1999 Eric Larson testimony before Congress regarrding ATF record keeping [Page 1] Violating the Rule of Law: The Bureau of Alcohol, Tobacco and Firearms Has Not Corrected Errors in the National Firearms Registration and Transfer Record, Which Unjustly Subjects Law-Abiding Citizens to Imprisonment, Fines, and Confiscation of Their Historic Firearms by Eric M. Larson Associate Member Collectors Arms Dealers Association Prepared for presentation before the Subcommittee on Treasury, Postal Service and General Government of the Committee on Appropriations House of Representatives B-307 Rayburn House Office Building Washington, D.C. March 31, 1999 ---------------------------------------------------- Eric M. Larson is a Contributing Editor to the Blue Book of Gun Values, the Standard Catalog of Firearms, the Official Price Guide to Antique and Modern Firearms, and R. L. Wilson's Price Guide to Gun Collecting. A Life Member of the National Rifle Association of America since 1968, he became an Associate Member of the Collectors Arms Dealers Association in 1998. His research has been published in The Gun Report, CADA Gun Journal, Machine Gun News, Small Arms Review, Guns Illustrated, The Gun Journal, and he is author of Variations of the Smooth Bore H&R Handy-Gun: A Pocket Guide to Their Identification. A journalist and demographer by training, he graduated with honors in 1974 from the University of Texas at Austin, where he also earned a Ph.D. and three master's degrees. [Page 2] Mr. Chairman and Members of the Subcommittee: My name is Eric M. Larson. I am submitting this testimony to you in my capacity as a private citizen, as an Associate Member of the Collectors Arms Dealers Association, and as a scholar and collector of historic firearms. I am concerned that errors in record keeping made by the Bureau of Alcohol, Tobacco and Firearms (ATF) have endangered the rights of citizens, licensed collectors, licensed importers, and licensed dealers to possess, transfer, import, give away or collect historic firearms for lawful purposes. I am submitting this testimony because ATF has not corrected serious errors in the National Firearms Registration and Transfer Record (NFRTR), which ATF is required to maintain under the National Firearms Act (NFA) of 1934. I documented that ATF improperly destroyed firearm registration records and improperly registered firearms. Further, since at least 1981, thousands of NFA firearms have been registered for decades to people that ATF has stated are dead. I presented this evidence in testimony before this Subcommittee in 1997 and 1998. I am also submitting this testimony because these allegations were confirmed in 1998 in two audit reports issued by the Department of the Treasury Office of the Inspector General (IG). I would also like to point out that the law intends that the NFRTR records be accurate and reliable. SOME HISTORIC FIREARMS ARE REGULATED UNDER THE NATIONAL FIREARMS ACT The NFA is designed to control firearms thought to be mainly used by criminals by requiring registration of the firearms, and using prohibitive taxes to reduce their manufacture, distribution, and ownership. The NFA is a harsh federal law to discourage illegally manufacturing, selling or possessing hand grenades, machine guns and similar weapons, and the cutting down of conventional shotguns or rifles (regardless of their caliber) to make concealable firearms. Any violation of the NFA is a felony which carries heavy penalties: a fine of up to $10,000 and up to 10 years imprisonment for each violation, and other civil penalties and property forfeitures. In testimony before this Subcommittee in 1996, 1997, and 1998, I documented how ATF's errors in record keeping continue to endanger the rights of persons who lawfully collect, own, inherit, or deal commercially in certain historical firearms regulated under the NFA. These historic firearms, termed "Any Other Weapon" (AOW), are mostly specialized firearms designed for trappers, or unusual "gadget-type" firearms that weren't designed or thought of as "gangster" weapons in the first place. These firearms were originally commercially manufactured in the United States in or before 1934 in their present condition, and most models were obsolete long before 1934. Out of an estimated total original production of about 170,000, I believe fewer than 17,000 of these historic AOWs exist today. Because of their design and historical significance, these AOWs represent a unique aspect of U.S. firearms genealogy=97there is nothing else like them=97and [Page 3] are historical artifacts that are avidly sought and highly prized by collectors. The surviving number of these particular historical AOWs currently represents about 2 percent of all registered NFA firearms. Unlike any other type of