Audit of the Drug Enforcement Administration's Confidential Source Policies and Oversight of Higher-Risk Confidential Sources

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Office of the Inspector General

U.S. Department of Justice

Audit of the Drug Enforcement

Administration’s Confidential Source

Policies and Oversight of

Higher-Risk Confidential Sources

Audit Division 15-28

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July 2015

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AUDIT OF THE DRUG ENFORCEMENT ADMINISTRATION’S

CONFIDENTIAL SOURCE POLICIES AND OVERSIGHT OF

HIGHER-RISK CONFIDENTIAL SOURCES

EXECUTIVE SUMMARY

The Department of Justice (DOJ or Department) Office of the Inspector

General (OIG) is conducting an audit of the Drug Enforcement Administration’s

(DEA) Confidential Source Program. The OIG initiated the audit as a result of the

OIG’s receipt and review of numerous allegations regarding the DEA’s handling and

use of confidential sources. This audit report specifically focuses on our

examination of the DEA’s confidential source policies and their consistency with

Department-level standards for law enforcement components, review of the DEA’s

oversight of certain high-level confidential sources and high-risk activities involving

confidential sources, and evaluation of the DEA’s administration of death and

disability benefits to confidential sources.

Our audit work thus far has been seriously delayed by numerous instances of

uncooperativeness from the DEA, including attempts to prohibit the OIG’s

observation of confidential source file reviews and delays, for months at a time, in

providing the OIG with requested confidential source information and

documentation. In each instance, the matters were resolved only after the

Inspector General elevated them to the DEA Administrator. As a result, over 1 year

after we initiated this review, the OIG only has been able to conduct a limited

review of the DEA’s Confidential Source Program. Nevertheless, we have

uncovered several significant issues related to the DEA’s management of its

Confidential Source Program that we believe require the prompt attention of DOJ

and DEA leadership, as identified in this report. We will continue to audit the DEA’s

Confidential Source Program to more fully assess the DEA’s management and

oversight of its confidential sources.

The Attorney General’s Guidelines Regarding the Use of Confidential

Informants (AG Guidelines) provide guidance to all Justice Law Enforcement

Agencies(JLEA), including the DEA, related to establishing, approving, utilizing, and

evaluating confidential sources.

Compliance with the AG Guidelines is important

for JLEAs to manage confidential sources appropriately and to mitigate the risks

involved with using confidential sources in federal investigations. However, instead

of implementing the AG Guidelines verbatim as a separate policy, the DEA chose to

incorporate provisions from the AG Guidelines into its preexisting policy – the DEA

Special Agents Manual – and the DEA stated that manual successfully captured the

The AG Guidelines uses the term "confidential informant," while the DEA uses the term

"confidential source." Both terms refer to any individual who provides useful and credible information

regarding criminal activities, and from whom the DOJ law enforcement agent expects or intends to

obtain additional useful and credible information regarding such activities in the future. For

consistency with the DEA, throughout this report we generally use the term "confidential source."

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essence of the AG Guidelines. The Criminal Division’s leadership approved the DEA

policy in January 2004.

We found that the Criminal Division’s 2004 approval of the DEA policy

allowed the DEA to have a policy that differed in several significant respects from

the AG Guidelines’ requirements. We believe this has resulted in areas in which the

DEA is not fully addressing the concerns underlying the AG Guidelines and, as a

result, the DEA’s Confidential Source Program lacks sufficient oversight and lacks

consistency with the rules governing other DOJ law enforcement components.

The DEA’s differing policies have resulted in DEA personnel being able to use

high-risk individuals as confidential sources without the level of review as would

otherwise be required by the AG Guidelines for high-level and privileged or

media-affiliated sources. These categories include individuals who are part of drug

trafficking organization leadership, as well as individuals who are lawyers, doctors,

or journalists. The AG Guidelines provide a special approval distinction for these

individuals because the use of them as confidential sources poses an increased risk

to the public and DEA and creates potential legal implications for DOJ. The

exemption of the DEA from these requirements results in a relative lack of DEA and

DOJ oversight, and in our view should be revisited by the DEA and DOJ.

We similarly found that the DEA policies and practices are not in line with the

AG Guidelines’ requirements for reviewing, approving, and revoking confidential

sources’ authorization to conduct Otherwise Illegal Activity (OIA). The effects of

inadequate oversight of OIA may not only prove to be detrimental to DEA

operations and liability, but also could create unforeseen consequences. For

instance, confidential sources may engage in illegal activity that has not been

adequately considered, or may overstep their boundaries with a mistaken belief

that the DEA sanctions any illegal activities in which they participate. This is

another area that should be revisited by the DEA and DOJ.

Moreover, we found that although the DEA’s policy includes a provision that

generally follows the AG Guidelines requirement for evaluating the use of long-term

confidential sources, sources in use for 6 or more consecutive years, the DEA was

not adhering to its policy and conducted inadequate and untimely reviews of these

sources. In fact, over a 9-year period, DEA documentation indicates that the DEA

spent minimal time meeting to determine the appropriateness of the continued use

of long term sources. While a more detailed review was done in 2012, and then

even more in 2014 (when we observed some of the process) in total we found that

the DEA utilized over 240 confidential sources without rigorous review and, in most

instances, without the same Departmental concurrence required for other JLEAs.

This created a significant risk that improper relationships between government

handlers and sources could be allowed to continue over many years, potentially

The AG Guidelines’ Section I.1 states that upon Attorney General approval of these

Guidelines, each JLEA shall develop agency-specific guidelines that comply with the Guidelines, and

submit them to the Assistant Attorney General for the Criminal Division for review.

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resulting in the divulging of sensitive information or other adverse consequences for

the government. In some cases, the DEA continued to use, for up to 6 years

without any DOJ intervention, individuals who were involved in unauthorized illegal

activities and who were under investigation by federal entities.

We also identified that the DEA’s confidential source policies do not include

any specific mention of recruiting, establishing, or using sources who are also

subject to regulation by the DEA because they have a DEA-provided controlled

substance registration number. DOJ guidance emphasizes the need for controls to

ensure that no licensee is led to believe that the continued validity of their license is

in any way predicated on their status as a source. This was an issue we highlighted

in our report on the Bureau of the Alcohol, Tobacco, Firearms and Explosives (ATF)

Operation Fast and Furious, where ATF was obtaining information in connection

with its criminal investigations from individuals who were also Federal Firearm

Licensees.

We believe that a clearly stated policy is necessary to provide DEA

Special Agents with sufficient information to understand all of the implications of

these relationships.

Finally, we learned that the DEA was providing Federal Employees’

Compensation Act (FECA) benefits to confidential sources, yet had not established a

process or any controls regarding the awarding of them.

We estimated that, in

just the 1-year period from July 1, 2013, through June 30, 2014, the DEA paid 17

confidential sources or their dependents FECA benefits totaling approximately

$1.034 million. The DEA lacked a process for thoroughly reviewing FECA claims for

confidential sources or determining eligibility for these benefits. In addition, the

DEA did not oversee and ensure that the established pay rate for these sources was

proper and inappropriately continued using and paying confidential sources who

were also receiving full disability payments through FECA. We also found that the

DEA had not adequately considered the implications of awarding such benefits on

the disclosure obligations of federal prosecutors, and had not consulted the

Department about the issue.

As we continue assessing the DEA’s Confidential Source Program and get

access to more information from the DEA, we expect to conduct in-depth analyses

of the types of, payments to, controls over, and use of confidential sources.

However, we believe prompt action by the Department and DEA is required to

address the issues summarized in this report that directly impact oversight of a

highly sensitive and important DEA program. This report makes seven

recommendations to the DEA to address the issues we have thus far identified in

our review of the DEA’s Confidential Source Program.

U.S. Department of Justice Office of the Inspector General, A Review of ATF’s Operation Fast

and Furious and Related Matters, (Re-issued November 2012).

Federal Employees’ Compensation Act, 5 U.S.C. § 8101, et seq. (2011). FECA provides for

workers’ compensation coverage to federal and U.S. Postal Service workers for injuries or death

sustained while in performance of duty.

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AUDIT OF THE DRUG ENFORCEMENT ADMINISTRATION’S

CONFIDENTIAL SOURCE POLICIES AND OVERSIGHT OF

HIGHER-RISK CONFIDENTIAL SOURCES

TABLE OF CONTENTS

Issues Encountered During this Review............................................................ 1

DEA’s Confidential Source Program and the Attorney General Guidelines .............. 2

Criminal Division Approval of the DEA Policy ..................................................... 3

Confidential Source Categories ....................................................................... 4

Confidential Sources Requiring Special Approval................................................ 6

High-Level Confidential Sources............................................................. 7

Privileged or Media-Affiliated Confidential Sources .................................... 8

Authorization of Otherwise Illegal Activity ...................................................... 10

Review of Long-Term Confidential Sources ..................................................... 14

Inadequate SARC Review.................................................................... 15

Untimely SARC Review ....................................................................... 20

Absent 9-Year Interim Review ............................................................. 23

Confidential Sources and DEA’s Regulatory Function ........................................ 23

Death and Disability Payments to DEA Confidential Sources .............................. 24

Overall Weaknesses in FECA Activities Related to DEA Confidential Sources 25

Inadequate Eligibility Determinations .................................................... 27

Inconsistent Benefits Determination ..................................................... 29

Active Confidential Sources Paid FECA Benefits ...................................... 30

DEA Mismanagement of Confidential Source FECA Cases ......................... 32

Conclusion ................................................................................................. 33

Recommendations ...................................................................................... 34

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APPENDIX 1: OBJECTIVE, SCOPE, AND METHODOLOGY .................................. 36

APPENDIX 2: CROSSWALK BETWEEN THE DEA AND AG GUIDELINES

CONFIDENTIAL SOURCE CATEGORIES ......................................... 38

APPENDIX 3: THE DEPARTMENT OF JUSTICE’S RESPONSE TO THE DRAFT AUDIT

REPORT................................................................................... 41

APPENDIX 4: OFFICE OF THE INSPECTOR GENERAL ANALYSIS AND SUMMARY OF

ACTIONS NECESSARY TO CLOSE THE REPORT .............................. 45

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AUDIT OF THE DRUG ENFORCEMENT ADMINISTRATION’S

CONFIDENTIAL SOURCE POLICIES AND OVERSIGHT OF

HIGHER-RISK CONFIDENTIAL SOURCES

The Department of Justice (DOJ) Office of the Inspector General (OIG) is

conducting an audit of the Drug Enforcement Administration’s (DEA) Confidential

Source Program. The OIG initiated the audit as a result of the OIG’s receipt and

review of numerous allegations regarding the DEA’s handling and use of confidential

sources. In addition, in 2005, the OIG issued a report on the DEA’s payments to

confidential sources.

The OIG’s 2005 report identified needed improvements in the

DEA’s risk management over the use of and payments to confidential sources.

This audit report specifically focuses on our examination to date of the DEA’s

confidential source policies and their consistency with Department-level standards

for law enforcement components, review of the DEA’s oversight of certain high-level

confidential sources and high-risk activities involving confidential sources, and

evaluation of the DEA’s administration of death and disability benefits to

confidential sources.

Issues Encountered During this Review

In February 2014, the OIG initiated an audit of the DEA’s Confidential Source

Program with the preliminary objective of assessing the DEA’s management and

oversight of its confidential sources. Since that time, the DEA has seriously

impeded the OIG’s audit process, which has affected our ability to conduct a timely,

full, and effective review of the DEA’s Confidential Source Program. The DEA made

attempts to prohibit the OIG’s observation of confidential source file reviews and

delayed, for months at a time, the provision of confidential source information and

documentation. In these instances, the matters were resolved only after

discussions between the Inspector General and the DEA Administrator. As a result,

over 1 year after initiating this audit, the OIG has been unable to completely

address our original audit objective.

Nevertheless, this audit report identifies certain serious deficiencies in the

DEA’s management of its confidential source program uncovered thus far during the

OIG’s initial audit work. The OIG believes these matters require prompt attention

from the Department and DEA to address critical issues in this important area of

DEA’s operations. We will continue to audit the DEA’s Confidential Source Program

to more fully assess the DEA’s management and oversight of its confidential

sources.

U.S. Department of Justice Office of the Inspector General, The Drug Enforcement

Administration’s Payments to Confidential Sources, (May 2005).

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DEA’s Confidential Source Program and the Attorney General Guidelines

The DEA defines a confidential source as, “any individual who, with a

reasonable expectation of confidentiality, furnishes information regarding drug

trafficking, or performs an investigative activity.”

The DEA’s policy stipulates that

every confidential source must act under the direction and control of DEA

Controlling/Supervisory personnel when performing an investigative activity.

According to DEA officials, confidential sources are a critical part of its law

enforcement operations, referring to them as the “bread and butter” of the agency.

Nevertheless, DEA and DOJ officials have acknowledged that there are risks

involved with using confidential sources because these individuals often have

criminal backgrounds and offer their assistance or cooperation in return for cash or

consideration for a reduced criminal sentence. Therefore, the utilization of

confidential sources requires significant oversight and attentive program

management.

Although the DEA generally relies on its field office personnel to manage,

direct, and evaluate the use of confidential sources, the DEA’s Confidential Source

Unit is the headquarters entity responsible for the oversight of all confidential

source-related matters. The Confidential Source Unit provides support to the field

and manages the electronic system, Confidential Source System Concorde (CSSC),

which contains data on each source. In addition, the Confidential Source Unit

updates and implements DEA confidential source policies, which are prescribed in

section 6612 of the DEA Special Agents Manual. This section of the Agents Manual,

entitled, “Confidential Sources,” contains the mandatory requirements for the DEA’s

Confidential Source Program and the conditions for establishing, using, and

reviewing confidential sources.

The Attorney General’s Guidelines Regarding the Use of Confidential

Informants (AG Guidelines) provide guidance and requirements to all Justice Law

Enforcement Agencies (JLEAs), including the DEA, related to establishing,

approving, utilizing, and evaluating a confidential source.

In 2001 and again later

in 2002, DOJ updated the AG Guidelines to address mismanagement, misconduct,

and criminal prosecution issues related to the handling of confidential sources; and

to enhance DOJ oversight of JLEAs’ use of confidential sources. AG Guidelines’

Section I.1 states that each JLEA shall develop agency-specific guidelines that

comply with the AG Guidelines and submit those agency-specific guidelines to the

Assistant Attorney General for the Criminal Division for review.

DEA Special Agents Manual, Section 6612.11, A.

The AG Guidelines uses the term "confidential informant," while the DEA uses the term

"confidential source." Both terms refer to any individual who provides useful and credible information

to a DOJ law enforcement agent regarding criminal activities, and from whom the DOJ law

enforcement agent expects or intends to obtain additional useful and credible information regarding

such activities in the future. For consistency with the DEA, throughout this report we generally use

the term "confidential source."

