Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, May 3, 1993                   TAG: 9305030101
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A2   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

REPORTS OF CUSTOMS AGENTS SMUGGLING DRUGS `LOST'

The three December 1990 reports by investigator Teresa Price outlining the drug allegations - the most explosive in an otherwise routine internal probe - never reached the official case file in Washington, according to the case file ledger and officials.

It was that file, eight volumes thick, that the Treasury inspector general's office in Washington used to close the probe in 1991. The allegations that Customs inspectors in Long Beach, Calif., may have assisted in drug smuggling were never investigated, officials said.

"At this point, we're still trying to determine how the material didn't get into the file," said James Cottos, the Treasury Department's assistant inspector general for investigations.

Since learning about the three Price memos, obtained by The Associated Press, Cottos said the smuggling allegations have been forwarded to the Customs Service internal affairs unit for investigation. He said his own agency is conducting an internal review into why the reports didn't reach Washington.

The mystery over the reports is the latest twist in an investigation in which:

An informant was gunned down eight months after he began providing information to Price. Los Angeles police believe the killing stemmed from a robbery, but federal investigators received information suggesting a link to the case.

Investigators discovered that the Customs Service was inexplicably diverting some containerized cargo at its Long Beach, Calif., checkpoints to a single warehouse. No action was taken, but Customs agreed to stop the diversion.

Seventeen Customs Service officers were reprimanded for socializing at a Christmas party paid for by the same warehouse operator who benefited from the diversions.

The review of the case comes shortly after two congressional subcommittee chairmen wrote a letter to the incoming Clinton administration in November sharply criticizing the Treasury inspector general's handling of Customs cases.

Reps. Doug Barnard and Charlie Rose alleged that they had found evidence that the inspector general's office had "prematurely killed uncompleted investigations" of Customs and delayed other probes. Donald Kirkendall, the Treasury inspector general appointed by the Bush administration, has since resigned.

Price's investigation two years ago was spurred by complaints from James Kendricks, a Los Angeles business consultant who was shot to death outside his home in August 1991. Kendricks was a key source of the drug allegations and photos proving the reprimanded Customs inspectors had socialized with the warehouse operator, documents show.

In late 1990 and 1991, Kendricks and Manuel Macias, executive vice president of International Truck & Transfer Inc. of Carson, Calif., held a half-dozen discussions with Price. The two described a wide array of alleged improprieties in the Customs Service in Long Beach, according to Price's memos and notes of the meetings obtained by AP.

Adding to the intrigue is Kendricks' slaying.

Shortly after the killing, Customs investigators received an allegation "there must have been some Customs involvement," said Stephen DeVaughn, acting assistant commissioner of internal affairs.

In addition, Price reported in an Aug. 21, 1991, memo that Macias received an anonymous phone call the day after the killing also tying the death to the probe.