Handbook 9.4
Investigative Techniques
Chapter 8
Undercover Operations
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Contents
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An undercover operation is an investigative technique in which an operative
of the Service, either an undercover agent or a confidential informant, assumes
a covert identity or purpose and takes action to gain evidence or information
which would not be available but for the target's reliance on the operative's
covert role.
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The undercover technique may be used in relation to criminal violations
enforceable under the investigative jurisdiction of the Service.
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The use of undercover operations is an essential technique in the detection
and investigation of criminal activity involving tax and money laundering
offenses.
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Undercover does not include the temporary assumption of a pretext identity
for the purpose of protecting the integrity of a surveillance.
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Generally only authorized Service employees in the GS-1811 series may participate
in undercover activity.
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The use of undercover operations is a lawful technique in the detection and
investigation of tax fraud, political corruption, organized crime, money
laundering, narcotics trafficking, questionable return preparers, and other
priority areas related to tax crimes.
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However, undercover operations can be controversial and potentially dangerous
undertakings requiring significant financial and personnel resources. Therefore,
judicious decision-making must be practiced with regard to the use of undercover
techniques.
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The successful use of undercover techniques rests on the prudent and judicious
application of the technique. The long-term success of this technique is
a direct function of the ability, training, and support of our undercover
operatives. To ensure that our operations are supported, management must
demonstrate unwavering concern for the welfare of our undercover agents.
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When not functioning as undercover agents, special agents with undercover
training, assigned to district offices, are expected to work a complete range
of assignments. Because planned or ongoing undercover operations may require
the services of a particular undercover agent on short notice, district
management officials must ensure that undercover agents are available when
needed.
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District management officials, especially those with several trained undercover
agents, may be required to shift or defer completion of assignments so that
the undercover needs of another district are met. This spirit of cooperation
is essential for the continued success of the undercover program.
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Each Director of Investigations will designate a Regional Undercover Program
Manager (RUPM) who will:
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Have administrative control of undercover agents assigned to the region.
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Monitor and provide support and assistance to all undercover operations in
their assigned regions.
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Participate in a preoperational meeting prior to the initiation of undercover
activity.
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Be responsible for conducting reviews of undercover activities.
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Undercover activities are classified as either Group I or Group II. The Directors
of Investigations or their designee will forward requests for proposed operations
that they determine to be Group I to the Assistant Commissioner, Criminal
Investigation (CI). The Assistant Commissioner, CI, must approve all Group
I operations.
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Group I operations exceed 6 months in duration, and/or exceed the Director
of Investigations' level of approval for confidential expenditures. For tracking
purposes, the approval period will be measured in months rather than days.
Therefore, an operation beginning on January 1 for 3 months will terminate
on March 31 and an operation beginning on September 25 will terminate on
December 24, etc.
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Group I approval is required for any operation which involves a reasonable
expectation of one or more of the following factors:
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The undercover operation will result in significant civil claims against
the United States either arising in tort, contract, or claims for just
compensation for the "taking" of property.
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The undercover operation will require indemnification agreements for losses
incurred in aid of the operation.
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The undercover operation will have a significant impact on investigations
in more than one region.
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The undercover operation will involve an investigation of possible corrupt
action by a public official, a political candidate, the activities of a foreign
government, the activities of a religious or political organization, or the
activities of the news media.
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The undercover operation will involve damaging untrue representations by
an undercover employee or cooperating private individual concerning the
activities or involvement of an innocent person.
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An undercover employee or cooperating private individual will engage in any
activity that is proscribed by federal, state, or local law as a felony or
that is otherwise a serious crime, except for the making of false representations
to third parties in concealment of personal identity or property or involvement
in illegal gambling activities necessary for the maintenance of the operation.
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An undercover employee or cooperating private individual will seek to supply
an item or service that would be reasonably unavailable to criminal actors
but for the participation of the government.
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An undercover employee or cooperating private individual will run a significant
risk of being arrested by seeking to continue in an undercover capacity.
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An undercover employee or cooperating private individual will be required
to give sworn testimony in any proceeding using a false identity.
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An undercover employee or cooperating private individual will attend a meeting
between a subject of the investigation and his or her lawyer which is covered
by the attorney-client privilege.
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An undercover employee or cooperating private individual may pose as an attorney,
physician, clergyman, or member of the news media. For example, an agent
may pose as an attorney in a setting where he or she purports to represent
some other identified party, such as another agent or cooperating private
individual, or when the impersonation will clearly not involve a setting
conducive to the initiation of an attorney-client relationship with any third
party. Further, when assuming such roles, agents will not perform professional
services associated with these cover occupations or assume such a cover
occupation for developing a privileged relationship.
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A request for information will be made by an undercover employee or cooperating
individual to an attorney, physician, clergyman, or other person who is under
the obligation of a legal privilege of confidentiality, and the particular
information would ordinarily be privileged.
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A request for information will be made by an undercover employee or cooperating
private individual to a member of the news media concerning any individual
with whom the newsperson is known to have a professional or confidential
relationship.
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There is a significant risk of violence or physical injury to individuals
or a significant risk of financial loss to an innocent individual.
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The operation will earn income which will be used to offset expenses of the
operation, referred to as churning. (See 9.4.8.16.3.)
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An undercover meeting will occur in a foreign country.
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The Assistant Commissioner, CI, must approve all Group I operations.
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Group II Operations include all other undercover activity not meeting the
requirements for Group I.
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Group II operations require the approval of the Director of Investigations.
The authority to authorize confidential expenditures to fund undercover
operations may not be delegated below the level of the Director of
Investigations.
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The Director of Investigations or his designee may approve an extension of
a Group II operation for a cumulative duration of 6 months for the original
Group II operation and the extensions.
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A Group II operation will automatically be elevated to Group I when it meets
any one of the criteria for a Group I operation. Once it meets this criteria,
Assistant Commissioner, CI, approval is required.
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A copy of an approved or disapproved Group II undercover request will be
transmitted to the Assistant Commissioner, CI, Attn: Office of Special
Investigative Techniques, within 10 workdays of approval or disapproval.
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Requests for undercover operations, including required funding, will be submitted
using Form 8354, Request for Undercover Operation.
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Targets for undercover operations must be generated from either a numbered
general, primary, or subject investigation. Separate funding should be approved
for each specific operation.
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An initial undercover request must include sufficient information to evaluate
the particular request. In addition to the information required to be provided
on Form 8354, each request must include a narrative set forth in the following
order (see Exhibit 8-6):
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Information obtained to date which would lead a reasonable person to believe
the target is in violation of the law.
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A statement will be made in the narrative section of the request that "
alternative investigative actions have been considered and the utilization
of the undercover investigative technique has been determined to be the best
investigative approach at this point in time." This section should also be
used to identify other targets of the operation. This does not preclude others,
not known at the inception of the operation, from becoming targets as long
as a target approval process is established.
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Objectives of the operation will normally be directed to address a particular
compliance problem and state what the district expects to accomplish through
the operation.
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State the plan of action to reach these objectives.
