ATF's Milwaukee sting operation marred by mistakes, failures

A store calling itself Fearless Distributing opened early last year on an out-of-the-way street in Milwaukee's Riverwest neighborhood, offering designer clothes, athletic shoes, jewelry and drug paraphernalia.

Those working behind the counter, however, weren't interested in selling anything.

They were undercover agents from the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives running a storefront sting aimed at busting criminal operations in the city by purchasing drugs and guns from felons.

But the effort to date has not snared any major dealers or taken down a gang. Instead, it resulted in a string of mistakes and failures, including an ATF military-style machine gun landing on the streets of Milwaukee and the agency having $35,000 in merchandise stolen from its store, a Journal Sentinel investigation has found.

When the 10-month operation was shut down after the burglary, agents and Milwaukee police officers who participated in the sting cleared out the store but left behind a sensitive document that listed names, vehicles and phone numbers of undercover agents.

And the agency remains locked in a battle with the building's owner, who says he is owed about $15,000 because of utility bills, holes in the walls, broken doors and damage from an overflowing toilet.

The sting resulted in charges being filed against about 30 people, most for low-level drug sales and gun possession counts. But agents had the wrong person in at least three cases. In one, they charged a man who was in prison - as a result of an earlier ATF case - at the time agents said he was selling drugs to them.

Other cases reveal that the agency's operation was paying such high prices that some defendants bought guns from stores such as Gander Mountain and sold them to the agents for a quick profit. The mistakes by agents are troubling and suggest a lack of planning and oversight, according to veterans of the ATF, who learned about the operation from the Journal Sentinel. The newspaper combed through police reports, court documents, social media and materials left behind by the ATF, all of which provide a rare view inside an undercover federal operation.

"I have never heard of those kinds of problems in an operation," said Michael Bouchard, who retired five years ago as assistant director for field operations for the agency. "Sure, small bits and pieces, but that many in one case? I have never heard of anything like that."

The agency has been on the defensive in recent years following the ill-fated Fast and Furious operation, run out of Arizona, where agents allowed sales of more than 2,000 guns to gun traffickers but then failed to keep track of most of them. Many turned up at crime scenes in Mexico, including two at the site where a U.S. border guard was killed.

And now, in the wake of the school shooting in Connecticut, as President Barack Obama considers new restrictions on guns, the agency is poised to take on additional responsibilities.

The ATF has run storefront stings in other cities, holding news conferences trumpeting results and showing off the guns and drugs seized. In Milwaukee, the operation has been kept quiet.

Residents of the area, tucked between N. Humboldt Blvd. and the Milwaukee River, are angry the ATF secretly drew drug dealers and gun-toting felons to their neighborhood, which is rallying to improve.