Criminal Division Approval of the DEA Policy

Between 2001 and 2004, DOJ’s Criminal Division reviewed the DEA’s

confidential source policies to ensure that they complied with the AG Guidelines.

According to historical documents that were provided to the OIG during our 2005

audit noted above, the DOJ representatives who were involved in the review of the

DEA’s policies included an Assistant United States Attorney (AUSA) and the

following Criminal Division officials: the Assistant Attorney General, two Deputy

Assistant Attorneys General (DAAG), the Deputy Chief of the Organized Crime and

Racketeering Section, and the Principal Deputy for the Narcotics and Dangerous

Drugs Section. The documents indicate that the various officials had differing

opinions on whether the DEA’s policies complied with the AG Guidelines.

In a memorandum dated August 6, 2001, one of the DAAGs indicated

support for the DEA’s confidential source policies as written in the DEA Special

Agents Manual. By contrast, a September 3, 2002, memorandum from the AUSA

and the Deputy Chief of the Criminal Division’s Organized Crime and Racketeering

Section identified numerous significant deviations between the DEA’s policy and the

AG Guidelines. In addition, the memorandum stated that the DEA’s Confidential

Source Program policies were difficult to follow because instead of implementing the

AG Guidelines verbatim as a separate policy, the DEA chose to incorporate

provisions from the AG Guidelines into its preexisting policy – the DEA Special

Agents Manual.

In a September 26, 2002, Criminal Division memorandum responding to this

evaluation, the Principal Deputy for the Criminal Division’s Narcotics and Drugs

Section and the DAAG who authored the August 6, 2001, memorandum stated that

the language in the AG Guidelines was a foreign vocabulary and structure to DEA

personnel and that it did not cover all aspects of the DEA’s confidential source

handling. In this memorandum, these two Criminal Division officials reasoned that

in order to ensure that DEA Special Agents understood the AG Guidelines’

requirements and implemented them, the DEA needed to integrate the

requirements into its DEA Special Agents Manual, which was “written from

beginning to end by DEA for DEA.” These Criminal Division officials further stated

that the DEA had “successfully captured the spirit and essence of the AG Guidelines

in the DEA Special Agents Manual.”

Various Criminal Division documents indicate that between September 2002

and January 2004, numerous meetings were held to discuss the varying Criminal

Division opinions on the DEA’s policy, its compliance with the AG Guidelines, and

specific areas of disagreement. The documents also indicate that the DEA made

revisions to certain provisions of its Special Agents Manual. The Criminal Division’s

leadership subsequently approved the DEA’s policy on January 8, 2004. The

memorandum documenting the Criminal Division’s approval of the DEA’s policy

states “…the Criminal Division finds that the DEA [Special] Agents Manual fully

complies with the Attorney General’s Guidelines…”

However, we found that DEA’s policy changes did not take into account all of

the inconsistencies between the DEA policy and the AG Guidelines. Moreover, the

memorandum did not cite the AG Guidelines’ provision that allowed for exceptions

to compliance with those policies. The OIG believes that the Criminal Division’s

2004 approval of the DEA policy allowed the DEA to have a policy that differed in

several significant respects from the AG Guidelines’ requirements, such as policies

and practices for establishing and approving certain confidential sources and for

utilizing sources to undertake high-risk activities. We believe that this has resulted

in areas in which the DEA is not fully addressing the concerns underlying the

AG Guidelines and, as a result, the DEA’s Confidential Source Program lacks

sufficient oversight. Moreover, the DEA’s policies lack consistency with the rules

governing other DOJ law enforcement components and this undermines the intent

of a uniform set of guidelines for all DOJ law enforcement components.

Confidential Source Categories

One area in which the DEA Special Agents Manual and the AG Guidelines are

not consistent is in the identification and definition of categories of confidential

sources. As illustrated in Table 1, the AG Guidelines identify three types of

confidential sources and six sub-categories of confidential sources that are

specifically identified because they require additional scrutiny and special approval.

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Table 1

AG Guidelines’ Categories of Confidential Informants

Categories Definition

Confidential

Informant

Any individual who provides useful and credible information to a JLEA regarding

felonious criminal activities, and from whom the JLEA expects or intends to obtain

additional useful and credible information regarding such activities in the future.

Cooperating

Defendant/

Witness

A confidential informant who has agreed to testify in a proceeding as a result of having

provided information to the JLEA; and is a defendant or potential witness who has a

written agreement with a federal prosecutor, pursuant to which the individual has an

expectation of future judicial or prosecutorial consideration or assistance as a result of

having provided information to the JLEA, or is a potential witness who has had a

federal prosecutor concurs in all material aspects of his or her use by the JLEA.

Source of

Information

A confidential informant who provides information to a JLEA solely as a result of

legitimate routine access to information or records and not as a result of criminal

association with persons of investigative interest to the JLEA.

Sub-Categories Definition and Special Approval Requirements

High Level A confidential informant who is part of the senior leadership of an enterprise that has a

national or international sphere of activities, or high significance to the JLEA’s national

objectives, even if the enterprise’s sphere of activities is local or regional; and engages

in, or uses others to commit, any conduct described as Tier 1 Otherwise Illegal Activity

(OIA).

Registration or establishment requires approval from an oversight committee,

referred to as the Confidential Informant Review Committee (CIRC), which includes

representatives from the JLEA and DOJ.

Privileged or

Media-Related

An individual who is under obligation of legal privilege of confidentiality (such as

doctors, lawyers, and clergy) or who is affiliated with the news media. Registration or

establishment requires approval from the CIRC.

Long-term Any individual who has been registered as an informant for more than six consecutive

years. The CIRC must review and approve continued use of these informants.

Individuals in

Custody

Any individual who is a federal, state, or local prisoner, probationer, parolee, detainee,

and on supervised release. Registration or establishment requires approval from the

Criminal Division.

WITSEC

Participant

Any individual who is a current or former participant in the Federal Witness Security

Program. Registration or establishment requires approval from the Criminal Division

and the United States Marshals Service.

Fugitive An individual for whom a federal, state, or local law enforcement agency has placed a

wanted record in the National Crime Information Center (NCIC); who is located either

within the US or in a country with which the US has an extradition treaty; and who the

law enforcement agency that has placed the wanted record in the NCIC is willing to

take into custody upon his or her arrest and, if necessary, seek his or her extradition to

its jurisdiction. A JLEA shall have no communication with a fugitive unless the JLEA

receives approval from the law enforcement agency and FPO for the District issuing the

warrant or if the purpose of communication is to arrest the fugitive.

Source: The AG Guidelines

Section IB.10 of the AG Guidelines defines Tier 1 OIA. We provide a more detailed

definition of and a more in-depth examination of Tier 1 OIA in the Authorization of OIA section of this

report.

The AG Guidelines defines the initial stage of confidential source suitability determination

and review as registration, while the DEA refers to this stage as establishment. Throughout the

report, we generally use the DEA’s terminology of establishment to convey the initial suitability and

review process.

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The DEA identifies multiple categories of confidential sources, as described in

Table 2.

Table 2

Overview of DEA Confidential Source Categories

Categories

Definitions and Approvals

Restricted

Use

A confidential source who will be subject to a greater degree of supervisory control based

upon factors within his/her background that indicates a need for such supervision.

Defendant A confidential source who was under arrest or is subject to arrest and prosecution for a

federal or state offense; requires federal or state prosecutor concurrence for establishment.

Protected

Name

An individual whose public identification or utilization as a DEA confidential source could pose

a threat to the national security of the United States or a foreign country, or result in a high

likelihood of violence to the confidential source and/or his/her family members or associates,

or is likely to raise complex legal issues.

Regular Use A confidential source who does not meet the criteria for establishment as a Restricted Use,

Defendant, or Protected Name confidential source.

Limited Use An individual established as a confidential source for payment purposes only and who is a

“professional” business person or a “tipster.”

Source: DEA

A comparison of the preceding tables demonstrates that the DEA’s

confidential source categories do not specifically correlate to the categories

established in the AG Guidelines, which makes it more difficult to ensure that the

DEA is following the same requirements for each confidential source category that

are imposed on other JLEAs. Moreover, the DEA’s Confidential Source Unit does not

have any documentation that shows how the DEA’s confidential source categories

correlate to the AG Guidelines’ source categories. At the OIG’s request, the DEA

created a cross-walk between its confidential source categories and the

AG Guidelines categories, which is included in Appendix 1. We found that this

cross-walk provided a correlation between some of the confidential source

categories, such as the DEA’s Defendant category corresponding to the

AG Guidelines’ Cooperating Defendant/Witness category and the DEA’s Limited Use

category corresponding to the AG Guidelines’ Source of Information category.

However, the correlation still did not account for specific requirements of the AG

Guidelines, including the establishment of special approval confidential sources, as

described in the following section.

Confidential Sources Requiring Special Approval

According to documents supporting the Criminal Division’s review of the DEA

confidential source policies, the requirement for an oversight committee is one of

the most important provisions of the AG Guidelines. The AG Guidelines require the

JLEA to establish a Confidential Informant Review Committee (CIRC) for the

purposes of reviewing certain decisions relating to the registration and utilization of

The DEA does not have a unique category for long-term confidential sources, but it does

use this term (outside of its Special Agents Manual) and identifies these individuals as sources active

for 6 or more consecutive years.

confidential informants. According to the AG Guidelines, the CIRC will include

specific representatives of the JLEA, as well as a Criminal Division representative

and an Assistant United States Attorney (AUSA). Along with other matters, the

CIRC is required to review the establishment and approve the use of confidential

sources who present greater risks of potential liability, intrusion into governmental

processes, and other adverse consequences. These confidential sources fall into

the AG Guidelines’ three special approval sub-categories: (1) high-level

confidential sources; (2) privileged or media-affiliated confidential sources, such as

lawyers, doctors, and journalists; and (3) long-term confidential sources.

The DEA has identified its Sensitive Activity Review Committee (SARC) as its

established committee for conducting the CIRC-related responsibilities identified in

the AG Guidelines. According to the DEA Special Agents Manual, the SARC is

composed of DEA’s Chief of Global Enforcement, Chief Counsel, appropriate Office

of Global Enforcement Section Chief(s), the Chief of the Undercover and Sensitive

Investigations Section, relevant Special Agents in Charge or Regional Directors and

case agents responsible for matters before the SARC, and a DOJ representative.

The DEA’s Office of Undercover and Sensitive Investigations is responsible for

managing and administering all SARC-related activities. Under DEA’s policy, the

SARC is responsible for examining certain operational proposals to ensure the plans

for proposed sensitive investigative activities are well-founded and all issues of

concern are sufficiently addressed.

However, the DEA’s policy defining the SARC does not identify any specific

position or individual for the DOJ representative(s), or, as directed by the AG

Guidelines, if the DOJ representatives include a Deputy Assistant Attorney General

for the Criminal Division and an Assistant United States Attorney (AUSA). In

addition, we found that Criminal Division-approved DEA policy does not require the

SARC to approve the establishment and use of what are categorized as high-level

or privileged confidential sources under the AG Guidelines, and that the SARC does

not undertake such a review and approval. The lack of DEA oversight over such

confidential sources is troubling given the assessment reflected in the AG Guidelines

that these categories of confidential sources pose the greatest risk to the

U.S. government and the public. In addition, although DEA policy includes

provisions regarding SARC review of long-term confidential sources, and these

provisions are generally consistent with the AG Guidelines, we found myriad issues

related to the implementation of this requirement, which are discussed later in the

report.

High-Level Confidential Sources

The DEA does not use the term “high level” to identify any of its confidential

sources and does not have a policy, as required under the AG Guidelines that

covers the establishment and use of an individual who fits the AG Guidelines’

definition of a high-level confidential source. Further, prior to creating one at the

OIG’s request, the DEA did not have a cross-walk or any other document

correlating the DEA confidential source categories and the AG Guidelines’ high-level

confidential source category.

DEA officials stated that individual confidential sources categorized by the

DEA as Restricted-Use, Protected Name, Defendant, or Regular-Use could

potentially correspond to the AG Guidelines’ high-level category, but this

categorization is entirely dependent on what happens during an investigation and is

not based upon the characteristics of a confidential source. Therefore, the DEA

would apply its normal establishment procedures when initially recruiting a

high-level confidential source, and DEA policy has no provisions for SARC

involvement in any type of confidential source establishment. By contrast, the

AG Guidelines are clear that an individual who meets the criteria for a high-level

confidential source should be reviewed by the CIRC, which would include DOJ

Criminal Division and U.S. Attorney’s Office consideration, before receiving approval

to be established as a confidential source.

According to DEA officials, the DEA targets the senior leadership of drug

organizations and, therefore, if such an individual became a confidential source

then the person would be defined as a Defendant confidential source because they

were subject to arrest and prosecution, and would necessarily require the approval

of a prosecutor. Therefore, the category of high level is not needed. However, the

requirement to consider such individuals as Defendant confidential sources is not

included in the DEA’s Special Agent Manual, and we did not identify any

documentation where this policy was conveyed to DEA Special Agents.

Moreover, when we asked another DEA official if the DEA had a SARC

approval requirement for establishing a high-level confidential source, this official

explained that the DEA does not have any confidential sources who fit the definition

of the high-level category identified in the AG Guidelines. This explanation is

contrary to the aforementioned statement that alluded to the DEA’s use of what

would otherwise be considered high-level confidential sources under the rubric of

Defendant confidential sources.

The lack of explicit DEA policy and inconsistent treatment of what would be

high-level confidential sources under the AG Guidelines increases the risk that the

DEA is using what would otherwise be considered as high-level sources without

sufficient oversight. The AG Guidelines reflect that the use of high-level sources

comes at a risk to the U.S. government and the public because these individuals

are associated with and may be directing the activities of criminal organizations.

Therefore, by approving a policy that does not comply with the AG Guidelines’

requirements related to high-level sources, the Department has allowed the DEA to

have a policy that does not incorporate appropriate safeguards and necessary

scrutiny of the risk and reward of using such individuals as confidential sources.

Privileged or Media-Affiliated Confidential Sources

As previously noted, the AG Guidelines require that a case agent first obtain

the written approval of the CIRC prior to utilizing as a confidential source an

individual who is under the obligation of a legal privilege of confidentiality or

affiliated with the media. The DEA Special Agents Manual states that any individual



who is a public official, a representative of the news media, or a party to privileged

communications (e.g., a member of the clergy, physician, lawyer, etc.) should be

categorized as a Protected Name confidential source. DEA policy requires a Senior

Executive Service (SES) manager within the DEA to authorize the use of a

Protected Name confidential source by a domestic field office. However, this level

of approval differs markedly from the AG Guidelines’ requirement for CIRC approval

of all privileged and media-affiliated confidential sources, which includes

consideration by high-level agency headquarters officials, the Criminal Division, and

an AUSA. Although the DEA’s policy does require SARC approval for the use of a

confidential source acting in an undercover capacity who will “request information

from an attorney, physician, clergyman, or member of the news media about a

matter or person that would be considered privileged,” it does not provide for the

SARC review for the establishment of an individual who otherwise fits the criteria of

a privileged or media-affiliated confidential source.