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State the specialized need for a certain type of undercover agent or cover.
Only trained undercover agents should be used in undercover operations. However,
when circumstances preclude using a trained undercover agent, the facts outlining
the need for granting a deviation should be included here.
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Provide an itemization of all estimated non-recoverable funds such as all
undercover agent travel and subsistence regarding the operation, informant
payments, surveillance expenditures, etc. (See text 9.4.8.16.4)
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If recoverable funds are necessary, the request for the funds will be
incorporated in the undercover request in accordance with text 9.4.8.16.2.
Group II requests requiring recoverable funds will be acted upon based on
the copy of the approved undercover request forwarded to the Assistant
Commissioner, CI.
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Explain whether there is a reasonable expectation that one or more of the
items stated in text 9.4.8.3.1 will occur and if so why.
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If one or more of the items is specified in text 9.4.8.3.1 (j), (k), (l),
or (m), enumerate in the request what steps or techniques will be employed
to avoid the receipt (by an undercover employee or cooperating private
individual) of information which would ordinarily be privileged.
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Provide other pertinent information or specialized needs for the operation.
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Counsel should be given the opportunity to provide legal advice to undercover
operations at all levels, without regard to whether Counsel review will be
required for the prosecution recommendation. To this extent, it is encouraged
that Counsel be given the opportunity to: provide legal advice in preparing
recommendations for undercover operations; attend pre-operational meetings;
and provide legal advice during the course of the operation.
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When it is determined that an operation should be elevated from Group II
to Group I, a Form 8354 will be forwarded to the Assistant Commissioner,
CI, for approval. The narrative will include the following:
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Synopsis of the results of the operation to date.
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Accounting of expenditures to date.
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The factor(s) that elevated the operation from Group II to Group I (if costs
or time, or both, raised the operation to Group I, indicate the new projections).
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Any significant change in the objectives or plan of action or identification
of additional targets.
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All other requests relating to undercover operations (i.e., additional funding,
extension of time, significant deviations) will be made on Form 8354. The
narrative will be attached and contain sufficient details to justify the
request. The narrative for significant deviations should stand alone and
not refer to sections approved in previous requests or sections pertaining
to other approved operations.
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All requests for Group I operations will be reviewed by the Undercover Committee.
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Members of the committee should include the following, or their designees:
Director, National Operations Division; Assistant Chief Counsel (Criminal
Tax); Chief, Office of Special Investigative Techniques; and Deputy Assistant
Attorney General, Department of Justice. Other individuals may be invited
as necessary.
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The committee is advisory in nature and will recommend approval or disapproval
to the Assistant Commissioner, CI. The committee will also review any significant
deviations in ongoing Group I operations and review all requests for recoverable
funds which exceed an aggregate of $50,000 in Group II operations.
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All requests for Group II undercover operations where there is a request
for recoverable funds aggregating $50,000 or less will be reviewed by a Director
of Investigations' Undercover Review Committee to be established for each
region.
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Members of the Regional Undercover Review Committee should include the following
or their designees: representative of the Office of Regional Counsel Criminal
Tax; the RUPM; and one other analyst from the Director of Investigations'
staff.
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The Regional Undercover Review Committee is advisory in nature and will recommend
approval or disapproval to the Director of Investigations. The committee
will also review any significant deviations in ongoing Group II operations
which had been previously reviewed by them.
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Once the undercover plan for the operation has been approved by the Director
of Investigations or Assistant Commissioner, CI, no significant deviation
may be made with regard to the stated objectives or the proposed plan of
action without the approving official's consent.
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Emergency approvals regarding both Group I and Group II operations may be
granted telephonically by the Director of Investigations or Assistant
Commissioner, CI. A Form 8354 must be submitted within 5 working days of
telephonic approval.
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Emergency Extensions of Time to enable a district to perfect a deviation,
extension and/or elevation request may be granted. These emergency extensions
allow the district to continue the operation under the existing authorization.
Unless specifically granted, an emergency extension does not authorize a
deviation from the original approval nor does it provide for an operation
to be elevated from a Group II to a Group I level.
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Approved extensions will be in monthly increments. The time authorized in
the emergency authorization will be included as part of the time requested
in the extension request. For example, in a 3-month old Group I operation
involving a requested 3-month extension, and a 10-day emergency extension
(to perfect the extension request), the total time upon approval will be
6 months. However, if the extension is not approved, the total time will
be adjusted to show 4 months, since the operation has extended beyond the
3rd month and into a part of a 4th month.
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The undercover operation will be considered initiated on the date approved,
unless another date is specified in the request.
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Upon receipt and classification (e.g., Group I or II) of an undercover request,
a 7-digit number will be assigned by the Director of Investigations. A separate
number will be assigned to each operation (not subjects targeted). All numbered
investigations related to the undercover operation, or derived from the
undercover operation, will reflect the 7-digit number and approval date as
provided for in text 9.9 of the Criminal Investigation Management Information
System Handbook (CIMIS).
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A copy of all Group II approvals, and disapproved requests, should be sent
to the Assistant Commissioner, CI Attn.: Chief, Office of Special Investigative
Techniques, within 10 days after the action is taken. (See text 9.4.8.3.1.1(5).)
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[9.4] 8.5 (06-30-1998)
UNDERCOVER ACTIVITY IN MULTI-AGENCY INVESTIGATIONS
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In multi-federal agency investigations (e.g., a joint grand jury investigation
with another agency), Service approval for participation in an undercover
operation is not required if each of the following conditions are met:
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The undercover operative is not a Service employee or confidential informant;
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IRS is not assuming a prominent role in managing or directing the activities
of the undercover operation;
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The controlling federal agency has obtained authorization for an undercover
operation within their established guidelines.
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When an undercover agent from another agency performs undercover activities
solely to benefit the Service and is not connected to an investigation with
his or her own agency, Service approval must be obtained before the undercover
agent begins the undercover operation.
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A Service undercover special agent who performs undercover activities on
behalf of another agency and is not connected to a Service-related investigation
must be detailed to that agency.
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The recruitment, selection, and training of special agents to become undercover
agents is critical to the success of the undercover program.
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To ensure that the needs of the undercover program are met, all CI Group
Managers must identify those special agents with the interest and the unique
talents to effectively function in an undercover role.
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All management officials, especially the RUPMs and Headquarters officials
involved in the undercover program, will attempt to identify potential undercover
agents during the special agents' on-the-job training and probationary period.
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RUPMs will also be responsible for ensuring that the Service's undercover
program is regularly promoted to all special agents.
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Based on available undercover agent training slots, each RUPM will notify
the districts to seek applicants. Undercover agent applicants must have at
least 2-years of experience as a special agent. Under no circumstances will
special agents be required to participate in the program.
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Interested special agents will submit a memorandum to their Group Manager,
not to exceed two pages, detailing their qualifications to become an undercover
agent. This memorandum should include previous appropriate experience (personal
or job related), personal attributes, and any special skills (i.e. languages,
licenses, etc.) that indicate potential to perform undercover duties.