firearm controlled under the NFA, the Congress has repeatedly amended the NFA to provide (in the words of ATF in a 1983 court case) for "special and more lenient treatment" for AOWs. This has been done mainly by reducing the prohibitive $200 transfer tax. The Congress reduced the $200 tax to $1 for certain AOWs in 1938 and 1945. Because the Congress did not define the terms "pistol or revolver," "rifle," "shotgun," or "any other weapon" in the NFA in 1934, AOWs were first defined administratively by the Department of the Treasury. In 1954, the Congress enacted the first statutory definition of "Any Other Weapon," and established the current statutory definition in 1968. In 1960, the Congress established a $5 transfer tax for and determined that all AOWs were (1) mainly unusual and gadget-type firearms mainly of interest to collectors, and (2) unlikely to be used by criminals in their criminal activities. The $5 tax was intended to cover only the administrative costs of processing registrations and transfers. In 1960, there was no provision in federal law to remove any firearm from the NFA as a collector's item, nor any federal law that recognized any pistol, revolver, rifle or shotgun as an historical, collectible artifact. Under the Gun Control Act of 1968, the Congress enacted provisions which protect firearms that have special value to collectors=97the first and on= ly federal statutes to specifically do so. Since 1968, the ATF has administratively removed thousands of firearms from the NFA because it has determined they are mainly collector's items and are unlikely to be used as weapons. Under the 1968 Act, ATF has licensed many thousands of persons as collectors of :"curio or relic" firearms=97a classification which includes historic AOWs. The ATF established the NFRTR in 1934 to provide a firearms registration and transfer system. It is used for all NFA firearms, including the historic AOWs. Consequently, errors in the NFRTR which potentially affect these AOWs by definition also potentially affect all other NFA firearms=97including modern firearms that do not possess the same unique historical significance as those manufactured in or before 1934, the year the NFA was enacted. Thus, while my original interest was and remains protecting the rights of persons who collect historic AOWs manufactured in and before 1934, as well as these historic AOWs themselves, there is no way to separate these record-keeping problems from all other NFA firearms, unless ATF chooses to do so. My work has been complicated by the fact that ATF refuses to consider these historic AOWs differently from the remaining NFA firearms. For example, a rare, obsolete single-shot animal trap gun, "gadget" gun, or a low-powered, single-shot or two-shot small-game gun specifically recognized by the Congress as having "legitimate uses" is not the same thing as a bazooka or machine gun or hand grenade. However, ATF has refused to make that distinction, even though the Congress clearly established a distinction in law. The result is that any study of errors in the NFRTR must include all NFA firearms=97at least at this point in time. [Page 4] I hope that in the future, the Congress will reiterate to ATF its intention that the historic AOWs be treated differently than hand grenades or machine guns or bazookas. THE INSPECTOR GENERAL REPORTS IDENTIFIED DATA RELIABILITY PROBLEMS WITH THE NFRTR I believe that the audits performed by the IG establish that serious inaccuracies exist in the NFRTR, and provide a basis for correcting deficiencies in the system. Specifically: 1. The IG determined that NFA documents "had been destroyed about 10 years ago by contract employees." [Footnote 1] I alleged that NFA firearm registration documents have been destroyed by persons at ATF, and the IG's investigation determined that my allegation was correct. "We could not," the IG concluded, "obtain an accurate estimate as to the types and number of records destroyed." [Footnote 2]. Given the harsh penalties for violating the NFA, being unable to determine how many NFA documents have been destroyed (and, moreover, unable to determine the types of documents that were destroyed) is a very serious problem. Because the law intends these NFA records to be accurate and reliable, the fact that NFA documents have been destroyed means that the NFRTR data base is not completely accurate and reliable. 2. The IG determined that firearms were registered by ATF and that ATF "was unable to locate any documented support for its limited conferral of amnesty beyond the statutory period" that such registrations were allowed by the Congress.[Footnote 3] Specifically, the IG determined that "ATF may have failed to follow procedures by failing to publish the amnesty extension in the Federal Register, required by the Gun Control Act."