The Federal Bureau of Investigation's Compliance
with the Attorney General's Investigative Guidelines
(Redacted)

Special Report
September 2005
Office of the Inspector General


Chapter Four: The Attorney General's Guidelines
on FBI Undercover Operations


Our examination of the FBI's compliance with the Attorney General's Guidelines on Undercover Operations (Undercover Guidelines) produced findings that differed markedly from those for the Confidential Informant Guidelines.244 In contrast to the many compliance deficiencies we found in the Criminal Informant Program, our examination of the FBI's undercover operations identified comparatively few instances of non-compliance with the Undercover Guidelines. Although we noted several issues that merit further review by the FBI, we found that the FBI's organization and oversight of its undercover operations generally was effective.

Before discussing our compliance findings and our recommendations, we provide an overview of FBI undercover operations, the requirements of the Undercover Guidelines, and the May 2002 revisions to those Guidelines.

  1. Role of FBI Undercover Operations
    1. The Need for Undercover Operations
    2. The Undercover Guidelines describe the importance of FBI undercover operations:

      The use of undercover techniques, including proprietary business entities, is essential to the detection, prevention, and prosecution of white collar crime, public corruption, terrorism, organized crime, offenses involving controlled substances, and other priority areas of investigation.245

      As we detailed in Chapter Two, the Undercover Guidelines were revised in 1982 following congressional hearings and press accounts critical of the FBI's ABSCAM undercover operation targeting official corruption in the early 1980s. At that time, FBI Director William Webster discussed the importance of undercover operations:

      The kinds of crimes the FBI is giving high priority today - bribery, gambling, narcotics, theft of technology, other white collar violations - often require undercover work. They are so-called consensual crimes. There is a willing participant on each side, so it is difficult to come up with someone willing to be a material witness to the crime. . . .
      Undercover operations, usually coupled with a cooperating witness or an informant, permit us to get inside a criminal apparatus and stay there long enough to find out how it works and who the players are. Undercover work is an exceedingly cost effective method of getting at problems that could not be solved in any other way.246

      According to Philip B. Heymann, former Assistant Attorney General in charge of the Criminal Division who later served as Deputy Attorney General:

      From the prosecutor's perspective, undercover operations are extremely effective in aiding us to identify, prosecute and convict the guilty and to reduce the chances that innocent parties will be caught up in the criminal process. Undercover operations permit us to prove our cases with direct, as opposed to circumstantial, evidence. Instead of having to rely on . . . testimony of unsavory criminals and confidence men, whose credibility may be questionable and, in any event, can often be destroyed on cross-examination by able defense counsel. Instead, through undercover techniques, we can muster the testimony of credible law enforcement agents, often augmented by unimpeachable video and oral taps which graphically reveal the defendant's image and voice engaged in the commission of crime. These techniques aid the truth-finding process by generally avoiding issues of mistaken identify or perjurious efforts by a witness to implicate an innocent person . . . .247

      Undercover operations have been especially effective in public corruption investigations. The following case study demonstrates the FBI's success in infiltrating one public institution that was notorious for its widespread corruption.

      Case Study 4.1: Operation Greylord

      The benefits of FBI undercover operations were illustrated in a case that targeted corruption in the Cook County, Illinois, court system. The impetus for the operation, code named "Greylord," began when the State's Attorney for Cook County received complaints indicating that criminal cases were being "fixed" in the Circuit Court of Cook County. These complaints were supported by a pattern of acquittals in cases involving particular judges and attorneys. After the U.S. Attorney was notified, the FBI initiated plans to conduct an undercover operation regarding these allegations. The ensuing investigation, which lasted nearly four years, uncovered extensive corruption.

      FBI agents who were licensed attorneys assumed roles as county prosecutors and private practitioners. In addition, the FBI recruited a state prosecutor and a judge from southern Illinois who were temporally assigned to Cook County to deal with the backlog of cases there. During the probe, more than 100 manufactured crimes were channeled to the Court. Equipped with electronic surveillance devices, the undercover agents were able to record hundreds of incriminating conversations with judges and attorneys which revealed that judges routinely accepted bribes to dismiss cases and received kickbacks from attorneys for assigning cases to them. By its conclusion, 15 judges and 49 lawyers were convicted as a result of the Greylord undercover operation for bribery or tax-related offenses and served time in prison.

      Under the current Undercover Guidelines, the FBI may employ undercover operations in preliminary inquiries, general crimes investigations, and both types of criminal intelligence investigations: racketeering enterprise investigations and terrorism enterprise investigations. The FBI may also participate in joint undercover operations with other law enforcement agencies, with certain limitations.248

    3. The Benefits and Risks of the Undercover Technique in FBI Investigations
    4. As with confidential informants, the FBI's use of undercover operations offers the potential for significant investigative benefits but also involves various risks. The Guidelines acknowledge that, "these techniques inherently involve an element of deception and may require cooperation with persons whose motivation and conduct are open to question, and so should be carefully considered and monitored."249

      Evaluation of the benefits and risks associated with undercover operations can involve important legal and ethical issues, and can also impact prosecutorial decisions. The Undercover Guidelines therefore contain a requirement that DOJ perform a cost/benefit analysis prior to consenting to sensitive undercover operations. Section IV.F.2.b of the Undercover Guidelines states that the "appropriate Federal prosecutor" must furnish a letter in support of the Group I application to FBI Headquarters that "should include a finding that the proposed investigation would be an appropriate use of the undercover technique and that the potential benefits in detecting, preventing, or prosecuting criminal activity outweigh any direct costs or risks of other harm."

      As described in Chapter Two, the Senate Select Committee to Study Undercover Activities of Components of the Department of Justice, convened in the wake of the ABSCAM investigation, highlighted the competing considerations associated with use of undercover operations:

      The Select Committee finds that undercover operations of the United States Department of Justice have substantially contributed to the detection, investigation, and prosecution of criminal activity, especially organized crime and consensual crimes such as narcotics trafficking, fencing of stolen property, and political corruption. In this era of increasingly powerful and sophisticated criminals, some use of the undercover technique is indispensable to the achievement of effective law enforcement. . . .
      The Select Committee also finds that use of the undercover technique creates serious risks to citizens' property, privacy, and civil liberties, and may compromise law enforcement itself. Even when used by law enforcement officials with the most honorable motives and the greatest integrity, the undercover technique may on occasion create crime where none would otherwise have existed.250

      After the Senate's report on ABSCAM in 1982, the FBI strengthened its controls on undercover operations. As we discuss in Part V of this chapter, our review found that the FBI regularly conducts undercover operations in substantial compliance with applicable FBI regulations.

      The FBI uses the undercover technique in a broad array of cases, as the following examples illustrate.

      • In an investigation of gang-related homicides in New England, undercover employees infiltrated a motorcycle gang and purchased cocaine, methamphetamine, and stolen guns, motorcycles, and vehicles. The undercover operation resulted in 17 convictions, the solving of a homicide, and the recovery of 11 stolen vehicles and 17 motorcycles.

      • In an investigation of organized crime, 32 defendants were indicted in March 2005 and charged with numerous racketeering crimes and other offenses committed over more than a decade, including violent assault, extortion, loansharking, union embezzlement, illegal gambling, trafficking in stolen property and counterfeit goods, and mail fraud. Most of the defendants were members or associates of the Gambino Organized Crime Family of La Cosa Nostra, including its acting boss and underboss. Evidence developed during the investigation resulted from the undercover activities of an FBI agent who infiltrated the crime organization and was offered induction as a "made member."