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All applicant memoranda and the agent's most recent evaluation will be forwarded
to the Chief for his or her approval and transmitted to the Director of
Investigations. The Chief should seek input from the Group Manager and may
conduct interviews prior to submitting a recommendation to the Director of
Investigations.
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The Director of Investigations will select applicants to be interviewed by
the Undercover Panel. The panel will be selected by the Director of
Investigations and should include at least three individuals with experience
in undercover assignments or supervising undercover activities.
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The Director of Investigations will use all available information, including
recommendations by the Undercover Panel, to determine which applicants will
be nominated to Headquarters for final selection to attend undercover training
school. Only after satisfactory completion of formal training will a special
agent be considered an undercover agent.
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Schedule A employees may be utilized in undercover operations. Their use
must be approved by the Assistant Commissioner, CI, (see text 9.11.4.)
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Headquarters will provide uniform training for all undercover agents.
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District Counsel attorneys will be offered the opportunity to attend all
Headquarters and regional training for undercover and contact agents. This
will provide counsel attorneys exposure to problems and issues regarding
undercover operations.
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Throughout the screening and selection process for potential undercover agents,
management officials will discuss the necessity of making a commitment to
short-term or long-term undercover assignments.
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"Short-term" assignments may last from several days to several weeks in the
target area. They may also involve being assigned to "cameo" or supporting
roles in more complex undercover operations. "Cameo" assignments offer an
excellent opportunity for trained but inexperienced undercover agents to
gain experience and confidence.
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"Long-term" assignments may last from several months to several years in
the target area (with periodic visits home).
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Undercover agents may be allowed to continue to accept undercover assignments
based on a yearly review. The review will consider:
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The undercover agent's desire to continue in the program.
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The undercover agent's receipt of satisfactory evaluations relating to his
or her undercover assignments.
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The undercover agent's ability to satisfactorily cope with the emotional,
psychological, and physiological stresses associated with undercover.
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The District Director of the home district of the undercover agent and the
Director of Investigations will be the responsible review officials.
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Cadre agents will be administratively assigned to the office of the Director
of Investigations, need not be physically relocated, and may be assigned
to a post of duty in a district office. Continuation in the cadre will be
subject to periodic review.
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Undercover agents must be trained and successfully complete one or more
undercover assignments before selection into the cadre. The Directors of
Investigations select the cadre. Cadre undercover agents should develop multiple
cover identities so that they can work multiple operations simultaneously.
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Cadre undercover agents have as their primary responsibilities performing
and supporting undercover operations. While on an undercover assignment,
the agent works under the direction and supervision of the district to which
he or she is assigned.
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When not functioning as an undercover agent, cadre agents will be assigned
to support undercover and other activities as needed. If not needed in this
capacity, cadre agents will be assigned to the district in which their home
post of duty is located and be given such duties and responsibilities that
will permit their immediate availability for an undercover assignment.
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The assignment of cadre agents to undercover operations will be coordinated
with Headquarters prior to their assignment.
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If cadre agents are not assigned to a Group I or Group II undercover assignment
during a 2-year period or more, they will no longer be considered cadre
undercover agents. They will have to be retrained before resuming undercover
assignments.
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The Chief in the district in which the undercover agent is working is responsible
for the supervision of the undercover special agent.
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Within 30 days of the close of each undercover operation, or within 30 days
of the completion of an undercover agent's assignment, outside his or her
home district, the manager of the group in which the operation took place
will evaluate the undercover agent's performance, with input from the Chief.
Undercover agent evaluations should be in a format paralleling the seven
special agent job elements as listed on Form 5014, Evaluation of Special
Agent Performance.
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The evaluation of performance must be prepared as a separate document and
forwarded through the RUPM where the operation took place to the RUPM of
the agent's home office.
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Evaluations of undercover agents assigned to district offices should be forwarded
to that district. The undercover agent's Group Manager should discuss the
evaluation with the undercover agent and perform any necessary counseling
at that time.
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The agent's Group Manager will consider evaluations of an agent's undercover
performance in the agent's annual appraisal of critical elements.
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During long-term undercover assignments, the Chief, where the undercover
assignment takes place, may temporarily promote the undercover agent after
a period of 90 consecutive days. This temporary promotion may not exceed
the GS-13 level and will be based on the complexity of the assignment and
performance of the undercover agent.
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Undercover agents will avoid acts of entrapment and must observe the
Constitutional rights of persons they come in contact with during assignments.
However, while acting in an undercover capacity, agents are not required
to advise a subject of his or her Constitutional rights as contained in text
9.4.8.11.
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[9.4] 8.8 (06-30-1998)
REPORTING BY UNDERCOVER AGENTS VIOLATIONS OF THE LAW
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The undercover agent will report to the contact agent any illegal activities
that come to his or her attention and will also specify any self involvement.
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[9.4] 8.9 (06-30-1998)
DEVELOPING INFORMATION BEING GATHERED BY UNDERCOVER AGENTS
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Information and evidence will be reported in the undercover agent's daily
memorandum unless it is contained in consensually monitored conversations.
The contact agent will prepare and forward information and evidence developed
by the undercover agent which will not compromise the integrity of the undercover
operation. During meetings with the undercover agent, the merit of releasing
information prior to completion of the operation should be discussed. All
information not disseminated during the undercover operation should be
disseminated upon completion.
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Information obtained as a result of an undercover operation which pertains
to violations of laws administered by other law enforcement agencies will
be transmitted to the appropriate agencies through channels, provided the
dissemination of the information does not jeopardize the undercover operation
or agent. In order to withhold information concerning other violations, the
Chief will submit a recommendation, along with justification, to the District
Director for his or her approval in accordance with the provisions of Delegation
Order No. 156 (as revised).
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If during the undercover operation significant violations of laws enforced
by other federal law enforcement agencies are uncovered, the Chief should
consider alerting those agencies for joint participation in the operation.
In all instances the disclosure guidelines will be followed.
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The Chief will assign a trained and/or experienced contact agent at the district
location of the undercover operation to perform on-site liaison with the
undercover agent and to be primarily responsible for the security of the
undercover agent.
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The principal duties of the contact special agent are to:
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Attend to the security and safety of the undercover agent.
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Transmit necessary instructions and information to the undercover agent.
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Ensure that district objectives are being carried out by the undercover agent.
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Receive and review daily activity and financial reports of the undercover
agent.
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Prepare reimbursement claims and financial earnings statements.
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Provide assistance in all administrative matters including leave, compensation,
firearms, etc.
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Develop and disseminate all information being gathered.
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Provide immediate assistance in any emergency.
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Maintain detailed accounting records of all recoverable and confidential
funds.
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The complete Contact Agent Guidelines are included in text 6.1.1 of the LEM
IX. The contact agent will arrange for meetings to be held between the undercover
agent, contact agent, and investigating agent and the supervisory manager.
In addition to administrative matters, the short and long-term goals and
objectives of the operation will be reviewed.
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The contact agent is responsible for reviewing the Undercover Checklist (Exhibit
8-9 or 8-10) when planning undercover meetings at pre-established and unknown
locations.
