Report: FBI mishandled counterterrorism case

The Justice Department's inspector general has found that FBI agents mishandled a counterterrorism case in 2002, falsified records to cover up their mistakes and retaliated against a whistleblower for exposing the problems.

The IG's draft report on the case -- obtained by Government Executive -- also sheds rare light on problems with how the FBI internally handled allegations from the whistleblower, then-special agent Michael German.

But in another twist, German remains critical of the IG despite the report. He contends IG officials distorted some facts and failed to fully investigate whether the bureau missed an opportunity to infiltrate a terrorist conspiracy. He has asked the IG to do a more complete investigation before issuing a final report.

Congressional aides now are reviewing the situation to determine what action they should take, not only in relation to the counterterrorism case and subsequent cover-up, but also with regard to how the FBI and inspector general responded to German's allegations. Options under consideration include writing letters to the FBI and to the inspector general, and calling officials to Capitol Hill for briefings.

The incident could have far-reaching implications for the FBI, which made counterterrorism its top priority after the Sept. 11, 2001, attacks and publicly pledged to protect whistleblowers.

The FBI and the Justice IG declined to comment for this story.

The Tampa Case

In January 2002 - just four months after 9/11 - the FBI began investigating the possibility that a U.S. right-wing extremist group and an overseas Islamic terrorist organization were joining forces to launder money and funnel it to terrorists abroad.

A meeting that month between an FBI informant and a person with suspected links to terrorism in Orlando, Fla., indicated that such a conspiracy was in the works, prompting the bureau's Tampa Division to launch a formal counterterrorism investigation, the IG report stated.

In March 2002, the Tampa Division asked German, a seasoned special agent, to go undercover in the investigation. During the next few months, however, German found widespread problems with how the investigation was being managed.

He also discovered that the informant had violated FBI policy during the January meeting by leaving a recording device unattended. The informant did not have permission to do that, and the violation meant that parts of the meeting could not be used in the investigation.

German formally filed his whistleblower complaint in a letter to his supervisors in September 2002.

IG On the Case

The inspector general concluded in a draft 40-page report that the Tampa Division mismanaged the investigation.

The draft report, completed in mid-November, stated that the case agent in charge of the probe failed to prepare reports and document investigative activities in a timely manner. The IG also found that the case agent acted improperly by backdating FBI reports. The agent began adding false dates to reports after German wrote his September 2002 letter, the inspectors found.

The IG found that supervisors in the Tampa Division were aware of problems with the investigation but did not take prompt corrective action. And the IG found that dates on at least three documents were falsified using correction fluid. The IG said, however, it could not conclude who falsified those forms.

The IG concluded that FBI agent Jorge Martinez, who served as chief of the bureau's Undercover and Sensitive Operations Unit from 2001 until 2004, had retaliated against German for raising the allegations by excluding him from training programs.

Internal Confusion

The IG report also highlights a complicated and, at times, messy process inside the bureau in response to German's allegations, including a lack of coordination between offices responsible for investigating and resolving complaints.

The Tampa Division and the FBI's Inspection Division both conducted internal reviews into German's charges. The Inspection Division is responsible for ensuring the bureau follows its own rules and conducts investigations properly.

German also met with representatives from the FBI's Office of Professional Responsibility, which is responsible for investigating and adjudicating allegations of criminal conduct and serious misconduct by FBI employees. OPR, however, declined to investigate German's allegations, according to the IG report.

The Tampa Division and the Inspection Division both concluded that the agent in charge of the counterterrorism case failed to prepare reports and document investigative activities in a timely manner.

Only the Inspection Division recommended disciplinary action against the case agent. The FBI did not act on this recommendation until February 2004, when the bureau placed the agent under a "developmental plan," the IG stated. The Inspection Division also concluded that Tampa managers failed to take necessary corrective action, but did not recommend any punishment.

Neither review reached conclusions on whether the case agent had falsified dates on reports. The IG noted confusion between the Inspection Division and OPR on the matter. Members of the Inspection Division team said they thought OPR already had investigated whether the case agent was falsifying dates. But OPR officials said they thought the Inspection Division team would investigate that issue and report any findings to them.

Managers in the Tampa Division also told FBI headquarters that the January 2002 meeting between the informant and the person with suspected terrorism links was not recorded, the IG found. But German had a partial transcript from the recording of the meeting, which he showed to OPR.

On the same day that German showed the transcript, the Tampa Division issued a clarification saying the meeting was indeed recorded and that FBI policy had been violated by the informant, the IG stated. German said he suspects that somebody within OPR tipped off the Tampa Division that he had a transcript.

The IG concluded that OPR should have investigated German's allegations, as well as the circumstances surrounding the clarification on the recording.

Whistleblower's Critique

In a 26-page response to the draft IG report, German noted the significance of some of the findings.

"These are important findings that demonstrate a dangerous lack of internal controls within the FBI that calls the integrity of every FBI investigation into question," he wrote. "The administration, Congress and the American public should be gravely concerned about these findings under the current national security threat situation."

But German, who resigned from the bureau in 2004, also was highly critical of some of the inspector general's work. He contended that parts of the investigation weren't thorough. The IG also took too long to do its investigation, he argued.

"The failure of the OIG to properly address this matter and to protect me from retaliation compelled me to resign from the FBI in order to bring this case to the attention of members of Congress and the American public, and only that public pressure compelled the OIG to act," German wrote.

He also maintained that he was retaliated against in more ways than the IG found. He asked the IG to re-evaluate its conclusion with regard to retaliation.

One congressional aide noted that German has meticulously documented his allegations, and is not seeking any compensation or reinstatement. "Frankly, he's one of the most credible whistleblowers I've ever seen," the aide said.

Terrorism Nexus?

One of the biggest areas of dispute between the FBI, IG and German is whether the Tampa case actually involved a terrorist plot.

The Tampa Division claimed in late 2002 that it could not find a "viable" terrorism connection. The IG and Inspection Division also said they did not find evidence of links to terrorism in the case.

German, however, said there was an "extraordinary amount of evidence" in FBI records to show a terrorism connection. He said it was only after he raised his allegations that Tampa managers argued that there was no link to terrorism.

German criticized the IG for failing to conduct an independent evaluation to determine if there was a terrorism connection. He asked the IG to either conduct such an investigation of case files before the report is final, or acknowledge in the report that it did not investigate whether there was a terrorism connection.

"The refusal to undertake an independent review . . . seriously undermines the integrity of this OIG report," German wrote. "More importantly, however, the OIG refusal to look at the evidence directly affects the national security of the United States and our allies."

A Public Plea

Shortly after the 9/11 attacks, FBI Director Robert Mueller issued a memo in support of whistleblowers.

"The freedom to expose any impropriety within the bureau, without suffering reprisal, is fundamental to our ability to maintain high standards of organizational performance and conduct and to expeditiously root out inefficiency and malfeasance," Mueller wrote. "This critical freedom cannot be impaired by fear or reprisal or intimidation."

More than four years since Mueller issued the memo, German said the FBI still does not have adequate protection for whistleblowers and runs the risk of losing valuable, experienced agents, such as himself.

"There's nobody that wants the FBI to reform more than the agents out there doing the work, but unfortunately the way the system's set up they can't do anything about it," he said. "What I hope happens with all of this is that the public realizes there are still enormous problems with the way the FBI handles counterterrorism and compels Congress to reform the FBI, because it won't reform itself. Period."