FBI officials mishandled a Florida terror investigation, falsified documents to try to cover mistakes and retaliated against an agent who complained about the problems, The New York Times reported in its Sunday edition.
Citing a draft report of an investigation by the Justice Department's inspector general's office, a copy of which was obtained by the newspaper, the Times said that in one instance correction fluid was used to alter dates on three FBI forms to conceal an apparent violation of federal wiretap law.
It was not known who altered the forms.
The case dates to 2002, the Times said, when the FBI's Tampa office opened a terror investigation into whether laundered money, possibly connected to a drug outfit, might be used to finance terrorists overseas.
The FBI was considering initiating an undercover operation and asked an agent with expertise in the area to take part.
But the agent, Mike German, soon told FBI officials the Orlando agent handling the case had "so seriously mishandled" the investigation that a prime opportunity to expose a terrorist financing plot had been wasted.
The report however concluded that "there was no viable terrorism case."
But the draft report, dated Nov. 15, said German, who left the bureau last year after he said his career was derailed after the Florida incident, was "retaliated against" by his boss, who stopped using him for prestigious assignments in training new undercover agents.
FBI spokesman Michael Kortan told the Times the bureau had not been briefed on the findings but said that once it did get the report, "if either misconduct or other wrongdoing is found we will take appropriate action."
The report said the inspector general found the FBI had "mishandled and mismanaged" the investigation and said supervisors were aware of problems in the case but did not take prompt action to correct them.
Once German raised his concerns, an unidentified agent in Orlando "improperly added inaccurate dates to the investigative reports in order to make it appear as though the reports were prepared earlier," the inspector general found, according to the Times.
Correction fluid was used to backdate forms that the main informant had signed as part of a bugging operation, in which he agreed that he had to be present for all undercover taping.
The alteration was significant, the report found, because the informant had taped a 2002 meeting with suspects but left the recorder unattended while he used the restroom, in violation of federal law.
The report also said that after German began making his complaints about the case, the head of the FBI undercover unit, Jorge Martinez, froze him out of teaching assignments in undercover training and told one agent that he would "never work another undercover case."