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When it is not appropriate to assign a full-time contact agent, the Chief
will designate an individual to be responsible for the administrative matters
of the undercover agent and operation. If a trained contact agent is not
available, a trained undercover agent should be considered to perform these
duties.
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The duties of the contact agent should not be assigned to the investigating
agent.
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The RUPM will be responsible for conducting a review of all ongoing undercover
operations at a minimum interval of 3 months. The review should take place
with the Group Manager and contact agent and should include, if possible,
the undercover agent and a summary discussion with the Chief and District
Director. Counsel should be given the opportunity to provide advice on legal
issues. The review should provide support and/or assistance and keep management
aware of all undercover activities.
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The RUPM should notify the Assistant Commissioner, CI, Attn: Office of Special
Investigative Techniques, 10 workdays in advance of reviews of Group I operations
for possible participation in the review. Attendance, however, is optional
and discretionary.
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A summary of the review of both Group I and II operations, prepared by the
RUPM should cover the following areas:
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Identification of investigative assignment and assigned operation number.
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Operation progress.
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Significant deviations needed or made.
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Highlight significant events.
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Whether the duration of the assignment is sufficient to accomplish the
objectives.
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Information or evidence obtained which has an impact beyond the district
and coordination steps taken.
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Resolution of administrative and operations problems.
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Expenditures made during the operation to date, including comments regarding
a review of the operation's accounting records and the agent's daily reports.
The RUPM will also comment on the reasonableness of the expenses incurred
in the undercover
operation.
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A review of Form 4930 (Criminal Investigation Division General/Primary/Subject
Investigative Report) should be performed to insure that the undercover operation
number is entered properly.
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A copy of the review summary will be forwarded to the District Director,
Director of Investigations, and the Assistant Commissioner, CI, Attn: Office
of Special Investigative Techniques. If a review is not conducted, a brief
memorandum stating why it was not conducted will be substituted for the review
summary. The review summary should be received in Headquarters no later than
30 days after the review.
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A Year End Account Report will be prepared by October 31 for each undercover
operation that had approved churing authority during the previous fiscal
year only. Each Director of Investigations will prepare and forward to the
Assistant Commissioner, CI, Attn: Office of Special Investigative Techniques,
a summary of confidential funds approved and expended and churned income
earned and expended. This summary should reflect the following:
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| District FY |
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| Operation Number |
Approval Date |
Expiration Date |
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| Approved Confidential Funds |
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Approved
Prior Period
Not Spent |
Approved This
Reporting
Period |
Spent This
Reporting Period
Sub-Object Class Code |
Approved Funds
Not Spent
At End of Reporting Period |
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| Churned Income |
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| Earned This Reporting Period |
Expended This Reporting Period |
Returned to the General Fund |
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When the Chief determines that the objectives of the undercover operation
have been accomplished, or cannot be accomplished, or cannot be accomplished
without expending an unreasonable amount of staff time, he or she should
recommend terminating the operation.
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Before closing an operation, the Chief, through regular channels, will consult
with the officials responsible for approving the operation.
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After operational aspects are closed down, the district may continue to make
expenditures from the approved imprest fund authorization necessary to terminate
the operation. These additional expenditures will be reported via a memorandum
from the Chief, through the Director of Investigations, to the Assistant
Commissioner, CI, Attn: Office of Special Investigative Techniques. This
report is to be received by Office of Special Investigative Techniques no
later than 30 days after the final expenditure. The issuance of the operational
closing report should not be delayed by expenditures still being made to
terminate the operation.
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Within 30 days after each operation, the Chief will prepare a closing report
which includes the following:
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Identification of investigative assignment (taxpayer/project name), operation
number, and date the undercover activity terminated.
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Describe results of the operation and whether objectives were accomplished.
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Amounts of civil assessments including jeopardies, terminations, and/or seizures
of assets.
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Cost of the operation.
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Inventory of all capital and other reusable items acquired during the operation
and available for future use (storage location of all items should be noted).
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Significant or unusual events or problems which occurred during the operations.
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Suggestions which would help improve future operations.
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Any other pertinent information relating to the operation.
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The evaluation of the undercover agent's performance should accompany this
report as a separate attachment. (See text 9.4.8.6.6(2).)
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If a tax return was prepared on behalf of the undercover agent's cover identity,
please provide the name(s), address(es), Social Security Number(s), the year(s)
filed, amount of the refund claimed, and the disposition of the refund check
for each return.
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The report will be prepared with a signature block for the Director of
Investigations to concur with the opinion of the Chief. A copy of the closing
report will be forwarded through normal channels to the Assistant Commissioner,
CI, Attn: Office of Special Investigative Techniques. This report is to be
received by Office of Special Investigative Techniques not later than 60
days after the close of the operation.
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Cost of the operation include:
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Total disbursed from the imprest fund.
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Gross receipts.
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Total expenses paid from receipts generated.
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Net income earned excluding interest income.
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Interest income earned.
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Net income earned sent to the general fund.
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Interest income sent to the general fund.
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A description and itemization of other monies sent to the general fund.
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Costs of capital acquisitions.
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Estimated cost to terminate the operation.
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An itemized comparison of proposed operational costs to actual operational
costs by expense category as set forth in the following example:
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| Expense Category |
Proposed Expenses |
Actual Expenses |
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| Rent |
$XX |
$XX |
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| Travel |
$XX |
$XX |
A statement as to whether the operational expenses were deemed reasonable
and necessary by the Chief.
If recoverable funds were authorized, state the amount and date the recoverable
funds were returned to Office of Special Investigative Techniques.
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[9.4]
8.13 (06-30-1998)
OBTAINING, USING, AND MAINTAINING COVER DOCUMENTS
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A general investigation may be established at the District, Regional, or
Headquarters level to develop and maintain cover documents for undercover
and contact agents. These general investigations must be approved by either
the Director of Investigations or the Assistant Commissioner, CI. The general
investigations may be approved for the duration an undercover agent or contact
agent is available to work. The approval level is dependent upon the amount
of funding requested.
-
The Director of Investigations is responsible for approving and controlling
cover documents for use by cadre undercover agents.
-
The District Director or his or her designee will approve the use of undercover
documents and the Chief, CI, Division will control cover documents for non-cadre
undercover special agents and any other agent requiring cover documents.
Examples of documents that may be obtained locally include operator's permits,
automobile registrations, and credit cards.
-
Trained undercover and contact agents should be provided sufficient time
and funds to acquire cover documentation in anticipation of specific assignments.
-
The Office of Special Investigative Techniques will assist in obtaining any
documents not available at the district or regional level. In addition,
Headquarters, Office of Special Investigative Techniques, will be responsible
for securing documentation contained in 6.1.1 of LEM IX.
-
The Chief should forward a memorandum outlining the nature and circumstances
for requesting documents from Headquarters. This request should go through
the Director of Investigations to the Assistant Commissioner, CI, Attn: Office
of Special Investigative Techniques. Preliminary informal discussions with
the Office of Special Investigative Techniques should take place whenever
prior experiences determine that required documents are unavailable or difficult
to obtain. Documentation needed in connection with a specific operation should
be incorporated into the undercover request.
