bureau of alcohol, tobacco and firearms - fraser...to a man who lived in emporia. kans. his mother...

78 1973 REPORT OF THE SECRETARY OF THE TREASURY

Physical security

Pursuant to Executive Order 11652 and the National Security Council directive of May 17, 1972, Treasury Orders dealing with "National Security Information" and "Safeguarding Officially Limited Information" were distributed throughout the Department. A booklet entitled "Security Do's and Don'ts in the Department of the Treasury" was prepared and disseminated throughout the Department.

Space

The Department has been successful in acquiring a major-size office building, the U.S. Postal Service headquarters, in downtown Wash-ington, D.C. This centrally located 510,000-square foot instaUation, after a planned renovation and when fully occupied, is expected to resolve certain critical space shortages, allow for the consolidation of organizational elements from 12 locations, and release 6 leased buildings.

Efforts to consolidate Public Debt's Chicago and Parkersburg ac-tivities nioved closer with the groundbreaking for a 240,000-square foot, multistory office complex. The facility will be located in the Park-ersburg, W. Va., urban renewal area, and is expected to be completed by November 1974. An award has been made for construction of a 25,000-square foot microfilm depository in Eavenswood, W. Va. This facility will replace the present depository in Wisconsin and serve the new consolidated Public Debt operations.

Efforts to acquire a site for construction of the new Denver Mint were consummated when the mayor of Denver signed the letter of agreement conveying approximately 38 acres on the west bank of the South Platte Eiver to the Government.

BUREAU OF ALCOHOL, TOBACCO AND FIREARMS

The Bureau of Alcohol, Tobacco and Firearms completed its first year as a separate bureau withiii the Department of the Treasury. In addition to its law enforcement responsibilities, A T F is concerned with Federal regulation of the legal alcohol, tobacco, firearms, and explosives industries, and is charged with protection of both consumers and the environment with respect to these regulated industries. Also, during the past fiscal year, A T F collected over $7.2 billion in excise taxes on alcohol and tobacco products.

On the law enforcement side, A T F enforces the Federal laws re-lating to firearms, explosives, and illicit liquor. Of the nearly 4,000 employees in the Bureau, approximately 1,600 are special agents, with investigative and arrest authority, stationed at 240 posts throughout the United States and Puerto Eico.

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Fiscal Year Ended June 30, 1973

ADMINISTRATIVE REPORTS 7 9

The law enforcement and revenue protection authority currently exercised by the Bureau originated in 1863, when the first Commis-sioner of Internal Eevenue appointed two detectives to ferret out those persons making whiskey without paying the Federal excise tax. The first hundred years were devoted mainly to suppressing the illicit liquor traffic which defrauded the Government of millions of tax dollars each year. At the same time, procedures for regulating the legitimate al-coholic beverage industry were developed.

The first Federal gun law was enacted in 1934 when Congress em-ployed a manufacturing and transfer tax system to control the machine guns, sawed-off shotguns, and short-barreled rifles frequently used by gangsters. I t was not until 1942, however, that A T F was given inves-tigatory responsibility for the National Firearms Act of 1934 and the Federal Firearms Act of 1938. In 1951, A T F assumed the regulatory responsibility for these acts.

Because of this experience A T F , functioning as a division of the Internal Eevenue Service, was charged with enforcing and adminis-tering the Gun Control Act of 1968, which amended the National Firearms Act and expanded the other Federal firearms laws. Sole responsibility for regulating the legitimate explosives industry and joint jurisdiction with the Federal Bureau of Investigation for in-vestigating the misuse of explosive materials were assigned to A T F with the passage of the Organized Crime Control Act of 1970.

On July 1, 1972, the new Bureau was formed, and these functions were transferred to it from the Internal Eevenue Service.

Plistorically, A T F has a long tradition of close cooperation with other law enforcement agencies. Under the laws enacted in the past 3 or 4 years on firearms and explosive materials, the Bureau has deep-ened its commitment to assisting law enforcement officials at all levels.

Criminal enforcement

The A T F criminal enforcement activity has four principal areas of responsibility: (1) Investigation and apprehension of violators of the Federal firearms statutes, (2) investigation of bombings and explo-sions and apprehension of violators of the Federal explosive materials laws, (3) enforcement of the Federal laws relating to the production and sale of illicit distilled spirits, and (4) providing assistance to State and local officers in their fight against crime through the shar-ing of manpower and facilities where there are joint interests.

Firearms programs.—The Gun Control Act of 1968 caused A T F to direct a large part of its investigative manpower to the task of licens-ing the approximately 155,000 firearms dealers and collectors. While this briefly limited the perfecting of criminal cases for gun violations, it accomplished two important steps toward keeping guns out of the hands of criminals ensuring (1) that only legitimate and responsible dealers were licensed, and (2) that those dealers would keep complete and accurate records.

A T F special agents and inspectors made approximately 25,000 dealer compliance investigations last year in order to ensure that dealers understand the law and are complying with it. The bulk of this work is now being shifted from investigative personnel to those who work in regulatory enforcement, thus freeing special agents for more




direct work on criminals. While less than one-tenth of 1 percent of the licensed dealers checked were found to be in such serious violation of the law as to warrant prosecution, the value of such investigations is illustrated by five cases made in the last 3 years in South Carolina against licensed dealers involving the illegal sale of nearly 40,000 small, cheap handguns. The dealers were falsifying their sales rec-ords, selling the guns in bulk lots to unlicensed individuals who sold the guns on the streets of cities in New York and New Jersey. In the latest case, the dealer disposed of about 3,600 handguns, 122 of which were seized by New York City police in connection with crimes of murder, armed robbery, and assault.

Accurate dealer records are important for A T F gun-tracing activi-ties, which increased dramatically over the last 2 years. Eequests for firearms tracing now number over 1,000 per month and are increasing by 10 percent per month.

The majority of these requests stemmed from the recovery of a fire-arm at the crime scene by local law enforcement agencies. Tracings were over 63 percent successful, some of them beins: completed within hours of the commission of a crime and receipt of the trace renuest. Eirfit hundred local and 15 Federal law enforcement agencies utilized ATF's service, which significantly aided crime solving. This success was made possible by the full cooperation of the firearms industrv; at their reouest, the Bureau moved toward the goal of performing all gun tracing in order to reduce expense to the industry from time wasted because of incomplete descriptions of the guns by police officers who are not totally knowledgeable in gun-tracins: techniques.

One gun trace durin;or the year involved the Euger .44 caliber rifle found on the roof of the HowR.rd Johnson's Motel in New Orleans beside a dead man who had held the New Orleans police; at bay after killinfif several persons. A T F received the request to trace the firearm at 6:30 p.m. and 27 minutes later had traced the gun from the factory to a man who lived in Emporia. Kans. His mother in Emporia told A T F a


On December 7,1972, in Gary, Ind., A T F special agents, assisted by Office of Drug Abuse Law Enforcement (DALE) agents, executed a Federal search warrant on the premises of a convicted felon sus-pected of possessing an M-1 carbine in violation of the Gun Control Act. During the search the agents found and seized over 600 packages of heroin along with the carbine. Four persons were arrested.

On October 20, 1972, A T F special agents arrested three men from Baltimore for violation of the Gun Control Act and seized 98 hand-guns. Working on information supplied by a licensed dealer that the three men were involved in a gmi-rumiing scheme, the agents placed them under surveillance. After weeks of work, it was determined they were obtaining firearms from a dealer and transporting them to New York City to sell on the streets at a much higher price. One of these men was an alien who was in the country illegally.

