ATF, DOJ Launch Damage Control Effort Over Growing Project Gunrunner Scandal

A major scandal is developing around a signature U.S. effort to track and stop the flow of illicit weapons to Mexico, as officials at the Department of Justice close ranks, hoping to cover up an investigation critics say is responsible for an untold number of dead.

The investigation was known as Project Gunrunner -- a joint task force headed by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Department of Justice -- that took place in 2010.

It was conceived after the bureau was criticized for not conducting more complex investigations on straw buyers -- people who were allowed to purchase guns legally in the U.S.-- who illegally transport  guns into Mexico and sell them to cartels.

So rather than just take down low-level straw buyers here and there, the agency hoped by ‘letting the guns walk’ the sales would lead investigators to cartel members higher up in the organization.

However, whistle-blowers say that never happened.

Already we know the weapons used to kill Border Patrol Agent Brian Terry were being tracked by Gunrunner, but new documents reveal a much bigger problem.

The questions this morning in Washington are how high does this go and will Congress call for a formal investigation of its own.

"I'm still asking questions and we're getting the runaround from the Justice Department," Sen. Charles Grassley told Fox News.

"They're stonewalling.  And the longer the wait, the more they fight, the more egg that they're going to have on their face."

Grassley and others say Gunrunner was a dismal and deadly failure, with ATF intentionally allowing thousands of weapons to be illegally trafficked to Mexico.

Here is how sources say it worked: Arizona gun stores sold weapons to suspected straw buyers -- in some cases - 10 - 20 - 30 - AK-47s to the same person over just a few months.

ATF could have said no, or later seized the guns in an arrest. Instead, owners were urged to sell, even though agents often knew the buyer was a straw for the Mexican cartels.

Records show Gunrunner was aware of more than 1,000 weapons sold from 10 Arizona gun stores to roughly 50 straw buyers. More than two-thirds of those guns have already been recovered at crime scenes in the U.S. and Mexico.

"What people don't understand is how long we will be dealing with this," ATF agent and whistle-blower John Dodson said Tuesday.

"Those guns are gone -- gone. You can't just give the order and get them back. There is no telling how many previous crimes will be committed before we get to them."

Privately, ATF agents say Gunrunner “was out of control” and deserved to be shut down. But the mistakes made were not intentional and they say there are no limits to the number of long guns (as opposed to pistols or revolvers) a person is allowed to buy.

Therefore, while gun stores had the freedom to sell as many guns as they wanted to any single buyer, at no time did agents tell owners to ‘break the law.’

Already sources say those guns can be traced to hundreds of robberies, rapes and murders. Critics say ATF knowingly allowed those sales to take place and failed to make arrests of known smugglers, thereby intercepting the guns before they crossed the border.

"They would tell us -- we would say -- 'do you want us to stop selling?…is there something we should do here? and they would say "No, no, no -- continue selling -- just tell us after the fact," said Brad Desaye, owner of J & G Gun Sales in Prescott, Ariz.

J&G sold 60 guns to alleged straw buyers. ATF agents told him on the phone and in person to let the sales happen.

Dodson, one of seven agents on the Gunrunner task force, confirms that ATF knowingly allowed the sales and did not actively track the weapons, as in a traditional investigation. Instead, it allowed the guns to go south, where they were used in crimes or seized by Mexican police during raids.

Until now, administration officials blamed Mexico's drug violence on Arizona and border state gun shops, repeatedly making the false claim that 90% of the guns recovered in Mexico were sold in the U.S.

Now Desaye, paraphrasing Second Amendment activist Jeff Knox, says, "the truth is coming out. It's becoming obvious the largest supplier to Mexican gun violence is ATF, not the dealers. And they are using us as scapegoats."

Carolyn Terry, the stepmother of  murdered Border Agent Brian Terry also blames the ATF.

"I think they put those guns out there and they lost them and now one of our own has got killed with one and they have made a big mistake and the government hates to make mistakes," says Terry. "You would think such a murder and killing would make an impact and that they would revise their policy or at least review their policy and we have no indication that is the situation."

Sen. Grassley says ATF isn't the only guilty agency. He says Department of Justice lawyers and agents from Homeland Security also watched this debacle unfold, often hand in hand with ATF.

Grassley has lengthy correspondence and numerous documents he wants to post on the Senate Judiciary website, but sources on the Hill say Judiciary Chairman Pat Leahy won't allow it, refusing to call for an independent congressional investigation.

"The only reason this is going to be fair, the only way the Terry family is going to get the explanation that is owed to them is if there are independent hearings," says Dodson.

"I'm not satisfied with the inspector general there doing the investigation; to me it looks like a fox guarding the hen house," echoes Grassley.

As the scandal began to draw more media attention, the chief of Public Affairs at the ATF in Washington issued this memo February 28 to media relations staff throughout the agency. Critics say it's evidence the agency is trying to hide, or at least distract the media, from reporting on Project Gunrunner.

"ATF needs to proactively push positive stories this week in an effort to preempt some negative reporting, or at a minimum lessen the coverage of (Project Gunrunner) in the news cycle by replacing them with good stories about the ATF."

On Wednesday, the National Rifle Association also called for expedited congressional hearings on firearms trafficking enforcement tactics used by the ATF.  In a letter to Grassley and Sen. Patrick Leahy it stressed the need for investigation into the responses by the ATF and DOJ about the Gunrunner program.