Customs Whistle-blower Takes Treasury's O'Neill to Court
By: Martin Edwin Andersen


National-security whistle-blower Diane Kleiman has filed a lawsuit against Treasury Secretary Paul O'Neill in a case involving corruption and egregious security breaches at John F. Kennedy International Airport in New York.

In 1999, Kleiman, a former Queens prosecutor who was a U.S. Customs special agent, blew the whistle about alleged drug overdoses by Customs employees, drug trafficking and money laundering by low-level employees of a major airline, lack of proper background checks for airline employees and cash missing from seizures. Kleiman says she was asked to commit perjury by her supervisor to conceal successful drug smuggling by the airline employees. When she refused to participate in the cover-up, she says, she was fired.

In the case filed today, Kleiman alleges that she was the victim of violations of her privacy, fair employment and whistle-blower protection rights. She maintains that the discrimination practiced against her in the hostile workplace environment included being called epithets such as "Jew bitch." Kleiman, who has been unable to find work since leaving Customs, is demanding back pay, benefits, attorneys fees and other compensatory damages.

On Sept. 11, 2001, Kleiman helplessly watched bodies fall from the burning World Trade Center just two blocks from her home. As the second plane screamed overhead, she could only shout: "F___ Customs, f___ Customs!"

Kleiman's rage was due to the fact her warnings about the alleged cover-up and the potential security risks it posed prior to Sept. 11 were ignored. Kleiman says the letter she received announcing that she had been fired "stated that I was fired for sharing information with a DEA [Drug Enforcement Administration] agent which led to the arrest of an individual with 46.2 pounds of cocaine. How does the government think that the Homeland Security program will succeed when agencies do not share information?"

She tells Insight that current efforts to beef up security by airport screening and background checks will not protect the American public from potential harm if senior Customs management officials are allowed to continue to engage in what she describes as self-serving bureaucratic damage control.

"In January 1999, I had seized about $30,000 taped to the belly of a baggage handler who worked for American Airlines and who was an illegal alien," Kleiman says. "Upon doing a background check, I determined that this very same employee had been stopped only three months earlier for attempting to smuggle about the same amount of money. My boss refused to allow me to report this employee to security at American Airlines and at the time of my firing, he was still employed at the airlines."

"Further, after this incident, I started driving my unmarked government vehicle on the ramps, and [although] I was in plainclothes in completely restricted areas, I was never stopped and questioned as to who I was and what I was doing there," Kleiman adds. "I realized that whether day or evening, I could drive my vehicle up to any of the planes, which were unattended, and could place bombs and weapons on these planes. I reported this to my boss as well and was told to keep quiet."

Kleiman's allegations currently are being investigated by the Office of Special Counsel as well as by staff from Iowa Republican Sen. Charles Grassley's office. Sources say Kleiman's legal ace-in-the-hole may be performance evaluations doctored by Customs supervisors and the fact that she retained the original copies of her job ratings, which rate her performance consistently higher than the doctored evaluations.

Martin Edwin Andersen is a reporter for Insight. Story Source: Insight on the News      

Friday, December 06, 2002

2 men, Mattel fined for illicit donations

SCANDAL: Former executive and a consultant laundered 56 campaign contributions to several local politicians through third parties.

By Nick Green


El Segundo-based Mattel Inc., a former company executive and a Torrance-based political consultant have agreed to pay more than $900,000 in fines stemming from an ethics probe into the laundering of corporate political contributions.

The 56 contributions, most of them amounting to a few hundred dollars apiece, were given from 1996 to 2000 to more than two dozen political candidates, party committees and political action committees.

