The sting operation, known as "Operation Fast and Furious," was established to catch big-time drug lords responsible for illegally transporting guns in Mexico. The operation, based in Arizona, was carried out by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives.
The guns were sold legally and some were tracked in hopes they might lead investigators to cartel leaders. Instead, most of the firearms were smuggled into Mexico where they have been linked to dozens of crimes.
"I believe that this is a much larger scandal than what took place in Watergate," said Pinal County Sheriff Paul Babeu, president of the Arizona Sheriff's Association, at a Phoenix news conference.
Babeu said the operation was a betrayal that should lead to the removal of Attorney General Eric Holder, The Arizona Republic reported.
During a Thursday news conference, President Barack Obama said Holder "indicated that he was not aware of what was happening in Fast and Furious; certainly I was not. And I think both he and I would have been very unhappy if somebody had suggested that guns were allowed to pass through that could have been prevented by the United States of America."
Babeu accused Holder of delivering false testimony on Capitol Hill.
"Eric Holder, in my opinion, should resign or he needs to be fired," Babeu said. "Nobody in America is above the law, including Eric Holder, including President Obama. There is no king."