[Footnote 4] The IG states that "the law provided that such amnesty periods could be granted "after publication in the Federal Register of (the Secretary of the Treasury's) intention to do so." ----------------------------------------------------------- [Footnote 1] Special Report on Allegations Concerning the Bureau of Alcohol, Tobacco and Firearms' Registration and Record keeping of the National Firearms Registration and Transfer Record (Report No. OIG-99-009, October 26, 1998), page 1. Hereafter, I call this document the "October Report." [Footnote 2] October Report, page 1. [Footnote 3] October Report, page 12. [Footnote 4] October Report, page 13. [Page 5] For registrations that occurred during 1969 to 1986, the ATF "advised [the IG] that the Bureau never issued a notice in the Federal Register" as required by law.[Footnote 5] Therefore, these registrations were improper. I alleged that ATF illegally registered almost 2,500 firearms after a 1968 amnesty period expired, because ATF failed to comply with all of the procedures required legally register these firearms. The IG determined that firearms were not registered according to the requirements specified in federal law. Under the NFA all of these firearms are contraband, and they are consequently subject to seizure and forfeiture at this time. 3. The IG determined that "the [NFRTR] lists thousands of weapons owned by persons who may be deceased."[Footnone 6] I alleged that thousands of NFA firearms are currently registered to people ATF has stated are dead, and that ATF has known of this condition since at least 1981 and done nothing about it. The IG also determined that "unless ATF acts to address this issue the number of deceased registrants will become greater as time passes and could adversely impact Congress' intention to control these weapons." "ATF," the IG concluded, "could be subject to further criticism from the public which would reflect negatively on ATF's efforts to administer the registry."[Footnote 7] Again, the law intends that the NFRTR records be accurate and reliable, and the IG has drawn into question accuracy and completeness issues. 4. As the result of independent audit work, the IG has identified weaknesses in ATF's controls over administration of the NFRTR, and made recommendations to ATF that would help correct them. For example, ATF's new practice of "imaging of original documents" so that these forms can be brought up on a computer screen should an original document be destroyed, is a positive step in the right direction, as is strengthening procedures for processing documents within the NFRTR. The IG determined that "ATF did not always control or process checks, forms, and other documents in accordance with procedures because employees did not always adhere to the procedures."[Footnote 8] The failure of ATF employees to follow procedures means that some unknown number of records in the NFRTR are inaccurate, incomplete, and unreliable=97which is contrary to the purpose of the law; because the law intends that the NFRTR records be complete, accurate and reliable. --------------------------------------------------------------------- [Footnote 5] October Report, page 11. [Footnote 6] Audit Report on Allegations Concerning the Bureau of Alcohol, Tobacco and Firearms' Administration of the National Firearms Registration and Transfer Record. (Report No. OIG-99-018, December 18, 1998), page 19. Hereafter, I call this document the "December Report." [Footnote 7] December Report, page 21. [Footnote 8] December Report, page ii. [Page 6] As we have seen, the IG determined that "National Firearms Act (NFA) documents had been destroyed about 10 years ago by contract employees. We could not obtain an accurate estimate of the types and number of records destroyed."[Footnote 9] However, the IG disclosed that its audit tested only "a limited part of the [NFRTR] for completeness." The IG also stated: "It is critical to note that our discovery sample was limited to one infrequently used form and other correspondence of the registry . . . Accordingly, we cannot make any probability statement or draw any other conclusions concerning the more commonly used forms and corresponding data in the registry"[Footnote 10] Consider these statements, quoted directly from the IG's audit report: 1. "Our [audit] scope did not include a review of the accuracy of ATF's certifications in criminal prosecutions that no record of registration of a particular weapon could be found in the registry." 2. "We also did not evaluate the procedures that ATF personnel use to search the registry to enable them to provide an assurance to the court that no such registration exists in specific cases." 3. "Accordingly, this report does not provide an opinion as to the accuracy of the registry searches conducted by ATF."