The Army's Criminal Investigative Division, investigating the theft from the Fort Hood angle, soon placed its own undercover agents and informants around Posey.
PATCON shifted its focus yet again.
Through his contacts with Posey, Rossi secured an introduction to John Grady, head of the Tennessee-based American Pistol and Rifle Association (APRA), a militant version of the National Rifle Association that the FBI suspected of training and advising white supremacists and other extremists. Through multiple informants and Rossi, the FBI again compiled an alarming list of leads, including reports that Grady was part of Posey's Patriot alliance and that APRA had deployed six-man teams around the country to carry out acts of terrorism and infrastructure sabotage.
Excerpts from several FBI documents containing these allegations were e-mailed to Grady, who responded in a telephone interview.
"Every statement that you've shown me is false," Grady said. He disputed the contention in FBI documents that the APRA was white supremacist in nature and said he had only a passing acquaintance with Posey.
A source with knowledge of the investigation and documentary materials affirmed some of the allegations found in the case file, but others did not check out. For instance, FBI records sourced to Rossi indicated that an October 1992 speech by Grady said "a person was better off to take out as many people as they could than to be arrested and taken to jail," but a videotape of the speech obtained from a source did not match the description.
While the intelligence continued to flow, the criminal investigation again foundered, failing to produce any evidence on which to base a prosecution.
In April 1993, an FBI committee reviewing the investigation of Grady expressed concern that agents were "only obtaining intelligence and not moving forward with the criminal investigation." PATCON undercover agents were cautioned to limit their reporting to criminal activity, rather than "speeches or rhetoric protected by the First Amendment." In July 1993, FBI headquarters determined "that insufficient justification exists to justify" continued investigation.
Both the Grady case and the undercover operation were terminated. Agents were instructed in unusually strong terms that they "should conduct no further investigation regarding either [The Order of St. John] or PATCON."
With the operation shut down, other complications that had beset PATCON throughout its history became a closed book, including the involvement of FBI personnel and investigative targets in the dramatic events that McVeigh would later cite as motivation for the Oklahoma City bombing.
In August 1992, one of the PATCON undercover agents served on a SWAT team assigned to the standoff at Ruby Ridge, Idaho. The ATF had tried to convince Randy Weaver, a religious fundamentalist who lived on the site, to act as an informant against the Aryan Nations. When Weaver refused, the ATF prosecuted him on a minor weapons charge and began planning to arrest him at his remote mountain home. U.S. Marshals scouting the site got into a firefight with Weaver and others living there, resulting in the death of a marshal and Weaver's 14-year-old son.
After the confrontation, the FBI took over the scene and a protracted standoff ensued, lasting several days. The tense situation erupted when an FBI sniper opened fire, wounding Weaver and killing his unarmed wife, Vicki, who was holding their baby in her arms.
Ruby Ridge instantly became a signal event for the Patriot movement, which had been predicated in significant part on the idea that the government would soon crack down on gun owners, sparking the much-anticipated revolution.
According to FBI records, the PATCON agent took rudimentary precautions to avoid detection -- pulling a coat over his head when he passed through the FBI roadblock on the way to the scene, and staying at a motel in a less-trafficked area. But headquarters decided that it was better to err on the side of caution and pull him out of the undercover operation. His role was never disclosed.