The number of murders committed in 1971 involving guns was 66 percent of total murders committed. Armed robberies increased 175 percent from 1966 through 1971. Special surveys indicate that approxi-mately 63 percent of all armed robberies are committed with a firearm. Thus, considerable A T F investigative manpower, equipment, and ma-terials will continue to be required to assist State and local law enf orce-ment agencies in combating crime.

Explosives program.—^^Since 1934, Federal law has required that machine guns, sawed-off shotguns, short-barreled rifles, and silencers be registered with the Federal Government, and has vested responsi-bility for maintaining the National Firearms Eegistry in the Bureau. The Gun Control Act added "destructive devices," including bombs of all types, to the registration requirements. Although A T F has over 182,000 gangster-type weapons and destructive devices registered in its files, there is no record of any incendiary, or criminal-type, bomb having been registered; therefore, possession of such a bomb is a viola-tion of the National Firearms Act.

Since December 1968, when the Bureau began investigating bomb-ings, A T F has developed an expertise in making such investigations while, at the same time, working alongside State and local officials. The headquarters laboratory in Washington has built one of the world's finest libraries on explosive materials and has developed tech-niques for examining minute particles of explosion scene debris to identify the type of explosive.

In fiscal 1973 A T F arrested 282 persons for explosives violations as compared with 280 for the previous year.

The enactment of title X I , Eegulation of Explosives, for the Safe Streets Act of 1970, placed primary responsibility for control of ex-plosive materials in interstate and foreign commerce on A T F and provided, in six subsections of the statute, for joint investigative authority between the Secretary of the Treasury and the Attorney General. A working agreement between A T F and the F B I on each Bureau's responsibility under those six subsections has reduced dupli-cation of effort and helped State and local officers understand which Federal agency they should turn to for help in a given situation.

The increasing frequency of bombings led A T F to develop a na-tional incident-reporting systeni to supply intelligence to field person-nel and permit analysis of trends in this type of criminal activity.



82 19 73 REPORT OF THE SECRETARY OF THE TREASURY

"Campus" bombings declined and the bulk of A T F bomb investiga-tions during the last 6 months was in the labor field.

A T F special agents investigated several bombings where the targets were State or Federal witnesses to a crime. The most significant of these caused the death of a school teacher in Oklahoma when a bomb exploded in a pickup truck she started. The truck was usually used by her husband, who was a prosecution witness in a pending case against a well-known Oklahoma gangster. After extensive investigation, the gangster was convicted in State court for the teacher's murder and sentenced to life imprisonment. Six months later a second man was arrested for helping set the bomb. Pie was convicted on Federal charges and sentenced to 10 years in prison.

In New Mexico, two men attempted to induce an A T F undercover agent to kill a local truck driver with homemade bombs. The two men were convicted in August 1972 for unlawful possession of the bombs and received maximum 10-year prison sentences.

Many A T F investigations of bombings result in charges being filed in State court. In Carteret County, N.C., eight persons were charged under State laws in the bombing of the county high school and several other buildings. A T F special agents, working with State and local officers, spearheaded the investigation, which resulted in the conviction of the ringleader and his sentencing to 20 years in State prison.

The enactment of title X I of the Safe Streets Act of 1970, which re-quired the licensing of dealers in explosives and placed restrictions on the sale of explosive materials, has forced those who would misuse the most common of explosives—dynamite—to resort to theft to acquire a supply. In Sacramento, Calif., A T F special agents watched as three men associated with the Hell's Angels motorcycle gang burglarized an explosives storage bunker. The men, all heavily armed, were arrested by A T F special agents in a safe area after they had left the storage bunker. At the time of arrest, they had 5 tons of dynamite, 17 cases of detonating cord, and over 100 electric blasting caps.

Illicit liquor,—In fiscal 1973, A T F special agents participated in the seizure of 1,693 illicit distilleries, approximately 95 percent of these in the seven Southern States and the fringe areas of Virginia, Kentucky, Arkansas, eastern Oklahoma, and northeastern Texas. Many other distilleries were seized by State and local officers.

Distilleries seized had an average lifespan of 30 days and during that time produced 1,682,458 proof gallons of illicit liquor. This re-presents a Federal tax loss of $17.7 million, plus an accompanying loss in State taxes. Had these distilleries been allowed to go undetected, the yearly Federal tax loss would have approached a quarter of a billion dollars.

During the 1960's, A T F conducted a program called "Operation Dry-Up" in South Carolina, Georgia, and Alabama. Basically, it in-creased investigative personnel in the States and mounted an all-put public information campaign to overcome the apathy of the law-abid-ing citizen toward "moonshining," since these people made up the jur-ies which tried the moonshiner. In those three States, the legal liquor industry documented the success of the program by increased sales of taxpaid distilled spirits in direct correlation with the enforcement




effort. Over $100 million in additional revenue has accrued to the Federal Government since the inception of the program.

While there was a definite decrease in the illicit production of whiskey as compared with 15 or 20 ĵ ^ears ago, the problem still requires Federal attention. The Southern bootlegger no longer confines his illegal activities to moonshine whiskey, but has branched into counter-feiting and narcotics. On January 16, 1973, a large-scale liquor law violator in the Atlanta area who entered a plea of guilty to Federal charges of'possessing and selling nontaxpaid whiskey was sentenced to 2 years in prison to be served concurrently with a 6-year sentence for possession and sale of heroin. Another major liquor violator from the Gainesville, Ga., area received an 8-year State prison sentence on drug charges. Local officers have long found the sale of illegal whiskey to be contributory to crime in the community.

Assistance to local authorities,—ATF assistance to State and local agencies, in addition to actual joint criminal investigations, included 2-week training courses and shorter schooling on bombs and bomb investigations. Training is conducted at sites selected by the requesting agency and sometimes includes police officers from several small de-partments who have joined together for the instruction. During fiscal 1973, A T F provided training for over 45,000 police officers. Some funds for these A T F courses were provided by the Law Enforcement Assist-ance Administration.

The Bureau assists State and local officers but does not take over their investigations. Many joint investigations were prosecuted in State courts when the State laws paralleled the Federal firearms statutes. Typical of A T F assistance was an incident in Champaign, 111., where police requested help in the apprehension of a convicted felon who was the major suspect in a series of armed robberies in two of which the victims were shot. A T F special agents arrested the man on charges of possessing a firearm in violation of Federal laws and the robberies in the Champaign area stopped.

In another case in Michigan, the State police asked A T F help in an ° investigation relating to stolen property, including firearms. An A T F

agent in an undercover role bought six guns from the suspect. The joint investigation resulted in the officers obtaining State search warrants for several locations in the Detroit area and recovering stolen property estimated at $300,000 in value.

In Salon, Ohio, local police officers asked A T F for assistance in the investigation of a bombing that occurred on a golf course. Three in-dividuals arrested for the bombing admitted committing 30 burglaries, with stolen nierchandise valued at approximately $250,000. They also admitted having committed three arson violations.

Other enforcement activities.—Nineteen A T F special agents were attached to organized crime strike forces established by the Depart-ment of Justice in 17 major cities. The Department of Justice selected A T F to coordinate the intelligence on organized crime gathered by all Federal agencies participating in the strike force program. A group of experienced A T F agents provided much of the in-house instruction and training necessary for this coordination.