Recipients were both Republicans and Democrats and included the campaigns of such local politicians as state Sen. Debra Bowen, D-Redondo Beach; Assemblyman George Nakano, D-Torrance; county supervisors Don Knabe and Yvonne Brathwaite Burke; former Republican Rep. Steve Kuykendall and Hawthorne Mayor Larry Guidi. Cash also went to Gov. Gray Davis and the Gore 2000 presidential campaign. (also Senator Diane Feinstein, Senator Barbara Boxer, Bob Filner-San Diego)

"The laundering of campaign contributions is one of the most serious violations of the (Political Reform) Act, as it denies the public of information about the true source of a candidate's financial support," the state Fair Political Practices Commission said in its filing.

Indeed, the politicians involved didn't know the true identity of the donors either.

"I had no idea," Guidi said, adding he did not plan to return the $5,000 he received in 1999, the largest single contribution. "It's money spent. How do you return it?"

Fines also have been levied by the city of Los Angeles Ethics Commission and the Federal Election Commission, which announced Thursday that its $477,000 penalty was "one of the highest cumulative civil penalties in the history of the commission."

However, the state commission observed that the contributions were so "widely dispersed" that they "did not have a significant effect on any particular election."

The scheme, unbeknownst to Mattel, went like this: Fermin Cuza, senior vice president of governmental affairs at Mattel from 1997 until he resigned under company pressure in 2001, funneled more than $100,000 from the world's largest toymaker to political campaigns under other people's names. "It was done in the mistaken belief that this was necessary to get out there politically, without thinking of the consequences," said Mark E. Beck, an attorney for Cuza.

Cuza, who maintains a house in Manhattan Beach, has agreed to pay $188,000 in federal penalties, $110,000 in city fines and $88,000 to the state.

Alan Schwartz, a political consultant well known in Democratic circles and a member of a prominent Torrance family, was hired as a consultant by Mattel and via his company, Asset Management Systems, aided Cuza in laundering 30 of the contributions. He has agreed to pay $195,000 in federal fines, $66,000 to the city and $58,000 to the state.

Mattel uncovered the scheme last year and reported it to government officials, who began the three-pronged probe.

"The actions taken were in direct violation of Mattel policy and without the knowledge or approval of the company," Mattel spokeswoman Jules Andres said in a statement.

Nevertheless, the company conceded it failed to report 48 campaign contributions made to various local and state candidates. It will pay $94,000 in federal penalties, $72,000 in state penalties and $60,000 in city fines.

Observers on Thursday were mystified why Cuza and Schwartz broke campaign finance laws. The amounts involved were relatively small; Schwartz had contributed to campaigns before and in some - such as state races - there was no limit to the amount of corporate contributions Mattel could give anyway at the time. "We're talking about a contribution I got from somebody, having no idea the money he was donating to the campaign wasn't really coming from him and wasn't really his to give," Bowen said. "The whole thing is just so odd that I still don't know what to make of it or what they were trying to accomplish.

"I wouldn't have had a problem with a contribution from Mattel and I can't imagine George Nakano would have either," she added. "Mattel is a good employer in my district."

Schwartz wasn't talking Thursday to shed light on his actions. He referred inquiries to his attorney, who didn't return a phone call requesting comment.

Becky Ames, chief of staff for Nakano - who knows Schwartz well, but was traveling and unavailable for comment - said the real damage was to the public's perception of politics. "Garbage like this is just unfortunate because you accept the contributions in good faith and it undermines the public's faith in the (political) process," she said. "It's a very frustrating position to be in." Both Cuza and Schwartz had glowing civic careers.

Cuza is a former executive in residence at California State University, Los Angeles, and rose to director of border operations on the U.S.-Mexico border during a 15-year career with U.S. Customs. Los Angeles Mayor James Hahn appointed him in July to his International Trade Advisory Board, although Cuza resigned a month ago to start his own business, city officials said.

Schwartz, who flirted with running for Congress in 1998, is former chairman of the South Bay Economic Consortium, served as managing director of a Torrance investment firm and is a member of the Harbor-UCLA Community Alliance Steering Committee, which is working to save the trauma center. While the federal commission levied the fines Thursday, the state commission isn't scheduled to take action until next Friday while the city's Ethics Commission will finalize its settlement Dec. 17. Federal ethics officials said recipients of the contributions will be instructed to "disgorge" all illegal donations.

