Federal Gun Dealer Violations: FFL License Violations.

Target Audience:

• Individual or entity currently under federal investigation for FFL license violations.
• Family member seeking answers and guidance.

Core Thesis

Federal firearms licensees face a spectrum of administrative, criminal, and civil consequences. Adhering to recordkeeping, lawful transfers, inspection protocols, and timely legal intervention is paramount.

Planned Sections

• What is the U.S. Department of Justice (DOJ) doing regarding illegal gun sales? (Overview of federal prosecution priorities)
• What are federal firearms dealer recordkeeping violations? (Explanation of violations like failure to keep required records or inaccurate records)
• What is an FFL transfer violation? (Explanation of unlawful transfers, including lack of background checks or selling to ineligible purchasers)
• Can a gun dealer face civil liability as well as federal criminal prosecution? (Discussing negligent entrustment and potential for civil litigation)
• What are federal firearms dealer inspection violations? (Overview of ATF inspection violations and potential administrative consequences)
• Can gun dealers face federal possession charges? (Clarification between federal possession charges and FFL license violations)
• What are the federal criminal charges that gun dealers can face? (Listing criminal charges like conspiracy, aiding and abetting, and substantive law violations)
• What are the federal criminal penalties for illegal firearms deals? (Detailing penalties, from misdemeanor FFL violations to felony firearm offenses)
• What should a federal gun dealer do about an investigation? (Guidance on responding to federal investigations)
• What can an FFL lose when records or transfers violate federal law? (Addressing the consequences of FFL recordkeeping and transfer violations) ***

What can an FFL lose when records or transfers violate federal law?

While FFL recordkeeping violations are usually charged as misdemeanors, federal charges can vary in severity. Federal prosecutors have the option to pursue felony charges in certain cases, even if a firearm license violation has occurred, even though many federal firearm violations are not automatically felony offenses. Even if an FFL license violation is charged as a misdemeanor, it can pose an immediate threat to the licensee’s business livelihood. In addition to federal criminal prosecution, firearms dealers can also face civil liability in cases involving negligent entrustment, which can occur independently of criminal charges. Federal possession charges are distinct from FFL violations, and while they can be related, they are not the same. Federal firearms dealers and FFLs can face various federal criminal charges based on the specific circumstances of the alleged offense. This includes conspiracy, aiding and abetting, substantive law violations, and other related charges. The federal criminal penalties for illegal firearm transactions can range from misdemeanor FFL license violations to felony firearm offenses, with penalties including federal prison time and probation. The extent of the penalty will depend on the severity of the violation, any aggravating factors, and the specific federal law violated. When facing an investigation or potential charges, federal firearms dealers and FFLs should seek experienced legal representation. The law firm of Spodek Law Group represents federal firearms dealers in cases involving FFL recordkeeping violations, illegal firearms sales, negligent entrustment, and other federal criminal charges. Our attorneys work to resolve these cases efficiently and can help protect licensees’ businesses and reputations. Spodek Law Group is a law firm focused on federal defense cases. If you have questions or would like to speak with an attorney about your case, call Spodek Law Group today.

Which records and transfers must a firearms dealer handle lawfully?

Federal Firearms Dealer License (FFL)

Federal law, specifically the Gun Control Act and related regulations found under 27 CFR Part 478, requires persons and entities that are “engaged in the business” of dealing in firearms to obtain and renew the appropriate Federal Firearms License (FFL). However, this legal requirement is not straightforward, as determine when an individual or business is “engaged in the business” can be difficult, and it is frequently contested as well.

The federal definition of engaging in the business of dealing in firearms is broadly defined as “to predominantly earn a profit through the repetitive purchase and resale of firearms.” However, a precise definition of engaging in the business of dealing in firearms generally involves engaging in the purchase and sale of firearms or ammunition, in a repetitive manner, with a primary purpose of seeking to establish a livelihood, and the ability to make a profit.

The federal government exempts individuals who make only occasional transfers of firearms from their personal collections or for other similar reasons from having to obtain an FFL. However, determining when occasional sales are no longer within a permissible range requires a careful analysis of the circumstances at hand. For example, selling to members of the same household or community will be viewed very differently than selling to members in a different state across the country.

NICS Background Checks

The NICS requirement is the most vital part of an FFL’s obligations. Federal law generally requires FFLs to conduct a NICS background check before transferring a firearm to a non-licensee, unless a statutory exception applies. Before completing a transfer to a non-licensee, the FFL must determine the buyer’s eligibility by conducting a NICS background check or using a legally recognized exception, such as a qualifying alternate permit. Selling to someone that is prohibited from possessing a firearm, especially when the seller is well-aware of the purchaser’s eligibility, is a federal offense that can bring serious criminal charges.