-
All documentation obtained for substantiation of a temporary identity will
be used only for official business purposes and in connection with an approved
activity.
-
Undercover agents and trained contact agents will retain their cover documents
in order to perfect their cover.
-
Cover premises, bank accounts, and companies may be maintained provided there
is foreseeable reason, based on past activity, for such maintenance. This
will become an integral part of the cadre agent cover.
-
When special agents with cover documents no longer need the cover (due to
retirement, transfer to another agency, reassignment, etc.), the Chief will
discuss with the RUPM the feasibility of transferring the cover documents
to another special agent. If the district or region wishes to maintain the
cover documents, approval should be obtained from the Assistant Commissioner,
CI. If the RUPM determines that the transfer of cover documentation is not
appropriate, documents obtained from Headquarters should be returned. Other
documents should, at the Chief's or Director of Investigations' option, be
destroyed or returned to the issuing source as determined by agreements to
obtain the
documents.
-
The approving official or his or her designee will conduct a yearly inventory
of all cover documents, under his or her control. On an annual basis, agents
will provide their Chief with a complete inventory of all cover documents.
Agents will certify to the accuracy and completeness of this inventory.
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Special agents, nor any other CI employee, will use a fictitious identity
or pseudonyms except when conducting surveillance or an authorized undercover
activity, unless he or she receives specific written authority to do so from
the Assistant Commissioner, CI. However, CI vehicles may be registered in
fictitious names to shield them from being identified as law enforcement
vehicles by the public in general.
-
Assumed identities will not be used on taxpayer correspondence or notices
except as authorized above.
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Undercover Employer Identification Numbers (EINs) and Social Security Numbers
(SSNs) are used by:
-
Internal Revenue Service (IRS)
-
Federal Bureau of Investigation (FBI)
-
Customs
-
Drug Enforcement Administration (DEA)
-
Department of the Interior (Fish & Wildlife)
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U. S. Postal Inspectors
-
Other federal, state and local law enforcement agencies
-
Undercover SSNs are controlled by CI in the regions.
-
All EIN requests from the districts and other law enforcement agencies for
undercover storefronts and covert companies will be directed to Headquarters,
Office of Special Investigative Techniques. Headquarters will obtain all
pertinent information and coordinate with the appropriate Chief, Criminal
Investigation Branch (CIB) at the service center.
-
The Chief, CIB, will ensure confidential and expeditious handling of all
undercover requests by designating a CIB contact person who will:
-
Coordinate all Headquarters requests for undercover EINs.
-
Obtain undercover EINs from the Entity Section at the service center.
-
Refer all district office CI requests for undercover EINs to
Headquarters.
-
Maintain a record of all EIN requests.
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Undercover agents and contact agents should not deposit personal funds in
cover bank accounts or write checks on cover bank accounts to pay personal
expenses with the exception of paying personal charges made on the undercover
credit cards. In addition, with the approval of the Chief, undercover agents
assigned to long-term undercover operations may deposit per diem or subsistence
reimbursement funds in the form of currency to a cover bank account and issue
checks to pay related expenses.
-
To assist the undercover and contact agent to establish a history of financial
transactions, the Chief may authorize the transfer of recoverable funds to
a cover bank account on a temporary basis. Transfers should be in various
amounts on different dates from the operation. These transfers and use of
the funds must be included and specifically detailed in the request for the
recoverable funds. The RUPM will receive (i.e.: fax, mail, or express mail)
a monthly verification of the recoverable funds and forward the verification
report, through channels to Headquarters, Office of Special Investigative
Techniques, no later than 5 workdays after the first of each month. This
procedure will be followed each month for as long as the funds are outstanding.
-
Sufficient records will be maintained on undercover bank accounts. They will
include:
-
A check register detailing all deposits and withdrawals.
-
Explanation of all charges to the account.
-
All interest earned on the account.
-
An explanation of all personal funds deposited.
-
On a monthly basis, the agent maintaining undercover accounts not used in
connection with a specific operation will submit to his or her Group Manager,
Monthly Balance Sheet (Exhibit 8-2) and all supporting documents relating
to those undercover bank accounts. This includes bank statements, canceled
checks, memos, etc. The Monthly Balance Sheet will be prepared in the same
manner as for an ongoing undercover operation. The agent will account for
all advances, security deposits outstanding, and interest income earned on
accounts to date.
-
On a quarterly basis, interest earned on undercover accounts, which are not
being used in connection with a specific operation, will be remitted to the
General Fund.
-
On a quarterly basis, the Chief or his or her designee will conduct a joint
review of the undercover account with the Group Manager.
-
Situations may arise when a cadre undercover agent has more than one advance
outstanding. In these situations, the RUPM will perform the functions as
discussed in text 9.4.8.13.2 (1), (2), (3), and (4) above. The RUPM should
also insure that he or she has documentation, statements, etc., regarding
any advances that the undercover agent may have received, had control of,
or was responsible for. The RUPM should also receive copies of Form 1012,
Travel Voucher, and any other type of reimbursement request from all sources
submitted by the cadre undercover agent.
-
When an undercover agent is assigned from another region and funds are advanced
to be cycled through a cover account located in the undercover agent's district
or region, it will be necessary to forward to the undercover agent copies
of all financial data monthly. These records should show all funds advanced
to the undercover agent as well as their disposition and status.
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Interest or finance charges may be paid for balances on undercover credit
cards in order to establish and maintain credit histories for undercover
agents. Interest or finance charges may not be incurred for more than 2
consecutive months. The account must be paid in full every 3 months. For
the months when the interest or finance charges are incurred, there must
be a timely payment on the account for at least the minimum payment due.
-
Finance charges will be paid from imprest funds and reported as an expenditure
on the Form 1164, Claim for Reimbursement for Expenditures on Official Business.
Changes for late payments are not
authorized.
-
The agent with prior written approval of the Chief, may charge personal items
not to exceed $500 in any one month to establish a credit history. All debits
and credits on the monthly statements should be annotated with a "P" (personal)
or a "B" (business).
-
Cash advances may not be drawn against undercover credit cards.
-
In extraordinary situations, the Chief, may approve monthly personal charges
in excess of $500 but caution must be exercised. Cadre agents assigned to
the Director of Investigations' staff must obtain approval from the Director
of Investigations. The Group Manager or RUPM should review activity at the
end of each month.
-
Personal charges on a credit card may be paid from an undercover bank account
after the appropriate amount has been deposited or with cashier's checks
or money orders purchased with personal currency.
-
On a monthly basis, the undercover and contact agent should present statements
for undercover credit cards for review to his or her Group Manager or RUPM.
Agents will also list credit cards which did not issue a monthly statement.