      • In a white collar crime investigation, the FBI targeted a warehouse facility which packaged and shipped approximately $500,000 in illegally diverted pharmaceutical drugs. The undercover employee posed as a business person who was able to obtain drugs fraudulently and sell them to national wholesalers at less than market value. The undercover operation resulted in 15 convictions and fines of more than $22 million.

      • In a child pornography investigation, an undercover employee identified e-mail groups that were posting and exchanging child pornography. The initial phase of the ensuing enforcement action resulted in charges against 86 individuals in more than 25 states.

      While the FBI has achieved significant benefits through undercover operations, the potential risks are also present.251 The Undercover Guidelines require the FBI and DOJ to routinely address risk factors in undercover operations such as:

      • agent safety;

      • damage to public institutions through manipulation of, or interference with, political and administrative processes;

      • injury to the targets of undercover operations by, for example, needlessly harming their reputations;

      • improper execution of the undercover operation that establishes a defense to prosecution, such as entrapment or outrageous government conduct;252 and

      • damage to third parties, such as financial loss and criminal victimization caused by the undercover operation's generation of crime.

      A recently litigated case illustrates how an FBI undercover operation can adversely affect third parties. As explained in Case Study 4.2 below, in Brown v. Nationsbank Corp., 188 F.3d 579 (5th Cir. 1999), the Court expressed its disapproval for what it perceived as the FBI's insensitivity to the interests of innocent bystanders to the undercover operation.

      Case Study 4.2: Operation "Lightning Strike"

      The litigation in Brown resulted from an FBI undercover operation called "Lightning Strike," which was initiated in 1991 to investigate contract procurement fraud and other illegal activity in the aerospace industry. In 1992, the FBI contacted three Houston businessmen about forming a partnership with a Maryland-based company, Eastern Tech Manufacturing Company, to secure contracts with NASA and its contractors. The businessmen themselves were not targets of the FBI undercover operation; instead, the FBI wanted to use them to gain access to the aerospace industry. 188 F.3d at 583. As the undercover operation unfolded, the FBI offered one of the businessmen a job as Chief Financial Officer and Vice President of Marketing of another company, Space Inc., and promised multi-million dollar loans to all three in support of their existing businesses. During 1992 and 1993, the businessmen were extensively involved in the preparation of bids for Space, Inc., and introduced FBI agents to managers at NASA and many leading aerospace manufacturers. According to the Court, the businessmen "were unaware that they and their companies were being set up by the FBI as tools of deception in an undercover operation." Id. at 583.

      At the end of 1992, the FBI offered one of the businessmen, Brown, an opportunity to develop an exclusive resort in the Bahamas. After he dissolved his business relationship with his partners and made arrangements to sell his home, the FBI tried to persuade Brown to become an unpaid informant. The FBI directed one of his associates to deliver a sealed envelope to him with "entertainment funds" with instructions to meet another party at a hotel. Brown complied, and the FBI recorded the transaction. In its opinion, the Court stated:

      Attempting to convince Brown to work as an unpaid undercover informant to set up stings, the FBI agents physically and psychologically intimidated Brown. On numerous occasions throughout August and September, 1993, the agents questioned Brown for multiple hours without the presence of an attorney and detained him against his will. Brown was threatened with prosecution of twenty-one different crimes, which could result in sixty years imprisonment and over a million dollars in fines.

      Id.

      In 1994, the FBI shut down Lightening Strike. Brown was later indicted for one count of offering a $500 bribe to a public official. His trial on that charge resulted in a mistrial. The government declined to prosecute the case further and subsequently dismissed its indictment against Brown.

      In 1996, Brown and his two associates filed suit against the FBI in U.S. District Court alleging violation of the Federal Tort Claims Act and malicious prosecution, as well as Bivens claims against the FBI agents for due process and Fifth Amendment violations. The district court dismissed the action, and the plaintiffs appealed. Although the Court of Appeals affirmed the district court's dismissal, it included the following analysis addressing the qualified immunity defense to Bivens claims:

      No court has addressed the particular issue presented by this case: the specific limits on federal agents' authority in undercover operations. The district court found no limits on the power of federal agents operating under cover, reasoning that if Appellants are allowed to pursue state law causes of action it would 'effectively stop' federal undercover operations because, 'by their very nature [they] seek to invade the privacy of those who violate the law.' . . . The district court should have asked whether it was constitutionally permissible for federal agents to inflict damages on innocent non-targets during an undercover operation and refuse them compensation. Because the Fifth Amendment due process guarantee against conscience-shocking injury imposes clear limits on law enforcement conduct, we conclude that it was neither necessary nor proper for the defendants in this case to destroy the lives and businesses of innocent non-targets in the name of law enforcement. . . . [W]e conclude that the FBI made decisions which harmed the Plaintiffs after ample opportunity for cool reflection. In fact, they invested almost two years and thousands of man hours in developing the sting operation. Thus, the due process clause protects the Plaintiffs from any harm that arose from the officers' deliberate indifference. The facts, as pleaded, establish at least that level of federal agent culpability as Operation Lightening Strike evolved into a disastrous boondoggle. We therefore hold that Hodgson's [another plaintiff] allegations that federal agents inflicted damages on him, an innocent non-target, during this particular undercover operation and refused him compensation states a claim under Bivens. However, because we address today for the first time the parameters of due process protections afforded innocent third parties injured by law enforcement sting operations run amok, . . . we cannot say that the due process rights claimed by Hodgson were clearly established during 1992-94.

      188 F.3d at 590-92.

      As explained later in this Chapter, our review found no undercover operations that involved the sort of adverse consequences described by the court in Brown. Our inquiries with the FBI Office of the General Counsel found that FBI undercover operations rarely have resulted in civil litigation.

  2. Significant Requirements of the Undercover Guidelines
  3. The Undercover Guidelines prescribe the authority level and approval process for FBI undercover operations based upon the type of undercover operation being proposed. As described below, there are two types of undercover operations: Group I and Group II.253

    1. Group I Undercover Operations
    2. Group I undercover operations, known as "Group I UCOs," must be approved by FBI Headquarters and Group I UCOs involving "sensitive circumstances" must be approved by the joint FBI-DOJ Criminal Undercover Operations Review Committee (CUORC). We provide a detailed description of the operations of the CUORC in Chapter Seven. The major categories of Group I UCOs are those in which there is a reasonable expectation of involving either "sensitive circumstances" or "fiscal circumstances." The types of operations that involve "sensitive circumstances" are:

      • investigations of possible criminal conduct by any elected or appointed official, or political candidate for a judicial, legislative, management, or executive-level position of trust in a federal, state, or local governmental entity or political subdivision thereof;

      • investigations of any public official at the federal, state, or local level in any matter involving systemic corruption of any governmental function; and

      • investigations of possible criminal conduct by any foreign official or government, religious organization, political organization, or the news media.

