posted June 16, 2006 09:20 PM            

NEW YORK (AP) — As firefighters searched for survivors after the Sept. 11 attacks, heat from the World Trade Center's smoldering ruins burned the soles off their boots. They needed new ones every few hours, and Chris Christopherson made sure they got them.
The disaster specialist was proud to dispatch replacement boots from the Long Island warehouse of a company paid by the government to manage rescue supplies donated by Americans. Then came the moment that crushed Christopherson's faith.

His employer dispatched trucks to the warehouse and loaded hundreds of thousands of dollars worth of donated bottled water, clothes, tools and generators to be moved to Minnesota in a plot to sell some for profit, according to government records and interviews.

Dan L'Allier said he witnessed 45 tons of the New York loot being unloaded in Minnesota at his company's headquarters. He and Christopherson complained to a company executive, but were ordered to keep quiet. They persisted, going instead to the FBI.

The two whistle-blowers eventually lost their jobs, received death threats and were blackballed in the disaster relief industry. But they remained convinced their sacrifice was worth seeing justice done.

They were wrong.

Once-secret documents obtained by The Associated Press detail how the company, Kieger Enterprises of Lino Lakes, Minn., went unpunished for the Sept. 11 thefts after the government discovered FBI agents and other government officials had stolen artifacts from New York's ground zero.

As a result, most Americans were kept in the dark about a major fraud involving their donated goods even as new requests for charity emerged with disasters like Hurricane Katrina. And Christopherson and L'Allier were left disillusioned.

"I wouldn't open my mouth again for all the tea in China," L'Allier said. Added Christopherson, a 34-year-old father of two: "I paid a big price."

The government ultimately gave the whistle-blowers $30,000 each after expenses, their share in a civil settlement against KEI. They say the sum was hardly worth their trouble.

VIDEO: Outrage over 9/11 thefts

Federal prosecutors eventually charged KEI and some executives with fraud, including overbilling the government in several disasters, but excluded the Sept. 11 thefts. Officially, the government can't fully explain why.

KEI had worked for years for the government, providing disaster relief services during tornadoes, floods and other catastrophes. It was picked to manage the New York warehouse for the government's main Sept. 11 relief contractor.

Thomas Heffelfinger, the former U.S. attorney in Minnesota who prosecuted KEI, said he never intended to charge the company for the ground zero theft, and instead referred that part of the case to prosecutors in New York.

"At the heart of the KEI case was financial fraud," Heffelfinger said. "It was so bad we didn't need the theft."

Heather Tasker, a spokeswoman for the U.S. attorney's office in New York, declined to discuss the KEI case. The whistle-blowers, however, said they've never been contacted by New York prosecutors.

FBI documents indicate the government, in fact, was preparing to charge KEI with Sept. 11 thefts.

A March 2002 entry in the FBI's "prosecutive status" report states the U.S. Attorney's office in Minnesota intended "to prosecute individuals who were alleged to be involved in the transportation of stolen goods from New York City after the terrorist attack." A followup entry from Sept. 6, 2002 lists the specific evidence supporting such a charge.

The lead investigators for the FBI and the Federal Emergency Management Agency told AP that the plan to prosecute KEI for those thefts stopped as soon as it became clear in late summer 2002 that an FBI agent in Minnesota had stolen a crystal globe from ground zero.

That prompted a broader review that ultimately found 16 government employees, including a top FBI executive and Defense Secretary Donald Rumsfeld, had such artifacts from New York or the Pentagon.

"How could you secure an indictment?" FEMA investigator Kirk Beauchamp asked. "It would be a conflict."

While the globe's discovery had been widely reported, its impact on the Sept. 11 thefts had remained mostly unknown.

Prosecutors "and the FBI were very conscious of the fact that if they proceeded in one direction, they would have to proceed in the other, which meant prosecuting FBI agents," said Jame Turner, the lead FBI agent. She too became a whistle-blower alleging the bureau tried to fire her for bringing the stolen artifacts to light. Turner retired in 2003.

The FBI declined to discuss Turner's allegation, saying it involved a personnel matter.

"It's illogical" not to prosecute KEI because of the agents' stolen artifacts, said E. Lawrence Barcella, former chief of major crimes in the U.S. attorney's office in Washington. "The fact that FBI agents stole trinkets is an order of magnitude different than a company selling things they steal."

Nick Gess, another former federal prosecutor, said the agents' actions shouldn't have precluded prosecuting the company.

"DEA agents have been found to smoke pot occasionally," Gess said. "That doesn't mean they (the Drug Enforcement Administration) can't still work on drug cases."

The government also didn't prosecute any of its employees for taking souvenirs, claiming it lacked a policy prohibiting such thefts.

Ultimately, the FBI donated the stolen goods found at KEI's warehouse to the Salvation Army.

Joe Friedberg, a lawyer who represented a KEI executive, dismissed the Sept. 11 thefts as "much ado about nothing." Friedberg said KEI took a few pallets of water and T-shirts because they had authorization from a FEMA official to take surplus items.

But that FEMA official, Kathy McCoy, said she never gave Kieger such permission.

Those who work near ground zero today are shocked to learn such thefts went unpunished.

"To take advantage of people at a time of despair, it's probably one of the worst things human beings can do to another person," said Gregory Broms, Sr., a firefighter with Engine Company 10 at the foot of the former World Trade Center site. "It was morally wrong."

Christopherson recalled receiving boxes of white T-shirts stolen from the Long Island warehouse sent back to him after KEI had embossed a Sept. 11 logo on the front. He was instructed by his boss to sell them to firefighters, police and volunteers for $12 a piece. Disgusted, he threw them in the corner and never sold them.

Christopherson and L'Allier went to the FBI in fall 2001. On April 16, 2002, agents raided KEI, recovering at least 15,000 T-shirts and 18,000 bottles of bottled water. Because months had passed, the seized items were a fraction of the total the company had taken, the whistle-blowers said.

Both men were threatened and harassed, reporting it to the FBI's Turner. "We all experienced the death threats," L'Allier said. "We all experienced the phone ringing at three in the morning and no one being there. I'd come home and the house would be wide open."

A few months after the raid, prosecutors drafted charges accusing the company of stealing the ground zero relief supplies, seeking an indictment on the one-year anniversary of the Sept. 11, 2001 attacks, Turner said.

But Turner discovered in late August 2002 a cracked Tiffany & Co. globe — lifted from the World Trade Center ruins — on the desk of a colleague. The theft case against KEI sputtered.

Eventually, KEI executives Edward Kieger Jr., Patrick Iwan and Joseph Dreshar were indicted in 2004 by a federal grand jury on charges of scheming to defraud the government. The former executives pleaded guilty, and Kieger and Iwan are serving prison terms. KEI has gone out of business.

Christopherson and L'Allier were stunned when the indictment excluded the ground zero thefts. They spent two years unsuccessfully trying to find new work in disaster relief. Christopherson now runs a landscaping business; L'Allier works as a paramedic.

For years, the two couldn't speak publicly because their whistle-blower case remained under seal. They worried similar fraud might have occurred during Katrina.

"If you donated, at your local supermarket, water or canned goods or cleaning supplies and a truck goes down there (to New Orleans), who knows where it is ending up," L'Allier.

Today, the whistle-blowers worry their fate might chill others from exposing wrongdoing.