[Footnote 11] Consequently, the IG's audit reviews have not determined whether the NFRTR record searches are reliable, but have drawn into question data accuracy and completeness issues. These data accuracy and completeness issues must be definitively resolved for ATF to conform to the rule of law. At this time, some of ATF's actions are arbitrary and do not conform to the rule of law. ----------------------------------------------------------- [Footnote 9] October Report, page 1. [Footnote 10] December Report, page 22. [Footnote 11] Each of these three quotations are from the December Report, page 4. [Page 7] THE TREASURY IG DETERMINED THAT AN UNKNOWN NUMBER OF NFA DOCUMENTS HAVE BEEN DESTROYED, AND NEITHER ATF OR TREASURY HAS CORRECTED THIS SERIOUS PROBLEM Despite the two 1998 audits by the IG, which were requested in 1997 by the Honorable Dan Burton, Chairman, House Committee on Government Reform and Oversight, that confirmed my major allegations about errors in the NFRTR data base, all of the foregoing serious errors remain uncorrected. Perhaps the most serious problem is that the IG determined that an unknown number of NFA documents are known to have been destroyed by persons working at or for ATF. Further, according to the IG, there are 104,357 "original registrants still listed in the registry as in current possession of the NFA weapon" who have not transferred ownership of these firearms since they were registered during 1934 to 1969.[Footnote 12] These 104,357 registrations represent nearly 14 percent of all currently registered NFA firearms, according to the IG=97hardly an insignificant number. In other words, there are just 104,357 single pieces of paper that ATF theoretically possesses to show the legality of these registrations. If ATF destroys or loses even one of these single pieces of paper, and the owner of that firearm innocently loses his or her copy, that firearm is unregistered in the eyes of ATF. It seems likely that some of these 104,357 firearms are historic AOW firearms. The result is that some law-abiding owners of historic firearms are in jeopardy of being unjustly prosecuted, and that the Government can no longer guarantee the validity of some of the registration documents it issues to individuals to legally possess historic NFA firearms. For example, Capt. Mont Lamar Mendenhall needed to send an NFA firearm (a machine gun that is registered and that he legally owns) to a federally licensed gunsmith for repair. The NFA requires him to temporarily transfer the registration for the firearm to the gunsmith, and Capt. Mendenhall completed an application to do so. After receiving his application to temporarily transfer the NFA firearm to the gunsmith for repair, ATF sent Capt. Mendenhall a notice dated May 18, 1998, stating the firearm was not shown in the NFRTR records as being registered to him. This is a serious condition, because all NFA registration and transfer documents are prepared in duplicate original=97one copy for ATF, and the other copy for the transferee (in this case, Capt. Mendenhall). No NFA firearm can be legally transferred unless ATF approves the transfer and enters the data into the NFRTR. Only then can the registration for the firearm (that is, the approved transfer document) be sent to the new owner; and it is only after receiving this document that the lawful owner may finally legally take possession of the firearm. The important question is: Why did the NFRTR not contain a record of the registration of Capt. Mendenhall's registered firearm? -------------------------------------------- [Footnote 12] December Report, page 19. [Page 8] Had Capt. Mendenhall been unfortunate enough to innocently lose his copy of the registration document because of a fire, earthquake, flood, tornado, burglary or just plain human error, he would have been subject to a $10,000 fine and 10 years imprisonment, in addition to the uncompensated confiscation of his firearm. The reason is that under the law as it is currently written, the Government is not required to prove a machine gun isn't registered to convict a person for illegally possessing it. Capt. Mendenhall told me of his concern about this situation, and asked me to submit to this Subcommittee his personal statement regarding this matter along with my testimony. Noel Napolilli of Fairbanks, Alaska, also asked me to include his testimonial regarding an historic firearm he legally owned that ATF apparently illegally confiscated in 1992. Although Mr. Napolilli possessed an NFA transfer document that ATF approved in 1985 entitling him to lawfully possess the firearm, and ATF's own forensic examination proved that ATF issued the NFA transfer document, ATF confiscated the firearm anyway because