Recently, the Stag Arms case has been resolved with guilty pleas by the firm and its founder, forfeiture of two Federal Firearms Licenses by the manufacturer, and a ban on FLL ownership for the founder. The company continues to operate while seeking new owners, and the founder only pled to a single misdemeanor.
Here is part of the US Attorney for the District of CT’s statement.
Deirdre M. Daly, United States Attorney for the District of Connecticut, and Daniel J. Kumor, Special Agent in Charge of the ATF Boston Field Division, announced that STAG ARMS LLC, a firearms manufacturer in New Britain, pleaded guilty today in Hartford federal court to violating federal firearms laws.
“It is critically important for those who are responsible for manufacturing firearms, especially high-powered semiautomatic rifles, to diligently comply with federal firearms laws throughout the production and distribution process,” said U.S. Attorney Daly. “Stag’s misconduct has resulted in hundreds of these weapons being lost or untraceable. In addition, Stag’s possession of dozens of unregistered machine guns is particularly egregious. Federal firearms laws exist to ensure that all legal firearms are properly accounted for and don’t wind up on the street, and in the hands of those who shouldn’t possess them. Gun manufacturers who don’t follow the rules and violate federal law not only face license revocation, but criminal prosecution. I commend the ATF for expertly investigating this matter.”
“What occurred in this case is absolutely unacceptable and will not be tolerated,” said ATF Special Agent in Charge Kumor.
Yeah, right. What Kumor really opposes is the manufacture and private ownership of firearms, period. He’s a Party member, and that makes him a square peg in a square hole in ATF management.
“ATF relies on individuals and corporations who are licensed to manufacture firearms to mark them in accordance with the law, keep thorough records of the manufacture and disposition of all firearms and maintain their inventory in secure facilities to prevent their theft or loss. When firearms licensees fail to comply with these federal regulations and laws they open the door for untraceable firearms to wind up on the street in the hands of traffickers and criminals. Today’s guilty plea and the license revocations demonstrate our commitment to hold firearms licensees accountable when they place public safety at risk.”
The whole statement is here at ATF. Be aware that these statements are often argumentative in nature, and contain claims that the USA and the LE officials never took to court — they’re spin, basically. Remember that Daly, Kumor and the AUSA who handled the case, S. Dave Vatti, are all anti-gun political partisans committed to an aggressive gun control agenda. They all supported the ATF’s Gunwalker program that provided at least two to three thousand firearms directly to Mexican cartels, so their outrage about Stag’s record keeping is a bit… selective. The statement also contains some claims that are definitely not true.
Here is Stag’s statement; it’s very brief.
A STATEMENT FROM STAG ARMS, LLC
NEW BRITAIN – Tuesday, December 22, 2015 – Stag Arms, LLC today announced that the company and its founder, Mark Malkowski, have reached a resolution with government officials stemming from an investigation that began last year relating primarily to the timing of recordkeeping during the manufacturing process and compliance with federal firearms manufacturing and registration requirements. Both Stag Arms and Mr. Malkowski cooperated fully with the government throughout the investigation. While both Stag Arms and Mr. Malkowski believe that public safety was never compromised, they have agreed to enter guilty pleas and to pay significant fines, because doing so is in the best interests of the company and its employees. Mr. Malkowski has also agreed to transition the business to new ownership and is in advanced talks with a potential buyer. Mr. Malkowski will continue as a marketing consultant to the business and the industry for a period of time following the sale. Stag Arms takes its obligations to comply with all laws and regulations very seriously and has made comprehensive changes to ensure that similar problems cannot happen again and that best compliance practices are maintained in all of its operations.
In response to a question, a Stag spokesman confirmed that the company is up and operating.
The federal government has agreed to allow Stag Arms to continue operating with an effective firearms license during the transition to new ownership and the plan moving forward is for business as usual during the transition and beyond.
Stag is noted for reasonably priced, entry-level AR-15s. Its most unique products are probably its near-mirror-image left-hand models.
Stag Model 1L (left-handed).
The dust cover, inverted so the same spring can be used on both sides, is the only give-away that this is not a flipped picture rather than an image of a mostly-flipped firearm.
ATF has its marching orders, which are to destroy FFLs, especially manufacturers. It gets froggy about this when its own party controls the executive, and eases up when its preferred politicians are out. But today, the mission is, “Get licensees!”
