Firearms License Privilege Pawnbroker Can Lose


Whether a pawnbroker keeps or loses a firearms license can often depend on how the government or the courts interpret the willfulness of the broker’s violations, as a Wisconsin pawnbroker recently found out.

In 1998, a Wisconsin pawnbroker received a federal firearms license. The broker met with an Alcohol, Tobacco, Firearms, and Explosives agent who provided him with packets of relevant forms that were to be completed for all gun sales, including the Form 4473 Firearms Transaction Record.

The agent advised the broker, in writing, of the federal record keeping requirements. The general record keeping provisions of the Gun Control Act of 1968 are found in Title 18 United State Code, Section 923 and its implementing regulations at 27 Code of Federal Regulations Part 478.

The ATF granted the pawnbroker permission to use a computer to log the firearm acquisitions and dispositions, provided that he printed the records semi-annually.

ATF Compliance Investigations

In 1999, the ATF conducted a compliance investigation of the broker. The inspection disclosed nine compliance violations, including failure to properly maintain a book record, failure to timely record disposition entries in at least 145 instances, and failure to properly record firearm model and serial numbers into the log book on at least 23 occasions.

Another inspection of the pawnbroker in 2004 disclosed six GCA violations, including failure to print a semi annual hard copy of his computer receipt/disposition record, failure to maintain an accurate record of receipt and disposition in 36 instances. It also showed seven instances where the pawnbroker transferred firearms to individuals who had indicated on Form 4473 that they were prohibited from purchasing firearms.

In April 2005, ATF held a warning conference with the broker regarding the recent violations. They discussed the inspection, the violations, and the necessary corrective action to prevent recurrence. ATF sent a follow up letter confirming that the broker “understood the severity of the violations and would work to ensure future compliance.”

In March 2007 the ATF conduced a third inspection of the broker. That inspection disclosed seven GCA violations. The broker had repeated several violations he had been warned about from the prior inspections.

The 2007 violations included sale of firearms less than 1,000 feet from a school, failure to obtain proper identification, failure to maintain an accurate acquisition and disposition log, and transferring firearms to individuals who indicated they were prohibited purchasers. The ATF also noted that the broker knowingly assisted in the use of straw purchasers by altering pawn tickets.

In November 2007, ATF served a Notice of Revocation on the broker.

In August 2008 the ATF and the broker attended an administrative hearing. After considering testimony from five witnesses and numerous exhibits, the Hearing Officer concluded that the broker willfully violated the GCA and recommended that the pawnbroker’s license be revoked. In December 2008, the AFT revoked the license.

The pawnbroker filed an action in the United States District Court for the Eastern District of Wisconsin for a judicial review of the ATF’s decision. The ATF Director of Industry Operations in turn asked the court to grant the ATF a summary judgment.

The District Court noted that the broker was entitled to a judicial review of the ATF’s decision in district court. Case law makes it clear that the standard of review means that the ATF’s decision is entitled to no presumption of correctness and that the district court may attach such weight, if any, as it deems appropriate to the ATF’s determinations and decision.

Willful Violations Under GCA

Congress, said the court, designed the GCA, in part, to “to keep firearms from persons Congress classified as potentially irresponsible and dangerous.” The government may revoke a federal firearms license if the holder of the license has “willfully” violated any provision of the GCA or its implementing rules and regulations.

Willfulness, said the court, is a prerequisite to the ATF’s revocation authority. The United States Court of Appeals for the Seventh Circuit has held that a licensee’s violation is “willful” if the licensee “knew of his legal obligation and purposefully disregarded or was plainly indifferent to the record keeping requirements.”

Bad purpose or evil motive need not be shown to establish a “willful” violation. Other courts have applied the same “willful” standard.

Even though the pawnbroker admitted he violated the GCA, he argued that the violations were not willful. The District Court said it would analyze each of the five counts.

Count No. 1

The first count charged that, in 2006 and 2007, the pawnbroker failed to properly record the disposition of at least 54 firearms in the acquisition and disposition record. ATF previously cited the broker for similar violations in 1999 and 2004.