it could find no record of it in the NFRTR. I have placed Capt. Mendenhall's and Mr. Napolilli's declarations, and their supporting documentation regarding these events, in the Testimonial Appendix of this testimony. WHAT NEEDS TO BE DONE NOW Mr. Chairman and Members of the Subcommittee: I would like to emphasize to each of you that the type and extent of errors in the NFRTR is currently unknown. Apparently, nobody inside or outside the Government has any idea how accurate these NFRTR records currently are. Knowing how accurate they are is critically important for law enforcement reasons, as well as for the Government to be able to guarantee the validity of the ownership of NFA firearms to persons who have complied with all legal procedures. It is also necessary to detect situations where Government negligence has unjustly transformed otherwise legally owned firearms into illegal firearms, to avoid unjust prosecutions and confiscations of private property. The fact that some unknown number of NFRTR records are missing appears to cast reasonable legal doubt upon the accuracy of certifications that firearms are not registered, in some criminal cases. In the light of the fact that the IG has drawn into question the accuracy and completeness of the NFRTR data base, I respectfully suggest that this Subcommittee consider immediately taking the following actions: 1. Determine that all of the IG's recommendations to ATF to correct the weaknesses the IG identified in ATF's administration of the NFRTR have been implemented. 2. Determine the accuracy of the complete NFRTR data base. 3. Determine the accuracy of the searches ATF performs using the NFRTR data base, which are used in ATF's certifications of evidence of nonregistration of firearms as evidence in criminal trials. [Page 9] 4. Recommend that the Congress direct the Secretary of the Treasury to establish a national, well-publicized 1-year amnesty period so errors in the NFRTR database can be corrected and the NFRTR database be made as complete, accurate and reliable as it can be.[Footnote 13] An amnesty period appears to be the only practical way to address the issues of completeness and accuracy in the NFRTR data base, which the IG has raised. Mr. Chairman and Members of the Subcommittee: The IG has determined that thousands of NFA firearms have been registered for many decades to persons that ATF has stated are deceased. Because the Congress has mandated that these firearms be strictly controlled, there appears to be only two ways to correct this problem: (1) conduct searches to physically locate these firearms and update the registrations as appropriate to persons who are entitled to own these firearms; or (2) establish a national, well-publicized 1-year amnesty period, so persons who currently possess these firearms can register them. In some cases, as I pointed out in my 1996 testimony, widows don't go through their departed husband's things for many years, if ever; survivors innocently distribute NFA firearms to family members or friends as important keepsakes, in some cases mistakenly thinking that once registered, no more needs to be done; and particularly in the case of certain historic AOWs, the firearms simply are not recognized as NFA firearms that must be registered. Finally, often years later, persons who innocently were given or inherited NFA firearms realize they have inadvertently broken the law, and are fearful to come forward and legitimize the involuntary transfer caused by the registered owner's death. Once an NFA firearm is given away to a relative or sold, ATF usually confiscates it=97even if it was lawfully owned by the same family for 60 or more years, and no crimes were committed with the firearm. The fact that some unknown number of NFA documents have been destroyed further complicates the issue. The reason is that there is often strong circumstancial evidence a firearm for which no registration can be found in the NFRTR was registered by its owner=97but that cuts no ice with ATF. Many of these firearms are valuable historical artifacts. Firearms registered to dead people is not the only issue, and is maybe not the most important issue. Importantly, consider that the IG determined that an unknown number of NFA documents have been destroyed, which establishes that the NFRTR database is incomplete and inaccurate. In fact, the accuracy of the NFRTR database is currently unknown. -------------------------------------------------- [Footnote 13] Under section 207(d) of the Gun Control Act of 1968, the Secretary of the Treasury is empowered to establish amnesty periods (and immunity from liability during any such periods), that "will contribute to the purposes" of the NFA. The 90-day statutory limit under section 207(d) for such amnesty periods is, in