,
according to Shelly and other sources within Customs. The Business Journal
was unable to reach Ellis for comment.

Shelly has sent off a series of letters over the past seven months to the
U.S. Attorney's Office, the U.S. Office of Special Counsel, the Department
of Treasury's Office of Inspector General, Customs Internal Affairs as well
as to members of Congress attempting to get someone to investigate the
perjury charge.

"Mr. Ashcroft, is perjury by a high level U.S. Customs manager not a
crime?" states Shelly in a letter dated Aug. 1 that was sent to U.S.
Attorney General John Ashcroft. "I am not seeking vengeance, nor am I
trying to retaliate. I am simply seeking justice.

"... However, in order to protect my family and my integrity and my honor,
I will not cease in my quest to right this wrong."

No one in the government has done anything about his case, Shelly says.

As a result, he has decided to go public with his story.

To read other Business Journal coverage of the U.S. Customs Service, go to
the following Web link:
http://sanantonio.bcentral.com/sanantonio/stories/2001/10/08/story1.html.