        In addition, the following activities constitute sensitive circumstances:

      • engaging in activity having a significant effect on or constituting a significant intrusion into the legitimate operation of a federal, state, or local governmental entity;

      • establishing, acquiring, or operating a proprietary business;

      • providing goods or services that are essential to the commission of a crime and that are reasonably unavailable to a subject of the investigation except from the government;

      • activity by an undercover employee that is proscribed by federal, state, or local law as a felony or that is otherwise a serious crime;

      • activities involving a request to an attorney, physician, member of the clergy, or other persons for information that would ordinarily be privileged, or to a member of the news media concerning an individual with whom the news media is known to have a professional or confidential relationship; and

      • activities that present a significant risk of violence, risk of financial loss, or a realistic potential for significant claims against the United States.254

      The types of activities that qualify as "fiscal circumstances" are those in which there is a reasonable expectation that the operation will:

      • require the purchase or lease of property, equipment, buildings, or facilities; the alteration of buildings or facilities; or prepayment of more than one month's rent;

      • require the deposit of appropriated funds or proceeds generated by the undercover operation into banks or other financial institutions;

      • use the proceeds generated by the undercover operation to offset necessary and reasonable expenses of the operation;

      • require a reimbursement, compensation, or indemnification agreement with cooperating individuals or entities for services or losses incurred by them in aid of the operation; or

      • exceed the limitations on duration or commitment of resources established by the FBI Director for operations initiated in the field.255

      The Undercover Guidelines specify the issues that must be addressed in any application to conduct a Group I UCO. The application must include: a description of the proposed objective, scope, duration, and cost of the operation; how, if the operation involves "sensitive circumstances," the operation merits approval in light of the involvement of "otherwise illegal activity" (OIA), if any; procedures to minimize the acquisition, retention, and dissemination of any information which does not relate to the matter under investigation; and an explanation of how potential constitutional or other legal concerns are being addressed. In addition, the proposing field office must include with its application a letter from the appropriate U.S. Attorney indicating that he or she has reviewed the proposed operation, agrees with the proposal and that it is legal, will prosecute any meritorious cases, and has made a finding that the proposed investigation "would be an appropriate use of the undercover technique, and that the potential benefits in detecting, preventing, or prosecuting criminal activity outweigh any direct costs or risks of other harm." Undercover Guidelines IV.F.2.b. Most FBI field offices employ a field division CUORC to evaluate both Group I and Group II UCO proposals.

      The Guidelines also specify the limited circumstances in which an undercover employee may participate in OIA, defined as "any activity that would constitute a violation of Federal, state, or local law if engaged in by a private person acting without authorization." Undercover Guidelines IV.H.256 An FBI Assistant Director must approve certain types of OIA after review by the CUORC. Id. III.H.5.

      To avoid entrapment of innocent persons caught up in undercover operations, the Guidelines require that any undercover activities that involve an inducement to engage in crime be authorized only upon a finding that the illegal nature of the activity is reasonably clear to potential subjects; the nature of the inducement is justifiable in view of the character of the illegal transaction; there is a reasonable expectation that offering the inducement will reveal illegal activity; and there is either a reasonable indication that the subject is engaging, has engaged, or is likely to engage in the proposed or similar illegal activity, or the opportunity for illegal activity has been structured so that there is reason to believe that any persons drawn to the opportunity or brought to it are predisposed to engage in the contemplated illegal conduct.257 Undercover Guidelines V.B.

      With respect to applications for the extension or renewal of a Group I UCO, the Guidelines require an explanation of the expected results to be obtained from the operation or an explanation of any failure to obtain significant results. At the end of 2004, the FBI had [SENSITIVE INFORMATION REDACTED] open Group I undercover operations that were governed by the Undercover Guidelines.

    3. Group II Undercover Operations
    4. Undercover operations that may be approved by the Special Agent in Charge (SAC) in FBI field offices without FBI Headquarters' review are known as Group II undercover operations, or "Group II UCOs." A Group II UCO is defined as an undercover operation that does not involve either "sensitive circumstances" or "fiscal circumstances." Currently, SACs have the authority to approve Group II UCOs involving the expenditure of up to $100,000 (or $150,000 in drug cases of which a maximum of $100,000 is for operational expenses) for up to 6 months, and to renew the operation for one additional 6-month period, not to exceed 1 year.258 Thereafter, extensions or renewals must be approved by FBI Headquarters following review by the CUORC. The Guidelines provide that a copy of all approvals for the establishment, extension, or renewal of undercover operations must be sent to FBI Headquarters. Undercover Guidelines IV.B.

      In approving the establishment, extension, or renewal of a Group II UCO, the SAC must make a written determination referencing the facts and circumstances indicating that initiation of the investigative activity is warranted under departmental guidelines; the proposed undercover operation appears to be an effective means of obtaining evidence or necessary information; the operation will be conducted with minimal intrusion consistent with the need to collect evidence or information in a timely and effective manner; approval for the use of confidential informants has been obtained pursuant to the relevant Guidelines; any foreseeable participation by an undercover employee in illegal activity that can be approved by the SAC is justified by the pertinent factors; and there is no present expectation of the occurrence of any of the sensitive or fiscal circumstances that would render the operation a Group I UCO. Undercover Guidelines IV.B. At the end of 2004, the FBI had [SENSITIVE INFORMATION REDACTED] open Group II undercover operations that were governed by the Undercover Guidelines.

  4. Major Revisions to the Guidelines
  5. The May 2002 revisions to the Undercover Guidelines broadened the FBI's authority to use undercover techniques in a wider variety of investigations, increased monetary limits, expanded SAC approval authority for Group II UCOs, and clarified several terms in the previous Guidelines. The major changes were:

    Counterterrorism-related Revisions

    • emphasizing the "prevention of terrorism" as a permissible objective of undercover operations;

    • making explicit and emphasizing the FBI's authority to use undercover techniques to further the objectives of both types of criminal intelligence investigations: racketeering enterprise investigations and terrorism enterprise investigations;

    • authorizing SACs to grant emergency approval for the initiation of terrorism-related Group I UCOs if the SAC determines that the UCO is necessary to avoid the loss of a "significant investigative opportunity;"

    • adding "potential constitutional concerns" as a factor the SAC must consider in approving any Group II UCO and requiring an explanation of how such concerns have been addressed in an application for a Group I UCO involving the infiltration of a group as part of a terrorism enterprise or recruitment of an informant from such a group;

    Other Revisions

    • clarifying that only substantive contacts with an undercover employee, as distinguished from incidental or passive contact, count toward the rule defining a "series of related undercover activities" as three or more substantive contacts with the individual(s) under investigation;

    • clarifying the FBI's authority to participate in joint operations with other federal agencies by authorizing the FBI's participation without complying with the Attorney General's Guidelines on FBI Undercover Operations as long as the lead agency's sensitive case review process is substantially comparable to the FBI's CUORC review process;

    • raising from $40,000 to $50,000 the operational expenditure limits for Group II UCOs which may be approved at the field level;

    • clarifying that felony activity by an FBI undercover employee and potential civil actions against FBI employees under Bivens is a "sensitive circumstance," thereby requiring CUORC approval;

    • extending the authority of SACs to approve low-level money laundering not to exceed five transactions and $1 million without requiring Group I authority from the CUORC;

    • authorizing SACs to approve the continuation of covert online contact with subjects for a 30-day period pending approval of a Group I UCO at FBI Headquarters if necessary to maintain credibility or to avoid permanent loss of contact; and

    • requiring that the FBI immediately notify the Deputy Attorney General whenever FBI Headquarters disapproves an application for approval of an undercover operation and whenever the CUORC is unable to reach consensus concerning an application.