The Associated Press, staff writers Donna Littlejohn, Ian Gregor and Lee Peterson, Copley News Service correspondent David Zahniser and researcher Sam Gnerre contributed to this article.

Publish Date:December 6, 2002

Associated Press article:

Fines recommended for alleged laundering by former Mattel exec

December 5, 2002

LOS ANGELES - More than $450,000 in fines have been recommended against Mattel Inc., one of its former executives and a former political consultant for allegedly laundering political contributions, state and city ethics investigators said.

On Wednesday, officials said former Mattel executive Fermin Cuza signed a stipulation admitting that he used $52,000 from the El Segundo-based toy maker for political purposes.

Cuza made 56 political contributions in the names of others to 25 campaign committees in state and local races. Officials said that political consultant Alan Schwartz admitted that he aided Cuza in laundering 30 of the contributions.

Mark E. Beck, an attorney for Cuza, said his client has agreed to pay approximately $105,000 for laundering contributions to federal candidates, including those running for Congress.

"It was done in the mistaken belief that this was necessary to get out there politically, without thinking of the consequences," Beck said.

Both men were fined for laundering and Mattel stipulated that it failed to properly disclose contributions that came from its coffers.

"The laundering of campaign contributions is one of the most serious violations of the (Political Reform) Act, as it denies the public of information about the true source of a candidate's financial support," the state Fair Political Practices Commission said in its filing.

Some of the political committees that received the money include those for Gov. Gray Davis, Attorney General Bill Lockyer, state Sen. Debra Bown, D-Marina del Rey and Los Angeles County Supervisor Don Knabe.NOTE:(Other names NOT printed in these article but printed in the San Diego Union Tribune on page A-8 are: Democrat Senators Diane Feinstein,Senator Barbara Boxer, Rep. Bob Filner, D-San Diego, Gore 2000 presidential committee.)

Representatives of the governor, attorney general and county supervisor said those officials had no knowledge that the contributions did not come from the source listed on the checks.

The city Ethics Commission said Cuza and Schwartz "sought to conceal the use of Mattel funds to make political contributions under assumed names by circumventing Mattel's internal policies and procedures regarding the making of political contributions."

The two also admitted that their laundered donations cumulatively exceeded the contribution limit of $500 in City Council races and $1,000 in mayoral contests.

The stipulations and fine amounts have been recommended by the staffs of the state and city agencies but still have to be approved by the FPPC and the city commission, which are scheduled to vote on them in the next week.

The government probe began last year when Mattel reported to the city, state and federal agencies that Cuza, a senior vice president, had Schwartz's help that "unilaterally caused Mattel to reimburse various individuals for their political contributions," according to the Ethics Commission stipulation.

"We are pleased to bring this issue to a close," Mattel spokeswoman Jules Andres said.

"These actions were taken in direct violation of Mattel policy. When we learned of the wrongdoing, we immediately investigated and self-disclosed the situation to the appropriate authorities and have since cooperated fully with them," Andres said.

Contributions financed with Mattel funds included a $1,000 contribution attributed to Schwartz and given to the Davis campaign for governor in 1997, almost a year before he was elected.

The largest single contribution was $5,000, given in 1999 to a committee for Larry Guidi, a candidate for mayor of Hawthorne.

Associated Press Clipping

FBI agents seriously injured while investigating
interstate rail car robberies near El Paso, Texas
The following article confirms what I, and several other former Customs agents have said regarding the "illicit" use of the U.S. Rail Roads by smugglers and narco-terrorists in order to introduce narcotics or contraband into the U.S. AND the theft of millions of dollars worth of merchandise entering this country 100's of times a day all across the U. S. borders everyday by rail road.