Moreover, various DEA headquarters officials related to us disparate practices

for the establishment of privileged or media-affiliated confidential sources.

Specifically, some DEA headquarters officials stated that Special Agents would not

establish as a confidential source or utilize an individual for information associated

with their privileged or media-related status. Other DEA headquarters’ officials

acknowledged that Special Agents are permitted to establish as a confidential

source a privileged or media-affiliated status individual, such as a doctor or lawyer,

to obtain information not related to the source’s employment. In these cases, the

DEA’s legal staff would review the proposed utilization of the privileged or media-

affiliated individual to ensure there is not a breach of privilege. However, this

requirement and process is not included in the DEA Special Agents Manual section

on confidential sources. Thus, the DEA solely relies on the discretion and judgment

of its special agents to identify occupations that necessitate additional review and

seek that from DEA legal staff. In addition, should that process occur, it would still

be inconsistent with the heightened level of independent review for the

establishment of sources in such sensitive occupations, as required for other DOJ

law enforcement components under the AG Guidelines.

During our limited review of confidential source files, we identified two DEA

confidential sources who were attorneys.

Despite these individuals’ privileged

status, the confidential source files did not contain any documentation indicating

that the DEA’s legal staff had reviewed the establishment of the confidential source

or that the confidential sources were ever categorized as Protected Name

confidential sources because they were parties to protected communications.

Neither of these confidential source files contained any documentation reflecting

Special Agent in Charge (SAC) or other Senior Executive Service-level approval,

much less SARC review and approval.

Although our limited review of confidential source files did not reveal any confidential

sources who held media-related positions, the potential exists that these same failures have occurred

for individuals who qualify for this special approval category.





We believe that the DEA’s policy and practice regarding the establishment of

privileged or media-related confidential sources do not reflect appropriate

consideration of the potential risks associated with these confidential sources.

Authorization of Otherwise Illegal Activity

The AG Guidelines provide for JLEAs to authorize confidential sources to

engage in activity that would otherwise be illegal if they were not acting under the

direction of the government. This is referred to in the AG Guidelines as Otherwise

Illegal Activity (OIA) and there are two types – Tier 1 OIA and Tier 2 OIA. More

serious offenses are categorized as Tier 1 OIA, and involve the commission or the

significant risk of the commission of certain offenses, including acts of violence;

corrupt conduct by senior federal, state, or local public officials; or the

manufacturing, importing, exporting, possession, or trafficking in what would be

considered as large quantities of controlled substances under the federal sentencing

guidelines.

Tier 2 OIA is defined as any other activity that would constitute a

misdemeanor or felony under federal, state, or local law if engaged in by a person

acting without authorization.

The AG Guidelines mandate that Tier 1 OIA be authorized in advance and in

writing for a specified period, not to exceed 90 days, by the agency’s Special Agent

in Charge and the appropriate Chief Federal Prosecutor.

Tier 2 OIA can be

approved at a lower level, namely by an agency’s senior field office manager, which

could be an Assistant Special Agent in Charge. The management of OIA as it

relates to confidential sources requires careful consideration and the AG Guidelines

outline clear instructions for agencies that direct confidential sources to perform

OIA. Figure 1 provides an overview of these instructions, which include obtaining

specific approval and documenting in a confidential source’s file: (1) the approval,

(2) the instructions provided to the source, (3) the source’s acknowledgement of

the instructions received, and (4) the revocation of the authorization.

See United States Sentencing Guidelines § 2D1.1(c)(1). The following provide an overview

of drug quantities that would meet this threshold under the sentencing guidelines: 90 kilograms or

more of heroin; 450 kilograms or more of cocaine; 25.2 kilograms or more of cocaine base;

45 kilograms or more of methamphetamine; and 90,000 kilograms or more of marijuana.

The AG Guidelines define the Chief Federal Prosecutor as the head of a Federal Prosecuting

Office, including the United States Attorneys’ Offices; the Criminal Division, Tax Division, Civil Rights

Division, Antitrust Division, and Environment and Natural Resources Division of the Department of

Justice; or any other litigating component of the Department of Justice with authority to prosecute

federal criminal offenses.

Figure 1

AG Guidelines Requirements for

Authorization and Management of Confidential Sources Performing OIA

Source: The AG Guidelines

As discussed above, the Criminal Division had reviewed the DEA Special

Agents Manual for compliance with the AG Guidelines and formally approved the

DEA’s policy in 2004. An August 6, 2001, memorandum from a DAAG for the

Criminal Division states that because, “the DEA’s policy requires that all cases

involving illegal activity on the part of an informant be thoroughly discussed with

the FPO [Federal Prosecuting Official], the DEA does not anticipate utilizing a source

as a “confidential informant” as defined by the [AG] Guidelines.” In addition, the

DAAG’s memorandum stated that the DEA had made efforts to minimize any

adverse effects of confidential source participation in OIA, including: (1) requiring

confidential sources to annually sign a form restricting the source from participating

in unauthorized unlawful acts; and (2) requiring controlling investigators to provide

specific instructions regarding the confidential source’s participation in each stage

of an investigation.



We reviewed DEA policy documents for references to OIA and how the DEA

handles such sensitive activities, especially when it involves confidential sources.

The DEA Special Agents Manual has a specific section dedicated to sensitive

investigative activities and this section contains a list of 18 sensitive operations and

the requirements for getting these operations approved. This list includes activities

that “will involve the commission of an act that is proscribed by federal, state, or

local law as a felony or that is otherwise a serious crime.” This entry would appear

to be somewhat consistent with what would fall within either Tier 1 or Tier 2 of the

AG Guidelines. Generally, this DEA policy requires the listed activities to go

through a formal approval process that includes high-level DEA headquarters

officials from the Office of Global Enforcement, Office of the Chief of Operations,

and the Chief Counsel’s office, and U.S. Attorney concurrence. In some instances,

at the discretion of the DEA’s Chief of Operations Enforcement, the DEA will

convene a SARC to review the proposed activity. However, for any instances of

“sensitive activity,” the DEA manual does not use the term OIA to describe such

conduct and the manual notes: “This does not include the purchase of drugs or

other undercover activities that are routinely performed by DEA Agents and CSs

[confidential sources] during the normal course of their duties.”

The DEA Special Agents Manual section dedicated to confidential sources

contains two references to OIA. The first reference stipulates: If the activity of the

CS [confidential source] will involve the manufacturing, importing, exporting,

possession, or trafficking of controlled substances in a quantity equal to or

exceeding those quantities specified in United States Sentencing

Guidelines 2D1.1 (c) (1), it cannot, under any circumstances, proceed without the

prior concurrence of an appropriate federal prosecutor regarding all material

aspects of his or her use by DEA.

However, unlike the AG Guidelines’ requirement

for authorizing confidential sources participation in such large quantity drug

trafficking, the DEA policy does not incorporate approval by the Special Agent in

Charge and does not track other AG Guidelines’ requirements for the OIA process,

including documenting findings, instructions, and acknowledgement of revocation of

OIA authorization. In addition, the DEA policy does not reach smaller quantity drug

offense involvement that would otherwise come within Tier 2 OIA under the AG

Guidelines.

The second reference to OIA in the confidential source section of the Special

Agents Manual requires DEA Supervisory Special Agents, during their quarterly

review of confidential source files, to assess sources’ continued engagement in

OIA.”

However, this section of the DEA Special Agents Manual does not provide

further detail for how the DEA initially approves the use of confidential sources in

OIA and contains no cross-reference to the Special Agents Manual section on

sensitive activities mentioned above. Moreover, the DEA’s requirements for

This requirement is the one referenced in the 2001 Criminal Division memorandum of the

DEA’s policies discussed following Figure 1, and tracks the AG Guidelines’ definition of Tier 1 OIA

involving large quantity drug trafficking as detailed in footnote 12.

DEA Special Agents Manual, Section 6612.6 B5.

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

supervisory quarterly reviews of confidential source files, as referenced in the policy

information above, are no longer in effect.

Because the DEA Special Agents Manual section on sensitive activities

explicitly excludes drug buys and other routine confidential source activities, and

the DEA Special Agents Manual section on confidential sources does not provide

detail on the process for using confidential sources to perform illegal acts such as

drug buys, does not require SAC approval for larger drug deals, and does not reach

smaller ones, we believe that DEA’s official policies do not sufficiently address the

concerns underlying the otherwise applicable AG Guidelines requirements for

approving the use of confidential sources in Tier 1 and 2 OIA.

Because of the lack of detail in the DEA’s formal policies addressing OIA, we

asked DEA officials to explain the process for reviewing, approving, and revoking

DEA authorization for confidential sources to participate in activities that would

constitute OIA. In response, we were provided several differing explanations.

Initially, we were told by a DEA official that the DEA does not authorize any type of

OIA. Subsequently, the OIG was told that the purchase of drugs or other

undercover activities that are routinely performed by DEA Special Agents and

confidential sources during the normal course of their duties are activities

performed under the legal authority granted to DEA under Title 21.

Still other

DEA officials told us that prior to utilizing a confidential source in an operation

(including a drug buy), Special Agents prepare a written operations plan and submit

it to senior field division officials for approval.

Of all the information we were provided, the DEA’s use and approval of

written Operations Plans seemed to provide the closest comparison to the

requirements of the AG Guidelines. However, neither the DEA Special Agents

Manual section devoted to confidential sources nor the one devoted to sensitive

investigative activity included instructions for the preparation, approval, or

documentation of an operations plan. Further, during our limited review of

confidential source files we did not identify any files that included documentation of

authorization for the confidential source to conduct narcotics-related OIA. As such,

we looked for evidence of approved operations plans in two investigative case files

referred to in two confidential sources’ files as cases involving confidential sources

performing OIA. We found that one investigative case file contained operations

plans and one did not. When we reviewed the operations plans in the one

investigative case file, we found that one plan did not contain approval signatures.

Although not required under DEA policy, we also examined the files for any

indication that the AG Guidelines requirements for OIA may have been otherwise

fulfilled. We found no evidence in any files that DEA confidential sources were

made aware of or signed acknowledgement of rules specific to OIA and there was

In 2007, the DEA eliminated the requirement for quarterly supervisory reviews of

confidential source files because it was seen as redundant to a different DEA policy that requires

supervisory agents to participate in a quarterly debriefing with each confidential source.

The Controlled Substances Act. 21 U.S.C. § 801 (2012).



no indication that the confidential sources were informed of their responsibilities,

limitations, or revocation of authority to perform OIA.

We believe the DEA’s policies do not adequately address the concerns and

risks involved in authorizing confidential sources to conduct and participate in OIA

and do not correspond to the AG Guidelines’ requirements in place to mitigate these

risks. Moreover, because OIA is not comprehensively addressed in the DEA policies

regarding sensitive circumstances or confidential sources, DEA personnel do not

appear to have a solid understanding of OIA, or the expectations for DEA’s

procedures that involve OIA. Further, the fact that the DEA confidential source files

we reviewed did not contain documentation authorizing the confidential source to

conduct narcotics-related OIA limits supervision and oversight of these activities.

These inadequate DEA policies and procedures related to OIA greatly increase the

risk to the DEA, the U.S. government, and the public from the involvement of DEA

confidential sources in OIA. DEA confidential sources could engage in illegal activity

that has not been adequately considered, or become involved in additional illegal

activities beyond those that have been considered with the mistaken belief that

they are doing so with the authorization of the DEA. Further, an ill-considered or

unclear decision to authorize a confidential source to engage in OIA may create

significant difficulties in prosecuting the source or co-conspirators on charges

related to the source’s activities.

Review of Long-Term Confidential Sources

Under the AG Guidelines, the Confidential Informant Review Committee

(CIRC) must approve the continued use of each confidential source who has been

registered for more than 6 consecutive years. Such sources are referred to under

the AG Guidelines as long-term sources. According to a DOJ official, this

requirement was included in the AG Guidelines due to concerns over a government

handler and a source developing an inappropriate relationship. This may involve

the government handler becoming so close to the source that the handler

improperly divulges information to the source, or result in other adverse

consequences for the government. Requiring review of long-term sources mitigates

the risk that such a relationship might develop and go unnoticed and ensures that

the continued use of such long-term sources is warranted and handled

appropriately.

The AG Guidelines stipulate that when a confidential source reaches the

6 consecutive year threshold and, to the extent the source remains open, every

6 years thereafter, the CIRC shall convene to review the confidential source’s

completed Initial and Continuing Suitability Reports and Recommendations and

decide whether, and under what conditions, the agency should continue to utilize

the individual as a confidential source. The AG Guidelines stipulate that a CIRC

All DEA confidential sources are required to sign a form each year acknowledging that they

are not allowed to take part in any illegal activity not specifically approved by a prosecutor or the

controlling agent. However, this is a standard form that all sources are required to sign and is not

specific to any individual operations or activities.

include an agency official at or above the Deputy Assistant Director level, a Deputy

Assistant Attorney for the Criminal Division (DAAG), and an Assistant United States

Attorney (AUSA).

Although the DEA Special Agents Manual does not use the term “long-term,”

it includes a requirement for the SARC to review domestic confidential sources who

have been continuously in an active status for 6 years, and who are to remain in an

active status. The DEA Special Agents Manual stipulates that the DEA’s Confidential

Source Unit and Office for Undercover and Sensitive Investigations should

coordinate to ensure that the SARC reviews the confidential source files to

determine if a confidential source should remain in an active status. During the

OIG’s prior review of the DEA’s Confidential Source Program, we found deficiencies

in the DEA’s process for reviewing long-term confidential sources. In response to

the OIG’s report, the DEA provided updated guidance to reinforce the DEA’s

requirement to provide a thorough examination of risk assessment factors and

relevant paperwork related to the establishment and suitability of long-term

confidential sources. However, during this audit the OIG found that the reviews

performed by the DEA SARC for the continued use of long-term confidential sources

were both deficient and untimely.

Inadequate SARC Review

Based on the aforementioned risks involved with long-term sources, the

oversight of these long-term confidential sources is critical to the overall

management of the DEA’s Confidential Source Program. Further, the importance of

the long-term confidential source reviews requires that the SARC members,

including any DOJ representatives, invest an appropriate amount of time and effort

evaluating the benefits and risks of the continued use of each long-term

confidential source.