  6. The OIG Review of the FBI's Compliance with the Undercover Guidelines
  7. The focus of our review of the Undercover Guidelines was on two of the three substantive Guideline sections: Authorization of Undercover Operations (Part IV), and Monitoring and Control of Undercover Operations (Part VI). We did not directly examine the third substantive section, Entrapment (Part V), because it largely addresses authorization issues that we analyzed through examination of the Guidelines' general authorization provisions.

    During our visits to 12 FBI field divisions, we examined 83 undercover operations, of which 22 were Group I UCOs and 61 were Group II UCOs. We collected Guidelines-related data on more than 75 variables for Group I UCOs that we evaluated, and 50 variables for Group II UCOs that we evaluated.259 As part of this assessment we examined the following questions.

    • Was the initiation of the undercover operation authorized?

    • Was authority to extend the undercover operation obtained?

    • Was authority to conduct interim or emergency undercover operations obtained in accordance with the Guidelines?

    • Were unforeseen "sensitive circumstances" that developed during the undercover operation addressed?

    • Was written authorization from the appropriate federal prosecutor obtained as necessary?

    • Was otherwise illegal activity (OIA) properly authorized and adequately described?

    • Did FBI management adequately supervise the undercover operation?

    • Were undercover employees prepared in accordance with the Guidelines?

    • Did the SAC review the conduct of the undercover employees as required?

    In addition to our evaluation of the FBI's undercover operations, we also examined the results of the FBI's undercover operation audits. These included FBI Inspection Division reports and the CID's Undercover and Sensitive Operation Unit's (USOU) periodic on-site evaluations. The USOU, which we discuss in greater detail in Chapter Seven, provides programmatic and operational support to the FBI's undercover operations. Finally, we surveyed the FBI's Undercover Coordinators and Division Counsel regarding the operation of the undercover program.260

  8. Compliance Findings
  9. Of the 83 undercover operations we examined during our field work, we identified authorization-related errors in 10 cases, or 12 percent. Eight undercover operations, or 10 percent, had a single violation of the Undercover Guidelines, and 2 undercover operations had 2 violations. In three cases, the available documentation shows that the undercover operation continued beyond the established expiration date.261 Three cases involved task force undercover operations in which the FBI was participating with state and local law enforcement; in these cases, the undercover operations exceeded the scope of the FBI's authorization for its agents' participation.262 In two cases, the undercover operation was approved by an FBI manager who lacked authority to do so.263 Finally, in two cases FBI Headquarters approval was not obtained for matters involving "sensitive circumstances" within the meaning of IV.C.2 of the Undercover Guidelines. These two violations both occurred in public corruption cases - one involving the payment of a bribe without following Headquarters' review procedures, and the other involving the "systemic corruption of [a] governmental function."264

    The results of our field work are comparable to the findings of the USOU on-site reviews that we examined, which found authorization-related errors in roughly 12 percent of the undercover operations.

    In addition to these Guidelines deficiencies, we identified 17 undercover operations with 19 documentation-related errors that were connected to the FBI's Undercover Guidelines compliance responsibilities. As discussed in detail below, the issues in these matters concerned the lack of or insufficient documentation addressing the SAC's review of undercover employee conduct, authorizations of OIA, and certain required elements of U.S. Attorney authorizations for Group I UCOs. We also identified inconsistencies relating to the evaluation of the risk of violence in undercover operations, a "sensitive circumstance" within the meaning of IV.C.2 of the Undercover Guidelines.

    Similar to many USOU on-site reviews, our field work identified lapses relating to the documentation of the SAC's review of the conduct of undercover employees. Section VI.A of the Undercover Guidelines requires the SAC or Supervisory Special Agent (SSA) to meet with the undercover employees and to discuss their expected conduct during the undercover operation and provide instructions included in the Guidelines. Section VI.B requires the SAC to review the conduct of the undercover employees "from time to time." Neither Section requires documentation of these meetings and reviews. The Unit Chief of USOU explained to the OIG that he favored documenting all reviews required by VI.A and B in order to demonstrate compliance with the Guidelines, and that this could be satisfied simply by having the case agent or supervisor include an e-mail in the case file.265 However, the FBI's Field Guide for Undercover and Sensitive Operations (Field Guide or FGUSO) requires documentation only of meetings with undercover employees whose undercover responsibilities require them to work outside field division offices.266 Field Guide 10.1(1)A.

    Of the 83 undercover operations we examined, 21 lacked documentation of the SAC's review of the undercover employees' conduct. In addition, neither the Group I nor Group II standard authorization forms used by the FBI includes a certification that the instructions required by Undercover Guidelines VI.A have been given, though both forms require the Undercover Coordinator to certify that he or she has "apprised the members of the undercover operation investigative team . . . of undercover program policy." Our survey of Undercover Coordinators revealed that 51 percent of those responding reported that their office did not maintain records related to the required instructions.267

    As we found with respect to the FBI's use of its authority to approve a confidential informant's participation in OIA in the Criminal Informant Program, we identified deficiencies in the sufficiency of the descriptions of OIA authorized for undercover employees. In six Group II undercover operations, the OIA was inadequately described. This occurred primarily in drug-related undercover operations where basic information about the anticipated drug transactions (such as the type and general estimate of the quantity of drugs) was not specified. For example, in one undercover operation the quantity of drugs that was authorized for purchase was identified as "that which will be needed to maintain sufficient leverage on the subjects in order to persuade them to cooperate with law enforcement." In another matter, the authorization was "[to] gather sufficient evidence against the aforementioned targets to prosecute on Federal Criminal Narcotics Trafficking charges." Two successive Unit Chiefs of USOU disagreed as to whether such descriptions of OIA were adequate.

    We also identified six Group I UCOs where the required letter from DOJ did not satisfy IV.F.2.b of the Undercover Guidelines. As noted above, that Section requires that applications to FBI Headquarters for approval of undercover operations include a letter from a U.S. Attorney or Section Chief in the Criminal Division of the DOJ that indicates that he or she:

    1. has reviewed the proposed operation, including any sensitive circumstances reasonably expected to occur;

    2. agrees with the proposal and its legality;

    3. finds that the proposed investigation would be an appropriate use of the undercover technique;

    4. believes that the potential benefits in detecting, preventing, or prosecuting criminal activity outweigh any direct costs or risks of other harm; and

    5. will prosecute any meritorious case that is developed.

    Four of the letters omitted two or more factors. All of the letters omitted factor number four.

    We also did not find a consistent practice of highlighting in the proposal materials the potential risk of violence or physical harm that could result from the undercover operations. Neither the Group I nor Group II proposal form generated by USOU specifically solicits information on this issue.268

    The following table summarizes these findings.

    TABLE 4.1
    OIG Compliance Findings from 83 Group I and Group II Undercover
    Operations in Select Field Offices
    Authorization-Related Errors Number
    of Group
    I
    Number
    of Group
    II
    Total
    The undercover operation continued beyond the established expiration date 1 2 3
    Task Force undercover operations exceeded the scope of the FBI's authorization for its participation 1 2 3
    The undercover operation was approved by an FBI manager who lacked authority to do so -- 2 2
    FBI Headquarters approval was not obtained for matters involving "sensitive circumstances" 1 1 2
    Documentation-Related Errors Number
    Of Group
    I
    Number
    Of Group
    II
    Total
    The undercover operation lacked documentation of the SAC's review of the undercover operation 2 4 6
    The required letter from USAO or DOJ did not address all required issues 6 -- 6
    The OIA was described inadequately -- 6 6

    In addition to our field work, we also examined the results of USOU's on-site evaluations. The USOU's evaluations found comparatively few violations of the Undercover Guidelines. Of [SENSITIVE INFORMATION REDACTED] on-sites conducted by USOU from May 2002 through October 2004, the following Guidelines-related deficiencies were identified:

    • in seven undercover operations, agents failed to obtain proper authorization for undercover activity;

    • in two undercover operations, division management failed to meet with undercover employees and in five other undercover operations documentation of such meetings was lacking;269 and

    • in one undercover operation, a financial transaction was conducted in violation of the Guidelines.