This incident follows a special investigative news team report by Elizabeth O'Hara of KFOX News in El Paso, Texas of former Customs employee and whistleblower John Carman which aired on July 25, 2002. This is just less than 45 days from this Saturdays' felony assault on two FBI agents who were investigating interstate theft. Just prior to this incident in 1998 and later in April 1999 I, and several other former Customs agents, like Darlene Catalan, Sandy Nunn and others, who do not wish to be identified at this time, advised the local San Diego FBI office through FBI special agent Robert W. Meza of the illegal activity and the killed investigation by former Customs SAIC John Hensley of the Riverside Customs office. Subsequent to that meeting in April, 1999 I reported the rail road smuggling to Customs contacts in Calexico of the smuggling and they did a surprise inspection on an "inbound" train and discovered over 1,000 pounds of narcotics on or about December 2000. This smuggling still continues and trains come into the U.S. everyday without inspection on the Mexican and Canadian borders. These are the same borders where certain terrorist factions like the Al Qaeda have entered the U.S. without detection. It is not just a Customs problem, but a National Security interest as well. In the mean time, Customs whistleblowers still suffer greatly the retaliation of Customs top managers for reporting such illegal acts and corruption within the agency. Commissioner Bonner has done NOTHING to enforce the protections under the law with regards to Customs whistleblowers under the Whistleblower Protection Act of 1989. The White House has also been informed of these issues with little or no response. How many loyal government agents have to be injured or killed before someone in charge will do something about these atrocities? Editor~

Agents left in comas after a border sting

Train robbers dragged both FBI agents into Mexico and beat them with rocks

By Associated Press
September 14, 2002

EL PASO - Two FBI agents were beaten with rocks and critically injured as they confronted suspected train robbers in a desolate area near the Mexican border, officials said Friday.

Agents had been investigating the theft of interstate shipments from the railroads, said FBI spokesman Al Cruz.

In that area - rolling hills at the foot of Mount Cristo Rey less than 10 miles west of El Paso - there have been 122 train robberies, 87 burglaries and 19 rock-throwing incidents since January, said El Paso Border Patrol sector chief Luis Barker.

Because of a bend in the tracks, thieves can jump onto the slow-moving train, break into the cars and throw off cargo, officials said. In the past, thieves also have unhitched cars at the end of the train so they can take more time moving the stolen merchandise into Mexico.

"Two agents were overwhelmed by Mexican nationals who had already mounted the train," said FBI Special Agent in Charge Hardrick Crawford Jr. "Those agents were dragged into Mexico, kicked and beaten, hit with rocks."

The border is yards away from the tracks.

The injured, who were in induced comas Friday, were identified as El Paso FBI agents Sergio Barrio, 38, and Samantha Mikeska, 38, Crawford said.

Crawford said Barrio, who suffered a severe injury over his right eye, underwent surgery early Friday at Thomason Hospital to relieve pressure on his brain. He said Mikeska also suffered from pressure on the brain.

2 convicted in drug case after buying a seized SUV from U.S. Customs
Editors Note: Customs inspectors are supposed to "double check" ALL narcotics seizures from vehicles even though they are to be processed for the impound lot and later to be sold at auction. I can personally attest to the fact that I have found additional contraband, like marijuana and steroids even AFTER another Customs inspector has released the vehicle for a tow truck driver to take the vehicle to the impound yard and later sold. This is a common mistake and should be checked. The procedure is that the seized vehicle should have been inspected at least three times before being towed away. Sometimes even more. But this does not happen all the time. There have been many instances where not only marijuana, currency, steroids, weapons, other contraband has been found in vehicles gas tank, tires and false compartments, but also large amounts of U.S. currency. The government never acccepts any blame for these mistakes and should as they are also trying to make a case out of their own mistake. After all, the new owners sign a release form accepting the vehicle as is, but the government later reneges on the contract when they find out there was more to the seized vehicle than marijuana or U.S. currency. Customs should just make amends and correct their mistakes. People should NOT have to suffer for their stupid mistakes. But that's management for you. They are not only "ignorant", they also refuse to listen to reason and are the most "arrogant" people you would have to deal with. Customs needs people with expertise to train all the new people working under the "new" management to prevent such occurrences. Editor ~ John Carman, former U.S. Customs Senior Inspector of 16 years.

