HAMPTON — One day in the spring of 2010, a special agent with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) approached the Hampton Police Division about working with him on undercover cigarette stings.
That agent, Clifford D. Posey, had already gotten approval from the ATF for the operation, with the agency agreeing to provide the initial cases of cigarettes and money for a warehouse lease.
By late June of that year, Hampton and the ATF opened shop in an industrial area of Hampton. Ads were placed online to catch people in the act of illegal cigarette trafficking — such as buying caseloads of cigarettes in low tax states and taking them to high tax states for resale.
But on Oct. 13, 2010 — with the operation still in its infancy — two Hampton police officers spotted strange email messages coming into a task force cell phone that Posey had been using. Through those messages, the cops learned that Posey, using the undercover name "Chris Dallas," was surreptitiously corresponding with a customer on the side.
The Hampton police reported the matter to local ATF officials, and the Justice Department's Inspector General's Office soon set up a sting — on Posey.
A GPS tracking device was attached to Posey's SUV. His buyer became a cooperating witness. And surveillance cameras were set up at his privately rented storage unit in Virginia Beach.
According to court documents, Posey was secretly taking cases of ATF cigarettes to that storage unit. Then he would have his buyer go there, pick up the cases, and leave behind envelopes filled with cash. Posey would then pocket the money.
Posey, 44, of Chesapeake, later admitted as part of a 2011 plea agreement that he embezzled more than $46,000 in cigarettes and guns. He is serving a three-year sentence in federal prison in Morgantown, W.Va. Through a prison official, he declined to comment for this story.
That the Hampton police helped root out Posey "shows the high standard of the officers involved in the operation and within the Hampton Police Division," City Manager Mary Bunting wrote in an email last week.
In late 2010, as soon as questions began to surface about Posey, the ATF ceased its involvement in the Hampton cigarette sting operation, said Teresa Hinson, who was then the resident-agent-in-charge for the ATF's Hampton Roads region.
For one thing, Hinson said, future prosecutions were compromised by Posey's corruption. "Anything that Cliff touched, we considered to be tainted," she said.
For another thing, Hinson added, she simply didn't have a spare agent to assign to the Hampton case. The rest of her agents, she said, were busy with gun trafficking cases and weren't interested in working cigarette stings.
Richard Marianos, the special-agent-in-charge of the Washington Field Division, said the Posey case also spurred the federal agency to do a nationwide review of its cigarette sting operations. As a result, he said, his field division, which includes Hampton Roads, decided to limit such cases only to certain narrow circumstances.
"The new division policy was to investigate cases where the focus is on violent crime, multistate revenue loss, and investigations with an international nexus," such as a connection to terrorism or organized crime, he said.
The Hampton-ATF cigarette operation did not meet that criteria, Marianos said.
But though the ATF backed out of the case, the Hampton police continued the operation. "The cigarette companies encouraged Hampton to continue the work that had begun," Bunting said in her email. She said that Hampton "conferred with the relevant state and federal authorities, which concurred that the HPD work could continue."
Bunting has not responded to questions about which cigarette makers those were, or which state and federal authorities the police spoke with.
By mid-2011, Hinson said, the Hampton police were pressing the ATF to get back involved.
Among the issues, Hinson said, was that Hampton wasn't able to get the cigarettes from manufacturer Philip Morris USA at the same sharply discounted rate that the ATF was getting under a national contract.
"They were so upset that they couldn't get the cigarettes for whatever the price was," Hinson said. One officer, she said, "said he was concerned about how he was going to pay the other operating expenses in the case. He said they were no longer going to be able to break even."
Another big issue, Hinson said, was that federal prosecutors were reluctant to prosecute Hampton's cigarette cases without the ATF's involvement.
At a July 2011 meeting at the U.S. Attorney's Peninsula headquarters in Newport News — a meeting attended by Hampton police officials, ATF officials and federal prosecutors — Police Chief Charles R. Jordan Jr. strongly urged the ATF to rejoin the case, said Hinson and another law enforcement officer in the room.
ATF officials stood firm, saying they were not interested in getting involved again, Hinson said.
But at that meeting, she said, a high-ranking federal prosecutor gave Hampton a chance.
David Novak — then the criminal chief for the U.S. Attorney's Office for Virginia's Eastern District — gave the Hampton officers a 30-day deadline to bring a solid federal cigarette case without the ATF's involvement.
That deadline came and went with no word from Hampton, Hinson said.
Peter Carr, a spokesman for the U.S. Attorney's Office, confirmed the July meeting in Newport News, Novak's month-long deadline, and that no federal charges were ever filed in the Hampton cigarette case.
No state charges were filed, either.
Former Hampton Commonwealth's Attorney Linda D. Curtis, who at the time led state prosecutions in Hampton, said police never brought her any cases related to the undercover cigarette operation. "I never said I would or would not (prosecute the cases), but I wasn't brought a case to make that call on," she said.
But Curtis said she didn't find that unusual. "It was clearly a long-term project that could go in a number of different directions," she said.
Though no arrests were made over the 19-month investigation, millions of dollars flowed through the operation, city records show. Some of the money was spent on new SUVs, electronics and officer training trips to New York and Las Vegas.
Jordan halted the operation in January after an officer misconduct complaint. A Hampton prosecutor determined in June that no criminal charges were warranted against any officers, though an internal investigation into three officers is under way to determine if they broke any city rules.
Some in Hampton law enforcement circles say the ATF backed out of the case in 2010 because they were mad that Hampton had embarrassed the agency by exposing a crooked agent.
Hinson, for her part, called that notion "the most ridiculous statement I've ever heard."
"Anyone who said that doesn't know me," Hinson said. "I would never condone a local police officer or a federal agent committing crimes."
Marianos sounded a similar sentiment, saying the Hampton cops' role in ferreting out Posey's crimes played no role in the parting of ways.
"We were happy that our partnership with Hampton exposed Posey," Marianos said. "There was a sense of embarrassment by the ATF, and contrition that other agencies were exposed. ... I thank them for what they did."Copyright © 2015, Los Angeles Times