    Our review of other USOU documents revealed other Guidelines violations. The CUORC's fiscal year 2003 report noted the lack of proper authorization in one undercover operation, and a USOU electronic communication to the field in 2003 described the failure of certain field divisions to provide prompt notification to FBI Headquarters of the approval of Group II UCOs, a requirement of the Undercover Guidelines. Undercover Guidelines IV.B.4. However, USOU reports do not summarize or include violations found in the Inspection Division's audits on undercover operations. According to the Unit Chief of USOU, the Inspection Division does not routinely share its undercover inspection findings with USOU. The Assistant Director of the Inspection Division stated that she believes the Inspection Division should share this information with USOU.

    Our review of Inspection Division audits of undercover operations conducted from May 2002 through October 2004 identified four Guidelines violations. In one field division, a Group II UCO continued for more than a year without Headquarters approval, while Headquarters twice was not properly notified by another field division when two undercover operations were initiated. Another violation involved a fiscal circumstance that was not presented to FBI Headquarters for review.

  10. OIG Analysis
  11. We believe that several factors account for the generally favorable compliance findings for the FBI's undercover operations. First, the FBI's use of undercover operations is not as widespread as its use of confidential informants. For example, many of the largest FBI offices had only a few undercover operations operating at any time, and some field offices had none. According to the Unit Chief of USOU, the small number of undercover operations allows the FBI to devote sufficient resources and attention to supervising them. Second, unlike with the confidential informant program, USOU has developed a field guide, standardized forms, and a user-friendly web site to assist with administration of undercover operations. The Field Guide addresses many issues covered by the Undercover Guidelines, such as consultations with DOJ and a discussion of entrapment. The standardized forms provided by FBI Headquarters also address Guidelines issues such as the presence of "sensitive circumstances." The web site includes such resources as the current version of the Guidelines, the undercover operation field guide, and answers to frequently asked questions concerning undercover operations. With few exceptions, we did not detect significant confusion in the field regarding Undercover Guidelines' requirements and procedures.270

    Third, according to the Unit Chief of USOU, field agents are able to draw upon the expertise of personnel assigned to USOU, Undercover Coordinators, and experienced undercover-certified agents to promote compliance with FBI and DOJ requirements. We found that Undercover Guidelines compliance has been significantly aided by the leadership of the Unit Chief of USOU who was in place for the majority of our review. During his tenure, which ended in March 2004, he took several actions to significantly improve the operation of USOU and promote compliance with the Guidelines. These included reinstituting preparation of the annual report of the CUORC, improving the USOU on-site review process, identifying Guidelines compliance issues in Unit reports, and promptly rewriting the Field Guide to account for the May 2002 Guidelines revisions.

    Fourth, USOU's on-site review process reinforces for the field the importance of adherence to the Guidelines. Although the focus of the on-site reviews is operational success and safety, the reviews include assessments of compliance issues that assist with the identification and correction of Undercover Guidelines violations.

    With regard to the causes of the limited Undercover Guidelines violations that we identified in our field work, the violations involved errors that we believe could have been avoided had there been closer coordination between the undercover investigative teams and the Undercover Coordinators and Chief Division Counsel. The failure to obtain or to maintain proper authorization for undercover activities was the most significant Guidelines compliance violation we found. These included continuing undercover activities beyond the approved authorization period, failing to obtain FBI Headquarters approval because of a misinterpretation of "sensitive circumstances," and participating in task forces that exceed FBI undercover operation authorizations. Although the frequency of these violations was not as common as for other kinds of Guidelines non-compliance identified during this review, it nonetheless occurred in 10 to 12 percent of the cases examined by the OIG and USOU. According to the USOU Unit Chief, the cause of the non-compliance is simply lack of knowledge by agents regarding the Guideline requirements.

    Our surveys of Undercover Coordinators and Division Counsel revealed two significant findings regarding oversight and assistance to FBI undercover operations.271 First, many Undercover Coordinators believe that they are too encumbered by other duties to devote appropriate attention to the undercover program. Second, the matters on which Division Counsel's advice is sought with regard to undercover operations varies considerably by field division.

    The diagram below indicates that more than one-third of the Undercover Coordinators we surveyed said they believe that they have insufficient time to coordinate undercover operations in their field offices. Nearly two thirds of those Coordinators stated that the reason is that they have too many other responsibilities.272

    DIAGRAM 4.1

    Undercover Coordinators' Views on Their Duties

    89% have Collateral Duty. 38% say they have insufficient time to manage the criminal undercover program in their field office. 65% of coordinators said they have 'too many collateral duties'.

    Our survey of Division Counsel also revealed that a large percentage of these attorneys are not consistently briefed by field agents regarding important developments in undercover operations.

    DIAGRAM 4.2

    Division Counsel's Views on Frequency of Field Agents' Consultation
    on Select Issues Concerning Undercover Operations

    % of Pending Undercover Operations briefed by field agents: 38% - All Operations; 17% - Majority of Operations; 31% - Sometimes; 8% - Rarely; 6% - Never.
    % of Planned Investigative Approaches briefed by field agents: 27% - All Operations; 27% - Majority of Operations; 35% - Sometimes; 9% - Rarely; 3% - Never.
    % of Anticipated Legal Programs briefed by field agents: 51% - All Operations; 19% - Majority of Operations; 24% - Sometimes; 3% - Rarely; 3% - Never.

    In addition, we found significant agreement concerning the lack of consultation among Division Counsel assigned to the same field office.273 We found that 40 percent of the offices to which these attorneys were assigned are not regularly briefed on the status of pending undercover operations, 33 percent are not regularly briefed on planned investigative approaches, and 27 percent are not regularly briefed on anticipated legal problems with the undercover operations. Moreover, Division Counsel in the five field divisions that had at least two cases of authorization-related errors reported that they were not regularly briefed on the status of pending undercover operations.

    Our interviews with FBI personnel also indicated that some field divisions need more frequent and consistent interactions by Undercover Coordinators and Division Counsel with undercover teams.274 The Unit Chief of USOU emphasized this point, stating "the mistakes that I have seen since being the Unit Chief of this Unit, if the Undercover Coordinator would have been involved, it probably wouldn't have happened." He also stated that "the CDC is first line of legal defense," and if agents are not working with legal counsel as part of a team effort both in the formulation and implementation of the undercover operation, "you are asking for problems." In addition, an electronic communication which USOU issued to all field offices during our review emphasized the importance of the Undercover Coordinator, the need for greater consultation with the Coordinator, and the problems that turnover in the Undercover Coordinator position was having on the undercover program.