2 convicted in drug case after buying a seized SUV from U.S. Customs

By Sandra Dibble

January 11, 2003

TIJUANA - Caught with 30 pounds of marijuana inside their SUV, the two printers sat for almost a year in Ensenada's state prison, insisting that the bundles were not theirs.

Their only mistake, they said, was buying a seized vehicle from the U.S. Customs Service, which had failed to find all the pot that drug dealers had stuffed inside.

Yesterday, Francisco Rivera, 40, and Alfonso Calderón, 34, walked free, after a federal appeals court in Mexicali believed their story and overturned their convictions.

"Definitely, the U.S. Customs Service is responsible for this," Rivera said by telephone shortly after his release last night. "They could have admitted that they can make mistakes, and saved us a year of misery."

Rivera and Calderón, brothers-in-law and partners in a small family-owned Tijuana printing business, said the marijuana was already inside the 1997 Nissan Pathfinder when Rivera bought it in San Diego at an auction of vehicles that had been seized by U.S. Customs.

They are suing Customs for an unspecified amount and the private contractors that sell seized vehicles, accusing them of negligence.

"Somebody had an obligation to make sure that the vehicle was clear of contraband," said their San Diego attorney, Teresa Trucchi. "My clients ended up paying for that mistake."

Vincent Bond, U.S. Customs Service spokesman in San Diego, said he could not comment because of the pending litigation.

Customs records show the Pathfinder was seized Jan. 25, 2001, at the San Ysidro border crossing after inspectors discovered 60 pounds of marijuana in the gas tank. The driver was sentenced to 39 days in San Diego County jail.

On Sept. 5, 2001, Rivera and a brother-in-law, Gabriel Calderón, Alfonso's brother, bought the vehicle for $2,600 at the auction conducted on Otay Mesa by McCormack Auction Co. The La Mesa-based company is a subcontractor for EG&G Technical Services, which runs auctions for the U.S. Treasury Department. That agency oversees the Customs Service.

Last Jan. 24, Rivera and Alfonso Calderón, who had never been in trouble with the law, were driving back to Tijuana when soldiers stopped them at a checkpoint outside Ensenada. They found bundles of pot stuffed into a wheel well and immediately arrested the pair.

Mexican investigators later found the marijuana was old and deteriorating, leading the men's Tijuana attorney, Carlos Mejía López, to conclude that it had been overlooked after U.S. Customs seized the SUV.

The Ensenada trial judge was not swayed, however. In a written opinion, Judge Blanca Evelia Parra Meza said U.S. Customs officers couldn't have overlooked the packets, given the technology at their disposal. She sentenced them to five years.

A federal judge in Tijuana upheld the conviction, saying the men had not proven their claims. But yesterday, the three-judge federal appeals panel in Mexicali reversed the lower courts' rulings.

Reunited with their families yesterday, Rivera and Calderón headed home to celebrate.

"This has helped me value everything that I have," Rivera said. "The hardest part was being away from my wife and daughters."

(1) of the Electronic Communications Privacy Act (ECPA). All violators are subject to fines, imprisonment or civil damages, or both.

Customs Employees Against Discrimination Assn. (CEADA)

P.O. Box 870555 ~ Stone Mountain, Georgia 30087
Phone (888) 607-1694 ~ Fax (678) 254-5018 ~ Email:

FOR IMMEDIATE RELEASE - September 19, 2002

U.S. Customs Whistleblower Had Warned America

Customs Employees Against Discrimination Assn. (CEADA), a non-profit global organization was created to fight racial profiling, discrimination and inequality of air travelers and Customs employees in the U.S. Customs Service. Because of the events surrounding September 11, 2001, we are continuing to inform the public about Customs practices that have proven to be fatal to America.

