Exclusive: Top Federal Postal Cop Retires in Wake of ABC News Investigation

October 17, 2008— -- Two weeks after being questioned by ABC News about his travel expenses and gambling habits, the head of the US Postal Service's Inspection Service abruptly announced his retirement.

Alexander Lazaroff announced his retirement earlier this month saying, "after 37 years of federal service, I feel that it's time for me to begin a new chapter in my life." He made no mention of the ABC News questions nor of an ongoing investigation of his travels by the Postal Service's Inspector General.

The Inspector General investigation of Lazaroff followed complaints from his own inspectors to Senator Charles Grassley (R-Iowa) that the chief inspector squandered postal service money to arrange travel to resorts and other locations near casinos.

(Click here to watch Brian Ross interview Lazaroff)

Grassley says Lazaroff's departure will not stop the Inspector General's investigation.

An ABC News investigative team recorded Lazaroff at a casino in Phoenix in late September, during a conference he arranged at a nearby resort.

Lazaroff spent two hours at the casino and was seen leaving in a white stretch limousine provided by the casino, Casino Arizona.

Asked six days later by ABC News whether he had been at the casino, Lazaroff said he could not recall.

"I'm not sure, I'm not sure," he told ABC News.

When shown pictures of him at the casino, Lazaroff then recalled the evening but insisted he went to the casino on his "own time" and did not have a gambling problem.

"I don't have any debt as a result of gambling, I am not a high roller," Lazaroff said.

Postal Service officials were reportedly taken aback at his failure to recall the evening of gambling and a short time later agents of the Inspector General's office contacted ABC News for further information.

Senator Grassley had initially asked for the Inspector General's investigation following a series of anonymous letters and whistleblower complaints to his office.

"He lives in Philadelphia, works in Washington and he's never moved," said Grassley. "Quite frankly, how can he do his job as postal inspector and the administrator he is, when he's never in the office?"

Grassley said there have been a number of new allegations referred to the Inspector General by employees who felt free to act once they knew Lazaroff was leaving.