A T F strike force agents also investigated the activities of mobsters, racketeers, and underworld hirelings for violations ofthe Federal laws



84 19 73 REPORT OF THE' SECRETARY OF THE TREASURY

relating to firearms, liquor, and explosives. Since the inception of the strike force program, the Bureau has developed cases which led to the indictment of 398 members of organized crime.

One such case saw A T F assisting the Cook Countyj 111., State's attorney's office in an investigation resulting in murder indictments against three organized crime figures. One of those indicted ranks high in Chicago organized crime lists, and a firearm seized from his home on Federal gun charges is to be used as evidence.

In another case, when the reputed boss of the Eochester, N.Y., organized crime syndicate traveled to Arizona, A T F gathered evidence for a Federal indictment for unlawful interstate transportation of firearms. Also, in Newark, N.J., an A T F special agent, acting in an undercover capacity, bought guns from a man who was a known fence for firearms and ammunition being hijacked by a New York organized crime family. Agents arrested him and seized 60 guns, in-cluding automatic weapons.

In fiscal 1973, A T F participated in the Federal drive against drug abuse by assigning 41 agents in 33 cities to full-time duty with the DALE project under the directioii of the Department of Justice.

Within its own jurisdiction, A T F applied its knowledge of the close correlation between firearms and narcotics violations to a pilot project to combat drug traffickers in Miami, Fla. Working closely with the Bureau of Narcotics and Dangerous Drugs, the IJ.S. Customs Service, DALE officials, the Intelligence Division of the Intemal Eevenue Service, and local officials, A T F placed several agents in undercover roles. Equipped with a target list of over a hundred per-sons known to be involved in the narcotics traffic, they sought to link those persons with gun violations. Eesults were excellent. Not only were violations of ATF-controlled laws uncovered, but intelligence on straight narcotics activity was gathered and forwarded to the appro-priate agency.

In addition, over 100 A T F special agents assisted the Secret Service in maintaining security at each of the national political conventions this past year and in protecting Government dignitaries and visiting foreign officials at the United Nations.

Regulatory enforcement

In fiscal 1973, the Bureau collected $71^ billion from commodit}^ taxes on distilled spirits, beer, wine, and tobacco products at a cost of approximately $17.6 million, or only $2.32 for each $1,000 collected. Over 1.1 billion tax gallons of spirits with a potential tax revenue of $11.6 billion were stored in bonded warehouses at the close of fiscal 1973.

Eegulatory enforcement consists of two basic programs—revenue protection and consumer protection—which occupy over 900 inspectors in the field. These inspectors spent 71 percent of their time on revenue protection, through revenue audits and compliance inspections, and 29 percent on consumer protection, ensuring that products were prop-erly labeled and represented and that fair trade practices were employed.

At latest count, there were over one-half million establishments (permittee or licensed premises) in the United States under Bureau




regulation. Of this number, about 405,000 are engaged in the produc-tion, distribution, storage, or use of alcohol, wine, and beer. The re-mainder are in the tobacco, firearms, and explosives industries. Eegula-tion of the latter two is being shifted to the Office of Eegulatory Enforcement as soon as resources permit.

Trade practice enforcement,—Congress, in passing the Federal Al-cohol Administration Act of 1935, stated that its purpose was to curtail the corruption which existed in the liquor industry under prohibition. But even after the repeal of prohibition, the criminal element con-tinued to engage in the illicit production and distribution of alcohol. Therefore, Bureau inspectors subject each individual desiring to enter the liquor industry, from the producer down through the wholesaler, to an intensive background investigation, and thoroughly investigate each application for a permit to do business in the liquor industry.

A report on organized crime filed by the President's Commission on Law Enforcement and Administration of Justice stated that "law enforcement is not the only weapon that governments have to control organized crime. Eegulatory activity can have a great effect." The report also said, "Governinent at various levels has not explored the regulatory devices available to thwart the activities of criminal groups, especially in the area of infiltration of legitimate business. These tech-niques are especially valuable because they require a less rigid stand-ard of proof of violation than the guilt-beyond-a-reasonable-doubt re-quirement of criminal law." The Bureau used this approach in its strike force activity during fiscal 1973 in Baltimore, New Orleans, Chicago, Pittsburgh, and Atlantic City, where retail liquor outlets with sus-pected organized crime ownership were inspected by teams of Bureau inspectors and special agents. Hidden ownership of the premises by (U'ganized crime figures was uncovered in many instances and appro-priate action under Federal or local statutes was taken.

A T F increased its attention to unfair trade practices from about 5 man-years to 20 man-years during 1973. In a case in an eastern State where 12 firms were found in violation, offers in compromise totaling $365,000 were submitted by these firms in lieu of criminal and civil action.

Consumer protection,—This program ranged from checking a for-mula on a new perfume or the label on a new product to ensuring that a fiftii of whiskey, when filled, contained a full fifth. I t also included a check of the actual beverage being sold in a bar, because it is not un-common to .find a retail outlet engaged in a "refill violation," substitut-ing a cheap whiskey for a more expensive brand.

To guard against consumer deception, every label for an alcoholic beverage, including imported beverages, must have A T F approval. A T F had pending several cases of varietal wine mislabeling wherein the bottled wine was not that stated on the label. Because of increased demands by consuniers to know the ingredients of the products they use, ATF , at the end of the fiscal year, was drafting proposed regula-tions requiring all labels of alcoholic beverages to show a complete list-ing of components.

In fiscal 1973, distributors of malt liquors engaged in an advertising campaign touting the alcoholic strength of malt liquor. The law pro-hibits implications of alcoholic strength in malt liquor advertising




since it is held under the statute to be a drink of moderation and not to be sold on the basis of alcoholic content. A T F required such adver-tising to be reinoved from the niarket.

Each doniestic formula for wine and beer is compared by A T F with Food and Drug Adniinistration requirements to ensure there are no ingredients which might be harmful. Last year, after A T F inspectors found traces of asbestos in an alcoholic beverage being distributed in the Midwest, the Bureau required that every bottle be recalled and taken off the market.

A T F officers also frequently inspected bars and retail outlets for un-fair competitive practices to ensure that the consumer was given a full choice of products.

Environmental protection.—^Under the Federal Water Pollution Control Act, the Bureau must ensure that each of its regulated indus-tries which, in its production processes, discharges waste into navigable waters has a certificate of compliance issued by the proper State au-thorities before A T F issues or renews a license or permit. Under the National Environmental Policy Act of 1969, the Bureau must also give appropriate consideration to all environmental aspects of any proposed action or decision.

Tobacco products,—Taxes paid on tobacco products, amounting to $2,207,273 during' fiscal 1973, came from the industry through a self-assessment system, with periodic on-premises checks by A T F inspectoi'S.

The classification for tax purposes of "little cigars" provoked con-siderable public controversy during the year. A T F continued to tax some of these as cigars, but warned manufacturers to conform pack-aging and marketing of the product, as well as its advertising, to stand-ards consistent with that tax category. Liaison in this matter was main-tained with the Department of Justice, Federal Trade Commission, and Federal Communications Commission because of their interrelated statutory responsibilities.

Technical and scientific services

ScientifiG services.—Bureau laboratories provided support to the Bureau's activities as well as those of State and local law enforcement agencies.

