Escalating a scandal that could rock the Obama administration, it has emerged the U.S. government trained Mexican police officers in precincts known to be corrupt as part of a scheme that ended up running guns into Mexico.

“Project Gunrunner” was run by the Bureau of Alcohol, Tobacco, Firearms and Explosives, or ATF, in conjunction with the Justice Department and the FBI.

As part of the project, the ATF conducted 12 training sessions for Mexican police in several Mexican cities, according to the Government Accountability Office, or GAO. The ATF trained officers at police stations that were raided and shut down by the Mexican government as part of a massive corruption sting in which police officers were arrested.

In spite of the GAO report, the ATF claimed in October 2010 that it only trained about 20 people in Mexico as part of the gunrunning scheme. This discrepancy has not been explained by either the GAO or the ATF.

According to the GAO report, the ATF trained Mexican police in the cities of Mexico City, Tijuana, Nuevo Laredo, Rosarito and Matamoros.

Most of those cities had their police forces subject to massive Mexican government raids in which the police had their weapons confiscated and some were arrested.

In November 2008, for example, the Mexican Army rounded up and disarmed 157 Matamoros police officers. Matamoros is located just south of the border city of Brownsville, Texas.

In January 2008, Mexican soldiers disarmed dozens of police officers in three border cities on suspicions that the officers had been protecting drug cartels, including in Mexico City.

In January 2007, the Mexican army confiscated guns from the entire police force of Rosarito, near the Mexican border with the U.S., on suspicion the town’s police were colluding with drug trafficking gangs.

Also that January, the entire Tijuana police force walked off the job after being effectively disarmed by the Mexican army as part of the same raid.

The ATF had been training the Mexican officers in a system called eTrace, which was the basis for “Project Gunrunner.”

Project Gunrunner is purportedly meant to stop the sale and export of U.S. guns to Mexico by denying Mexican drug cartels firearms. However, the project allegedly has resulted in allowing thousands of guns to cross into Mexico, where many of the weapons are currently untraceable and in the hands of Mexican criminals.

The same guns run into Mexico under the Project Gunrunner scheme have reportedly been recovered from crime scenes in Arizona and throughout Mexico.

One gun, reportedly recovered at the scene, is allegedly the weapon used to murder Customs and Border Protection Agent Brian Terry on December 14, 2010.

The project was first founded under President Bush as a bipartisan effort in 2005, when it had its inception as a pilot run by ATF in conjunction with the Justice Department and the FBI.

While Project Gunrunner was run by a few dozen officers under Bush, it has since received an infusion of cash from the Obama administration, becoming a full-time project staffed by over 200.

As WND reported, tucked away inside Obama’s stimulus was $10 million in funding for the ATF’s Project Gunrunner. This is in addition to $11 million already provided to the program under Obama, and another $12 million more requested by the White House for the end of this year.

The entire project revolves around tracing the U.S. guns that are allowed into Mexico using a program called eTrace, which is an Internet-based firearm trace request submission system.

ETrace does not electronically tag any of the guns. It simply serves as an online database that contains all registered information for each gun, including the personal information for all registered owners as well as whether law enforcement has information the gun was ever used in a crime. In essence, Etrace is a giant firearms monitoring database.

Once a gun enters the black market, the system cannot provide future information on a firearm unless the weapon is retrieved in a crime or once again enters into official registration.

ETrace was thought to have been advantageous to Project Gunrunner because it could provide information on “straw purchases,” meaning proxies who legally purchase a gun for a known criminal.

The ATF has repeatedly stated its tracing system was not designed to collect statistics. Still, the agency used information it claimed to have garnered from Project Gunrunner to release what turned out to be highly misleading information about U.S. guns.

In February 2008, William Hoover, Assistant Director for Field Operations of ATF, testified before Congress that over 90 percent of the firearms that have either been recovered in, or intercepted in transport to Mexico, originated from various sources within the U.S.

Hoover’s statistics were officially released by the ATF and were subsequently cited in a flurry of news media pieces claiming the vast majority of illicit firearms in Mexico originate in the U.S.

The U.S. Government Accountability Office used the ATF’s 90-percent statistic in an official report to Congress about American firearms. The Justice Department also incorporated the data in several of its programs.

After a series of independent reports contradicted the ATF claims, however, the ATF then admitted in November 2010 that its 90-percent figure cited to Congress “could be misleading because it applied only to the small portion of Mexican crime guns that are traced.”

The ATF admitted its statistics were based on the guns it traced, all of which originated in the U.S., thus skewing the data.

Who will be held accountable?

Project Gunrunner and its various inceptions, including “Operation Fast and Furious,” are coming under newfound scrutiny with a public investigation headed by Sen. Charles Grassley, R-Iowa, and Rep. Darrell Issa, R-Calif.

Obama himself responded to the controversy in an interview with a Spanish-language television station in which he stated someone must take the fall.

“There may be a situation here in which a serious mistake was made. If that’s the case, then we’ll find out and we’ll hold someone accountable,” he told Univision TV.

Acting ATF director Kenneth Melson told Issa in an emergency session on July 4 that he first learned about Border Agent Terry’s murder and that the scheme made him “sick to my stomach.”

Melson reportedly told Issa that those who ran the controversial project at the ATF were reassigned, but that he couldn’t tell Congress the reason for the reassignments.

Issa followed up with a letter accusing the Justice Department, headed by Eric Holder, of obstructing his investigation.

“If his account is accurate, then ATF leadership appears to have been effectively muzzled while the DOJ sent over false denials and buried its head in the sand,” Issa wrote. “That approach distorted the truth and obstructed our investigation.”

In subsequent testimony before Issa’s commission this past week, Holder stated under oath that he only learned about the gunrunning project “in the last few weeks.”

However, (link: found a 2009 speech by Holder on the Department of Justice’s own website in which Holder boasts about “Project Gunrunner.”

Stated Holder in 2009: “Last week, our administration launched a major new effort to break the backs of the cartels. My department is committing 100 new ATF personnel to the Southwest border in the next 100 days to supplement our ongoing Project Gunrunner, DEA is adding 16 new positions on the border, as well as mobile enforcement teams, and the FBI is creating a new intelligence group focusing on kidnapping and extortion. DHS is making similar commitments, as Secretary Napolitano will detail.”

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