    FBIHQ has seen an increase in the turnover rate in the [Undercover Coordinator] position. Since January 2001, 29 of 56 UCCs have been replaced. While a UCC may be promoted or transferred thus making a change necessary, efforts should be made to ensure continuity by selecting a candidate who will remain in the position for a period of time. Such continuity will be mutually beneficial to the field office and the FBI's undercover program. . . . It has also been noticed that [Undercover Coordinators] have not been fully utilized as reflected in the fact that several undercover proposals have been submitted to FBIHQ without the careful review by the [Undercover Coordinator].

    We also learned that the SSAs who exercise day-to-day supervision over the agents participating in the undercover operations are not required to receive training on undercover operations or compliance issues.

    Our review further revealed that the absence of guidance addressing undercover operations in which task forces participated contributed to some of the Guidelines violations we found. In one case a local law enforcement task force member made drug purchases using FBI funds on behalf of an FBI agent who previously had participated in the undercover operation, even though the FBI's authorization for the undercover activity had expired weeks earlier. Although the Field Guide includes a section on joint operations, it does not address many compliance issues that are unique to task forces, such as the need to identify in the FBI proposal documentation all task force officers who will participate in the undercover operation. The USOU Unit Chief explained that the FBI has not developed guidance for undercover operations involving task forces.

    We also identified some confusion concerning the scope of "sensitive circumstances" in the Undercover Guidelines. Our survey of FBI Undercover Coordinators revealed that 43 percent of those responding believed that determining whether "sensitive circumstances" are present in a case is one of the three most difficult issues to resolve in the course of initiating and conducting undercover operations.275 Our field work also noted compliance issues associated with the interpretation of "systemic corruption" in IV.C.2.b and the "significant risk of violence or physical injury to individuals" in IV.C.2.m.276 For example, we identified an undercover operation in which law enforcement officers from two agencies were engaged in illegal conduct, and the target of the investigation had consulted with the head of one of the agencies about some of these activities. After we questioned the field division's application of IV.C.2.b (systematic corruption) in this case and its decision to treat the undercover operation as a Group II, we conferred with the Chief of the Investigative Law Unit of the FBI Office of the General Counsel who described a framework for analyzing when a governmental function has been systemically corrupted. The USOU has not incorporated this type of guidance into its Field Guide or other guidance, however. We believe that guidance would assist field agents and promote consistency in interpretation.

    In addition, we reviewed a number of Group II UCO proposals originating from Violent Crime and Major Offender and Drug Units which contained little information about the risks of violence. Our discussions with FBI personnel revealed a wide range of opinions concerning what qualifies as a "significant risk of violence or physical injury to individuals" within the meaning of IV.C.2.m.277

    With respect to compliance violations regarding the documentation concerning reviews required under Part VI of the Undercover Guidelines, descriptions of OIA, and the contents of DOJ authorization letters for Group I UCOs, our discussions with FBI personnel indicated that a lack of awareness of the need for the documentation or for greater specificity in such material appeared to be the primary cause of the deficiencies. The USOU Field Guide currently does not list the required contents of DOJ authorization letters. With regard to oversight of undercover employees, VI.B of the Undercover Guidelines requires the SAC to review "from time to time" the conduct of undercover employees.278 According to the Unit Chief of USOU, the case agents and their supervisors have the responsibility to document meetings with the SAC.

    With respect to the lack of specificity found in some OIA authorizations, the USOU Unit Chief stated that "it is a common sense approach. [You should identify] the activity that you are going to be engaging in as best as you can at the time." According to one USOU Unit Chief, the kind of general descriptions that we found in several of the OIA authorizations, such as "that which will be needed to maintain sufficient leverage on the subjects in order to persuade them to cooperate with law enforcement," does not provide sufficient guidance or indicate the likely limitations that the SAC intended to impose on the scope of the OIA. Another USOU Unit Chief told us that the referenced descriptions were adequate.

  12. OIG Recommendations
  13. Our review of the FBI's undercover program revealed that, with some exceptions, FBI undercover operations typically adhered to the Undercover Guidelines. We believe this generally favorable record is attributable to the availability of information about the requirements, including a field guide, standardized forms, and a user-friendly web site, and the contributions of experienced FBI personnel in ensuring adherence to the Guidelines. Our review nonetheless identified authorization-related deficiencies in 12 percent of the undercover operations that we examined, an outcome that is consistent with the results of USOU's on-site reviews over the last two years. We believe that these violations, while not high in number, are important to rectify, especially because of the risks that undercover operations present for the participating agents, the FBI, and the public.

    To ensure that undercover operations are properly authorized and conducted in accordance with the Guidelines, we believe that the FBI should encourage greater utilization of its Undercover Coordinators and Division Counsel. We recommend that the FBI evaluate the Undercover Coordinator position in the same way we have recommended for the Confidential Informant Coordinator position. Given the demands placed on Undercover Coordinators in certain field divisions, it may be appropriate to afford senior field managers the option of elevating the post to the GS-14 supervisory level. We also concur with the view of the USOU Unit Chief that the FBI should assess whether it should "formalize [the position] so that the Coordinator is put in a position where you do have to go through them and do have to consult with them." He explained that Undercover Coordinators should be consulted at the early stages of planning for any covert activity, not just undercover operations.

    We also believe that the FBI should encourage Undercover Coordinators to conduct their own progress reviews of the undercover operations within their field division. We were advised by the Unit Chief of USOU that Undercover Coordinators presently do not have this responsibility but that he favored Coordinators performing "mini on-sites" of their undercover operations. We believe this function is especially important for Group II UCOs since they are rarely examined by USOU in its on-site reviews and are not reviewed by the COURC. Our survey of Coordinators also found support for this work. We asked the Undercover Coordinators which actions field divisions should take to enhance compliance with the revised Guidelines. Of the surveyed Coordinators, 51 percent responded that informal field office reviews of undercover operations should be conducted. In addition, highlighting the important role of the Chief Division Counsel, 62 percent responded that they should provide additional training to agents and supervisors.

    Our survey of Undercover Coordinators also revealed another consideration that is relevant to oversight of undercover operations: nine percent of the surveyed field divisions reported that they did not have a local CUORC to review undercover operation proposals. Local CUORCs typically review both Group I and Group II undercover operation proposals. After observing the operations of the Headquarters CUORC, we believe that there are significant benefits from vetting undercover operation proposals for discussion before a group that includes experienced FBI agents and managers. Most FBI's field divisions - 90 percent - have a local CUORC. We believe that those field divisions that do not have a CUORC should be required to establish a local CUORC or specify written internal review procedures for both Group I and Group II UCOs that ensure proper consideration of the undercover operation approval standards set forth in VI.A of the Undercover Guidelines.

    Two other factors are also important to ensure full compliance with the Undercover Guidelines: 1) supervising agents and undercover employees should be adequately trained in undercover procedures; and 2) adequate technology should be employed to monitor undercover operation authorizations. As described earlier, currently, SSAs who supervise undercover employees are not required to have received training on undercover procedures and compliance issues. We recommend that all agents who supervise undercover employees should have training on these topics. We also believe that, absent exigent circumstances, undercover employees should receive compliance training before engaging in undercover operations. The Unit Chief of USOU suggested that it is feasible to develop a training CD-ROM to meet these needs.

    Technology also can support compliance efforts. According to the USOU Unit Chief, the FBI will soon be able to use a database to monitor undercover operation authorizations and other compliance issues nationwide.279 This system will automatically send electronic notifications to users and to USOU of upcoming deadlines and requirements. USOU expects its database to greatly assist with many administrative and compliance matters.

