That should be a pretty easy material to work with!!
Are you making a pen style that leaves very little on the tube?? Churchill cap??
Sorry to agree, but yes, when that type of material develops cracks, it IS operator error (please understand I know this BECAUSE I have screwed up so many of them!!),
but I have never seen it crack in sanding. My guess would be that your pen mill is cracking it and the crack shows up when you sand and it gets dust in it. (BTW, conversely, if you clean the crack and drizzle a little thin CA on it, it will likely disappear!!)
What size hole and finished outside diameter are you attempting, please?