A T F laboratory personnel pioneered the use of neutron activation analysis in law enforcement work. The first acceptance of the technique in Federal court was in New York City where it was used to prove that a truckload of moonshine whiskey seized in New York had origi-nated on the farm of a bootlegger in Georgia. Neutron activation anal-ysis today is the most sensitive and specific method known for detecting gunshot residue and this, too, is a technique developed in the A T F lab, which processed 1,200 cases of this type in 1973 for local law enforce-ment agencies. Laboratories are located at headquarters, Philadelphia, Atlanta, and Cincinnati.

The A T F laboratory also performed over 1,000 bomb debris exami-nations during the year.

A complete A T F ink library of approximately 2,500 domestic and European ink standards helped identify inks on questioned docunients involved in investigations conducted by A T F and other Federal agen-cies, including I E S , the Securities and Exchange Commission, and the Department of Justice. A large percentage of the approximately 150




analyses involved tax fraud and organized crime drive cases. The International Association of Identification, one of the world's largest professional forensic organizations, presented its Dondaro Award to an A T F forensic chemist for his outstanding contribution to the field of ink identification.

A T F firearms and toolmark examiners completed over 250 cases coming from all over the country. One A T F examiner testified in California State court in the Juan Corona case, identifying tire tracks at the gravesite as the same type tire as was on Corona's vehicle. This same examiner also testified for the State of California as an expert witness in the mass murder case involving members of the Charles Manson family.

A T F laboratories also offered a wide range of document examina-tion services, such as handwriting and typewriting identification, watermark examination, and deciphering of obliterated writing. Dur-ing 1973 A T F examined over 10,000 documents. One A T F expert testi-fied that the list of victims written in a ledger book found in Juan Corona's belongings was in the handwriting of Corona.

Alcoholic beverages were checked for fill of containers, additives, and harmful ingredients, such as lead in canned cocktails, asbestos fibers, and antifermentation chemicals in wines. Imported wines were examined to ensure that overcarbonated wines were taxed at the champagne rate. Coloring in alcoholic beverages was analyzed for conformity to Food and Drug Administration standards, and contents of alcoholic beverages, including artificial flavoring, for conformity with labels.

A T F also ensured that denatured alcohol articles (toilet prepara-tions and industrial alcoholic products) were properly labeled as to place of origin (French perfumes) and contained sufficient addi-tional ingredients to prevent recovery of beverage alcohol.

Tobacco was tested to assist in distinguishing between cigars and cigarettes for tax purposes and to protect consumers. Lubricants, filled cheeses, and other articles subject to tax were examined for tax classification.

In addition to the above programs, A T F laboratories were active in fingerprint examination and photography and are developing a voice-print identification capability.

The laboratories also assisted regulatory enforcement activities in protecting the revenue, the consumer, and the environment through sample analysis and technical advice.

Total regulatory enforcement samples received for analysis in fiscal 1973 exceeded 16,000. The headquarters laboratory received more than 4,850 formulas for nonbeverage drawback products (internal medic-inal products, fiavors, and alcoholic foods); 4,195 formulas for spe-cially denatured alcohol products (toiletries, etc.); and 7,893 labels for toilet preparations.

A D P functions,—^The Bureau utilized little automated data process-ing. Functions which could be computerized, such as licensing, permit-ting, criminal case recordkeeping, criminal intelligence, firearms trac-ing, and personnel recordkeeping, were performed manually in the seven regions and at headquarters. However, the Bureau readied a 5-year plan for installing a national A T F computer center to handle these functions.



88 1973 REPORT OF THE- SECRETARY OF THE TREASURY

Technical services,—^Under the Mutual Security Act of 1954, A T F registered importers and controlled importations of all implements of war, ranging from battleships to nerve gas. The Bureau also acted on applications to import fireairms and ammunition under the Gun Con-trol Act of 1968. Since 1968, over 95,000 import permits covering 4 mil-lion firearms have been approved, with disapproval of approximately 4,000 applications covering 640,000 firearms valued in excess of $9 million.

A T F also examined a wide range of professional and industrial devices utilizing explosives and/or projectiles, such as rivet guns used in construction and tranquilizer hypodermic guns used in veterinary work, for classification as firearms under the 1968 act.

A firearms reference collection of over 1,600 different models of firearms was used by the Bureau and other Federal agencies for re-search purposes. For example, the Federal Aviation Administration utilized this collection for testing proposed metal-detection devices in its antiskyjacking program.

A T F exercised control over the manufacture and transfer between owners of all firearms defined by the National Firearms Act, including sawed-off shotguns, machine guns, short-barreled rifles, bombs, and grenades, maintaining a national firearms registration and transfer record of all such weapons.

The Bureau also maintained "The Explosives List," published an-nually and used principally by the chemical and explosives industries. A T F provided scientific and technical information rdat ing to safety to Government agencies engaged in the transportation and use of ex-plosives. Eesearch and development in the explosives industry was monitored and evaluated to help industry comply with the laws with-out retarding technological progress. A T F personnel performed prac-tical demonstrations and conducted seminars on explosives through-out the United States for local law enforcement agencies.

Bureau support services

Steady progress was made in 1973 in establishing self-supporting administrative operations covering personnel, procurement, budget-ing, accounting, training, and related functions.

In addition, an Office of Inspection was created to assist in main-taining the integrity of the Bureau and in evaluating the Bureau's enforcement and regulatory programs.

OFFICE OF THE COMPTROLLER OF THE CURRENCY

The Comptroller of the Currency, as the Administrator of the National Banking System, is charged with the responsibility of main-taining the public's confidence in the Systeni by sustaining the banks' solvency and liquidity. An equally important public objective is to




Treasury Historical Association

The first meeting of the Board of Directors and of the membership of the newly established Treasury Historical Association was held on March 8,1974. The Board elected Mr. Edward C Schmults, Chairman; Mr. Robert R. Fredlund, President; and Mr. John Verkouteren, Treas-urer. Mr. Sid Sanders was designated Executive Secretary. The Board has adopted the Articles of Incorporation and the By-Laws. Former Secretary Shultz has expressed his support toward this new association.

BUREAU OF ALCOHOL, TOBACCO AND FIREARMS

The Bureau of Alcohol, Tobacco and Firearms (ATF) is charged with regulating four industries—alcohol, tobacco, firearms, and ex-plosives. The Bureau is staffed with 1,600 law enforcement officers who enforce criminal laws relating to those industries, and 800 inspectors, who are regulatory officers.

To accomplish its mission, A T F has 3,700 employees. The primary-task of A T F law enforcement officers is in the enforcement of Federal gun control laws, particularly in attempting to keep guns from crim-inals and would-be criminals.

Traditionally, the Bureau's primary goal was to eliminate the man-ufacture and sale of illicit liquor, which defrauds the Federal revenue of potential taxes.

During the 1930'S) as a result of the misuse of certain types of fire-arms by the criminal element. Congress passed the National Firearms Act and designated enforcement responsibility to the Internal Revenue Service, Alcohol Tax Unit, the forerunner of the Bureau. Thus, when the Federal Firearms Act, which regulated the interstate commerce in firearms, was passed in 1942, enforcement responsibility was given A T F .