    In addition, we believe that the likelihood of finding Guidelines violations of the sort we identified during our field work would be reduced if the FBI issued guidance or supplemented the USOU Field Guide with information addressing compliance issues associated with task forces and the interpretation of sensitive circumstances set forth in IV.C.2.b and IV.C.2.m of the Undercover Guidelines. As described earlier, several of the Undercover Guidelines violations we found involved the failure to obtain proper authorization for activities undertaken in undercover operations that were conducted in conjunction with task forces. We also noted compliance issues associated with the interpretation of "systemic corruption" in IV.C.2.b and the "significant risk of violence or physical injury to individuals" in IV.C.2.m. We believe that the FBI should adopt a consistent interpretation of "sensitive circumstances" in both ordinary and task force settings and require its undercover operations proposals to identify facts that will allow FBI supervisors to determine whether such circumstances, including the risk of violence, are present and to what degree.

    With regard to the VI meetings and consultations with undercover employees, the Unit Chief of USOU explained that an e-mail documenting the meetings can be included in the FBI's records and that a formal electronic communication is not necessarily required. Authorization letters from U.S. Attorneys' Offices approving Group I UCOs should address all the factors set forth in IV.F.2.b of the Undercover Guidelines, and the descriptions of otherwise illegal activity can be modified in the same fashion as we have recommended in Chapter Three with respect to otherwise illegal activity authorized for confidential informants.

    In sum, we recommend that the FBI take the following steps.

    Enhance the Role of Undercover Coordinators and Division Counsel

    (10) Evaluate the grade level of Special Agents who serve as Undercover Coordinators and consider allowing Undercover Coordinators to be elevated to a GS-14 supervisory level, particularly in larger field offices where executive management deems it necessary to be a full-time position.

    (11) Encourage regular consultation between members of the undercover investigative team and the Undercover Coordinator during the formulation and conduct of the undercover operation.

    (12) Evaluate ways for the Undercover Coordinator to perform progress reviews at least every 90 days on undercover operations, a component of which should include an evaluation by senior managers, in consultation with Division Counsel and the Undercover Coordinator, of compliance with the Undercover Guidelines. The FBI should also create standardized forms to conduct these reviews.

    (13) Establish policies that promote more consistent Division Counsel involvement in the development and implementation of undercover operations, and ensure that Division Counsel are advised of anticipated legal problems in undercover operations.

    Improve Guidance and Training

    (14) Because neither the MIOG nor FBI field guides adequately address the issues below, provide guidance on the following:

    • the meaning of "sensitive circumstances" relating to "systemic corruption" of governmental functions, and the "significant risk" of violence or physical injury to individuals pursuant to Undercover Guidelines Sections IV.C.2.b and IV.C.2.m, respectively;

    • how to limit the scope of authorizations for otherwise illegal activity in undercover operations; and

    • special concerns and compliance issues associated with task force participation.

    (15) Identify ways to enhance Undercover Guidelines compliance training for field supervisors and undercover employees, including use of instructional CD-ROMs, web-based courses, and joint training with the U.S. Attorneys' Offices. Absent exigent circumstances, either as part of the certification of undercover employees or otherwise, the FBI should require undercover employees to complete undercover operation compliance training before participating in undercover operations. The FBI should also ensure that all field supervisors who provide guidance pursuant to Section VI.A of the Guidelines regarding preparation of undercover employees are familiar with undercover techniques, compliance requirements, and the Field Guide for Undercover & Sensitive Operations.

    Improve Internal Controls

    (16) As part of the Undercover Coordinator's certification currently provided for Group I and II undercover operation proposals, add a certification that the instructions set forth in Section VI.A.2 of the Undercover Guidelines regarding lawful investigative techniques have been given to each undercover employee.

    (17) Amend the Group I and Group II undercover operation proposals forms that currently provide information regarding the expected execution of the undercover operation to include a section: "Facts Pertinent to Violence Risk Assessment." (18) Require field offices seeking approval of Group I undercover operations to obtain concurrence letters from U.S. Attorneys' Offices that meet the requirements of Section IV.F.2.b of the Undercover Guidelines and amend Section 4.8(5) of the Field Guide for Undercover & Sensitive Operations accordingly. (19) Ensure that the Undercover and Sensitive Operations Unit has access to the Inspection Division's undercover operation audits.



Footnotes

  1. We provide in Appendix B a copy of the Undercover Guidelines.

  2. Undercover Guidelines § I at B-39.

  3. Why the FBI Uses Undercover Agents, U.S. News and World Report, Aug. 16, 1982, at 50. In the early 1980s, the FBI conducted about 400 undercover operations per year. The dangers involved in undercover operations are discussed in FBI Undercover Guidelines: Oversight Hearings Before the Subcommittee on Civil and Constitutional Rights of the House Judiciary Committee, 97th Cong. 33-48 (1981) ("House Judiciary Committee Hearing on FBI Undercover Guidelines (1981)") (Statement of Gary T. Marx, Professor of Sociology, Massachusetts Institute of Technology); Hearing Before the Senate Permanent Subcommittee on Investigations, Senate Government Affairs Committee, 100th Cong. 13 (1988) (Statement of Oliver B. Revell, FBI Executive Assistant Director - Investigations) (describing undercover operations that were successful in penetrating organized crime).

  4. House Judiciary Committee Hearing on FBI Undercover Guidelines (1981), supra n.246 at 130 (statement of Philip B. Heymann, Assistant Attorney General, Criminal Division, Department of Justice).

  5. If a joint undercover operation is under the direction and control of another federal agency, the FBI does not need to comply with the Attorney General's Undercover Guidelines provided the other agency's process with respect to "sensitive operations" is "substantially comparable" to the process established under the Guidelines for the review of undercover operations by the Criminal Undercover Operations Review Committee (CUORC). Undercover Guidelines III at B-40.

  6. Undercover Guidelines § I at B-39.

  7. See Final Report of the Senate Select Committee to Study Undercover Activities of Components of the Department of Justice, S. Rep. No. 97-862, at 11 (2d Sess. 1982).

  8. See also FBI Undercover Operations: Final Report of the Subcommittee on Civil and Constitutional Rights, Committee on the Judiciary, 98th Cong. 14-35 (1984) (discussing the dangers of undercover operations).

  9. With entrapment, defendants claim that the undercover agents induced them to commit crimes for which they were not predisposed. Undercover Guidelines V.A at B-54. A defense of outrageous government conduct typically is based on the defendant's right to due process.

  10. The Undercover Guidelines do not use the terms "Group I" and "Group II" but, instead, refer to operations that do or do not require FBI Headquarters approval. The Group I/Group II designation is found in the FBI's Field Guide for Undercover and Sensitive Operations (FGUSO).

  11. The complete list of "sensitive circumstances" is at Undercover Guidelines § IV.C.2 at B-44.

  12. The complete list of "fiscal circumstances" is at Undercover Guidelines § IV.C.1 at B-43.

  13. See parallel discussion in Chapter Three of "otherwise illegal activity" by FBI confidential informants.

  14. According to the Guidelines, entrapment occurs "when the Government implants in the mind of a person who is not otherwise disposed to commit the offense the disposition to commit the offense and then induces the commission of the offense in order to prosecute." Undercover Guidelines V.A at B-54. See also United States v. Jacobson, 503 U.S. 540, 548-554 (1992).