We reviewed the DEA’s documented meeting minutes for the SARC meetings

conducted specifically for the review of long-term confidential sources that occurred

between 2003 and 2012 and found that between 2003 and 2012, the DEA SARC’s

reviews of long-term confidential sources appear to have been inadequate and

infrequent. The DEA held only 7 SARC meetings during that 9-year period.

Moreover, between its meeting in October 2009 and its most recent meeting in July

2014, a nearly 5-year timespan, the SARC met only once, in February 2012.

Each set of meeting minutes we reviewed briefly and broadly described the

SARC’s review of long-term confidential sources. The minutes also identified the

time of day that the meetings started and ended, as well as the number of sources

reviewed. Our review of the minutes indicates that certain information obtained

from Special Agents in Charge of field offices using the long-term confidential

sources was provided to SARC members. This information included the date of

activation in the particular office, confidential source type, information on adverse

performance/behavior, a dollar amount identified as the total amount of lifetime

payments received, any judicial considerations given, a brief synopsis of

accomplishments, and justification for continued status. It appears from the

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meeting minutes that DEA headquarters officials compiled this information into a

listing [spreadsheet] and provided it to the SARC members prior to the formal

meetings. Prior to 2006, the meeting minutes make no reference to confidential

source files or information equivalent to the Establishment and Continuing

Suitability Reports and Recommendations forms, which is the minimum

requirement set forth by the AG Guidelines for other JLEAs. Although the minutes

reflect that starting in 2006, headquarters’ confidential source files were available

for SARC members during the formal meetings, there is no indication that any

SARC members actually reviewed any of these files. According to this information,

between 2003 and 2012, during these formal meetings the SARC devoted what we

calculated to be an average of just 1 minute per confidential source to consider the

appropriateness of the source’s continued use.

Our review of historical SARC events also revealed that despite the DEA

Special Agents Manual requirement that DOJ representative(s) participate in SARC

meetings, in some instances the DEA convened SARC meetings without any DOJ

representatives present. As shown in Table 3, neither a DAAG nor an AUSA were

present at two of the seven meetings.

In addition, there was only one SARC

meeting between 2003 and 2012 in which both an AUSA and Criminal Division

representative were in attendance for the review of long-term confidential sources,

which is what is required by the AG Guidelines. Thus, in these instances, the DEA

failed to ensure that 249 long-term DEA confidential sources received the same

external DOJ oversight provided to other JLEAs’ long-term confidential sources.

The 2004 minutes state that the Criminal Division official was unable to attend the

meeting; however, she concurred with the list and had no issues to report. In addition, the 2007

minutes state that the Criminal Division official was absent from the meeting, had previously been

sent the confidential source spreadsheet and all existing information regarding the confidential sources

subject to review, and had not contacted the DEA regarding any questions or concerns relative to any

of the confidential sources.

Table 3

Overview of SARC Reviews of Long-term Confidential Sources

2003 through 2012

Meeting

Date

Sources

Reviewed

Meeting

Length

(in minutes)

Calculated Average

Time Reviewing

Each Confidential

Source

(in minutes and

seconds)

External Participation

Criminal

Division DAAG

AUSA

1 11/13/2003 48 20 25 seconds

YES NO

2 11/04/2004 60 15 15 seconds

NO NO

3 01/31/2006 67 15 13 seconds

YES NO

4 04/26/2007 16 40

2 minutes and 30

seconds

NO NO

5 05/13/2008 30 15 30 seconds

YES NO

6 10/27/2009 28 15 32 seconds

YES NO

7 02/29/2012 25 150 6 minutes

YES YES

Source: OIG analysis of DEA documentation

It is noteworthy that the DEA spent significantly more time reviewing the

long-term confidential source information during the 2012 SARC meeting and,

based on the meeting minutes and our review of DEA documentation, as well as

interviews with DEA officials, this is the year the DEA established specific files for

the SARC review, as discussed below. These files provided information from the

official confidential source files to the SARC, in addition to the Special Agent in

Charge’s testament of confidential source information. DEA officials and a Criminal

Division official attributed these changes to the involvement of new SARC

leadership at DEA and a change in the participating DOJ officials. However, our

review of the SARC files for the 2012 meeting revealed that the files did not contain

basic information such as the annual forms documenting the DEA’s assessment of

the sources’ continued suitability (DEA Form 512b) for each of the 6 years under

review, identification of DEA offices concurrently using the sources, or criminal

history reports. In addition, based on our review of the meeting minutes, the SARC

members generally relied on the Confidential Source Unit’s review of the

confidential source documentation and Special Agent in Charge testimonial to

inform their decisions to concur with the continued use of long-term confidential

source up for review. This conclusion was substantiated by at least one DEA staff

member who attended the 2012 meeting told us that not every SARC member

reviewed all of the confidential source files or critically reviewed the continued use

of each source but, rather, the SARC allowed certain DEA officials to attest to the

appropriateness of the continued use of long-term confidential sources. We

therefore concluded that all of the SARC reviews from 2003 through 2012 did not

fully satisfy the intent of the AG Guidelines requirements for additional scrutiny and

oversight of long-term confidential sources.

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2014 SARC Meeting and Confidential File Preparation

After initiating our audit, we inquired about the possibility of observing a DEA

SARC meeting for the review of long-term confidential sources. We were informed

that a meeting would be held on June 20, 2014. We were also informed that this

SARC meeting represented the DEA’s review of long-term sources who had reached

the 6-year threshold by January 2013, and that the DEA had originally expected for

the meeting to occur in 2013. However, the meeting did not occur as expected due

to scheduling issues and conflicts with the required participants.

The meeting was then subsequently postponed twice, on June 20, 2014, and

July 1, 2014, while discussions were held between OIG, DEA, and Criminal Division

leadership about the OIG’s attendance at the meeting. On July 8, 2014, OIG, DEA,

and Criminal Division leadership officials agreed that OIG representatives would be

in attendance for an agreed-upon portion of the meeting, which was subsequently

scheduled for July 18, 2014.

At the July 18, 2014, SARC meeting, the DAAG and AUSA asked questions

pertaining to general DEA Confidential Source Program requirements and DEA

processes for documenting information. The DAAG and AUSA initiated their review

of an individual long-term confidential source by selecting it from a list and

retrieving a paper file from a stack that the DEA had made available in its meeting

room. Upon taking time to review information in the file at the meeting, the DAAG

and AUSA then asked specific questions pertaining to information in the file, such

as criminal history entries or payments received. As a result, the SARC only fully

reviewed two files over a 2-hour period and the meeting was carried over to

August 5, 2014.

According to the DAAG and AUSA, they later went to DEA

headquarters and reviewed SARC files in advance of the next scheduled meeting.

The OIG attended a portion of the August 5, 2014, meeting, and it was evident to

us that the DAAG and AUSA had reviewed the files prior to the meeting because

they began their inquiries without first reviewing the files and their questions were

very specific. On August 5, 2014, after reviewing 37 long-term confidential source

files in a total of more than 3 hours, the meeting was again carried over to

subsequent meetings on September 3, 2014, and October 21, 2014. The OIG did

not attend either of these meetings because the agreed-upon portion of the SARC

meetings that the OIG was to observe concluded on August 5, 2014.

For the 2014 SARC review, the DEA’s Confidential Source Unit and Office of

Undercover and Sensitive Investigations prepared files with condensed versions of

information contained in the DEA’s official confidential source files, which are

located in the field office where the source is being used. We discussed with the

DAAG and AUSA the quality of documents included in the SARC files and they

Officials from the DEA, the Criminal Division, and the OIG agreed the OIG would observe

the SARC’s review of 10 long-term domestic confidential sources judgmentally selected by the OIG.

Because so few confidential source reviews were ultimately completed during this July 18,

2014, meeting, OIG representatives were present for the entire length of the meeting.

expressed that they were generally satisfied with the contents of the files, but that

they provided suggestions to the DEA for process improvement based upon

information needed to answer their questions regarding the DEA’s use of the

confidential source. When we examined the 2014 SARC files, we found that they

were more comprehensive than the 2012 SARC files, but we also identified issues

regarding the content and preparation of the files.

Our review of the files indicated to us that if the meeting had taken place as

originally scheduled in 2014, the meeting participants would have received

outdated information and documentation for all of the long-term confidential

sources under review because the files were not updated until mid-July 2014. As

noted above, the SARC meeting was originally scheduled to take place on two

previous dates – June 20, 2014, and then again on July 1, 2014. The cancellation

of the July 1, 2014, meeting did not occur until the late evening of the day before.

However, many of the documents in the SARC files that we reviewed were dated

after July 1, 2014, and immediately prior to July 18, 2014. On July 10, 2014, 1

week before the meeting ultimately occurred, DEA officials sent an e-mail request

to the affected field divisions requesting more specific information related to the

utilization of their long-term confidential sources, including updated justification for

continued use of each of the sources up for review. DEA headquarters officials used

this information in conjunction with information provided by field offices in 2013, to

create and attach to each SARC file a “fact sheet.” The fact sheet contained

summary information on the confidential source, judicial consideration received,

total payments, the source’s contributions to operations, and any adverse

information identified by the field office. In addition, the day before the July 18,

2014, meeting, the DEA conducted a criminal history search in the National Crime

Information Center (NCIC) and a printout was included in the files. We were told

that the creation of the “fact sheets” for each confidential source and inclusion of

criminal history records were new tools that the DEA used to prepare for the 2014

series of meetings. Therefore, had the meeting occurred as scheduled prior to

July 18, 2014, the SARC members would not have had the benefit of up-to-date

status information from the field offices or updated criminal history checks.

We also found that although the DEA had recently updated a portion of the

information in the SARC files, some pertinent information was outdated because it

dated from the spring of 2013 when DEA headquarters first requested its field

offices to provide information on the long-term sources that were being included in

this SARC process. In general, the files did not include any changes to the status of

the confidential sources, confidential source deactivation forms, pertinent DEA

reports of investigation, or up-to-date, detailed payment information. Moreover,

the SARC files did not contain information from all offices and agencies that were

concurrently using the confidential source. For example, we found an instance

where up to five offices concurrently used a confidential source, but information

from only one of the offices was provided to the SARC. We believe that if the DEA

had made more current and complete information available to the SARC, this

information could have affected the consideration given and ultimately affected the

SARC’s approval of the continued use of the long-term confidential sources.

Evaluation of the 2014 SARC Review

Despite the weaknesses with the preparation and content, the 2014 SARC

evaluation of long-term confidential sources appears to be drastically different than

the DEA’s historical patterns. This SARC review assessed the DEA’s continued use

of 61 long-term confidential sources over the course of a series of four documented

meetings and various undocumented SARC member confidential file reviews in

preparation for the meetings. The meeting minutes for these meetings totaled

68 pages and encompassed a detailed overview of what occurred during the

meetings. The minutes provided specific information about each long-term

confidential source, including any questions from SARC members related to the

review of the confidential source’s file, and formalized the DAAG’s and AUSA’s

concurrence with the DEA’s continued use of the long-term confidential source or

the DEA’s deactivation of the confidential source. The minutes provide the DEA

with a record of each SARC file reviewed, questions and answers related to each

confidential source, and instructions provided for the continued use of certain

confidential sources. It is clear from these minutes that the DEA and DOJ officials

conducted a more thorough review of long-term confidential source SARC files. In

comparison, the meeting minutes from previous SARC meetings were between 2

and 4 pages, and provided only a vague overview of the meeting, and in

4 instances reflected that the DEA spent a total of only 15 minutes formally

reviewing as a complete committee between 28 and 67 confidential source files.

The thorough review provided during the 2014 SARC meetings is appropriate

for such a critical and sensitive component of the DEA’s operations. Although we

commend the SARC for conducting a more adequate review, we believe that the

DEA should improve its preparation for and provision of information to the SARC

through the development of policies specific to the process.

Untimely SARC Review

Although various DEA officials told us that they convene an annual meeting

of the SARC to review the continued use of long-term confidential sources, we

found that since October 2009, the SARC has only convened on two occasions.

These meetings took place in February 2012 and the one meeting spanning multiple

dates within 2014. We reviewed the timeliness of SARC meetings dating back to

2003, when the DEA convened its first annual SARC meeting dedicated to long-term

confidential sources. As shown in the following timeline, prior to the meeting held

in October 2009, the DEA convened a SARC meeting to review the use of long-term

confidential sources fairly regularly every 12 to 17 months, with the longest interval

being between the May 2008 and October 2009 meetings.



Figure 2

Long-term Confidential Source SARC Meeting Timeline

Source: OIG analysis of DEA documentation

After the October 2009 meeting, another long-term confidential source SARC

meeting was not convened until February 2012, over 2 years and 4 months later.

After that February 2012 meeting, the next meeting did not take place until July

2014, again more than 2 years and 4 months later. As previously noted, DEA

officials explained that the reason for the delays in conducting the latest long-term

SARC meeting was due to scheduling difficulties with the required officials, primarily

the DAAG for the Criminal Division. DEA officials provided us with multiple e-mails

dated between September 2013 and June 2014 as evidence that they had made

numerous attempts to schedule a SARC meeting.

We asked the DAAG about the DEA SARC and any relevant scheduling

problems and were told that there was a misunderstanding. This official informed

us that, to his knowledge, the Criminal Division had not explicitly designated

representatives to participate in the DEA SARC meetings for the review of

long-term confidential sources.

The DAAG noted that he had taken part in the

2012 meeting, but he believed his participation in that long-term confidential

source review was an informal invitation from the DEA because of his involvement

in other DEA SARC meetings that review and approve sensitive operational

activities. Therefore, when the DEA requested his participation at a long-term

confidential source SARC meeting in 2013, he was unaware of his requirement to

participate. Nevertheless, we believe that the DAAG could have been more

responsive to the DEA’s requests for assistance in scheduling a long-term

confidential source SARC review.

We asked DEA officials about any additional actions that may have taken

place to ensure that a timely long-term confidential SARC review occurred. We

As previously noted, the DEA also convenes the SARC for the purpose of reviewing

individual case operations of a sensitive nature. These meetings are held more frequently, but they

are not calendar driven and are instead based solely on the operational needs of the DEA. According

to the DAAG, DOJ has explicitly identified the DAAG as a member of these DEA “Operational SARCs.”

As a result, his knowledge of this formal designation and his lack of knowledge of any formal

designation for long-term SARC meetings was the basis of his misunderstanding.

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received varying responses and found that the DEA does not have a formal process

to ensure that these SARC meetings are initiated and take place on a consistent

basis. The DEA Special Agents Manual stipulates that the DEA’s Confidential Source

Unit and Office for Undercover and Sensitive Investigations should coordinate to

ensure that a SARC reviews long-term confidential source files to determine if a

confidential source should remain in an active status. However, responsible officials

from these DEA entities could not describe how this coordination occurs to ensure

that the SARC reviews long-term confidential sources in a timely fashion.