This is why they’re not taking MG cases that state investigators or other Feds develop, unless (1) the case is a slam dunk that the AUSAs won’t whine about, (2) the guy is a licensee, or (3) manufacturing without a license or (4) can be leveraged to inform on a manufacturer or dealer. That’s also why they’re not prosecuting straw buyers, instead running them as paid CIs against one dealer after another, trying to get one to agree to break the law.
Back in May we wrote this about this case, in a roundup of industry bad news:
Stag Arms is in a Legal Jam
Once again we’ll go to Guns.com for the tale of the tape, as it were.
Federal agents seized thousands of gun parts and documents from New Britain gun maker Stag Arms LLC today.
According to court documents, an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives revealed that Stag failed to comply with the National Firearms Act when agents found 3,000 unserialized machine gun lower receivers, and that the company failed to maintain documents for 136 unserialized receivers.
Stag’s owner, Mark Malkowski, was named as the claimant in the civil suit filed in Connecticut federal court on May 6.
ATF inspectors discovered the alleged violations last July and August during a routine check of Stag’s facilities and the inspector subsequently informed the company.
Tadeusz Malkowski, the federal firearms licensee for the Stag facility where the unserialized parts were found, told ATF inspectors that the receivers had been on the premises between seven and 30 days because the employee who serialized the receivers was on vacation, according to the filing.
This sounds pretty bad, but so far there have been no criminal charges. What is really happening here is that Stag’s Industry Operations Inspector seems to have gone wild on the firm.
The IOI reneged on a verbal OK previous IOIs had given the company about keeping spare receivers on hand to retro-serialize to replace damaged receivers for warranty or other repairs. If you do this, expect ATF to target you (not that they’re consistent at all from one office to another). If you want to keep receivers to be serialized as replacements, keep those receivers in an incomplete state, which ATF has generally interpreted to mean no milling or drilling of the fire control pocket (partially finishing the pivot and takedown pin recesses, broaching or EDM’ing the magwell, finishing the mag release and bolt release recesses, and partially finishing the buffer tower (drill and tap for receiver extension), have all been ruled OK in the past). Go beyond that without a serial number and maker name, city and state on the receiver and they will violate you.
ATF Managers and US Attorneys, including the ones involved in this case, have been given marching orders to destroy firearms companies, and especially, makers of Modern Sporting Rifles, by any means necessary.
Here’s the .pdf of one forfeiture complaint. As is customary with forefeiture proceedings, the “defendants” are the seized guns and they are guilty until Stag proves them innocent. The file is courtesy of Guns.com.
The forfeiture complaint makes little sense to us, as they charge that these receivers were unserialized, but they list them by serial number. There are also many fewer receivers listed in this complaint than the 3,000-plus that the ATF supposedly seized. Three thousand receivers are a staggering number but as Stag produces about 150,000 a year, it’s really only a week’s production.
The anti-gun reporters at the Hartford Business Journal breathlessly reported that, “a large cache of gun parts” was found — at the gun factory. Layers and layers of editors!
In court filings and to the Hartford Business Journal, ATF agents charged that Stag is “suspected of ongoing illegal activity” and “unauthorized trafficking of guns.” They have also called all the receivers the company had on hand “machine guns,” and have obtained an opinion from the ever-flexible Firearms Technology Branch supporting that position.
Nothing in this seems to be changed by the case’s resolution, except that Mark Malkowski was charged with one or more felonies, did enter into a plea bargain to plead to a single misdemeanor, and did enter into a consent agreement not to apply for an FFL. He is not barred from working in the industry, working for an FFL, or owning personal guns.
To recap, the problem was caused by the receivers being processed in two separate locations — separately licensed as 07 FFL manufacturers — with the serial numbers added only after completion. This meant that at any given time there was work in process that was literally not legal because it consisted of complete, unserialized receivers. This process had been approved verbally by previous IOIs, but even a written opinion from ATF is not considered binding or precedential by ATF, when they want to get you; a verbal opinion is not worth the paper it isn’t written on.
It looks in the end like it was an expensive, near-death experience for Stag. The large fines paid will be put to work to further persecute industry firms and lobby for more gun control. As a GEICO ad might say, if you’re the ATF, that’s what you do.
Moral of story, bend over backwards to be in compliance with the letter of the law, and put no faith in any variances from untrustworthy people at an untrustworthy agency. Then maybe they’ll make someone else the example. Like they did to Malkowski and STAG.
They left themselves open to this difficult case by their efficient, but literally illegal handling of AR receivers. They were probably singled out due to Malkowski’s high profile on 2nd Amendment issues, and opposition to the Governor of Connecticut’s anti-gun platform.