By Tim Gaynor
PHOENIX (Reuters) - U.S. federal agents encouraged an Arizona gun dealer to sell weapons to suspected traffickers for the Mexican drug cartels, even after the dealer warned they would end up in the hands of "bad guys," according to correspondence released by a U.S. senator.
Sen. Charles Grassley, an Iowa Republican, released excerpts from an e-mail from an unidentified Arizona gun dealer to a supervisory agent of a Bureau of Alcohol, Tobacco, Firearms and Explosives operation targeting gun traffickers that is now subject to a federal investigation.
"Operation Gunrunner" investigated third party "straw purchases" in Arizona of guns including assault rifles in a bid to arrest high-ranking traffickers suspected of arming drug cartels south of the border in Mexico.
The Justice Department's Office of Inspector General is now looking into the matter. Grassley, the ranking Republican member of the Senate Judiciary Committee, accused the agency of knowingly allowing straw purchases of weapons that could risk the lives of U.S. federal agents.
Grassley said that, in a letter to him, the Justice Department had said that the ATF has never "sanctioned" assault weapon sales to straw purchasers. But the denial was apparently contradicted in parts of an e-mail from the unnamed gun dealer to ATF supervisor David Voth, released by Grassley on Thursday.
"I shared my concerns with you guys that I wanted to make sure that none of the firearms that were sold per our conversation with you and various ATF agents could or would ever end up south of the border and in the hands of the bad guys," the gun dealer wrote to Voth.
"I want to help ATF with its investigation, but not at the risk of agents' safety because I have some very close friends that are U.S. border patrol agents in southern Arizona," he added.
The administration of President Barack Obama has been under pressure to curb gun running to Mexico, where more than 12,400 people were killed in raging drug violence in 2010.
About 90 percent of the crime guns seized and traced in Mexico last year were initially sold in the United States, according to ATF.
The Gun Runner operation has become politically sensitive following the fatal shootings of two U.S. federal agents in recent months -- one in southern Arizona and one in Mexico -- using guns traced back to arms sales in U.S. border states.
U.S. Border Patrol agent Brian Terry was shot dead in southern Arizona in an operation targeting border bandits last December and Immigration and Customs Enforcement agent Jaime Zapata was shot dead in a suspected drug cartel attack in central Mexico in February that also wounded a colleague.
Weapons used in the killings were traced back to sales in Arizona and Texas respectively.
In a letter to Attorney General Eric Holder on Thursday, Grassley said the new evidence provided by a whistle-blower contradicted a previous statement from the Justice Department denying that ATF had allowed straw sales to proceed.
"In light of this new evidence, the Justice Department's claim that the ATF never knowingly sanctioned or allowed the sale of assault weapons to straw purchasers is simply not credible," he wrote.
The ATF did not respond to a request for comment on Friday.
A Justice Department spokeswoman declined to comment, pointing out that the agency's inspector general is looking into the matter and that Attorney General Holder has said he takes the concerns raised by agents seriously.
(Additional reporting by Jeremy Pelofsky; Editing by Greg McCune)