As a result of the DEA’s recent infrequent SARC meetings, there has been a

delay in the timeliness of the review and approval of DEA’s continued utilization of

long-term confidential sources. During the DEA’s most recent SARC event that

began in July 2014, the SARC reviewed sources who reached the 6-year mark

immediately prior to the time when the SARC should have met rather than

reviewing all sources who had reached that threshold as of the meeting date or

another more recent cutoff date. As a result, the 2014 SARC meetings were

reviewing confidential sources who were in use for 6 or more consecutive years as

of the beginning of January 2013, more than 18 months prior to the start of the

meeting.

Even though it was clear to us that the non-DEA members of the SARC were

not familiar with the files prior to the initial session of the 2014 meeting, in the

weeks prior to the SARC meeting scheduled for July 18, 2014, DEA officials from

the Office of Global Enforcement and the Office of Undercover and Sensitive

Investigations examined the SARC files for the long-term confidential sources being

reviewed. During this review, these DEA officials identified six long-term

confidential sources to deactivate before convening the first installation of the SARC

meeting; two more sources were deactivated during the time period over which the

meeting took place.

Of the eight deactivated confidential sources, one was in the

United States illegally, four were no longer providing useful information or

performing ongoing activities for the DEA, one had been arrested, one had been

involved in an unauthorized illegal activity, and one was under investigation by the

DOJ OIG. Based upon our review of the files, the information related to the DEA’s

reasons for deactivating some sources was available prior to the convening of the

SARC. Nevertheless, the field offices responsible for overseeing these confidential

sources did not deactivate them until the DEA SARC members reviewed the

information and questioned the ongoing use of the confidential sources.

Although the field offices should have deactivated these confidential sources

promptly, the SARC’s instruction to deactivate these sources demonstrates the

importance of the SARC’s oversight and scrutiny of the field offices’ use of

long-term confidential sources. However, as a result of the significant delays in

scheduling the most recent SARC, the SARC did not have the timely opportunity to

ensure that the DEA’s use of these confidential sources was justified. This, in

As previously described, the July 2014 SARC meeting took place over four separate dates

between July 18, 2014, and October 21, 2014.

effect, weakened the control provided for within the AG Guidelines for mitigating

the risk involved in using sources over an extended period.

Absent 9-Year Interim Review

In addition to the 6-year threshold for CIRC review of confidential sources,

the AG Guidelines require JLEAs to perform an internal review of long-term

confidential sources 3 years after the CIRC approves the continued use of a

long-term confidential source. This review is commonly referred to as the “9-year

review,” and is different than the 6-year threshold in that this interim review is

strictly internal to the agency and no other DOJ officials are involved. We found

that the DEA Special Agents Manual does not include a requirement for the DEA to

conduct this type of review. However, on March 31, 2014, the DEA initiated its

first-ever 9-year interim review of long-term confidential sources. According to

DEA documentation, this review was initiated in an effort to bring the DEA into

compliance with the AG Guidelines.

We believe that the absence of this requirement in the DEA’s Special Agents

Manual is significant. By not including this requirement in its policy, the DEA failed

to provide proper oversight over long-term confidential sources and did not institute

mitigating controls to ensure that certain risks associated with continued use of

long-term confidential sources were addressed. Further, we believe that the

Criminal Division’s approval of the DEA’s policies should be revisited to ensure that

the DEA addresses the long-term source-related risks that are mitigated through

the 9-year interim review requirement within the AG Guidelines.

Confidential Sources and DEA’s Regulatory Function

Under federal law, all businesses that import, export, manufacture, or

distribute controlled substances; all health professionals licensed to dispense,

administer, or prescribe them; and all pharmacies authorized to fill prescriptions for

such substances must register with the DEA. Registrants receive a DEA registration

number and must comply with regulatory requirements relating to drug security

and recordkeeping. The DEA uses the DEA number to facilitate the tracking of

prescribed controlled substances. This regulatory function is essential to the DEA’s

required enforcement of the provisions of the Controlled Substances Act pertaining

to the manufacturing, distribution, and dispensing of legally produced controlled

substances.

Recently, we expressed concern when another DOJ law enforcement agency

was found to have created a potential conflict between its investigative and

regulatory functions. In the OIG’s report, A Review of ATF‘s Operation Fast and

Furious and Related Matters, we found that ATF, which is responsible for licensing

firearms dealers, was receiving information and cooperation from an ATF licensee

regarding firearms sales by the licensee to individuals who were engaged in

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firearms trafficking and illegal firearms purchases.

Our review revealed that ATF

did not have controls in place to ensure that there was no conflict between its use

of the individual in an investigative manner and its oversight of the same individual

as an approved license holder.

Following the OIG’s Fast and Furious review, DOJ issued guidance to its law

enforcement and litigating components addressing certain risks revealed in our

report. This guidance states that law enforcement protocols should include special

considerations for establishing a confidential source whose business requires a

license from a law enforcement agency. The guidance also states that the

licensee’s status as a licensee of that agency and the individual’s relative

compliance history should be considered in the determination of the licensee’s

suitability to serve as a confidential source. Such controls are important to ensure

that no licensee is led to believe that the continued validity of their license is in any

way predicated on their status as source.

We found that the DEA’s confidential source policies do not include any

specific mention of recruiting, establishing, or using sources who are also

individuals with a DEA-provided controlled substance registration number. Instead,

according to the DEA, it categorizes confidential sources whose business requires a

license from a law enforcement agency that serves a dual-regulatory function

(which would include, but is not limited to the DEA itself) as Protected Name

confidential sources. Therefore, rather than implementing specific policies for these

types of confidential sources, DEA processes these individuals the same as any

other Protected Name confidential source. While this requires a certain level of

supervisory approval, typically at the SAC level, without a stated policy that

provides Special Agents with sufficient information to understand all of the

implications of these relationships and the special considerations that must be

taken into account, there is no assurance that DOJ’s expectations will be met and

there is an increased risk to DEA operations, the public, and the confidential source

from the potential conflict between the source’s varying relationships with the

agency.

Death and Disability Payments to DEA Confidential Sources

The Federal Employees’ Compensation Act (FECA) provides for workers’

compensation coverage to federal and U.S. Postal Service workers for injuries or

death sustained while in performance of duty.

FECA compensation can include

temporary or permanent wage replacement, as well as medical and vocation

benefits. The Department of Labor (DOL) is responsible for managing the FECA

benefit program within the federal government and is responsible for reviewing all

claims for benefits and making payments to claimants. Each employing federal

agency then reimburses DOL for all FECA payments on an annual basis. According

U.S. Department of Justice Office of the Inspector General, A Review of ATF’s Operation

Fast and Furious and Related Matters, (Re-issued November 2012).

Federal Employees’ Compensation Act, 5 U.S.C. § 8101, et seq. (2011).

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to the DEA Special Agents Manual, the DEA may offer FECA benefits to confidential

sources who are injured as a result of their cooperation with the DEA and to

families of confidential sources killed as a result of their cooperation with the DEA.

Between July 1, 2013, and June 30, 2014, it appears that the DEA paid

approximately $1,034,000 for FECA benefits to 17 confidential sources or their

dependents.

In some cases, the DEA has been paying FECA benefits since 1974,

but we could not determine the total historical cost because the DEA and DOL do

not track payments to confidential sources receiving FECA benefits. In one

particular case we reviewed, the confidential source was killed in July 1989 and his

surviving family, which included a widow and dependents, began receiving FECA

payments of $4,287 every 4 weeks. At the time of her death in 2012, the widow’s

4-week payment amount had increased to $6,311. Therefore, this family alone

received over $1.3 million in FECA benefits since 1989. Although the exact amount

of DEA confidential source FECA payments is unknown, it is clear that significant

taxpayer dollars have been expended.

We found that the DEA’s administration of its confidential source FECA cases

is suffering from serious mismanagement and inadequate oversight due to a lack of

DEA policies and procedures for handling such cases coupled with DOL’s special

method for processing and administering these cases. And while the DOL FECA

files show that the DEA has not submitted a confidential source FECA case since

2008, as discussed below, the DEA’s policy still allows for such claims. Moreover,

there are ongoing effects of the weaknesses and implications for the DEA’s current

policy for providing FECA benefits to confidential sources, we identify below.

Overall Weaknesses in FECA Activities Related to DEA Confidential Sources

The DEA Special Agents Manual includes two sentences stating that FECA

may apply in situations where a confidential source is injured or killed as a result of

their cooperation with the DEA. This policy references the DEA’s Personnel Manual,

which states that non-federal law enforcement officers injured or killed during the

apprehension of an individual who has committed a federal crime or who is wanted

in connection with a federal crime are covered by FECA and goes on to suggest that

certain confidential sources may be included in this category for FECA coverage. As

authority for the proposition that confidential sources may be categorized as

non-federal law enforcement officers, the Personnel Manual cites Section 886 of

21 U.S.C. However, 21 U.S.C. § 886 merely discusses, among other things, the

Attorney General’s authority to pay confidential sources from DEA funds; it has no

relationship to FECA nor does it characterize confidential sources as non-federal law

enforcement officers for any purpose. Although FECA does, in some instances,

DOL and DOJ officials could not provide us with the exact amount. The OIG calculated this

estimate using a bill for the period of July 1, 2013 through June 30, 2014, provided by DOL to the

DOJ’s Justice Management Division (JMD), which is involved in the process of reimbursing DOL for

payments related to DOJ FECA claims. In addition, although we identified 18 FECA files involving

confidential sources, this estimate was calculated using information specific to 17 confidential sources

because one case was declined prior to the issuance of the aforementioned bill.

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extend availability for benefits to eligible law enforcement officers not employed by

the United States, 5 U.S.C. § 8191, the implementing regulation defines eligible

non-federal law enforcement officers only as law enforcement officers of state or

local governments or governments of U.S. possessions and territories, and certain

officers eligible for pensions under the D.C. Policemen and Firemen's Retirement

and Disability Act.

Confidential sources are none of these. In our view, 21 U.S.C.

§ 886 does not provide a legal basis for the DEA’s position that its confidential

sources were appropriately categorized as non-federal law enforcement officers

eligible for FECA benefits. In responding to a draft of this report, the DEA seeks to

rely on 5 U.S.C. § 8101(1)(B)—which extends FECA eligibility to “an individual

rendering personal service to the United States similar to the service of a civil

officer or employee of the United States, without pay or for nominal pay, when a

statute authorizes the acceptance or use of the service, or authorizes payment of

travel or other expenses of the individual”—to characterize certain of its confidential

sources as “employees” under FECA. Whatever legal authority there may be for

this proposition, as noted above it is not the legal basis relied upon by the DEA in

its own policies to substantiate FECA coverage, as set forth in the Personnel Manual

and, by reference, the Special Agents Manual. Accordingly, we recommend that the

DEA, in consultation with the Department, analyze and come to a conclusion about

whether there is a legal basis and, if so, whether it is appropriate to extend

eligibility for FECA benefits to confidential sources.

We also found that a number of key DEA offices lacked knowledge about its

confidential source FECA activities and expenditures. For example, DEA officials

with whom we spoke from the Office of Human Resources and the Office of

Operations Management, in particular officials from the Confidential Source Unit,

were all unaware that confidential sources were receiving FECA benefits. After

numerous attempts and coordinating with entities external to the DEA, we identified

two people in DEA’s Office of Safety and Worker’s Compensation who were aware

that confidential sources were receiving FECA benefits. These DEA officials stated

that the DEA does not keep any files for these FECA cases and relies solely on DOL

to administer and oversee the cases. These individuals elaborated that there is

almost no review of these FECA cases by any DEA headquarters officials. We were

told that the field office staff forwards these cases to DEA’s Office of Safety and

Worker’s Compensation, which reviews the forms only for clerical errors and then

submits them to DOL. According to these DEA officials, after the DEA forwards the

FECA case to DOL, neither the DEA field office nor headquarters is notified of DOL’s

acceptance or denial of the case or any other interaction between DOL and the

claimant. However, DOL’s Division of Federal Employees’ Compensation, the

division responsible for administering FECA, stated that the DEA has been notified

of the acceptance or denial for every secure FECA case. DOL specified that it

provides to the DEA two copies of the acceptance or denial decision – one for the

DEA and the other routed through DEA for the claimant [confidential source].

20 C.F.R. § 10.735 (2013).

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



A DOL Office of Workers Compensation Programs (OWCP) official stated that

DOL does not follow normal procedures for processing the DEA’s confidential source

FECA cases. This lead DOL official, who is currently responsible for handling these

DEA cases, stated that DOL identifies these FECA cases as “secure” cases and does

not perform an in-depth review of these FECA applications.

Further, DOL does not

process any related claims through its electronic system and instead uses a labor-

intensive manual process that requires a very small staff to complete the review

process, maintain hard copy files, and oversee the payment transactions for all

“secure” files. According to this DOL official, DOL established this structure a long

time ago to accommodate the DEA’s concerns regarding the sensitivity of

confidential source FECA cases. We requested documentation to substantiate this

statement, but neither the DOL official nor the DEA were able to provide any

information to the OIG.

Inadequate Eligibility Determinations

In general, only federal employees are eligible to receive FECA benefits, but

in some circumstances others may qualify for FECA benefits if the submitting

agency and DOL determine that these individuals meet the criteria of a civil

employee, as defined by the FECA statute and DOL regulations. We discussed

confidential source eligibility with DEA and DOL officials and neither agency

accepted responsibility for determining whether DEA confidential source FECA

applicants met the criteria. Officials from the DEA’s Office of Safety and Worker’s

Compensation stated that DOL is responsible for determining who is eligible for

FECA benefits, while the DOL official who currently manages the DEA’s confidential

source FECA files stated that DOL has relied upon the DEA for the underlying

determination of whether confidential sources are eligible to receive FECA benefits

in accordance with the special procedure that it adopted to address DEA’s concerns

about the sensitivity of confidential source cases. DOL’s Division of Federal

Employees’ Compensation clarified that DOL is the agency that determines FECA

eligibility, but reiterated that, once the employing agency has identified the injured

individual as a confidential source, DOL considers the definition of “employee” to

have been satisfied for purposes of providing workers’ compensation benefits. DOL

relies on DEA and performs no independent analysis to test “employee” status.

In addition, when we discussed with the Criminal Division’s Deputy Assistant

Attorney General the provision of FECA benefits to DEA confidential sources, he

stated that he was unaware that this was occurring. However, he indicated that if

the DEA is providing FECA benefits to its confidential sources, then a prosecutor

needs to know this information because it creates a financial relationship

(potentially a dependent one) between the DEA and the confidential source. Based

upon this DOJ official being unaware of the DEA’s FECA activities related to

confidential sources as well as the fact that relevant DEA officials were also

DOL’s Division of Federal Employees’ Compensation acknowledged that certain aspects of

case development, such as the claimant’s status as a federal employee and aspects of the event

leading to the injury, may not be developed or documented as they would be in a traditional claim.