On March 13, 1999, based on information former Customs Special Agent Diane Kleiman received from a veteran DEA agent in Florida, she arrested a courier carrying 46.2 pounds of cocaine into JFK airport on an American Airline's plane. Seated closely nearby to the courier, was an American Airline employee with a key to the exit gate. The DEA agent, who had already made numerous arrests based on this pattern, informed Special Agent Kleiman that airline employees were assisting drug couriers into the country, using their exit keys to bypass Customs and Immigration checks. Although this information was given to the U.S. Attorney's Office at the time, they still chose to release the airline employee.

Six months prior to the 911 attack, Special Agent Diane Kleiman again warned the very same U.S. Attorney's office that a tragedy would occur because of the lack security at American Airlines. Kleiman herself was an former Assistant District Attorney at the Queens District Attorney's office. She told them that if these employees had such easy access to the planes, they could place bombs and weapons on the planes. She further informed them that American Airlines were not doing background checks on its employees and many that were hired were illegals. These employees were given ramp passes, giving them access to the ramps from public streets. With this access, they could do surveillance and observe the schedules of when planes landed and departed and the security in the airport. The U.S. Attorney's Office dismissed former Special Agent Diane Kleiman by saying they would look into it and never got back to her. When she reported these security breaches to her Senior Managers in Customs, they fired her for raising these issues.

During the tenure of former Special Agent Diane Kleiman at the JFK airport, she blew the whistle about drug overdoses and deaths amongst Special Agents, cash disappearing from seizures, and serious lapses in security at American Airlines that allowed drugs and illicit cash to flow with the collision of low-level airline employees. For refusing to go along with a cover-up which required her to commit perjury in the Grand Jury, her life and the lives of family members were threatened as well as her employment. For her refusal to participate in this illegality, she was fired and then blackballed by former bosses. She has since been unemployed for well over three years now.

CEADA is made up of scores of other whistleblowers like former Special Agent Diane Kleiman that was only looking out for the public's health and safety. But instead of being praised for their efforts, U.S. Customs like many other federal agencies terminates whistleblowers and then blackballs them from any further employment.

CEADA and other civil and human rights groups, are sending a strong message and demanding accountability from our legislators - to take a closer look at agencies like U.S. Customs. Too often have whistleblowers cries for help been ignored and they have been made to suffer in silence. There must be checks and balances to protect whistleblowers individual liberty and it's time to pass laws that are not against the total survival of whistleblowers. We will go nowhere unless we force a change in public policy - and that can only come from our legislators. This is a battle that demands the nation's uncompromising commitment because we don't want another 911 to occur.

Press Release – U.S. Customs Whistleblower Had Warned America

Page 2

Former Customs Special Agent Diane Kleiman will be present on September 24, 2002 at l:00 p.m. at New York City Hall where she will be telling her story to the New York City Council in order to encourage the members to implement legislation ensuring stronger whistleblower rights to New York City employees. On September 17-18, 2002, she met with the U.S. Office of Special Counsel (OSC) in New York, the office that oversee whistleblower protection, who recently accepted her case because of 911. In the next few weeks, she will be meeting with Senators along with Attorney Doug Hartnett, National Security Director and Attorney Tom Devine, Legal Director of the Government Accountability Project, a whistleblower watchdog group, (202) 408-0034, Please add this whistleblower to your calendar and listen closely to what she has to say.

In 1998, according to EEOC and OSC statistics, the U.S. Customs Service came in second to all federal agencies with the most Federal Whistleblowers. CEADA is seeking out attorneys to file a possible Whistleblower

Class-Action Lawsuit against the U.S. Customs Service and is hoping other federal agencies follow their lead.