-
On an annual basis, the Chief will require special agents having covert
identities, which include credit instruments, to submit multi-credit bureau
histories of each of those identities. A device such as TRW Credentials Service,
Equifax, and Trans Union are recommended. In no instance are the credit inquiries
to be made in a manner which will identify the requester as being in the
Service. The Chief will review the credit histories and reconcile them to
the agent's cover document inventory. A copy of the report will be maintained
in the individual's cover document file and a copy will be sent to the RUPM.
When an agent is assigned to the area cadre, the agent will furnish the credit
history to the Director of Investigations.
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See 6.2.1 of the LEM IX.
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Violations of criminal statutes by Service personnel are prohibited. However,
under certain circumstances, investigative techniques used by special agents
in the performance of their official duties which would appear to violate
a state or local statute or the Code of Conduct, do not actually constitute
a violation. For example, in a wagering investigation such techniques as
a special agent placing a wager, participating as a customer, using a temporary
identity, consuming alcoholic beverages during duty hours while on a surveillance
or when making an undercover contact to obtain evidence may be justified
and, therefore, would not actually, constitute a violation.
-
As set forth in the rules of conduct, special agents are prohibited from
consuming alcoholic beverages and from being intoxicated while on duty. One
possible exception to an agent being allowed to consume alcoholic beverages
while on duty is when the agent is working in an undercover capacity. Undercover
agents are discouraged from consuming alcoholic beverages while on official
duty. They are expressly prohibited from consuming alcoholic beverages to
an excess. In the event that an undercover agent must consume alcoholic beverages
to protect his or her cover and the integrity of the operation, he or she
will use the utmost discretion and may do so in moderation. This is an issue
which will be discussed during the pre-operational meeting (see text 6.2.1
of LEM IX). The use of alcohol by an undercover agent is at the discretion
of the Chief of the district where the agent is working in an undercover
capacity. In those circumstances where an undercover agent must consume alcoholic
beverages, the agent should not operate a motor vehicle.
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[9.4]
8.16 (06-30-1998)
CONFIDENTIAL FUNDS USED IN UNDERCOVER OPERATIONS
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Accounting for confidential expenditures in undercover operations is the
same as for other approved authorizations with the following significant
exceptions:
-
The contact agent is allowed to receive advances from the cashier of an
investigative imprest fund and make advances to other special agents or submit
claims for reimbursement of expenses on their behalf (subcashiering).
-
The contact agent serves as the bookkeeper and cashier for an undercover
operation. The contact agent is the only employee who transacts business
with the imprest fund cashier in relation to an undercover operation. The
contact agent will record and control the expenditures.
-
If the Imprest Fund Cashier is a CI employee, the original accounting records,
invoices, bills, bank records, and other supporting documentation will be
maintained by the Imprest Fund Cashier. If not a CI employee, these documents
will be kept by the Chief or his or her designee. The Form 1164, accompanied
by the Monthly Summary of Expenses (Exhibit 8-5) to substantiate expenses,
should be submitted to the Imprest Fund Cashier for
reimbursement.
-
The contact agent, Group Manager, and investigating agent(s), are responsible
for the proper use, security, and accounting of recoverable funds. These
funds should be kept separate from imprest funds, e.g., separate safe or
different checking account.
-
Requests for advances and reimbursement of expenditures incurred during
undercover operations will be submitted by the contact agent through channels
to the imprest fund cashier as prescribed in text 9.11.1. With the Chief's
approval, the contact agent will retain the documentation until the undercover
operation is completed and an audit is performed. The documentation will
then be forwarded to the Chief for association with the imprest fund records
or for storage.
-
Since each undercover operation has a certain degree of uniqueness, it is
impossible to prepare a "laundry list" of allowable expenditures. During
the preoperational meeting there should be an understanding among the undercover
agent, contact agent, and district management as to what is properly chargeable,
and spending limits placed on the undercover agent. This must be obtained
before approval for a particular expenditure. This will prevent misunderstandings
between the undercover agent and district management. Misunderstandings could
result from the undercover agent applying an approved method of operation
from a prior undercover project which may not be acceptable for the current
one.
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Sub-Object Class (SOC) 9102 Confidential Expenditures for Undercover Operations
(see text 9.11.2): Advances for these expenditures are to be obtained from,
and reimbursed through, imprest funds for Investigative Purposes. SOC 9102
expenditures are separate from recoverable investigative advances which may
be obtained only from Headquarters.
-
Recoverable Investigative Advances: Advances issued to employees for use
in an investigation which are to be returned when the investigation is completed.
These advances are not expected to be expended. They are to be obtained only
from Headquarters, as explained in text below.
-
Example: The difference between recoverable funds and nonrecoverable expenditures
may be illustrated by the following example: If $100,000 is to be "laundered"
through a bank, the contact agent should request an advance of $100,000 in
recoverable funds from Headquarters. The Headquarters, Financial Operations
Branch, will show the $100,000 as an account receivable until it is returned.
Assuming a $5,000 fee is paid to a corrupt banker for the banking activity,
the contact agent would obtain $5,000 from the imprest fund (this would be
an expenditure of the undercover operation) and add it to the remaining
recoverable funds of $95,000 in order to return the original amount of $100,000
to Headquarters. When the cashier requests replenishment of the imprest fund
through the Regional Controller's Office, the $5,000 will be obligated and
charged to SOC 9102.
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[9.4]
8.16.2 (06-30-1998)
Investigative Advances Which are Expected to be Recovered (Recoverable
Funds)
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-
The procedures in this section are applicable to advances which are expected
to be returned in full, and pertain to both undercover and non-undercover
operations.
-
Requests for recoverable fund advances will be noted in the undercover request.
Where the operation is classified as Group II, and the amount of recoverable
funds requested totals $50,000 or less, the request must be approved by the
District Director and the Director of Investigations. The Director of
Investigations will forward the approved field request and committee notes
to the Assistant Commissioner, (CI), for authorization of recoverable funds.
When the request for recoverable funds relates to a Group I undercover request,
it must also be approved by the Assistant Commissioner, (CI), before recoverable
funds are authorized. For Group I and Group II investigations, the Assistant
Commissioner, (CI), will retain the field request and forward a separate
memorandum directly to the Office of Financial Operations with sufficient
information to effect the advance. The Office of Special Investigative Techniques
will monitor recoverable funds to ensure that they are returned when no longer
needed.
-
Requests should state the purpose, amount, and the approximate time the funds
will be outstanding. There should also be a description of control and the
security precautions to be taken.
-
The request should provide Headquarters instructions about the payee of the
check and mailing instructions. No checks will be issued in an undercover
name. The Office of Special Investigative Techniques will mail the check
for recoverable funds as directed by the Chief in the request. The Chief
will issue instructions to the payee regarding planned disposition of the
check. Recoverable fund advance checks should not be deposited in a manner
which would compromise an undercover account or undercover agent.