DOL noted, however, that other aspects of claims acceptance are followed.

generally unaware of confidential sources receiving FECA benefits, it appears that

the DEA has not evaluated, or asked the Department to evaluate, how a

determination that confidential sources could qualify as civil employees and receive

FECA benefits might either increase the disclosure obligations of federal prosecutors

in criminal cases or impact other Department equities. We believe that this is an

important issue and therefore the Department should review the DEA’s process for

and implications of providing FECA benefits to its confidential sources.

We reviewed DOL’s hard copy files for the 18 DEA confidential source FECA

cases. These cases included injuries and deaths of confidential sources who were

U.S. citizens and foreign nationals. During our review of these cases, we identified

the event that triggered the FECA case and there were a variety of events cited. In

some instances there was a clear indication that the confidential source was injured

or killed while directly participating in a DEA operation. However, there were other

cases for which the files were unclear on the justification for providing benefits to

confidential sources or families of deceased confidential sources. In multiple cases,

we could not verify or validate that DEA confidential sources were receiving FECA

benefits for claims involving injuries or deaths that happened while the confidential

sources were performing services directly for the DEA because the file contained

insufficient information regarding the triggering event to make that determination.

In fact, in one of the FECA cases that we reviewed, the FECA application included a

statement from a DEA official indicating that the injury sustained by the confidential

source was possibly due to the source’s carelessness and that at the time of the

injury the confidential source was not being directed by DEA personnel. The

following are some other examples of these types of cases.

 The DEA submitted and DOL accepted a claim for a DEA confidential source

who was shot and injured in 1984, but there is no indication of where and

how the shooting occurred. In addition, a document in the file indicates that

the confidential source “claimed” that a narcotics trafficker committed the

act. We could not find any information in the file that would support that

DEA officials were present when the source was injured, how they confirmed

the source’s claim to have been shot by a narcotics trafficker, or the basis for

believing that the shooting resulted from the source’s cooperation with DEA.

 The DEA submitted and DOL accepted a claim for a confidential source who

was presumably killed overseas in 1991. However, according to the file,

there were no witnesses to the confidential source’s death and the source’s

body had not been recovered. The file contained no details describing how or

why the DEA believed that the source was killed as a result of cooperation

with the DEA.

 The DEA submitted and DOL accepted a claim for a confidential source who

was shot and injured while traveling to work in 1997. This incident occurred

1 day after the DEA activated the individual as a confidential source.

Further, DOL’s FECA file clearly indicates that DEA officials stated that the

source’s injury did not happen while performing DEA-related activities. The

file also indicates that the DEA had evidence that the shooting was related to





the source’s involvement with the DEA, but this evidence is not recounted in

the DOL file nor is there an indication that the evidence was verified.

 The DOL accepted a claim that was submitted by the DEA more than 2 years

after a confidential source was shot and killed at home in 1999. According to

the information in the file, no DEA officials were present when the incident

occurred. There was no other information in the file to indicate that the

shooting occurred as a result of the confidential source’s involvement with

the DEA.

 The DEA submitted and DOL accepted a claim for a confidential source who

was shot and injured at home in 2002. However, the file indicates that there

were no witnesses to the shooting and the file contained no evidence of a link

between the shooting and the individual’s status as a DEA source.

Inconsistent Benefits Determination

In addition to the absence of procedures for determining eligibility of DEA

confidential sources for FECA benefits, we found that there were no formal

standards or policies for determining the source’s “existing pay rate” at the time of

the event.

According to DOL policy, when a recipient of FECA benefits does not

receive a standard salary, DOL calculates FECA benefits using the average annual

earnings for an individual who performed similar work in the previous year. Given

that the services that confidential sources provide to the DEA are often irregular,

sporadic, and unique in nature, the DEA’s confidential sources are not paid standard

amounts and there is a wide range of payments provided to confidential sources

while they are active with the DEA. Therefore, in some of the FECA files we

reviewed, DOL requested that the DEA provide additional information to establish

the source’s “existing pay rate” at the time of the injury. However, in general, we

found that there was a lack of consistency in the determination of pay rates and the

resulting compensation benefits determination. The following examples illustrate

these inconsistencies.

 One case file indicated that a confidential source had been injured in 1994.

According to the case file, the DEA provided information that the source had

received approximately $10,868 in that year. DOL used that amount to

establish the existing annual pay rate for the claimant. Because this amount

was below DOL’s established minimum compensation amount, DOL used its

minimum allowable amount in establishing the recurring FECA compensation

benefits for the confidential source.

 One case file indicated that a cooperating witness was killed 2 days prior to

the sentencing of defendants in a DEA-related drug case in 1990. This

An individual’s existing pay rate is used to determine appropriate FECA compensation

benefit amounts for injured individuals or their surviving family members. FECA compensation

benefits refer to payments for lost wages due to the injury and any lasting disability. This does not

refer to reimbursements for specific medical expenses.

individual had not yet received any payments from the DEA at the time of

the death, but the DEA later paid the surviving family member an award

payment of $10,000. To determine the existing pay rate for the deceased,

DOL asked the local DEA field office to provide payment totals for its three

highest paid confidential sources in the year prior to confidential source’s

death. The DEA provided the amounts ($174,000, $44,000, and $22,000)

and recommended that the median amount be used to determine benefits.

DOL agreed with the recommendation and determined the recurring FECA

compensation benefit amount based upon the second highest paid DEA

confidential source in the local area.

 As previously identified, the DEA filed a FECA claim for a confidential source

who, 1 day after being activated as a confidential source, was shot and

injured while traveling to work in 1997. Without a history of payments to

this new confidential source, the DEA asked DOL to establish the source’s

existing pay rate by using the federal government’s General Schedule (GS)

pay rate for a GS-7 federal employee. DOL agreed and FECA benefits were

determined based on the GS-7 pay rate.

 One case file indicated that a DEA confidential source was killed in 1991.

DOL case files contain information from the DEA indicating that this source

had received over $500,000 from the DEA in the prior 2 years. According to

DOL, FECA benefits are capped at the maximum federal employee salary on

the General Schedule, which equates to the annual pay rate for a GS-15,

Step 10 employee. The file indicates that after reviewing the available

information, the DOL determined that the surviving family members should

receive the maximum benefit allowable, and the amount awarded at that

time (1991) was $6,661 every 4 weeks.

These examples highlight the different methods used for establishing a

confidential source’s established annual pay rate for the determination of FECA

compensation benefits for lost wages. In other files there was insufficient

information related to the basis for the benefit amount. While in some cases it was

clear that the responsible DEA field office was involved in the pay rate

determination, there was little evidence to indicate that DEA headquarters

personnel were providing any input or oversight in this area.

Active Confidential Sources Paid FECA Benefits

The purpose of FECA for injured workers is to compensate qualified

individuals who are injured on the job during the time they cannot perform their

duties. FECA regulations require agencies to provide assistance to injured

individuals to return them to work as quickly as possible. When an employee is

well enough that he or she can perform the duties that were performed prior to the



injury, the individual should no longer receive FECA benefits.

Therefore, we

believe that an active DEA source who is receiving payments from the DEA should

not also be receiving regular disability compensation payments. If the DEA

determines that a source who is receiving full-time disability compensation

payments is suitable for active status, then the DEA should ensure that DOL is no

longer providing payments to that individual. However, of the 18 confidential

source FECA files, we found that the DEA continued to utilize as confidential sources

at least two of the full-time disability claimants, as described below.

 For one confidential source who was injured in 1997, our review of DEA’s

confidential source file indicated that the DEA not only paid for this

individual’s housing expenses, but also provided payments for information

and an award payment of over $1 million between the date of his injury and

2012. At the same time, the individual was also receiving FECA disability

benefits, which amounted to approximately $2,000 every 4 weeks. The

source was deactivated in 2012 because he could no longer provide useful

information. He last received a source payment from DEA in October 2012.

Based on DEA and DOL documentation, we estimate that between 1997 and

2012, the DEA paid this individual a total of $2,186,813, comprised of

$353,075 in FECA benefits and $1,833,738 in confidential source service and

award payments.

 One confidential source was receiving full FECA disability benefits resulting

from an incident that occurred during a March 1986 DEA operation.

However, the DEA’s records indicate that the confidential source was

deactivated in December 1985 and not reactivated until September 1996.

DEA documentation also revealed that the DEA field office continued to pay

this deactivated confidential source for information and services within

months of submitting the FECA claim. One of the payments, in the amount

of $1,000, was paid just 4 days after the purported injury for which the

confidential source was deemed fully disabled and qualified for FECA benefits.

The DEA eventually reactivated this confidential source in 1996 and as of

November 2014, this individual was still an active confidential source

receiving DEA payments for cooperation as well as full FECA disability

benefits.

From our review of the DEA’s confidential source files and DOL’s FECA files it

did not appear that the DEA had informed DOL of the individuals’ continued use and

earning as a source, or that DEA was concerned about the individuals’ receiving

dual benefits.

FECA policy requires individuals receiving compensation for partial or total disability to

advise OWCP immediately of any return to work, either part-time or full-time. Individuals receiving

FECA benefits are also required to submit an annual report of earnings from any employment. If an

individual knowingly omits or understates his or her compensation, that individual forfeits their right to

benefits.

DEA Mismanagement of Confidential Source FECA Cases

We believe that the DEA has not properly managed FECA claims for its

confidential sources. Specifically, the DEA has not established a process or any

controls to implement the provision of FECA benefits to confidential sources. As

previously mentioned, we had great difficulty in finding anyone in the DEA with

knowledge of its FECA activities related to confidential sources. Officials from the

DEA Confidential Source Unit were wholly unaware of any confidential sources

receiving FECA benefits and told us that it would be unlikely for the DEA to provide

FECA benefits to its confidential sources. Moreover, the two individuals within the

DEA’s Office of Safety and Worker’s Compensation with whom we spoke who were

aware of the practice made it clear that they are not involved in any processing of

the claims or any decision making in the cases. Further, not only does the DEA not

keep any files for their own records of these FECA cases, it did not have a reliable

tracking system to even identify the individual cases for which the DEA was

reimbursing DOL. As a result of DEA’s lack of substantive involvement and record

keeping, as well as the atypical manual process DOL told us that it used for these

cases at the request of DEA, we could not specifically determine how much money

each recipient had been paid in FECA benefits or if the payments to the confidential

sources or their families were ongoing.

In addition, neither the DEA nor DOL has accepted responsibility for judging

the eligibility of FECA cases originating from confidential sources. We believe that

confidential sources have been awarded FECA benefits without adequate review to

verify that these individuals are legally entitled to benefits as described in the FECA

statute and implementing regulations. We believe that the absence of a thorough

eligibility review significantly increases the risk that taxpayer dollars will be used

inappropriately.

It also appears that taxpayer dollars are at risk through the DEA’s existing

inconsistent process for determining an established pay rate and compensation

benefits for confidential sources seeking disability payments. In some cases, FECA

payment amounts were calculated based on arbitrarily selected amounts, wholly

unrelated to amounts paid for any services provided by the confidential source. In

other cases, pay rates were established using historical confidential source payment

amounts, which may be skewed at any point in time given that the services

confidential sources provide to the DEA are often irregular, sporadic, and unique in

nature.

The DEA’s poor oversight of its FECA activities relating to confidential sources

has also resulted in the DEA inappropriately continuing to use and pay confidential

sources who are receiving full disability payments through FECA and should be

reporting all income to DOL. The lack of DEA policies in this area means that

Special Agents in the field are left unaware of the legal and financial implications of

FECA cases. In fact, one DOL case file that we reviewed contained a statement

from the DEA that: “there was a lack of prescribed procedures the DEA agents are

to follow in such cases, and the Special Agent had limited understanding that ‘these

employees’ are covered under the same ‘death insurance’.” The DEA does not have

a policy in place to facilitate informing appropriate DEA personnel about whether a

confidential source is receiving FECA benefits or to verify the FECA benefits status

during their normal handling of the confidential source.

As the OIG noted in its 2005 review of the DEA’s Confidential Source

Program, DEA officials acknowledged that confidential sources are generally not

“choir boys,” and the DEA must interact and rely on information from confidential

sources whose credibility may be questioned. Therefore, when the DEA submits an

application for a confidential source to receive FECA benefits, we believe that the

DEA should employ appropriate oversight and evaluate these cases thoroughly.

Although the identity of the claimants may be sensitive, this does not alleviate the

DEA’s responsibility to be judicious stewards of taxpayer dollars and ensure that

payments are warranted. It is our opinion that the FECA-related problems we

uncovered within the DEA may have broader financial and legal implications for all

DOJ and other federal law enforcement agencies.

DEA officials in the Office of Workers Compensation told us in October 2014

that they have initiated a program to review DOL’s FECA files related to DEA

confidential sources every 6 months. However, the DEA has not indicated that it

will begin keeping its own records or files related to these cases and we were not

informed of any policies under development in this area.

Conclusion

The OIG initiated this audit in light of recent OIG investigations and concerns

about the DEA’s administration of its Confidential Source Program. Despite various

instances of DEA resistance to our audit, which have impeded the OIG’s ability to

perform the comprehensive audit as planned, the OIG has identified certain

deficiencies that we believe are indicative of inadequate oversight and management

by the DEA of its Confidential Source Program.

We found deficiencies in DEA’s policies in comparison to those applicable to

other DOJ law enforcement components under the AG Guidelines, resulting in a

failure by the DEA to mitigate a number of significant risks associated with using

confidential sources. We have particular concerns about the relative lack of

oversight provided to DEA confidential sources who pose the greatest risk to the

U.S. government and for which the AG Guidelines specifically identify as requiring

increased oversight. We believe that the DEA should promptly address these

issues, and that it and the Department should re-evaluate the policies applicable to

DEA confidential sources in these areas. We also are concerned that the DEA has

failed to adopt policies to address the potential for conflict in the use of DEA

registrants as confidential sources. And, we also believe it is extremely troubling

that the DEA was almost wholly unaware of its provision of FECA benefits to

confidential sources and has not effectively or judiciously managed these FECA

claims.

In combination, the above mentioned deficiencies begin to demonstrate that

certain aspects of the DEA’s Confidential Source Program have not received the

requisite level of attentiveness and require prompt improvements. Officials from

the Office of the Deputy Attorney General (ODAG), Criminal Division, and DEA have

confirmed that they are coordinating to improve the DEA’s policies related to the

management and use of confidential sources and ensuring that the policies contain

all requirements included within the AG Guidelines. In addition, according to an

ODAG official, the Department will initiate a review of the DEA’s provision of FECA

benefits to confidential sources. We intend to continue auditing the program, but

encourage the DEA and the Department to continue taking corrective action and

keep us informed of its efforts to improve the management of its Confidential

Source Program.