In the 1960's, the assassination of a President, a Senator, and a prom-inent civil rights leader prompted Congress to pass the Gun Control Act of 1968, which encompassed the National Firearms Act and the Federal Firearms Act and added many controls not contained in the previous statutes. Since then, the primary efforts of A T F have been directed at controlling the flow of firearms to keep them out of the hands of criminals.

A more recent mission originated with the passage of title X I of the Organized Crime Control Act of 1970, which regulates explosives. Regulatory and enforcement jurisdiction of explosives also were awarded to A T F .

During fiscal 1974, the Bureau collected $7.5 billion in excise taxes on alcohol and tobacco products. These taxes are the second largest source of revenue to the United States, following personal and corpo-




rate income taxes. This tax administration is the major function of the Office of Regulatory Enforcement.

Criminal enforcement

The Office of Criminal Enforcement intensified its efforts to prevent the flow of firearms and explosives into the hands of criminals by im-plementing several new programs designed to cut off their sources of supply during fiscal 1974. These included a truck theft reporting pro-gram and a program of firearms tracing in selected cities.

In addition, the fight against the manufacture and distribution of illicit whiskey Avas continued, as was the program of providing assist-ance to State and local law enforcement agencies in their fight against crime. A T F activities covered a broad spectrum during the fiscal year. A T F solved bombing cases, broke up criminal gun rings, further de-feated illicit liquor manufacturers, bottled up sources of firearms des-tined for Northern Ireland, and broke up gangs of motorcycle-riding felons.

A T F established liaison with several foreign governments and reached agreement with Mexico in firearms matters.

Special agents completed 5,550 prosecutive criminal cases of all types ranging from bombings to felons in possession of firearms; ar-rested 4,995 persons; seized 4,414 firearms, 4,415 pounds of explosives, and 38,756 gallons of illicit whiskey; and assisted other agencies.

Explosives program,—The Bureau's efforts primarily are directed toward preventing the acquisition and misuse of explosives by the criminal element. Most of the criminal investigations under this pro-gram have been of actual or attempted bombings, and investigations of explosives thefts.

In December 1973, A T F and Virginia State Police investigated a bombing in which the Commonwealth Attomey, Montgomery County, Va., was mutilated. A convicted murderer released from prison 5 days before the bombing was arrested.

In October 1973, special agents in Toledo, Ohio, working with local officers, arrested three persons for the theft of 966 pounds of explosives from a storage magazine and recovered almost all of the explosives. The arrested thieves intended to trade the explosives for dinigs.

Illicit fireworks plants.—It became apparent in 1972 that the manu-facture and distribution of illicit fireworks was becoming a serious national problem. A T F estimates that it is a multimillion-dollar an-nual business which places ille2:al and unsafe fireworks in the hands of the public and defrauds the U.S. Goyernment of taxes through un-reported income.

In December of 1973, a nationwide program was begun to coordinate information in headquarters concerning trafficking in and the manu-facture of illicit fireworks in the United States. Through the explosives laws, A T F exercises control over most fireworks industry activities.

Agents have found that the methods of operation of fireworks viola-tors are much like those of illicit whiskey manufacturers and distribu-

. tors. The investigations of these violations have much similarity to the investigation of bootleggers. Information obtained from informers and from special agents who have worked on this type of violation indicates that most of the plants are established through a conspiracy of persons




who bankroll the operations as well as assist in establishing factories and supplying raw materials and the required expertise.

While the illicit fireworks business is spread throughout the Nation, most of it is centered in the Midwest. One of ATF's more notable cases occurred in Huntley, 111., when the owner of a fireworks com-pany was charged with unlicensed manufacturing of explosives and with storage violations. In a second case, an illicit plant was seized in an abandoned farmhouse near Richland, Mo. More than 400,000 M-80 casings were seized.

Firearms program..,—Criminal enforcement of the Gun Control Act of 1968 is directed at keeping firearms out of the hands of criminals, fl.nd providing assistance to Federal, State, and local governments in their fight against crime and violence, two of the stated purposes of the act.

During fiscal 1974, special agents continued to make application and compliance investigations of licensees to assure that business was being conducted in accordance with law and regulations, and that record-keeping by licensees was meaningful and useful. More than 30,000 of these inspections were made. These activities are necessary to prevent criminals from obtaining firearms from licensees, and to permit the successful tracing of firearms.

Project I was launched July 1,1973, to determine crime gun sources, flow patterns of crime guns nationwide, types of handguns involved in crime, and to provide investigative leads to those firearms dealers and criminals unlawfully obtaining, selling, and using firearms. The project was initiated in New York, Detroit, Atlanta, and New Orleans. For a 6-month period, all handguns found at crimes by the police de-partments in these cities were traced by A T F , resulting in more than 60 Federal cases being recommended for prosecution.

The tracing of 4,537 guns in the initial phase of this project revealed that 70 percent of the handguns used in crimes in these four major east-ern cities were low caliber, inexpensive, small handguns, the so-called "Saturday Night Specials."

In February 1974, the project was extended to Oakland, Kansas City, Denver, and Dallas. In fiscal 1975, the project will encompass Philadelphia, Minneapolis-St. Paul, Seattle, and Dade County, Fla.

Under the interstate firearms theft reporting program, common carriers are requested to report all thefts and losses of firearms ship-ments to A T F . The program began on a nationwide basis Septem-ber 1,1973, and is intended to eliminate firearms shipments as another source of firearms for criminals. During fiscal 1974, 820 theft or loss reports involving approximately 7,600 firearms were made to the Bureau. A T F , working alone or in conjunction with other agencies, recovered 900 of these. More than 500 firearms were found to have been lost and subsequently were located by the carrier. A T F prepared 15 criminal cases involving 26 defendants. Seventeen defendants were employed by the carrier.

In addition to the concerted effort to trace firearms under Project I, the Bureau continued its task of tracing firearms used in crimes through the A T F National Firearms Tracing Center. The traces are performed by personnel in the Technical Services Division and by field special agents generally at the request of local police. More




than 17,000 traces were completed successfully during the fiscal year, with requests for traces up 160 percent from the previous fiscal year. Many traces are instrumental in the solution of serious crimes, such as murder, robbery, and burglary.

The recurring illegal exportation of firearms, ammunition, and explosives from the United States to Mexico has created serious prob-lems for both Governments. A T F has attempted to cut off this flow since 1970. The approach has been to identify, prosecute, and revoke licenses of those firearms dealers involved in gunrunning on the Mex-ican border.

At an international traffic-in-arms conference held in Mexico City in March 1974, Customs and A T F personnel and the Attomey Gen-eral of Mexico reached an ao^reement to share intelligence to curtail this illegal exportation. Intelligence sources have indicated that many of the exported weapons are exchanged for narcotics, which then are smuggled into the United States. A T F is closely associated with the Customs Service in these investigations. A 3-month investigation late in 1973 resulted in the arrest of a Nicaraguan national and seizure of 66 M-1 carbines at the international border near San Ysidro, Calif., and Tijuana, Mexico. The subject and five other Nicaraguans were at-tempting to move the firearms to Nicaragua.

The disorder in Northern Ireland has caused British authorities to request A T F assistance in attempting to stop the shipment of firearms from the United States to Northern Ireland. Besides tracing many firearms seized by British authorities, A T F agents have successfully completed several criminal investigations resulting in prosecution of Irish Republican Army sympathizers. In one case, six I R A suppliers were arrested by A T F special agents for illegally transporting 70 Colt AR-15 semiautomatic rifles from Maryland to New York. These per-sons were indicted on April 2, 1974, on 23 counts charging various violations of the Gun Control Act. In May 1974, the defendants were convicted for conspiring to illegally purchase and ship 158 AR-15 rifles to the IRA.

