The U.S. Department of Homeland Security's watchdog agency is in turmoil amid allegations that its agents in Texas were told to falsify reports ahead of an office inspection last fall, according to an internal email and interviews.
Thomas M. Frost, the department's chief investigator, and deputy John Ryan were placed on administrative leave March 29, according to the email sent to managers nationwide last week.
Frost and Ryan declined to comment as did Acting Inspector General Charles K. Edwards.
Wayne H. Salzgaber, another deputy, wrote in the email that Ryan, who oversees the inspection operations, and Frost were on leave pending the conclusion of a U.S. Department of Justice and FBI investigation into the matter.
"The Acting [inspector general] decided to take this action in the interest of continuing our operations during the investigation with the least amount of disruption to our mission," he wrote. "I am confident that this situation will be short lived and that DOJ will quickly resolve this matter..."
A federal grand jury in Washington has been convened to hear testimony over whether agents in a McAllen, Texas, field office fabricated "investigative activity" to show progress on misconduct cases involving homeland security employees, officials familiar with the probe told the Center for Investigative Reporting.
One former agent who was called to testify said the entire McAllen office, which has about 10 employees, had been subpoenaed.
Along with investigating corruption, the inspector general is responsible for policing waste, fraud and abuse at the Department of Homeland Security. The Inspector General's office -- which was created along with Homeland Security in 2003 -- has a staff of 676 employees, including roughly 200 investigators in 33 offices nationwide.
Over the last decade, the Department of Homeland Security has spent billions of dollars to boost border security, including a hiring surge of U.S. Border Patrol agents that has more than doubled the size of the agency.
At the same time, officials report an uptick in corruption-related investigations. Since October 2004, 136 Customs and Border Protection employees have been indicted on or convicted of corruption-related charges.
The probe into activity at the McAllen office could have wide-ranging implications and bring calls to reopen criminal investigations by the inspector general.
Edwards testified in June that the inspector general's policy was to open investigations of all allegations of corruption by Department of Homeland Security employees.
Yet the practice has overloaded investigators at the inspector general's office, agents say. As a result, cases haven't been investigated or have been dormant for up to two years.
The inspector general for homeland security has been embroiled in a turf battle with the FBI and other homeland security agencies over which office has the responsibility to investigate corruption within the federal government's third-largest department.
In some cases, the inspector general has sat on cases rather than allow outside investigators from the FBI or Customs and Border Protection's internal affairs to pursue them, agents say. The inspector general had 2,564 open investigations as of Sept. 30, 2011, the end of the last fiscal year, up nearly 23 percent from the previous year.
Tim Herlihy, a former assistant special agent in charge of the inspector general's Washington field office, said the inspector general didn't have the resources to investigate cases alone. But, he said, the message to its agents was clear: Don't work or share information with other anti-corruption agencies, such as the FBI.
"To do big, high-impact corruption work, you have to work with as many other agencies as you can, including the FBI. Most (special agents in charge) feel that way," said Herlihy, who retired in April 2009. "At end of day, taxpayers are not well served because the inspector general's office is not properly investigating sophisticated corruption. It's not the way it's supposed to be."
Inspector General spokeswoman Marty Metelko said the agency works closely with other law enforcement agencies.
The allegations against the McAllen field office arose after a September 2011 internal inspection, according to the e-mail. Salzgaber wrote that the inspector general conducted an internal review of all investigations and later instituted a management shakeup.
Gene Pedraza, who ran the McAllen field office until he was placed on administrative leave earlier this year, did not return a call for comment. A former assistant special agent in charge of the office, Jody Warren, said he'd been called to testify before a federal grand jury.
"I'm waiting to see what happens with all that. Everybody in that office has been subpoenaed," said Warren, who retired in December. "Is this a mountain out of a molehill? I don't know."
James Gaughran, another deputy to Frost, will be the acting assistant inspector general for investigations, Salzgaber wrote. Mike Dawson, the top agent for the inspector general's Washington field office, will act as the deputy for inspection operations in Ryan's place.
Before Frost was named the head of investigations in February 2008, he was the special agent in charge of the Chicago field office, according to his biography on the Office of Inspector General website. He began his federal law enforcement career with the U.S. Secret Service in 1976. Ryan previously worked for the Government Accountability Office and the U.S. Secret Service.
Tensions flared after Frost sent a December 2009 memo to James Tomsheck, the Customs and Border Protection assistant commissioner for internal affairs, that ordered his internal affairs agents to cease conducting criminal investigations.
Frost also directed Customs and Border Protection to stop participating in corruption-focused task forces or sharing information with other agencies unless coordinated through the inspector general.
An August agreement between Customs and Border Protection and the Department of Homeland Security's inspector general aimed to address the friction between the agencies but has caused additional acrimony, interviews show.
A Department of Homeland Security spokesman declined to comment, as the inspector general's office is independent from the department. A Justice Department spokeswoman and an FBI spokesman both declined to comment.
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