-
If the funds are to be wired to a bank account, the Office of Special
Investigative Techniques should be requested to send confirmation of the
wire transfer to the Chief. A confirmation of receipt of the funds must be
secured from the bank and furnished to the Chief within 5 days of receipt
of the funds. The contact agent (or other appropriate person) should ascertain
that the bank designated as the recipient of the funds will accept a wire
transfer and that the funds will be available by the bank within the necessary
time frame. The request should contain the name of the bank, its nine-digit
ABA number, account number, and to whose attention. Recoverable fund advances
transmitted by wire should not be wired in a manner which would compromise
an undercover account or undercover agent.
-
Recoverable and confidential funds, generally, should not be commingled in
one bank account. In certain undercover investigations, the logistics of
the operation may deem it necessary to use one bank account for both recoverable
and nonrecoverable funds. In these situations, the undercover agent should
document, maintain, and ensure adequate accountability for the funds.
-
The Chief may also authorize the deposit of recoverable funds from more than
one operation into the same undercover bank account. In these situations,
the undercover agent should document, maintain, and ensure adequate
accountability for the funds.
-
When time is of the essence or where it is deemed necessary for backstop/cover
purposes, the Director, National Operations; Director of Investigations;
or Chief, depending on where the recoverable funds are being held, may authorize
the transfer of recoverable funds among approved undercover operations. This
authorization must be in writing.
-
In any situation where the agents plan to give or "flash" recoverable funds
to a subject of an investigation (for money laundering or tax shelter
investments, etc.), prior written approval of the Chief must be obtained.
-
If the recoverable funds are to be withdrawn in the form of currency and
given to the undercover agent, he or she should sign a receipt (Form 1165).
Each time funds are exchanged, a receipt will be obtained.
-
If substantial funds in the form of currency are involved, surveillance by
armed agents should be considered until the funds are returned by the undercover
agent. When agents are transporting large sums of currency, they should be
armed.
-
Large sums of currency should not be stored in Service space. Recoverable
funds, when not being utilized in the operation, should be maintained in
an interest-bearing bank account, whenever possible, requiring the signatures
of two Service employees. If it is not practical for the advance to be placed
in an interest earning account, approval of the Chief is necessary prior
to the advance being placed into a non-interest earning account. Documentation
of the approval should be placed in the investigative file for subsequent
review. If operational needs require immediate liquidity, a safe deposit
box may be utilized. If a safety deposit box is utilized, at least three
Service employees should be shown on the signature card, and it must require
two of the three signatures to enter the box. Utilizing three people will
allow more flexibility in obtaining entry to the box. A bank with 24-hour
access is desirable and increases flexibility while allowing for greater
security. The payment for safe deposit boxes and other expenses related to
the movement or storage of recoverable funds should be paid out of the imprest
fund.
-
The contact agent should maintain a detailed ledger (Exhibit 8-1) showing
all activity with respect to the receipt and disbursement of recoverable
funds. The Group Manager should review the ledger every month and compare
it to receipts, bank statements, and/or deposit slips.
-
On a monthly basis, the Group Manager and the contact agent will physically
verify all recoverable funds which are outstanding in the form of currency
and other negotiable instruments (cashier's checks, bearer bonds, etc.).
Their review should include the verification of the recoverable funds ledger,
the undercover agent's receipts for recoverable funds, deposit tickets, voucher
copies of cashier's checks, bank wire transfer memos, etc. In addition, bank
accounts which contain recoverable funds will be reviewed in order to account
for all recoverable funds. After verifying the amount and location of the
funds, the contact agent will complete the section relating to Recoverable
Funds on the Monthly Balance Sheet (Exhibit 8-2). The Group Manager will
verify the accounting and sign the Monthly Balance Sheet. The Group Manager
will provide written verification to the Director of Investigations through
channels within 5 workdays. The Director of Investigations will notify the
Office of Special Investigative Techniques about the status of the advance
within 5 workdays of having been notified.
-
All funds received from or given to other government agencies should be
documented and controlled under the above procedures. Each participating
agency at the conclusion of a joint investigation should identify and circulate
a summary of its project expenses and list any reimbursements received from
the other agency.
-
If another need for an investigative advance should arise while the original
advance is still outstanding, a separate request should be initiated seeking
approval to use the same recoverable funds. However, the original outstanding
advance, even though unrelated, may be used. This is critically important
when the need for the advance cannot be satisfied through normal or expedited
transfer procedures. This is not a common practice and should only be used
in emergency situations. The amount of funds needed should be justified and
adequately
documented.
-
The Chief will require that a verification of recoverable funds is conducted
as part of the undercover operation's quarterly financial review as provided
in text 9.4.8.17.4(3).
-
Any interest earned on recoverable funds will be forwarded through the Chief
to the Regional Controller's Office for transmittal to the General Fund at
the conclusion of the undercover operation. The transmittal memorandum
accompanying the return of funds should only make reference to the undercover
operation number. Identifying the operation by name could lead to an inadvertent
disclosure of sensitive undercover operation information.
-
Recoverable funds are to be returned within 10 calendar days of the close
of the undercover operation or other expiration date if unrelated to a specific
undercover operation. If the funds cannot be returned within this time frame,
a request for an extension of time should be submitted through the original
concurring and approving officials.
-
When returning recoverable funds to Office of Special Investigative Techniques,
the following procedures should be followed:
-
Obtain a check payable to "IRS Accounting Section" .
-
Mail the check through the Chief to the Assistant Commissioner (Office of
Special Investigative Techniques), P.O. Box 6196 Benjamin Franklin Station,
Washington, DC 20044.
-
In the event of loss of all or part of the recoverable advance, the Assistant
Commissioner, CI, will make a determination as to the liability of the special
agent, Group Manager, or other involved employee. The Chief will notify the
Director of Investigations at the earliest possible time of any recoverable
advance which is in jeopardy or lost. The Director of Investigations will
then make telephonic notification to Office of Special Investigative Techniques.
The Chief will submit a report through channels about the loss, including
recommendations about liability.
-
Whenever operationally feasible, recoverable fund advances should be in interest
earning accounts with multiple signatories. This could be critically important
if the undercover agent were the sole signatory and due to injury, etc.,
withdrawal of the recoverable advance could not be effected.
-
The Office of Special Investigative Techniques will prepare a reconciliation
of outstanding recoverable funds on a minimum of a semi-annual basis with
the Systems and Accounting Standards Division.
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Income earned during an undercover operation may be used to offset expenses
of the operation. This is referred to as churning. Operations which seek
to use churning must adhere to the following guidelines:
-
All operations which seek to use churning will be Group I operations which
require the approval of the Assistant Commissioner, CI.
-
The request to use churning should detail the source of the income, how it
is computed (flat rate, percentage, etc.), and in what form it will be received
(currency, check, wire, etc.).
-
Income earned may fully fund the operation but it is limited to the amount
of confidential funds and expenses authorized for the operation. A deviation
must be submitted for approval to incur and pay additional expenses. All
rules which apply to the use of confidential funds also apply to the use
of churned funds.
-
Expenses from the operation will first be paid from the income earned in
the operation. If or when the expenses of the operation exceed the balance
of moneys earned, confidential funds will be used to support the operation.