A T F is involved in similar projects in Jamaica and Haiti, having been requested to furnish assistance in stopping the export of firearms to those countries. A T F representatives attended a conference in Jamaica in April 1974 with the U.S. Customs Service and the Drug Enforcement Administration. Plans were made to include Jamaica in Project I. Between April and June 1974, the first trace requests were received from the Jamaican police.

Illicit liquor program,—During fiscal 1974, a total of 95,401 man-days were devoted to illicit liquor enforcement, resulting in the seizure of 1,254 illicit distilleries, 673,756 gallons of mash, and'38,756 gallons of illicit liquor. These investigations resulted in 1,599 arrests. These enforcement actions averted a tax fraud against the Federal Gov-emment of $7.5 million.

Despite a gradual decline in illicit liquor traffic, A T F agents have found the modem bootlegger to be sophisticated and engaged in interstate conspiracies involving long-distance distribution.

Legal liquor enforcement progra.m,—lsi

ADMINISTRATIVE REPORTSi 9 3

Office of Criminal Enforcement joins Regulatory Enforcement in a joint investigation. Such an investigation of liquor wholesalers in Maryland, completed in late 1973, revealed that during a 2-year pe-riod, 13 major wholesalers in Maryland disposed of approximately 51,500 gallons of liquor without records of disposition.

State assistance,—^ATF agents have close relationships with State and local law enforcement officers. A T F traced guns for 2,000 State £ind local law enforcement agencies in fiscal 1974. There are more requests for assistance in explosives investigations as they become more aware of A T F expertise and availability. Many cases are worked by A T F alone or side-by-side with local officers.

A T F provides training to local police departments in various phases of law enforcement and in A T F functions and availability. Financial assistance is provided by the Law Enforcement Assistance Adminis-tration.

When information is revealed during an investigation concerning another crime under the jurisdiction of another agency, special agents make referrals to that agency. During fiscal 1974, A T F made 9,669 such referrals.

Tjrpical of A T F assistance to other law enforcement agencies is a case in Tennessee. A T F , which was involved in an undercover investi-jS^ation, learned that a large number of stolen gambling machines were available for sale. Working with two city police departments and the F B I , A T F arranged the purchase of 50 of the stolen machines and used an A T F aircraft to locate the storage place of 100 more stolen gambling machines and other stolen property, which was seized by the F B I , accompanied by A T F special agents.

In Dallas, Tex., A T F undercover agents purchased a quantity of jSrearms from a convicted felon and were asked by him to join in an armed robbery of the residence of a Dallas auto dealer, who kept a $100,000 coin collection at his residence. On the day of the attempt, four persons were arrested by A T F agents and Dallas police officers waiting at the auto dealer's home.

In a referral, special agents discovered during a firearms investiga-t̂ ion that the subject of the investigation was wanted for the attempted murder of a police officer. His current address was furnished to the local police, and he was apprehended and charged.

Other enforcement activities,—^Several major objectives were reached in fiscal 1974 in the Bureau's anti-organized-crime efforts. Representatives continued to be assigned to strike forces in 17 metro-politan areas although supervision was decentralized. Strike force representatives were assigned to the Southeast and Southwest Regions to insure coordination of organized criminal activities in those regions. Field personnel have accelerated referrals of intelligence relating to significant organized criminals to the Department of Justice cen-tiiralized intelligence network.

A T F published its-definition of organized crime as : "Any large con-tinuous criminal activity which has significant impact upon a com-munity, region or an area of our country." This definition has enabled t;he Bureau to target significant groups of violators of laws enforced by A T F .

The Bureau's enforcement efforts directed a t the possession and mis-




use of firearms and explosives by outlaw motorcycle gangs are centered in Operation OMEGA. This program began in February 1973, vrith the intent- that A T F field offices would apprehend and prosecute indi-vidual members of outlaw motorcycle gangs violating ATF-enforced laws. In fiscal 1974, all available criminal intelligence on outlaw gangs was collected and transmitted to headquarters for evaluation and appropriate dissemination to field offices and other concerned agencies.

During fiscal 1974, more than 400 outlaw motorcycle gangs with a total membership of approximately 4,500 persons were identified. Numerous arrests of officers and gang members were made, including identifiable organized crime subjects having illicit business affiliations with gang members. Extensive intelligence collected on the high incidence of narcotic trafficking by OMEGA targets was referred to the Drug Enforcement Administration.

In May 1974, A T F seized 64 firearms in Dayton, Ohio, from the owner of a motorcycle parts business who deals with outlaw motor-cycle gangs. This person previously was convicted of firearms viola-tions that involved the seizure of more than 300 firearms by ATF .

In a Massachusetts case, a member of an outlaw motorcycle gang purchased 12 shotguns and rifles with ammunition, making false state-ments to a licensed dealer when he did so. In May 1974, A T F agents arrested this person and seized the 12 firearms and the ammunition at his residence.

Treasury enforcement communications system {TECS),—In December 1972, the Bureau joined other Treasury enforcement agencies to form TECS, a nationwide communications network linking all Treasury enforcement terminals. The system contains a data base A T F utilizes as a central summary index, referring queries to all available intelligence files related to any subject.

By October 1973, A T F established a data base of sufficient size to support its field offices. A T F entered 28^218 records into TECS during the fiscal year which included: All persons and corporations granted or denied relief from Federal disabilities regarding firearms and explosives, major traveling criminals, gun-tracing information, sig-nificant and sensitive investigations, an authentication-locator file for all A T F employees, and location data on all explosives incidents in the United States.

A T F had made 117,153 queries of the TECS data base by the end of the fiscal year. In fiscal 1975, all Federal Alcohol Administration Act permittees, National Firearms Act special occupational tax stamp holders and firearms registrants, and Mutual Security Act registrants will 'be entered. The T E C S system contains appropriate access controls to prevent any unauthorized disclosure.

Programs planned for fiscal 1975,—K new Bureau program, the significant criminal program, will be implemented in fiscal 1975. This comprehensive and selective enforcement program will establish cri-teria for identification of firearm and explosives Violators who present the greatest immediate threat to society on a local and district basis. Once these major criminals are directly identified, A T F will concen-trate its efforts toward their apprehension and will assist State and local agencies toward the same goal.

The changing priorities of A T F law enforcement, due to the re-




sponsibilities designated in the Gun Control Act of 1968, the Omnibus Crime Control and Safe Streets Act of 1968, and the Organized Crime Control Act of 1970, have dictated a change in investigative techniques.

In the past, undercover activity, an integral part of the majority of A T F investigations, has been handled locally. A new tactical support program will be instituted to identify, select, and train special agents who have a capability and desire for undercover work. These men will then be assigned to assist other field agents when a highly trained undercover agent is needed.

Regulatory enforcement Through the Office of Regulatory Enforcement, the Bureau collected

more than $7.5 billion in taxes on distilled spirits, beer, wine, and tobacco products during fiscal 1974. Regulatory Enforcement took the lead in major Bureau projects dealing with metrication of wine and distilled spirits containers, changes in supervision of distilled spirits plants, and ingredient labeling for alcoholic beverages. These projects, together with the assumption of firearms and explosives in-spections formerly conducted by Criminal Enforcement, and changes in regulatory requirements for distilled spirits plants records and reports, have added new dimensions in public accountability and efficiency.