In 2007 the pawnbroker failed to print out the acquisition and disposition log at the six-month interval as required. When, at the nine-month mark, an ATF agent asked the pawnbroker to print out the acquisition and disposition record, 54 firearm dispositions were missing.

Count No. 2

Count two charged that the pawnbroker failed to obtain complete and correct responses to questions on ATF Forms 4473 on 13 separate occasions. During the administrative hearing, the broker did not dispute these violations.

The pawnbroker was required to verify the firearm purchaser’s home address through a form of photo identification. One of the 13 violations occurred when the pawnbroker allowed a firearm purchaser to list a Wisconsin address while producing only a Texas driver’s license.

Other purchasers failed to answer questions or sign Form 4473 certifying their answers. The pawnbroker ignored the incomplete responses.

Count No. 3

The third count charged that the broker willfully made false record entries and aided and abetted the making of false record entries on five occasions by allowing “straw transfers” of firearms.

The broker produced affidavits from four of the gun purchasers indicating that they bought the guns for themselves. The broker obtained these affidavits during the pendency of the license revocation process.

Count No. 4

This count alleged that the broker transferred firearms to individuals who indicated on Form 4473 that they were prohibited persons. The pawnbroker didn’t dispute that these sales took placem but argued that the violations weren’t willful.

One of the transactions involved a firearm purchaser who answered “yes” to the Form 4473 question “Are you a fugitive from justice?” Nevertheless, the pawnbroker sold the person a Yugoslavian SKF long gun. After reviewing this “yes” answer the broker should have terminated the potential sale.

The pawnbroker’s argument that the customer received NICS clearance missed the point that he should never have even reached the step of checking with NICS on behalf of this purchaser.

Another example occurred with the sale of a shotgun to an individual who stated that he had been “convicted of a misdemeanor domestic crime of violence” on Form 4473.

This conduct, said the court, indicated that the broker willfully disregarded GCA regulations.

Count No. 5

This count charged that the broker willfully sold or otherwise disposed of firearms where the transferee indicated that he/she was not the actual purchaser of the firearm.

For example, the broker sold two firearms, a Winchester Model 94 and a Ruger 1022, to a customer who indicated in block 11A of Form 4473 that she was not the actual buyer of the firearms. When an ATF agent confronted the pawnbroker about these sales, he claimed to be shocked. The broker did not dispute that the sales occurred but argued that customers are often confused by the forms and that his actions were not willful.


The court said it considered the repetitive nature of the broker’s violations indicative of “willful” conduct. A firearm licensee’s “repeated violations after it has been informed of the regulations and warned of the violations does show purposeful disregard or plain indifference,” and can be considered in determining whether such violations are willful.

Here, the pawnbroker had nine violations in 1999, six violations in 2004, and seven violations in 2007. He received warning letters from the ATF and had face-to-face meetings with the ATF to discuss the violations and how to prevent them from happening again. Despite these efforts at compliance and cooperation, the pawnbroker continued to violate the GCA.

The pawnbroker argued that revocation of a firearms license for “inadvertent errors or technical mistakes” was improper because such mistakes and errors were not willful, and pointed to the dissenting opinion in the 2006 case of Article II Gun Shop v Gonzales which stated “the entire willfulness inquiry of section 923 illustrates that this is not a strict liability situation, and, thus, cases built upon nothing more than repeated violations should not automatically result in revocation at the summary judgment stage.”

The District Court noted that even if this dissenting opinion were the law — which it is not — the violations rose above inadvertent errors or technical mistakes. Allowing an individual who indicated he was a “fugitive from justice” to purchase a firearm was not an inadvertent error. Allowing individuals who failed to answer important background check questions on Form 4473 was not a technical mistake, especially the pawnbroker was warned, counseled, and cited for the same violations.

Because the court concluded that there was no dispute about whether violations occurred, and that the violations were willful, it said that there were no genuine issues of material fact and the ATF’s Motion for Summary Judgment was therefore granted in its entirety and the ATF’s final administrative decision revoking the pawnbroker’s firearms dealer license was affirmed.

Pawnbrokers who would like a free copy of this case sent electronically should send an E-mail to with “Privilege” in the subject line.

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