They were watching Arctor to use him to infiltrate the Oh I can't remember the name...the people that were suppose to get people off D....police at the top including Winona Ryder were trying to prove these people were behind the drug to begin with.

He knew he was Arctor but the cops at the lower level didn't. None of the lower level cops knew each other. Maybe you should watch it again I bet it will fall into place then