Revenue protection,—In fiscal 1974 the Bureau undertook a study of the laws and regulations governing the legal liquor industry. The purpose was to find a way of eliminating requirements for the Federal Government to maintain joint custody with the distilled spirits plant proprietor of untaxpaid spirits stored in bonded premises. Complete elimination of the joint custody concept will require changes in the law, and the Bureau has developed proposals for Government super-vision by regulation, leaving such regulation to the discretion of the Bureau. However, the Bureau can, under the present law, make certain changes that would soften the joint custody concept and allow savings to the Bureau of 27 man-years in supervision duties at plants.

During fiscal 1974, the Bureau fully implemented a records and reports simplification program dealing with production and ware-housing of distilled spirits. The Bureau plans to implement a similar simplification program for distilled spirits plants records and reports dealing with taxpaid bottling and statistics in fiscal 1975.

The Bureau approved alternate denaturants because of energy crisis-related shortages of petrochemicals needed for industrial alcohol production and denaturation. In addition, the Bureau approved the recovery of denatured alcohol by other than original users. As a result pf these measures and numerous spot approvals of other methods of operations, the projected negative effects of the energy crisis were softened, and many domestic industries dependent on industrial alcohol have continued to operate.

Trade practice enforcement,—The Bureau made a concentrated effort in training inspectors in detection of unfair trade practice violations and development of cases. A T F accepted a total of $477,500 in offers in compromise for trade practice violations of the Federal Alcohol Administration Act in lieu of taking criminal or civil actions. In some instances, operating permits were suspended.

553-554 O - 74 - 9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis



Consumer prote€tion,^Bec2iUse of consumer interest and with the cooperation of the Food and Drug Administration, the Bureau plans to issue in fiscal 1975 regulations to require that ingredients used in the production of alcoholic ^beverages appear on the labels.

Although the alcoholic beverage industry generally seeks to keep its advertising profile low key and reserved, some industry members believe they should be allowed to advertise in the same manner as soaps, soft drinks, automobiles, and other consumer products. In the active and often controversial area of advertising, the Bureau has noted during fiscal 1974 more money that is being spent on advertising cam-paigns directed at young adults and college students, particularly in the advertising of wines, pop wines, and malt beverages. The Bureau stops or tones down campaigns which use themes relating to sex, sensualism, drugs, and themes subject to ribald humor. In fiscal 1974, the Bureau accepted a total of $14,500 in offers in compromise for unfair advertising violations of the Federal Alcohol Administration Act, in lieu of taking criminal or civil actions.

A T F specialists processed approximately 900 formula applications for rectified beverage products and 300 formula applications for wine products. The formulas are reviewed for completeness and compliance with regulations promulgated under the Internal Revenue Code (26 C F R ) , the Federal Alcohol Administration Act (27 C F R ) , and the Federal Food, Drug and Cosmetic Act (21 C F R ) . The Bureau was particularly interested in formula submissions for the production at distilled spirits plants of wine-based alcoholic 'beverages containing less than 7 percent alcohol by volume with added water and flavorings, which may generate a new product classification.

More than 65,000 alcoholic beverage labels for distilled spirits, recti-fied distilled spirits, wines, wine products, beer, and other malt bever-ages were received and processed in fiscal 1974. The Bureau formu-lated a written record of administrative policies and definitions for appellations of origin, varietal designations, estate and chateau bot-tling, and in viticultural areas for wines.

In April 1973, representatives of the alcohol beverage industries conferred with A T F about the possibility of adopting metric sizes for containers. The consensus was that U.S. industry should adopt inter-national sizes rather than metrication of our present sizes, and that such conversion would benefit international trade.

A public hearing on proposed regulations to require metric sizes for wine and to establish standard case sizes was held on June 11, 1974. The Bureau plans to publish final regulations and implement the wine metrication proposals during fiscal 1975. I t also plans to conduct a public hearing on distilled spirits metrication proposals, and to imple-ment the proposals in the latter part of fiscal 1975.

Environmental protection,—Because the Bureau is responsible for participation in enforcement of environmental legislation with the Environmental Protection Agency and the Council on Environmental Quality, it developed a handbook for Bureau personnel to be followed in carrying out ATF's responsibilities under the National Environ-mental Policy Act of 1969 and the Federal Water Pollution Control Act, as amended.

Firearms and explosives,—Prior to fiscal 1974, the firearms and ex-plosives inspection programs were principally the responsibility of




Criminal Enforcement. When this program is fully implemented in fiscal 1976, Regulatory Enforcement will be required to complete ap-proximately 31,000 application inspections and an estimated 51,000 inspections yearly to verify compliance with the law and regulations dealing with firearms and explosives.

Data processing,—There are approximately 169,000 firearms licens-ees and 5,000 explosives licensees and permittees. During fiscal 1975, the Bureau plans to develop A D P programs to be used in conjunction with firearms licensee and explosives permittee registers. A significant benefit of such programs would be the production of licensee and permittee mailing tapes from the data bank of the A T F computer.

Tobacco products,—The little cigar-cigarette situation was resolved by A T F which issued a ruling to update criteria for determining whether a tobacco product is a cigar or cigarette for tax purposes. This ruling also clarified marking requirements for packaging material for small cigars, and provided for examination of marketing material and advertising to assure the product is clearly presented to the consumer as a cigar and not as a cigarette.

Technical and scientific services A D P services,—The I R S Data Center in Detroit continued to sup-

port A T F in preparing A T F paychecks and maintaining a property inventory control through the property accountability and recording system. The Data Center brought to operational capability the manage-ment information system for criminal enforcement cases.

The IRS service centers continued to provide address tapes for all firearms dealers licensed by A T F . Minor support in other areas is provided by GSA.

With the acquisition of the remote job entry (a terminal to connect to the computer center in the Office of the Secretary), A T F will begin in fiscal 1975 some of its A D P functions. Planning and systems devel-opment are designed to provide A T F an operational A D P system by fiscal 1979.

Technical services,—The Bureau is responsible for registering im-porters and controlling the importation of all implements of war under the purview of the Mutual Security Act of 1954. A T F is also responsi-ble for acting on applications to import firearms and ammunition under the Gun Control Act of 1968. During fiscal 1974, 19,383 appli-cations were approved and 534 were disapproved. The disapproved applications included 36,705 firearms valued at more than $1.5 million.

A T F maintains a firearms reference collection of more than 3,000 different models of firearms, which serves as a research and reference library for the Bureau and other Federal agencies. The collection is used to make comparison studies in preparing for court testimony; make import determination, e.g., whether or not a firearm is designed chiefly for sporting purposes; assist in the search for serial numbers of firearms and to identify brands for traces; provide instruction in firearms identification; and to make curio and relic determinations.

A T F exercises control over the importation, exportation, registra-tion by State and local govemment entities, manufacture and transfer between owners of all devices described as nonsporting weapons such as short-barreled shotguns and rifles, machineguns, bombs, and gre-nades. A T F also maintains the National Firearms Registration and




Transfer Record, which is the control file for these weapons. This registry provides the information needed to suppoit Criminal Enforce-ment activities and provide expert court testimony. A total of 2,920 certifications were prepared during the last year to be used as docu-mentary evidence in investigations of possible criminal violations involving N F A weapons.

