The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) had a great idea: facilitate the sale of weapons to gun runners near the Mexican border, then follow the guns to the higher echelon of criminals in Mexico. American and Mexican authorities would arrest the kingpins. Foolproof?

No. Project Gunrunner began in 2005 as an effort to use electronic tracking to trace guns sold illegally in Mexico and the Caribbean. It led to Fast and Furious (2009-11), Wide Receiver (2006-2007), the Hernandez case (2007), and the Medrano case (2008). In these latter operations, rather than create an intelligence trail with the eTrace software, the U.S. simply let straw buyers purchase guns to transport to Mexico. Mexican authorities were not notified. In the case of Fast and Furious, the ATF attaché at the U.S. Embassy in Mexico City was not notified.

The ATF Phoenix office facilitated the movement of more than 2,500 weapons, and promptly lost track of them. Some 195 Fast and Furious guns have been recovered from crime scenes in Mexico. Nearly 270 have been recovered at crime scenes in the U.S., including the two recovered at the scene of the murder of U.S. Customs and border agent Brian Terry. The 2011 death of Immigration and Customs Enforcement agent Jaime Zapata may have been the result of these guns as well.

It wasn’t a great idea. Now, we know the ATF has applied the same “strategy” to illegal cigarettes.

The ATF made profits of $162 million from stings — but they lost an estimated 420 million cigarettes worth more than $15 million between 2006 and 2011. Through a system of “churning operations,” ATF used profits from one sting to finance the next set of operations. ATF used informants to handle the cigarettes (one informant received a staggering $4.9 million in “expenses”). The operations were done without proper approval according to the Justice Department’s internal watchdog arm. The informants were paid without receipts. With so much money unaccounted for, is it possible that some ATF agents were also paid without proper approval and receipts?

Illicit cigarette sales cost states billions in tax revenue. New York State adds $4.35 to each pack and New York City another $1.50, so 21 million packs — 2.1 million cartons — represents tremendous money.

But lost tax revenue is only part of the story; terrorist financing is another.

According to Police Chief Magazine, terrorist groups including Hamas, Hezbollah, the PKK, and the IRA have made millions by selling cigarettes and sending the money to the Middle East (or to Ireland). In 2004, Mohammed Hammoud was convicted of funneling $7.9 million to Hezbollah and sentenced to 155 years in prison, one of several cases that year involving money laundered to Hamas, Hezbollah, and al-Qaeda. Despite these available historical examples, in 2006 ATF decided to facilitate illegal sales.

In 2008, Republican members of the House Homeland Security Committee published a report detailing the relationships between terror groups and traffickers. A pack of cigarettes that retailed for $8 at the time in high-tax states such as New York and New Jersey would cost only $4 in Virginia or North Carolina. The profit from a standard stolen truckload of 1,500 cartons would be worth approximately $60,000. An anti-tobacco group estimated that five percent of all cigarette sales in North America were illegal.

That ATF might have been one of the profiteers was not present in the report.

In 2009, U.S. Customs conducted the largest cigarette bust in its history — 200 million stolen cigarettes worth more than $20 million. How many of those came from ATF? There’s no way to know. More than twice that many were “lost” by the agency.

That year, recognizing the problem of terrorist financing from cigarettes, Congress passed the Prevent All Cigarette Trafficking Act. The bill noted:

Hezbollah, Hamas, al Qaeda, and other terrorist organizations have profited from trafficking in illegal cigarettes or counterfeit cigarette tax stamps; terrorist involvement in illicit cigarette trafficking will continue to grow because of the large profits such organizations can earn.

ATF, by its own admission, continued to run such operations for two more years until 2011 — the same year it claims to have shut down “Fast and Furious.”

The networks, money, and operators fostered and paid for by a U.S. government agency are still out there. In 2012, Brooklyn prosecutors took down a cigarette ring valued at $4 million. In May of this year, 16 Palestinian men — some with ties to convicted terrorists — were arrested on charges of illegal cigarette sales that may have netted more than $51 million. At least one of the men has ties to Omar Abdel Rahman, the “blind sheikh,” who is in prison on a conviction stemming from the first World Trade Center bombing.

So far, we know ATF has enriched criminal and terrorist organizations via guns and cigarettes. According to the acronym, perhaps stolen alcohol programs will be uncovered next, with similarly disturbing consequences.