  15. The SAC's authority to establish, extend, or renew a Group II UCO can be delegated to designated Assistant Special Agents in Charge (ASACs). The delegation must be in writing. Undercover Guidelines IV.B.3 at B-42.

    On April 29, 2004, the Criminal Investigative Division issued an internal electronic communication stating that confidential expenditure approval limits for Group II UCOs were increased effective immediately from $50,000 to $100,000 for Assistant Directors in Charge and Special Agents in Charge.

  16. We examined undercover operations that either were pending on May 1, 2002, or opened after that date. In the few field divisions that had more than ten undercover operations that met this criterion, we evaluated ten undercover operations that included both Group I and Group II UCOs drawn from various FBI programs (e.g., Cyber Crime, White Collar Crime, and Violent Crime and Major Offenders). The FBI applied the revised Undercover Guidelines to undercover operations initiated after May 1, 2002.

  17. Undercover Coordinators are the field divisions' on-site experts concerning undercover matters, and they perform duties such as evaluating proposals for undercover operations, maintaining familiarity with all policies and requirements that apply to undercover operations, and working with USOU. FGUSO 10.1 (2).

  18. See Undercover Guidelines IV.B.2 & IV.G at B-42 & B-49, which set forth the applicable authorization periods.

  19. Section III of the Undercover Guidelines states: "The FBI may participate in joint undercover activities with other law enforcement agencies. . . . Joint undercover operations are to be conducted pursuant to these Guidelines." See Undercover Guidelines III at B-40. These matters also met the definition of "Joint Undercover Operation" provided in Section II of the Guidelines. Undercover Guidelines II.F at B-40.

  20. In one field division, the approving ASAC authorized two undercover operations without obtaining a written delegation of authority from the SAC as required by the Undercover Guidelines IV.B.3 at B-42.

  21. The determination whether a public corruption matter will be presented to the CUORC can depend upon decisions made by FBI managers outside of USOU. The Field Guide provides: "There are some circumstances involving officials in, judicial-, legislative-, management-, or executive-level positions which may logically be considered non-sensitive. In such instances, the Section Chief, Integrity Government/Civil Rights Section, CID, FBIHQ, who is a member of the CUORC and has a national perspective on matters involving public officials, must be consulted for a determination as to whether the undercover operation should be presented to the CUORC." FGUSO 3.2.A(3).

  22. Our references to the Unit Chief of USOU refer to the SSA who served in that position through January 2005.

  23. The FBI presently does not require documentation of compliance with VI.B of the Undercover Guidelines for undercover employees who are not required to work outside field division offices. Our review identified 15 undercover operations where we were unable to verify from the case files whether the SAC had reviewed the conduct of undercover employees who were working from FBI offices. The current Unit Chief of USOU told the OIG that USOU will henceforth require SACs to meet with all undercover employees at least once during each authorization period and to document the meeting.

  24. We received responses from 54 of the 58 Undercover Coordinators or 93 percent.

  25. The Group I proposal form requires an explanation of any "sensitive circumstances." The Guidelines definition of sensitive circumstances includes "a significant risk of violence or physical injury to individuals." Undercover Guidelines IV.C.2.m at B-45.

  26. These seven undercover operations were in different field divisions.

  27. One noteworthy exception is the handling of undercover operations in international terrorism cases. Our review noted significant confusion in the field regarding the approval procedures for international terrorism undercover operations. In early 2004, 51 percent of the Undercover Coordinators we surveyed stated that there was confusion over which division at FBI Headquarters supervises such operations. When asked to identify the Headquarters division which is the initial point of contact to review criminal international terrorism undercover operations, 43 percent of the surveyed Undercover Coordinators failed to identify the Counterterrorism Division (CTD). Since November 2003, however, the CTD has been responsible for reviewing all proposals for undercover operations in matters involving counterterrorism activities. Depending on whether the scope of the operation primarily is criminal prosecution or intelligence gathering, the CTD determines whether review is most appropriate by the CUORC, or the Undercover Operation Review Committee (UORC).

    As explained by one Coordinator, "[u]nder the current arrangement there is lack of communication and lack of cooperation between CID and CTD. There is also confusion in the field, since there is a great deal of overlap between the two investigative entities. Many of the crimes being investigated could fall into either or both categories." Our survey revealed that 81 percent of Undercover Coordinators believed that it would be beneficial to have one operating division at FBI Headquarters approve all aspects of undercover operations, regardless of which substantive program is involved.

    According to the USOU Unit Chief, the FBI has made progress since our survey to standardize review procedures for undercover operations and to integrate aspects of the undercover program between the CID and CTD. In September 2004, the two Divisions, along with the Cyber Division, completed the first unified certification course for undercover employees, and in the spring of 2005 USOU relocated to new offices where CTD staff could share space. According to the Unit Chief, with the addition of CTD staff, the personnel assigned to this new space would function in practical terms as an undercover operations center, allowing the field to resolve questions with a single call to Headquarters. However, the OIG learned in August 2005 that this integration was delayed due to a reorganization associated with the creation of a National Security Service within the FBI. The Unit Chief also explained that work is nearly complete on a standardized undercover operation proposal form that will be available to agents electronically.

  28. We received a 92 percent response rate to our survey. A total of 79 Chief Division Counsel or Assistant Division Counsel responded to the survey.

  29. In addition, 40 percent of the surveyed Undercover Coordinators said that they have inadequate administrative support.

  30. Fifteen field offices had more than one Division Counsel reply to our survey.

  31. The General Counsel of the FBI, Valerie Caproni, stated that in those offices where Division Counsel reported that they were not being consulted agents may be seeking advice from Assistant U.S. Attorneys (AUSAs). She stated it would assist her if the Inspection Division surveyed not only CDCs to determine whether they believe that they are being consulted properly, but also agents to determine where they are seeking legal advice and why.

  32. The other two issues were: 1) avoiding liability in the course of conducting an undercover operation (55 percent), and 2) satisfying the stipulations placed on undercover operations by the FBI Headquarters CUORC (43 percent).

  33. Sections IV.C.2.b and IV.C.2.m concern, respectively, investigations "of any public official at the Federal, state, or local level in any matter involving systemic corruption of any governmental function," and investigations that involve "a significant risk of violence or physical injury to individuals." (emphasis in original).

  34. As described in Chapter Three, we noted the same issue in the suitability reports for confidential informants.

  35. According to USOU, this responsibility may not be delegated, even in circumstances where the SAC has delegated responsibility for approving undercover operations to ASACs. We believe this interpretation is sound given that IV.B.3 of the Undercover Guidelines limits delegation authority to the establishment, extension, and renewal of undercover operations. Consistent with the Field Guide, however, both the USOU and Inspection Division undercover operation checklists require verification that "the SAC, or in the SAC's absence, the ASAC, has met with undercover employee(s) that [sic] do not come into the field office at a location away from the office at least once every period of authorization." (Emphasis added.) Neither checklist requires verification of meetings with undercover employees who do not work outside the field office. Because the SAC's responsibility to review the progress of the undercover operation may not be delegated, ASAC review is not a substitute for SAC review under the Guidelines. Moreover, the Guidelines' requirement of the SAC's review of undercover employee conduct applies to all such employees, and is not limited to those who work away from the field office.

  36. Among other capabilities, the database is expected to track the scheduling of on-site reviews, assist with locating appropriate undercover employees through storage of biographical and skill data, and track and store undercover inventory information (e.g., weapons and computer equipment).



Previous Page Back to Table of Contents Next Page