-
Treasury guidelines require that only approved accounting procedures be utilized
to account for churning operations. Currently, Quicken and Quick
Books commercially available computer programs will be required in all
churning operations and may be purchased with the operation's authorized
funding.
-
Income earned by the operation will be maintained in a separate account by
the contact agent. Reporting procedures for this account will be identical
to an imprest fund account. Monthly reports, Form 1164, will account for
imprest funds and for churned funds separately. The report will include income
statements and balance sheets generated from the Quicken or Quick
Books program for the churned funds activity.
-
Each month a copy of the monthly Form 1164, without backup receipts, will
be provided to the Office of Special Investigative Techniques. This information
will be used to meet the law's requirement to report to Congress on our use
of the churning provision.
-
In cases where expenses must be incurred and paid prior to the generation
of income, confidential funds (imprest funds) may be used. If income is later
earned which would properly offset funds previously expended but not yet
charged against the imprest fund, the earned funds may replace imprest funds.
The procedures to be followed under these circumstances require that a Form
1164 be filed monthly for the Chief's approval of expenditures. Additionally,
in order to maintain the imprest fund, a separate Form 1164 must be provided
to the imprest fund cashier showing zero expenditure. Once sufficient income
is generated, imprest funds may be replaced with earned funds.
-
Earned income and churning will be subject to the same periodic audits as
recoverable and confidential funds. At the end of the operation, the earned
income and churning accounts will be audited as required by current undercover
operations guidelines.
-
Any income left over at the end of the operation will be forwarded to the
General Fund.
-
Interest income earned during the course of an undercover operation may not
be used for churning. It must be forwarded to the General Fund at the conclusion
of the operation.
-
If the operation earns income and churning is not utilized, monthly statements
of undercover earnings must be prepared. The earnings will also be reflected
in the undercover agents income and expense report (Exhibit 8-3) and the
cumulative amount will be reflected in the contact agent's monthly balance
sheet (Exhibit 8-2). At the end of the operation all earned funds will be
forwarded to the General Fund.
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A request for confidential funds should be included in the undercover operation
request and requires the approval of the Director of Investigations and if
over $10,000, the approval of the Assistant Commissioner, CI. See text 9.4.8.4.
-
Separate funding should be approved for each specific undercover operation
requested in the name of a single assigned investigation.
-
In projecting costs in the undercover request, the special agent should include
per diem or actual subsistence expenses, travel for the undercover agent,
payments to informants, and expenditures for operational support functions.
All travel costs should be funded from the undercover operation. Requests
for confidential expenditures for undercover operations should anticipate
administrative expenditures which might be made by the contact agent and/or
investigating agent(s) which directly support the operation and which are
properly reimbursable through the imprest fund.
-
The Chief may approve unanticipated expenditures not projected in the undercover
request but the total expenditures may not exceed the authorization.
-
Examples of confidential expenditures that can be incurred in undercover
operations are summarized as follows:
-
Surveillance Expenses: These include all expenses incurred by the contact
agent and special agents in observing and identifying the targets, audio
and video tapes, and the cost of surveillance facilities and activities.
-
Transcription Costs: Some undercover operations may entail substantial amounts
of electronic surveillance. Past experience has shown that it may take up
to 8 hours to transcribe 1 hour of non-telephonic recording. District clerical
support may not be able to adequately handle the volume of transcription,
or circumstances may require immediate transcription of voluminous recordings.
In these instances, the special agent should consider obtaining the service
of a qualified transcription service to transcribe recorded conversations.
Use of an outside service should be approved by the Chief. In grand jury
investigations, the Assistant United States Attorney should approve using
an outside transcription service.
-
Beepers: The contact agent and the Group Manager, if appropriate, should
obtain telephonic paging services. The undercover agent should commit to
memory the telephone number for the paging service. The paging service will
enable the undercover agent to contact the contact agent at any time from
anywhere the service is available.
-
Post Office Box: The contact agent should rent a post office box or mail
drop to allow for direct mailing by the undercover agent through non-official
channels.
-
Per Diem vs. Actual Expenses: At the option of the Chief, the undercover
agent or support team members may claim actual expenses for meals in lieu
of flat rate per diem. Actual expenses for meals may be claimed in undercover
operations with or without consideration of lodging costs as special lodging
may be required as part of the undercover agent's undercover identity. If
the undercover agent is claiming per diem, and he or she is provided a meal
which is paid for from confidential funds, the undercover agent's daily per
diem will be reduced as provided for in IRM 1763, Travel Handbook.
-
Capital Items: Any expenditures for capital items or fixed assets, such as
cash registers, computers, office furniture, personal furniture, etc., will
be approved in advance by the Chief, controlled for inventory purposes by
the contact agent, and accounted for in the closing report submitted at the
end of the undercover operation. Form 1930, Custody Receipt Card, should
be prepared at the time of the purchase and a copy forwarded to the RUPM.
The original should be maintained by the contact agent during the term of
the operation and should be used to account for the purchased item at the
conclusion of the operation or when its use is no longer required. The district
or region in which the operation occurred will provide for storage of items,
and the RUPM will maintain an inventory of all capital items available and
their location. To the extent possible, items to be used in future undercover
operations should be obtained from the equipment on hand. Items of nominal
value or use should be inventoried and turned over to the Chief, who may
transmit them to the District Facilities Management Branch for appropriate
disposition or maintain them in the district for future use. Items transferred
to another CI office will be accounted for on Form 1931, Transfer-Receipt
of Personal Property. A copy of this form will be sent to Office of Special
Investigative Techniques by the losing office. The gaining office will provide
the Office of Special Investigative Techniques a copy of Forms 1930 and 1931
upon receipt.
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Personal Items: In rare extraordinary circumstances, the undercover agent
may be required to purchase personal items which are necessary to the successful
completion of the operation. The Chief must approve all such requests in
advance. Personal property is not to be appropriated to private use at the
conclusion of the undercover operation. The contact agent systematically
will prepare a schedule of personal items which were not consumed or disposed
of and forward a comprehensive schedule of them to the Chief for control
purposes. The undercover agent will indicate approval of the schedule by
initialing it.
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Security Deposits: Advances from the imprest fund which are to be used as
security deposits (apartment rental, telephone, utilities, etc.) will be
shown as security deposits on the Monthly Balance Sheet (Exhibit 8-2). A
security deposit may be treated as recoverable fund or nonrecoverable fund
advance, dependent upon the certainty of recovery. If the security deposit
is expended, e.g., use of the security deposit in lieu of paying the last
month's rent for an undercover apartment, it should be claimed as an expenditure
at that time. If the security deposit is returned to the undercover agent,
it will be used to liquidate the imprest fund advance by returning the security
deposit to the contact agent.
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Start-up Capital: Initial payments for rent, inventory, phones, and other
expenses to commence a business type of activity in an undercover operation.
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Payments to or on Behalf of Confidential Informants.
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Travel costs, including those for informants and authorized trips home for
undercover agents, if applicable.
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Internal Revenue Manual
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Hndbk. 9.4 Chap. 8 Undercover Operations
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(06-30-1998)
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