Recommendations

We recommend that the DEA:

1. Coordinate with the Criminal Division to revisit the Special Agents Manual

to ensure compliance with and consistent DOJ implementation of the AG

Guidelines’ requirements, including the following.

a. Ensure that its confidential source policies include appropriate

provisions for AG Guidelines-required special approval for the use

of high-level and privileged or media-related confidential sources.

b. Ensure that its confidential source policies include adequate

information related to OIA to ensure that DEA Special Agents have

an appropriate level of understanding of the risks associated with

approving confidential sources in OIA.

c. Ensure that its confidential source policies include appropriate

provisions for AG Guidelines-based requirements for approving

confidential sources to participate in OIA, including documenting

findings, instructions, and acknowledgement of revocation of OIA

authorization in the DEA’s official confidential source files.

2. Ensure that its confidential source policies are updated to reflect the

current practice of documenting written operations plans, including

identifying the required content and approval level for those plans.

3. Develop specific policies related to the conduct of the SARC long-term

confidential source review, including ensuring appropriate attendance,

sufficient review procedures, and minimum file content.

4. Ensure that DEA confidential source policies are updated to ensure that

long-term confidential sources are reviewed in a consistent and timely

manner.

5. Ensure that its Special Agents Manual is updated to include requirements

for a 9-year interim review of long-term confidential sources, in

accordance with the AG Guidelines and the DEA’s current practice.

6. Ensure that the DEA develops and implements appropriate policies and

procedures related to establishing DEA registrants as confidential sources.

7. In consultation with the Department, analyze and come to a conclusion

about whether there is a legal basis and, if so, whether it is appropriate to

extend eligibility for FECA benefits to confidential sources.

a. If the Department and DEA determine that confidential sources

may be legally eligible for FECA benefits, the DEA must establish

controls and policies specific to the management of existing

confidential source FECA benefits and accurately memorialize the

justification in DEA’s policies.

b. If the Department and DEA determine that confidential sources

may be legally eligible for FECA benefits, the DEA must ensure that

the confidential sources who are active with the DEA do not receive

full-time FECA disability payments from DOL.

c. If the Department and DEA determine that confidential sources

may not be legally eligible for FECA benefits, the DEA must develop

a process for handling the existing cases wherein benefits are being

paid to confidential sources and/or their dependents.

APPENDIX 1

OBJECTIVE, SCOPE, AND METHODOLOGY

Objective

The preliminary objective of our audit was to assess the DEA’s management

and oversight of its Confidential Source Program. Our audit work thus far has been

seriously delayed by numerous instances of uncooperativeness from the DEA,

including attempts to prohibit the OIG’s observation of confidential source file

reviews and delays, for months at a time, in providing the OIG with requested

confidential source information and documentation. As a result, over 1 year after

we initiated this review, the OIG only has been able to conduct a limited review of

the DEA’s Confidential Source Program. However, we have uncovered several

significant issues related to the DEA’s management of its Confidential Source

Program that we believe require the prompt attention of DOJ and DEA leadership.

This report provides details on our work to date, which included specifically

examining the DEA’s confidential source policies to ensure consistency with the AG

Guidelines’ requirements, reviewing the DEA’s oversight of certain high-risk

confidential sources and high-risk activities involving confidential sources, and

evaluating the DEA’s administration of death and disability benefits to confidential

sources. We will continue to audit the DEA’s Confidential Source Program to more

fully assess the DEA’s management and oversight of its confidential sources.

Scope and Methodology

We conducted this performance audit in accordance with generally accepted

government auditing standards. Those standards require that we plan and perform

the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for

our findings and conclusions based on our audit objectives. We believe that the

evidence obtained provides a reasonable basis for our findings and conclusions

based on our audit objectives. As previously described in this appendix, we

refocused our audit work and have obtained sufficient, appropriate evidence for the

findings and conclusions in this report.

To accomplish our work, we completed interviews with 31 DEA officials

located in various DEA headquarters offices, including the Office of Operations

Management, Office of Global Enforcement, Office of Finance, Office of Information

Systems, Human Resources Division, and Inspections Division. Additionally, we

spoke with 8 officials from the DEA’s Chicago, San Diego, and Washington Field

Divisions. We also interviewed 10 representatives from DOJ’s Justice Management

Division, Civil Division, and Criminal Division; as well as 1 official from the

Department of Labor’s Office of Workers Compensation.

We reviewed the DOJ Attorney General Guidelines Regarding the Use of

Confidential Informants (AG Guidelines) and various DEA policies and procedures

associated with the DEA’s Confidential Source Program, including the DEA Special

Agents Manual, numerous teletype and cable updates to the Special Agents Manual,

and the DEA Personnel Manual. In addition, we reviewed and analyzed 65 DEA

APPENDIX 1

confidential source SARC files and 18 Department of Labor Federal Employees’

Compensation Act (FECA) files for DEA confidential sources. We also observed a

portion of the DEA’s 2014 SARC meeting and analyzed documentation from the

DEA’s 2003 through 2012 SARC reviews of long-term confidential sources.

After reviewing the DEA’s confidential source SARC files and the Department

of Labor’s FECA files, we judgmentally selected the Chicago and San Diego Field

Divisions as locations for preliminary site visits to perform a limited review of

confidential source files. During the visits, we requested and reviewed various

queries from the DEA’s electronic source management system and subsequently

selected and reviewed 17 confidential source files for more detailed analysis. We

also reviewed three closed investigative case files that were referred to in two of

the confidential source files.

We did not as, part of this review, evaluate the DEA’s overall compliance with

all laws and regulations or evaluate all of the DEA’s internal controls over its

Confidential Source Program. However, this report does provide some finding areas

that indicate a risk of non-compliance and weak internal controls. As stated in the

report, the OIG will continue auditing the DEA’s Confidential Source Program to

ensure that we fully address our original audit objective to assess the DEA’s

management and oversight of its confidential sources.

APPENDIX 2

CROSSWALK BETWEEN THE DEA AND AG GUIDELINES

CONFIDENTIAL SOURCE CATEGORIES

OIG

REQUEST

FOR

INFORMATION

PERTAINING

THE

CONFIDENTIAL

SOURCE

PROGRAM

September

12, 2014

QUESTION

#12: Prov

e an overview

how a

DEA CS catego

entified

al co

espo

ffere

types

CS catego

ned within

e Attorney

General Guide

lin

es.

AG Guidelines: Conlidential

Informant

- any

dividual who prov

es use

ful

ible info

on to a JLEA regard

ous crimi

nal

vities, a

om whom

e JLEA

expects or inte

obt

n addit

nal use

ful

credible info

on regard

g such activ

iti

futur

DEA c

ego

esponding

e guidelines above:

Regular

Use - does not meet

e guide

lin

es established for Res

tri

cted, Defe

Protected Name use.

Restricted Use -

indiv

idu

al who w

ill

be subject

a greater degree of supervisory

control

an a Reg

ar Use CS based upon factors within

s/her background

ndi

a n

d for such su

rvision.

Protected Name - An

div

idu

al whose publ

entifica

on or utilization as a DEA CS

could pose a threat

e na

onal security of

S. or a foreign country, or result

h like

lih

ood

violen

and/or

s/her

mily members or associates, or is

kely to raise co

mpl

legal issues.

AG Guidelines:

Cooperating

DefendanlfWitness - any individual wh

Meets

e definition of a CI; h

agreed

tes

a proceeding as a result of h

g prov

info

on to

e JLEA; a

is a defe

or pote

nti

al witness

o h

a written agr

ith

a FPO, pursua

to w

e individual h

pecta

on of future judicial or prosec

uti

cons

era

on or assistance

a result of h

ed information

e JLEA, or is a

pote

nti

ess who h

had a FPO concur

mate

al aspects of

s or her use by

e J LEA.

DEA category corresponding to

e guide

lin

es above:

Defendant Confidential

Source

- A Defe

CS h

been arrested or is subject to

est a

prosec

uti

on for a

deral or state

fense. This individual m

ayo

r may not

expect future considera

on for

er coopera

e fo

of j

udi

cial or prosec

era

on or

ass

istan

ce.

, .

APPENDIX 2

Guidelines:

Source

Information

- any individual

Meets

e definition of a CI; provides info

on to a JLEA solely as a result of legitimate

utin

access

to info

on or r

ecor

such

an e

mpl

oyee

e military, a l

enfor

agency, or a legitimate bus

ess (e.g.,

one

banks, airlines), and not as a result of

criminal associat

n with persons

ves

ve interest

the JLEA; a

provides such

a ma

nsiste

app

e l

aw.

DEA categories

rrespond

g to the g

nes above:

Limited

Use - A CS estab

shed

r payme

purposes o

y and is a professional

bus

ess person or a

pste

s person may be recruited by DEA b

st prov

informa

depe

ently (wi

direc

ons by DEA); This person wo

d not be

quired to testify as a witness

any legal proceeding, DEA

d corroborate

informa

on supplied by the CS indepe

entl

DEA antic

ates rewarding this person for

informa

/se

rvices re

ered;

e in

rma

on obta

ed by this person is not provided as

a r

ult of criminal

assoc

on w

ith

per

ns of

ves

inter

t (0 DEA.

Protected

Name

- An individual whose public

entifica

on or utiliza

on as a DEA CS

could pose a threat

e na

onal secu

ty of the

S. or a foreign country, or result

kelihood

violence to

e CS a

s/her family members or associates, or is

likely to raise complex legal issues.

Guidelines:

High

Level

Conlidentiallnformant:

- a CI who is part

e se

or leadership

an e

erprise

at has a na

onal

inte

onal sphere

activities, or

gh signi

cance

the

EA's

onal objec

even

e e

erpri

se's

ere

activities is local or r

ional; a

engages i

or uses others to commit, any of

nduct desc

bed bel

paragra

(I) (8)

(10)

(b) (i)-(iv).

DEA categories

rresponding to

e guidelines above: This solely depends on what happens

during

ves

on.

Regular

Use - does not meet

e guidelin

established for Res

tri

cted, Defe

ant or

Protected Name use.

Restricted

Use - An

dividual who will

subject to a greater degree

super

sory

contro

llh

an a Reg

ar Use CS based u

n factors within

s/her b

kground that

indi

cates

a n

d for such su

sion.

Protected

Name

- An individual whose public

enti fication

iza

on as a DEA CS

could pose a

reat to the na

onal security of

e U.S. or a

reign

untry, or result in a

gh likelihood

violen

e CS an

dlo

r his/her

mily members

associates,

kely to raise complex legal issues.

. .

APPENDIX 2

Defendant

Confidential

Source

- A Defenda

CS h

been arrested

is subject

est a

prosec

uti

on f

a federal or state of

Thi

individu

al m

ayor

may n

expect

futur

e consideration for

s/her cooperation in the fo

judi

cial or

osec

uti

cons

eration or

ass

istance.

APPENDIX 3

THE DEPARTMENT OF JUSTICE’S

RESPONSE TO THE DRAFT AUDIT REPORT

u,S,~~MUn~n

ofJusUce

Offic~

of the Deputy Attorney General

June

30,

015

MEMORANPUM

TO:

Carol

Tarasrlta

R~gional

Audit

Manag~r

Office

the:

Inspeaor

G~neral

FROM:

Daniel Grooms

"i'?#

Associate Deputy Attorney General

OffICe

the Deputy Attorney General

SUBJECT: Department

Response to Draft

Repon

the:

Office of the Inspector General:

Audit a/tire Drug En/o,.cement Admini.tt"ation '$ Confidential

Sou

,.ce Prog,.am

We appreciate

the:

review undc:naken

the Depe.nment of Justice

(De

partment) Office

the

spector

Genc:ra.l

(OIG) entitled Audit

o/the

Drug En/o,.cement Adminl.ttrotion

Confidential Sou,.ce Program. The OIG repon contains seven recommendations; the

Department concurs in all seven. Although

the:

Audit is focused

~){c1usively

on DEA

Confidential Source (CS) Program, and accordingly

the:

respcnSC:5to

the:

recomm~ndations

below

are addressed from the perspective

ofDEA,

because

the:

repon addresses issues that go beyond

DEA and requi

re:

the participation

mUltiple I)(!partmental components, this response:

being

submitted by the Office

the I)(!puty Attorney

Gen~ral.

Recognizing that the

usc:

of confidential infonnants

criminal investigations

and

prosecutions presents unique risks both to the safety

agents, infonnants, targets, and others,

and to

the:

viabi

ty and integrity

the investigations and prosecutions

which the infonnants

participate,

2002, the Attorn

General issued Guidelines Regarding the Use

Confidential

Infonnants (AG Guidelines).

lbese

Guidelines

.....

ere created both to establish policies for the

use

confidential

fonnants in criminal investigations and prosecutions

and

to establish the

criteria for procedures that

arc:

necessary to the implementation

those policies. The

I)(!partment remains committed to ensuring that its law enfor<:ement agencies maintain and

consistently implement policies and procedures regarding the u

sc:

confidential infonnants that

com

y with both the

Guidelines and the Department's overall approach to risk assessment

and mitigation.

In addition to

the:

recommendations addressed below, in its re:pon 0 10 raises concerns

about

DEA's

lack

cooperation with

the:

audit team. While

.....

e believe that

DEA'

s goal

throughout this process has been to cooperate with the

010

review

nsistent with their

gations to protect

the:

agency's

Program,

regret any delays to

OIO's

work.

The:

APPENDIX 3

Department and DEA remain committed to

\o'1)rldng

with

010

to ensure 0 10 receives

all

the

infonnation necessary to complete its reviews and understand that DEA and 0 10 have now

resolved a

concerns regarding access to info

ation and materials.

The Department appreciates the opportunity to respond to the OI

O's

audit and is

committed to wor

ng with the 0 10 as it continues its review

DE A

CS Progr

Recommendation

oordinate

witb the

Criminal

Division to revisit the Special Agents

Manual

to ens

e compliance witb

and

consistent

DOJ

implementalion

oftbe

Guidelines' requirements.

ure

that

its confidential source policies include

appropriate

pro

vision for

Guidelines -

required

special

approval

for the use

high - level

and

privileged

media-relaled confidential

sourc

es.

b. Ens

ure

Ihal its confidential s

our

ce polici

include

adequat

e information related to

OIA to e

nsur

tbat

DEA Special Agcnts have an

appropri

ate level of

und

rstanding

of the risks

~iat

with

approv

ing confidential s

ouree

s in OIA.

Ensure

Ibat its confidential s

ourc

e policies include

appropriate

provi!ions for AG

Guidelines-based

requirem

s for approving confidential s

oure

participat

in OIA, ineluding documenting findings, instructions. and acknowledgement

revocation

OIA

authorization

in the DEA

official confidential s

oure

e files.