my judgement, too short in this instance. I am therefore suggesting a 1-year amnesty period, which the Congress would be required to authorize. [Page 10] Technology has developed so that firearm registration and transfer forms can be read electronically, and software programs can be written to automatically process, classify, store and retrieve these documents. Once the 1-year amnesty period ended, further voluntary registrations would be prohibited. It is possible that despite an amnesty period, some people would not register their firearms; however, people who would voluntarily register firearms they possess right now are prohibited from doing so under current law. Furthermore, the negligent destruction of an unknown number of NFA documents at ATF means that some law-abiding citizens could be unjustly prosecuted and unjustly deprived of their historic firearms. Mr. Chairman, this ends my prepared statement. If you or other Members of the Subcommittee have further questions, I will be glad to answer them to the best of my ability. Thank you for the opportunity to present this information. NOTE: The following testimonial affidavits were included in Larson's testimony. Documents referred to within each testimonial have not been reproduced here, but were included in the testimony that was submitted to the House Appropriations Subcommittee. [Page 11] Declaration of Capt. Mont Lamar Mendenhall Dear Mr. Chairman: Please allow me to introduce myself. I am 55 years old and have been employed as a pilot by United Air Lines since 1966. Currently, I am based in Chicago and flying Boeing 777s to Europe. I enjoy collecting and writing about firearms. At last count, 39 of my firearm related articles have been published in national magaazines. Three more have been accepted for future publication. I began collecting firearms that are regulated by the 1934 National Firearms Act in 1978. My collection of them now exceeds 60 pieces. All of them are registered, as required by law, with the Bureau of Alcohol, Tobacco and Firearms (BATF). For added security, the majority of these firearms are stored in large safe deposit boxes at a local bank. For my own piece of mind, the original registration documents are stored there also. I only keep photocopies of these documents at home. About a year ago, I needed to have a registered machine gun repaired. I applied to the BATF, using a Form 5, for permission to temporarily transfer it to a liecnsed manufacturer who could make the repair. The BATF refused to grant permission and stated that my machine gun was not listed in the National Firearms Registration and Transfer Record. This was a frightening experience. The possession of an unregistered machine gun is a felony. The only agency that can authorize me to legally possess one is the BATF. Fortunately, as I stated, I store my original BATF-approved transfer documents in a local bank's safe deposit box. I copied the original document and sent it to the BATF along with another Form 5. The BATF approved the second Form 5 with no comment. I am frightened by the prospect of what might have happened if I had stored the original registration document in a less secure location and it had been lost or destroyed in a natural disaster or fire. If I had lost my registration document and the BATF did not have a copy of it in its records, I would have had no means of proving that I was the lawful owner. I could have been put in jail for up to 10 years and fined up to $10,000. In addition to forfeiting the gun that was in question, a felony conviction would have caused me to lose my job of 33 years and to lose the rest of my valuable firearm collection as well. Let me preface the following statement with this one: I have always had a very good relationship with the BATF. The BATF employees that I have dealt with have always been both courteous and helpful. Knowing though, the serious consequences of mak,ing an "innocent mistake" through ignorance of the law, on numerous occasions I have sent letters to various departments of the BATF asking for guidance on specific matters. A BATF representative has always replied to these letters, often promptly, with the information that I requested. [Page 12] The BATF representatives, who have answered my letters, have always been very patient with my requests. Most of my questions must have seemed very na=EFve to a person who deals with these things on a daily basis. Despite my personal good experiences with the BATF, this recent incident left me shaken. I was frightened because I know of many incidents when a small group of BATF agents have overreacted to a situation. My recent experierience is good evidence that the BATF's registry is flawed. Each time an NFA weapon's ownership is transferred, two original copies of the