The A T F National Firearms Tracing Center traces firearms from the manufacturer or the importer to the wholesaler to the retailer to the first retail sale. In fiscal 1973, 12,709 trace requests were received from A T F agents. State and local law enforcement agencies, and other Federal agencies. During fiscal 1974, 30,995 traces were requested of which 18,005 (58 percent) were from State or local agencies.

Support of investigations by State, local A T F and other Federal agencies is provided by the explosives tracing program. During fiscal 1974, 48 investigations for State and local agencies and 301 A T F Federal investigations were supported by explosives traces.

Criminal bombings in recent years have made the misuse of explo-sives a major national problem. Within the last 2 fiscal years, A T F agents participated in more than 1,200 explosives investigations, and the A T F laboratory analyzed evidence from more than 2,000 explo-sives cases.

At present, there is no means to trace explosives once they are removed from their original containers or from their residue after detonation. As a result, A T F initiated an explosives tagging program. This is an 18-month development program which will be fully im-plemented as funds become available. A T F is coordinator of all U.S. efforts in this program and is providing administrative support. Eight foreign countries have expressed interest in participating in the pro-gram once the technique has been developed.

A T F provides the public with a variety of technical pamphlets and publications relating to alcohol, tobacco, firearms, and explosives. In-formation contained in these publications involves the public's rights or duties, industry regulations, and new interpretations and positions taken by A T F . These publications include The Explosives List, the Monthly and Cumulative A T F Bulletin, Published Ordinances Fire-arms, and Questions and Answers concerning the Gun Control Act.

Scientific services,—ATF laboratories provide technical and scien-tific support to the Bureau with the laws and regulations administered by A T F . In addition, the laboratories assist without charge any re-questing State and local law enforcement agency.

A T F Scientific Services has the Nation's most complete ink library which includes more than 3,000 domestic and European ink standards. This ink library is used to identify and date inks on questioned documents.

A T F firearm and toolmark examiners, involved actively in the Bu-reau's law enforcement efforts, annually complete about 200 cases.

A T F laboratories also offer a wide range of document examination services such as handwriting identification, typewriting identification, watermark examinations, and deciphering obliterated writing. During fiscal 1974, more than 1,100 cases, including more than 29,000 docu-ments, were processed.

A T F continued in the forefront in the development of voiceprint.




The headquarters laboratory voice identification program is presently processing about 70 cases annually.

The photography laboratory handles both still photography and sound motion picture photography. A sound motion picture of the signing of the U.S.-U.S.S.R. trade agreement was made by A T F and presented by the Secretary of the Treasury to a Russian diplomat as a gift.

A T F Laboratory personnel pioneered the use of neutron activation analysis in forensic crime work. This system was used to process 1,200 such cases in fiscal 1974 as a service for local law enforcement agencies. A new method, the technique of flameless atomic absorption analysis of gunshot residue, was initiated in fiscal 1974. This method increased the speed of analysis fourfold over neutron activation.

In January 1974, the A T F headquarters laboratory began a program of serological testing to augment its present trace evidence analysis capabilities. From a caseload of 10 cases per month, requests for exami-nations are expected to reach several hundred per year by fiscal 1976.

For fermented beverages (wines and beers), A T F Laboratory per-sonnel check the fill of containers, proof, additives, and presence of harmful ingredients such as lead in canned alcoholic cocktails. Im-ported wines are examined to assure that overcarbonated wines are taxed at the champagne rate. A check is made to determine that colors used in alcoholic beverages are those authorized by the Food and Drug Administration, that products containing artificial flavors are so labeled, and that alcoholic beverages are properly labeled as to content.

A T F is responsible for regulating denatured alcohol articles (toilet preparations and industrial alcoholic products). A T F assures that a product is properly labeled to indicate its point of origin, and that articles containing alcohol contain sufficient ingredients to protect them from recovery as beverage alcohol.

Tobacco is examined for tax purposes to distinguish between cigars and cigarettes, and to protect consumers by proper labeling. Lubri-cants, filled cheeses, and other miscellaneous articles are examined for . tax classification for IRS.

OflSce of Inspection

Once A T F became a Bureau in July 1972, the Bureau established its own Office of Inspection which became fully operational during fiscal 1974. The Office of Inspection is chargcjd with four significant areas of responsibility: Protecting the integrity of the Bureau, reviewing all operational activities within the Bureau, auditing the Bureau's fiscal posture, and implementing the Bureau's security program.

Integrity investigations,—The image of the Bureau charged with the enforcement of Federal alcohol, tobacco, and firearms laws must be above reproach. Thus the Office of Inspection has the responsibility to conduct investigations of all allegations or evidence of wrongdoing on the part of Bureau personnel.

The Office conducted 79 integrity investigations during fiscal 1974. Of that number, 27 were cleared of any misconduct, and 52 investiga-tions resulted in a basis for criminal prosecutive action or administra-tive disciplinary action.

Operations review,—Inspection is responsible for monitoring the



100 1974 REPORT OF ITIE SECRETARY OF THE TREASURY

operations of all Bureau programs, offices, and activities. To insure the uniform and efficient functioning of these operations, emphasis is focused on general compliance with established policies, proce-dures, and guidelines, with maximum utilization of available man-power, equipment, and fiscal resources; and the impartial enforcement and administration of existing laws and regulations. These responsi-bilities are discharged through the development and implementation of a continuing program of scheduled and unscheduled evaluations of every organizational entity within the Bureau.

To accomplish this. Inspection utilizes standard audit and analysis procedures in the review and evaluation of all Bureau programs, offioes, and activities including spot checks, random sampling, inter-views, and verification through outside sources. The basic technique is to make a comprehensive study of all facts of the operational area being reviewed, including management controls over the operation.

Twenty-three reviews were conducted during fiscal 1974 in the areas of criminal enforcement, regulatory enforcement, and admin-istration. The reviews consisted of onsite visits and interviews through-out the Nation. The findings of these reviews were used by manage-ment to assess activities and initiate corrective action wherever necessary.

Internal auditing.—Internal Audit of the Office of Inspection, as an integral part of the management control system of the Bureau, has the responsibility for determining that controls established over the operations are efficient and effective, that policies and procedures are being carried out as laid down and serve their intended pur-pose. Particular emphasis is placed on determining if expenditures are made only to further authorized activities and in accordance with applicable laws and regulations, and whether revenue and receipts arising from Bureau activities are collected in full and properly ac-counted for.

Security.—The Bureau employs 1,600 employees in the GS-1811 criminal investigator series and a lesser number of support personnel (technical and clerical) in the critical-sensitive category as defined in Executive Order 10450. This contains specific instructions regard-ing preemployment background investigations and the implementation of a security update program for onboard employees to insure that employment of any person in these categories is clearly consistent with the national security. During fiscal 1974, 326 security and secu-rity update investigations were completed.

OFFICE OF THE COMPTROLLER OF THE CURRENCY'

The National Banking Act of 1863 established the Office of the Comptroller of the Currency as the Administrator of National Banks. The Comptroller, in assuring the solvency and liquidity of

1 Additional Information Is contained In the separate Annual Report of the Comptroller of the Currency.



bureau of alcohol, tobacco and firearms - fraser...to a man who lived in emporia. kans. his mother...

Documents