DEA concurs in this recommendation. Consistent

th the roles and responsibil

ies estab

shed

the

Guidelines,

December

14, the Deputy Attorney General directed DEA and the

Criminal Division to conduct a comprehensive process to review and revise the D

Agents'

Manual to ensure that

DEA's

policies comply with the

Guidelines and

IIIt

presented in a

manner that is con

si"ent

with the

Guidelines

both fonn and func

on. Thai review is

ongo

and when completed, the revised policies wi

clude provisions governing the

registrat

high·level, privileged, and media-related confidential sources. The revised

policies wi

also clari

the requirements necessary to approve Otherwise Illegal Activity (OIA)

and wilt require agents to doc

ent thc i

nfOnTIa

tion necessary to apply the principles

ofrisk

assessment and mit

ation when autho

zing and exccuting OI

ommendation 2:

Ensure

that

ils confidential

sourte

policies

are

updated

renect

tbe

current

practice

documenting written

operation

s plans. including klentifying

the

quired

content

and

approval

level for those plans.

DEA concurs

this recommendation. Thc ongoi

review and revision

the Agent

Manual,

which D

conduc

in consulta

on with the Criminal Division, wi

clari

the required

content

r written operations

ans and other

nTI

S the D

uses to document the autho

zation

ofO

IA, instructions given to confidential sourees, and the confident

l sources' acknowledgment

the same. The revisions to the Agents' Manual also will address how such fonns

maintained consistent with the

Guidelines.

Recommendation 3: Develop specific policies related to the conduct of the SARC long;

term

confidential source review, including ens

ing

appropri

ate

att

ance. sufficient review

APPENDIX 3

procedures, I

minimum

fil

e content.

DEA concurs

this recommendation. The ongoing review and revision

the Agents' Manual,

which DEA is conducting

consultation with the Criminal Division, will ensure that the revi

long-term confidential sources satisfies the

Guidelines both in the written policies

and

their implementation.

Reco

endation 4:

Ensure

tbat

DEA confidential so

ce policies

are

upd

ate

d to ens

that long-te

confidential sources are reviewed in a consistent and timely ma

nner

DEA concurs in this recommendation. As with Recommendation 3 ahove, the ongoing review

and revision

the Age

s' Manual, which DEA is conducting in consultation with the Criminal

Division, will ensure that the review

long-term confidential sources satisfies the

Guidelines both

the written policies and their implementation.

Recommendation 5:

Ensure

that its Special Agents

Manual

updated

to include

requirements for a 9-year interim review at long-term confidential so

ces, in accordance

with

the

Guidelines

and

the DEA

CUTTent

actice.

DEA concurs in this recommcndation.

with Recommendations 3 and 4 above, the ongoing

review and revision

the Agents' Manual, which DEA

conducting in consultation with the

Criminal

vision, will ensure that the review

long-term confiden

al sources sa

sfies the AG

Guidelines both

the written policies

and

their implementation.

endation 6: Ens

ure

tbe DEA develops and implements a

ppropri

ate policiH

and p

roc-e

dur

H related to

estab

lishing DEA registr

ants

as confidential sources.

concW'$

thi

s recommendation. The ongoing review process discussed above will ensure

that the Agents' Manual addresses the use

registrants as confidemi

sources and includes

policies governing such use.

mmendation 7: In consultation wi

the Department,

ana

lyze a nd come to a

conclusion

about

whe

ther

there

is a legal basis and,

so,

whether

it is

app

riate to

extend eligibility for FECA benefilllto confidential so

ces.

the D

epa

rtm

and

DEA determine

that

confidential sources may be lega

gible for FECA benefits, tbe DEA must

estab

sh controls and policies specific to

the

management of existing confidential so

urc

e FECA benefits and accuracely

memorialize the

ification in DEA's policie

tbe D

epa

rtm

ent

and

DEA determine

nfidential so

ces may be lega

eligible for FECA benefits, the DEA mu

ensure

that the confidential so

ces who

are

active with

the

DEA do not receive full-lime

"ECA disability payments from

DOL.

the

Department

DEA

determine

that

confidential

sour~es

may not be lega

eligibl~

for FECA benefilll, the DEA must develop a

pro~HS

for handling

esis

cin

g cases wberein benefits are being paid to confidential so

ces an

d/or

tbeir

APPENDIX 3

dependents.

DEA concurs in

thi

s reco

endation. As an initial matter, pending resolution

this issue,

DEA placed a moratori

on the transmission

new FECA claims for confidential sources to

e Department

Labo

alw

ha~

revisited the question whether confidential sources mily

qualify for FECA benefits and has detennined that, while

e ultimate determination must

made based on the facts and circumstances of each individual case, as a presumptive maner,

confidential sources are not

mployees" pursuant to FECA and therefore are not e

gible for

FECA benefits because confidential sources do not perfonn services "similar to the service

civil officer

employee

the United States." In the extraordinary circumstance where a

confidential source met the statutory criteria to qualify as an employee, DEA concurs with the

recommendation that

must establi

controls and policies for the provision and supervision

any benefits to which an individual

entitled. D

further concurs that

must establish

controls and policies for existing individuals receiving FECA benefits to the extent such benefits

continue to be provided. Accordingl

the Human Resource (HR)

vision, Office of the Deputy

Assistant Administrator for HR, will develop a process with the Department of Labor (DOL) to

manage any benefits requests and will develop internal operating procedures to ensure proper

claim review/justification, tracking, monitoring, r

ecO

rdkeeping, secure storage, and notification

to appropriate DEA office(s). DEA

Confidential Source Unit also will coordinate with the

DEA's Office

Chief Counsel and HR to establish policies and controls

garding the FECA

benefits process. The new policy and controls will address any potential future recipients, shou

there

any, and provide guidance

addressing the handling

current recipients. Included

within these polic

s will be mechanisms to prevent active confidential sourc

for DEA or other

law enforcement agencies from receiving FECA disability payments.

APPENDIX 4

OFFICE OF THE INSPECTOR GENERAL

ANALYSIS AND SUMMARY OF ACTIONS

NECESSARY TO CLOSE THE REPORT

The Office of the Inspector General (OIG) provided a draft of this audit report

to the Drug Enforcement Administration (DEA), the Office of the Deputy Attorney

General (ODAG), and the Criminal Division. As noted in the consolidated response

submitted by the ODAG, although this audit focused exclusively on DEA’s

Confidential Source Program, the report addresses issues that require the

participation of multiple DOJ components. As such, the responses provided are

addressed from the DEA’s perspective, but include the Department’s

acknowledgement of its commitment to ensuring DOJ law enforcement agencies

maintain and consistently implement policies and procedures regarding the use of

confidential informants that comply with both the AG Guidelines and the

Department's overall approach to risk assessment and mitigation. This

consolidated response is incorporated in Appendix 3 of this final report. The

following provides the OIG analysis of the response and summary of actions

necessary to close the report.

Recommendations:

1. Coordinate with the Criminal Division to revisit the Special Agents

Manual to ensure compliance with and consistent DOJ

implementation of the AG Guidelines’ requirements, including the

following.

a. Ensure that its confidential source policies include appropriate

provisions for AG Guidelines-required special approval for the use

of high-level and privileged or media-related confidential sources.

b. Ensure that its confidential source policies include adequate

information related to OIA to ensure that DEA Special Agents have

an appropriate level of understanding of the risks associated with

approving confidential sources in OIA.

c. Ensure that its confidential source policies include appropriate

provisions for AG Guidelines-based requirements for approving

confidential sources to participate in OIA, including documenting

findings, instructions, and acknowledgement of revocation of OIA

authorization in the DEA’s official confidential source files.

Resolved. The DEA concurred with our recommendation. In its response on

DEA’s behalf, the ODAG stated that, at the direction of the Deputy Attorney

General, the DEA and the Criminal Division are currently conducting a

comprehensive review of the Special Agents Manual to ensure that the DEA’s

policies comply with the AG Guidelines and are presented in a manner

consistent with the AG Guidelines in both form and function. The response

APPENDIX 4

further stated the revised policies will include provisions governing the

registration of high-level, privileged, and media-related confidential sources.

Additionally, it indicated that the revised policies will require agents to

document the information necessary to approve Otherwise Illegal Activity

(OIA) and will require agents to document the information necessary to apply

principles of risk assessment and mitigation when authorizing and executing

OIA.

This recommendation can be closed when we receive evidence that the DEA,

in coordination with the Criminal Division, has established and implemented

new AG Guidelines-compliant policies for the use of confidential sources who

meet the requirements for special approval. In addition, please provide

evidence that the policies include specific AG Guidelines requirements for

authorizing, instructing, and revoking a confidential source’s participation in

OIA and documenting this information in the confidential source file.

2. Ensure that its confidential source policies are updated to reflect the

current practice of documenting written operations plans, including

identifying the required content and approval level for those plans.

Resolved. The DEA concurred with our recommendation. In its response on

DEA’s behalf, the ODAG stated that the ongoing review and revision of the

Special Agents Manual will clarify the required content for written operations

plans and other forms the DEA uses to document the authorization of OIA,

instructions given to confidential sources, and the confidential sources’

acknowledgement of the same. The response further stated that the

revisions will also address how such forms will be maintained consistent with

the AG Guidelines. However, the response did not identify the inclusion of

required approval levels for operations plans in the revised policies.

This recommendation can be closed when we receive evidence that the DEA

has established and implemented new policies that reflect the DEA’s current

practice of documenting written operations plans, including the required

approval levels for operations.

3. Develop specific policies related to the conduct of the SARC long-

term confidential source review, including ensuring appropriate

attendance, sufficient review procedures, and minimum file content.

Resolved. The DEA concurred with our recommendation. In its response on

DEA’s behalf, the ODAG stated that the ongoing review and revision of the

Special Agents Manual will ensure that the review of long-term confidential

sources satisfies the AG Guidelines both in the written policies and their

implementation.

This recommendation can be closed when we receive evidence that the DEA

has established and implemented new policies that comply with all

APPENDIX 4

AG Guidelines requirements for the SARC review of long-term confidential

sources.

4. Ensure that DEA confidential source policies are updated to ensure

that long-term confidential sources are reviewed in a consistent and

timely manner.

Resolved. The DEA concurred with our recommendation. In its response on

DEA’s behalf, the ODAG stated that the ongoing review and revision of the

Special Agents Manual will ensure that the review of long-term confidential

sources satisfies the AG Guidelines both in the written policies and their

implementation. We believe that ensuring the manual satisfies the AG

Guidelines is the correct approach, but also believe that these revisions

should include sufficient detail regarding the procedures for executing the

long-term SARC review of confidential sources to ensure the continuity of

those processes.

This recommendation can be closed when we receive evidence that the DEA

has established and implemented new policies and procedures that comply

with all AG Guidelines requirements for the SARC review of long-term

confidential sources, including sufficient detail to ensure the continuity of

those processes.

5. Ensure that its Special Agents Manual is updated to include

requirements for a 9-year interim review of long-term confidential

sources, in accordance with the AG Guidelines and the DEA’s current

practice.

Resolved. The DEA concurred with our recommendation. In its response on

DEA’s behalf, the ODAG stated that the ongoing review and revision of the

Special Agents Manual will ensure that the review of long-term confidential

sources satisfies the AG Guidelines both in the written policies and their

implementation.

This recommendation can be closed when we receive evidence that the DEA

has established and implemented new policies that comply with the AG

Guidelines requirements for a 9-year interim review of long-term confidential

sources, including sufficient detail to ensure process continuity.

6. Ensure that the DEA develops and implements appropriate policies

and procedures related to establishing DEA registrants as

confidential sources.

Resolved. The DEA concurred with our recommendation. In its response on

DEA’s behalf, the ODAG stated that the ongoing review and revision of the

Special Agents Manual will address the use of registrants as confidential

sources and will include policies governing such use.

APPENDIX 4

This recommendation can be closed when we receive evidence that the DEA

has established and implemented appropriate policies and procedures related

to the establishment and use of DEA registrants as confidential sources.

7. In consultation with the Department, analyze and come to a

conclusion about whether there is a legal basis and, if so, whether it

is appropriate to extend eligibility for FECA benefits to confidential

sources.

a. If the Department and DEA determine that confidential sources

may be legally eligible for FECA benefits, the DEA must establish

controls and policies specific to the management of existing

confidential source FECA benefits and accurately memorialize the

justification in DEA’s policies.

b. If the Department and DEA determine that confidential sources

may be legally eligible for FECA benefits, the DEA must ensure

that the confidential sources who are active with the DEA do not

receive full-time FECA disability payments from DOL.

c. If the Department and DEA determine that confidential sources

may not be legally eligible for FECA benefits, the DEA must

develop a process for handling the existing cases wherein benefits

are being paid to confidential sources and/or their dependents.

Resolved. The DEA concurred with our recommendation. In its response on

DEA’s behalf, the ODAG stated that the DEA placed a moratorium on the

transmission of new FECA claims for confidential sources to the Department

of Labor, pending resolution of this issue. The response further stated that

the DEA has determined that, as a presumptive matter, confidential sources

are not ‘employees’ pursuant to FECA and are therefore not eligible for FECA

benefits because confidential sources do not perform services "similar to the

service of a civil officer or employee of the United States." However, the

response acknowledged that the ultimate determination of FECA eligibility

must be made based on the facts and circumstances of each individual case.

As such, for the extraordinary circumstances where a confidential source met

the statutory criteria to qualify as an employee, the DEA stated that it will

establish internal operating procedures, policies, and controls for the FECA

benefits process and will coordinate with the Department of Labor to develop

a process to manage benefits requests. According to the response, these

policies and procedures will include mechanisms that will prevent active

confidential sources for DEA or other law enforcement agencies from

receiving FECA disability payments. Moreover, the response indicated that

these policies, controls, and procedures will address any potential future

recipients, should there be any, and provide guidance in addressing the

handling of current recipients.



APPENDIX 4

This recommendation can be closed when we receive evidence that the DEA,

in consultation with the ODAG and the Criminal Division, has established and

implemented new policies that include provisions related to oversight and

management of confidential source FECA claims and benefits, as necessary to

act in accordance with the Department’s presumptive and a future final

decision regarding the appropriateness of extending FECA benefits to

confidential sources. In addition, this recommendation can be closed when

we receive evidence that the DEA, in coordination with the Department, has

reviewed and agreed on the continuance or cessation of the provision of the

current ongoing FECA benefits to confidential sources.



The Department of Justice Office of the Inspector General

(DOJ OIG) is a statutorily created independent entity

whose mission is to detect and deter waste, fraud,

abuse, and misconduct in the Department of Justice, and

to promote economy and efficiency in the Department’s

operations. Information may be reported to the DOJ

OIG’s hotline at www.justice.gov/oig/hotline or

(800) 869-4499.

Office of the Inspector General

U.S. Department of Justice