U.S. Agents’ Drug Trade Ties Probed : Crime: Federal grand jury hears testimony about alleged corruption by former and present Customs Service employees.

A federal grand jury in San Diego is taking testimony on allegations that eight present and former U.S. Customs Service employees, including two criminal investigators, have been assisting Mexican drug cartels in shipping tons of cocaine into the United States, officials said.

Informants have told investigators that Customs officials in San Diego were paid off with bribes and sexual favors, sources said. Authorities are performing an extensive examination of the personal finances of those officials, sources said.

The investigation, directed by the FBI in San Diego and the Justice Department in Washington, was launched after The Times reported in February that there were no cocaine seizures in 1992 and 1994 at the three largest commercial ports on the Southwest border.

The nexus of the probe is Customs’ controversial line-release program, which allows thousands of Mexican trucks to enter the country without inspections each month, sources said. The investigation stems in part from allegations of former Customs inspector Mike Horner of San Diego, U.S. Atty. Alan D. Bersin said.

It represents an escalation of federal examinations of alleged corruption within the Customs Service. Last month, two inspectors in El Paso were charged with conspiring to smuggle 2,200 pounds of cocaine into the country in return for a $1-million payoff from drug smugglers.

In a separate action, the Justice Department announced last week that three former federal prosecutors in Miami were indicted for helping Colombian cocaine dealers avoid prosecution in the United States.

Last month, the Justice and Treasury departments reached an unprecedented agreement, giving the FBI sole authority to investigate corruption cases in the Customs districts in San Diego and Los Angeles. On Thursday, Justice Department spokesman John Russell in Washington declined to comment on the grand jury investigation in San Diego.

Customs spokeswoman Bobbie Cassidy in San Diego also declined to comment, but said Customs officials welcomed the investigation. She declined a Times request for interviews with several employees identified as targets of the probe.

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Sources said the FBI is looking into allegations that Customs officials with ties to San Diego and supervisory inspectors in key enforcement positions aided and abetted drug smuggling through four ports of entry on the California-Mexico border, law enforcement sources said.

The FBI inquiry is one of two ongoing corruption investigations involving Customs employees in San Diego. The General Accounting Office, the investigative arm of Congress, is doing a separate investigation at the request of two San Diego-area congressmen, Rep. Brian Bilbray (R-Imperial Beach) and Rep. Duncan Hunter (R-El Cajon).

The FBI investigation was accelerated after Sen. Dianne Feinstein (D-Calif.) wrote two letters in March, asking the Justice Department to investigate charges of corruption in San Diego, including the line-release program. Feinstein has made several trips to San Diego since February to meet with Customs officials.

Under line-release, Mexican customs and business officials know by 4 p.m. every weekday which trucks are going to carry cargo that is exempt from inspection upon entering the United States the next day.

Feinstein has pressed Treasury and Justice Department officials to investigate charges by Horner and other present and former inspectors that the line-release program is a sieve, which allows cocaine to flow into the United States on uninspected trucks.

In a March 10 letter to U.S. Atty. Gen. Janet Reno, Feinstein urged the Justice Department “to investigate these very serious allegations.”

In an interview, Horner said authorities questioned him about his knowledge of alleged corruption by half a dozen current and former Customs employees. “I was called by prosecutors and asked specific questions about them. But that’s all I can confirm,” Horner said.

Horner, who served as an inspector at Otay Mesa, Tecate and San Ysidro between 1986 and 1991, said he also has talked with GAO investigators from Washington.

In addition, sources said, at least three current inspectors have been questioned as potential witnesses by the FBI.

On Thursday, sources said, the FBI investigation was broadened to include two Customs agents suspected of corruption. Agents conduct criminal investigations, while inspectors examine cargo and passengers at the ports of entry and airports.

At least one agent is suspected of tipping off an inspector who previously was under internal investigation for corruption.

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In addition, sources said, the FBI is investigating reports that two inspectors blocked, altered or erased intelligence reports from Customs computers regarding suspected drug haulers and vehicles used for smuggling.

Investigators also are looking into the activities of one inspector with apparent ties to drug traffickers in Tijuana. Sources said the inspector allegedly has used his position to release Mexican law enforcement officials arrested at the border in stolen U.S. vehicles and return undeclared U.S. currency seized from drug couriers at the border.

Among the allegations are that he returned $50,000 in cash that U.S. Customs inspectors had seized. Investigators said the money later was deposited in accounts in San Diego banks belonging to corrupt Mexican law enforcement officials with ties to narcotics traffickers. Under federal law, amounts greater than $10,000 in cash have to be declared to Customs officials upon entering the United States or the money can be seized.

The same inspector is under scrutiny for what sources said was an alleged attempt to sabotage the 1990 seizure of a Mexican propane tanker loaded with four tons of cocaine. A 1992 investigation report by the House subcommittee on commerce, consumer and monetary affairs said the inspector attempted to stop an inspection of the tanker, even after a drug-sniffing dog alerted a handler to the possibility of drugs.

The FBI also is seeking to learn how drug smugglers obtained Customs credentials, which they used to avoid inspections and slip loads of cocaine across the border in private vehicles. A Mexican source with ties to drug smugglers said the practice was halted after The Times disclosed it in 1993.

In her letter to Reno, Feinstein also asked the Justice Department to investigate a 1993 incident at the Otay Mesa commercial port when a Customs official, “who was later promoted, may have prevented investigators from conducting a surprise inspection . . . aimed at determining whether unauthorized trucks, potentially carrying drugs, were allowed to cross the border without inspection.”