ATF Form 4473 (Firearms Transaction Record)

The ATF Form 4473 is the formal record of the transaction between a dealer and the purchaser. FFLs are required to help purchasers properly complete this form and ensure that it is stored and preserved for the required length of time. This is a key focal point of federal audits and law enforcement scrutiny during investigations.

Acquisition and Disposition Record: The Bound Book

All firearms dealers and FFLs must maintain a “bound book” of all firearms that enter and leave their establishment. This includes all information about acquisitions, disposals, and transfers. Each and every transaction should be logged, and dealers must ensure that their acquisition and disposition books are up to date at all times.

How Does an ATF Compliance Inspection Turn Into a Federal Investigation?

ATF Compliance Inspections

The ATF regularly conducts compliance inspections to ensure that firearms dealers and other federal firearms licensees are fully compliant with all aspects of federal law. While these inspections can be helpful, they can also put you at risk of facing criminal charges if you fail to properly prepare. ATF compliance inspections typically target:

• Bound books
• Customer data from FFL Form 4473s
• Inventory and inventory control records
• Firearm transfers in recent months
• ATF Form 4473 and other relevant transaction forms

Many of these inspections are carried out by the ATF’s Industry Operations Investigators (IOIs). Generally, IOIs are tasked with assisting licensees during compliance checks; they also refer suspected criminal violations to applicable authorities, including ATF criminal-enforcement units.

When preparing for an ATF inspection, FFLs and other firearms dealers need to make sure they have reconciled their physical inventory with all the entries in their acquisition and disposition records. Federal firearms dealers and FFLs have a legal duty to maintain their bound books and Form 4473s, and they should ensure these documents accurately reflect all of their firearm sales, acquisitions, and other transfers.

Federal Firearms Law Enforcement

The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is the primary federal agency responsible for investigating firearms violations. ATF Special Agents have extensive experience conducting investigations involving illegal firearm sales, straw purchases, and federal firearms license violations. As a result, the ATF has developed sophisticated investigative techniques for collecting evidence, including:

• Undercover operations
• DEA agent stings
• Firearm tracing
• FFL business inspections

When the ATF is involved, it is not long before U.S. Attorneys with the Department of Justice (DOJ) get involved as well. ATF agents and DOJ attorneys work in tandem to build their cases, and they will use all available evidence to try to secure a conviction.

Defending Against an ATF Investigation

An ATF compliance inspection can quickly turn into a federal investigation. As a result, it is important to have an experienced defense attorney available to intervene when necessary. If ATF agents conduct illegal searches during their inspection, any evidence they obtain may be ineligible for use in a potential criminal case. Defense counsel can help protect your rights throughout the investigation and work to avoid unnecessary charges.

Why isn’t every FFL violation a felony, and what penalties can follow?

While incomplete or inaccurate records can expose a firearms dealer to regulatory and administrative penalties, these violations do not all rise to the level of criminal offenses. When an FFL license violation involves false statements in licensing or purchase records, the ATF can use federal law to support federal criminal charges, including felony charges.

False Statements in Firearms Transactions

False statements can be found in many of the documents and records that an FFL is required to maintain. FFLs are required to provide accurate information when applying for a license with the ATF. Similarly, when customers fill out a NICS background check or a Form 4473 in order to purchase firearms and ammunition, customers are required to make truthful statements. If customers or licensees intentionally make false statements when applying for, renewing, and using an FFL, they could face criminal charges.

Intentional or Willful Recordkeeping Errors

Knowingly making a false statement or representation concerning information required by federal firearms law to be kept in records can carry up to five years; violations of § 922(m) carry up to one year. Whether a recordkeeping violation warrants a misdemeanor or a felony charge depends in large part on the circumstances involved. If the recordkeeping errors are accidental or the result of poor bookkeeping practices, the FFL may be subject to administrative penalties. However, if the errors were intentional, a felony charge is more likely.

Possession of Firearms by a Prohibited Person

When a firearms dealer knowingly transfers a firearm or ammunition to a prohibited person in violation of 18 U.S.C. § 922(d), the offense is punishable under federal law by up to 15 years of imprisonment., and it is not uncommon for convicted individuals to receive multiple consecutive sentences if they are involved in selling firearms to multiple prohibited persons in a short amount of time.

The Prohibition of Owning and Possessing Firearms and Ammunition

Along with the possibility of federal incarceration and fines, a conviction for a crime punishable by imprisonment for a term exceeding one year can carry the consequence of the permanent loss of the privilege to own or possess a firearm or ammunition. The firearms industry revolves around the sale of weapons, and for most customers the ability to own a firearm is fundamental to their way of life. As a result, this can be one of the most impactful and emotionally challenging consequences of a conviction.

Talk It Through With a Lawyer

Every case turns on its own facts. Todd Spodek is the managing partner of Spodek Law Group, a second generation firm his father opened in 1976, and the firm takes federal criminal and white collar matters nationwide. Call 888 348 8028 to talk it through.