WASHINGTON (AP) -- The Justice Department's internal watchdog on Wednesday faulted the agency for misguided strategies, errors in judgment and management failures during a bungled gun-trafficking probe in Arizona that disregarded public safety and resulted in hundreds of weapons turning up at crime scenes in the U.S. and Mexico.
A former head of the department's Bureau of Alcohol, Tobacco, Firearms and Explosives and a deputy assistant attorney general in Justice's criminal division in Washington left the department upon the report's release -- the first by retirement, the second by resignation.
In the 471-page report, Inspector General Michael Horowitz referred more than a dozen people for possible department disciplinary action for their roles in Operation Fast and Furious and a separate, earlier probe known as Wide Receiver, undertaken during the George W. Bush administration. A former acting deputy attorney general and the head of the criminal division were criticized for actions and omissions related to operations subsequent to and preceding Fast and Furious.
The report did not criticize Attorney General Eric Holder, but said lower-level officials should have briefed him about the investigation much earlier.
The report found no evidence that Holder was informed about the Fast and Furious operation before Jan. 31, 2011, or that the attorney general was told about the much-disputed gun-walking tactic employed by the ATF.
Gun-walking was an experimental tactic, barred under long-standing department policy. ATF agents in Arizona allowed suspected "straw purchasers," in these cases believed to be working for Mexican drug gangs, to leave Phoenix-area gun stores with weapons in order to track them and bring charges against gun-smuggling kingpins who long had eluded prosecution, but they lost track of most of the guns.
The experimental operations were a response to widespread criticisms of the agency's anti-smuggling efforts. Because of thin ATF staffing and weak penalties, the traditional strategy of arresting suspected straw buyers as soon as possible had failed to stop the flow of tens of thousands of guns to Mexico -- more than 68,000 in the past five years.
The inspector general found fault with the work of the senior ATF leadership, the ATF staff and U.S. attorney's office in Phoenix and senior officials of Justice's criminal division in Washington. He also said that poor internal information-gathering and drafting at Justice and ATF caused the department to initially misinform Congress about Fast and Furious, beginning with a Feb. 4, 2011, letter.
"The inspector general's report confirms findings by Congress' investigation of a near total disregard for public safety in Operation Fast and Furious," said Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, which has been investigating Operation Fast and Furious since early 2011. Horowitz is to testify before Issa's panel Thursday.
During the investigation President Barack Obama ordered Holder to withhold from the committee, under executive privilege, some documents describing how the department responded to the panel. The Republican-controlled House voted to hold Holder in contempt and has authorized a civil lawsuit to make the administration turn over the documents. Horowitz said he was not denied access to any of the documents.
Two of the 2,000 weapons thought to have been acquired by illicit buyers in the Fast and Furious investigation were recovered at the scene of a shootout that claimed the life of U.S. border agent Brian Terry. About 1,400 of the total have yet to be recovered.
Holder noted in a statement that the report confirmed his assertions that the flawed strategies were driven by field agents without his knowledge or approval and that department did not set out to misinform Congress.
He said the report's disciplinary recommendations are being pursued and "we now have two men in custody and we will continue to aggressively pursue the remaining fugitives to ensure justice for Agent Terry, his family and his fellow law enforcement agents."
Fast and Furious has produced charges against 20 gun traffickers, 14 of whom have pleaded guilty so far.
One of those criticized in the report, former ATF acting director Kenneth Melson, who headed that agency during the Fast and Furious investigation, retired upon release of the report.
"Melson made too many assumptions about the case," the report stated. "Melson should have asked basic questions about the investigation, including how public safety was being protected."
Melson responded in a written statement: "While I firmly disagree with many of the speculative assumptions, conclusions and characterizations in the inspector general's report, as the acting director of the agency I was ultimately responsible for the actions of each employee."
Another of those criticized, Justice Department career attorney Jason Weinstein, resigned. Weinstein was a deputy assistant attorney general in Justice's criminal division in Washington.
"Weinstein was the most senior person in the department in April and May 2010 who was in a position to identify the similarity between the inappropriate tactics used in Operations Wide Receiver and Fast and Furious," the report said. ATF agents in Arizona conducted Wide Receiver in 2006 and 2007 and began Fast and Furious in October 2009.
Weinstein's lawyer, Michael Bromwich, called the report's criticism "profoundly wrong" and "deeply flawed."
The report said that a cover memo reviewed by Weinstein for a wiretap application in Fast and Furious "clearly suggests" that ATF agents had allowed a known illicit gun purchaser to continue his illegal activities for a gun-trafficking ring selling weapons to a Mexican drug cartel.
Weinstein's review of the cover memo should have caused him to question operational details of Fast and Furious, the report stated.
In response, Weinstein's lawyer said that before reviewing any Fast and Furious wiretaps, Weinstein had been assured by ATF Deputy Assistant Director William McMahon that guns were being aggressively interdicted.
Among others the report singled out for criticism were former acting Deputy Attorney General Gary Grindler; Assistant Attorney General Lanny Breuer, who heads the criminal division; Arizona U.S. Attorney Dennis Burke; and Holder's own former deputy chief of staff, Monty Wilkinson.
The report said:
--Wilkinson should have promptly informed Holder of the fact that two guns found at the scene of Terry's slaying were among the 2,000 illicitly acquired weapons in Operation Fast and Furious.
--Grindler relied on the FBI to investigate the Terry killing. That reliance was misplaced, given that the bureau did not have the responsibility to determine whether errors in ATF's investigation led to the weapons ending up at the murder scene.
--Breuer should have promptly informed Deputy Attorney General James Cole or Holder about the gun-walking problems in the earlier gun probe, Operation Wide Receiver.
The inspector general said he found no evidence that former Attorney General Michael Mukasey, who took office late in the Bush administration after Wide Receiver was ended, was ever informed that it used gun-walking.
Once allegations of gun-walking surfaced, the Justice Department waited 10 months before withdrawing an incorrect letter to Iowa Sen. Chuck Grassley in early 2011 denying that gun-walking had taken place. Grassley is the ranking Republican on the Senate Judiciary Committee.
A May 2011 Justice Department letter to Grassley said that "it remains our understanding that ATF's Operation Fast and Furious did not knowingly permit straw buyers to take guns into Mexico."
The inspector general said that by May, senior department officials knew or should have known that ATF had in many instances allowed straw purchasers to buy firearms knowing that someone else would transport them to Mexico. The report also found that the department should not have provided testimony in June 2011 before Issa's committee that created ambiguity over whether the department was still defending its Feb. 4 and May 2 letters.
Speaking to reporters at ATF headquarters, acting director B. Todd Jones said the agency is already implementing some of the report's recommendations and there are no gun-walking operations going on.
"We are recalibrating how we do business at ATF," Jones said. "Everyone in the current crew knows that that is not an acceptable investigative technique unless I know about it, and I don't know about any."
Associated Press writer Jesse J. Holland contributed to this report.