transfer document have to be sent to the BATF. Only after the BATF approves the transfer, by approving each document and entering the data into the registry, is the other original document sent to the lawful owner. It is that document that makes it legal to possess the firearm. The fact that both this approved document, and a record of it, were missing from BATF's records indicates a very serious problem. I can not help but wonder if some innocent people ahve been unjustly prosecuted because of errors in the National Firearms Registration and Transfer Record. In this case, the outcome was good. The great majority of the BATF's employees are quite capable and want to do the right thing. In my incident, they corrected their records when I supplied a copy of my original registration document. I have enclosed a copy of the Form 5 rejection that the BATF sent me. You will note that it has a square to check for "Firearm not shown registered to applicant." There must be numerous other unreported instances of this, since the BATF has found it necessary to create a space to note it on an official form. These mistakes are like land mines. They are buried there awaiting some innocent, unwary person who may have lost his or her registraiton document. Mr. Chairmsn, I hope that you and the Subcommittee will look into this problem and encourage the BATF to correct their firearm registration records. Best regards, (signed) Captain Monty Mendenhall. [Page 13] Declaration of Noel E. Napolilli I, Noel E. Napolilli, make the following declaration pursuant to 28 U.S.C. section 1746. 1. I am a federally licensed firearms dealer and was a special occupational taxpayer under 26 U.S.C. section 5802 doing business as Nap Armaments, 251 Napolilli Lane, Fairbanks, Alaska 99710, until 1995. I originally received my first license in 1971. I am a retired public high school teacher and coach of 28 years. I am an honorably discharged veteran of the Missouri National Guard, a licensed pilot, a licensed merchant marine captain, and was a member of the Fairbanks auxiliary police and the Alaska State Defense Force, with the rank of major. 2. In the early 1980s I was a partner in a partnership which itself was a federally licensed firearms dealer and special occupational taxpayer, authorized to deal in firearms governed by the National Fiearms Act of 1934, 26 U.S.C. sections 5801-5872 (hereafter "NFA"), such as machineguns and destructive devices. During that period the partnership purchased on my behalf a German MP-40 machinegun (Serial No. 4212) from Speciality Arms of Springfield, Ohio, a now defunct concern. The Bureau of Alcohol, Tobacco and Firearms (hereafter "BATF") approved the Form 3 transfer from Specialty Arms to the partnership at that time and re-registered the gun in the name of the partnership. The gun was shipped to us. 3. In mid-1985 the partners decided to dissolve the partnership and we submitted BATF transfer forms to transfer the partnership inventory to the various partners. Some 32 BATF Forms 3 were submitted to BATF to transfer and re-register various guns to me as an individual special occupational taxpayer. All 32 transfers were approved including one for the MP-40 in question, and I took sole custody of those firearms, entering them in my bound book. 4. In September of 1991 BATF conducted a compliance inspection of my firearms business. The inspector began by comparing my on-hand inventory with a computer print-out of NFA firearms shown as being registered to me in the national registry. That comparison showed me to be in possession of four machineguns not shown to be registered to me, a serious federal felony if true. I was a part-time, low-volume dealer who does not transfer many NFA firearms (less than six per year on average). The discrepancy in the inspector's print-out was thus not due to turnover in my inventory. In fact, the four accounted-for guns had been registered to me and in my possession for several years. 5. I was able to produce original BATF-approved Forms 3 for all four guns showing them legally transferred to and registered to me and BATF ultimately agreed that three of the four were registered to me. BATF has never revealed how or why three of the guns were ultimately determined to be registered to me or why their print-out failed to reflect that fact. Form 3 transfers are obtained by the transferor submitting counterpart original forms to BATF. If the transfer is approved, one approved original form is retained by BATF and the other original is returned to the transferor for transmission to the transferee along with the gun. [Page 14] 6. With respect to the fourth gun, the MP-40, which I submitted to BATF for examination, BATF initially took the position that my registration form must be a forgery (apparentlybecaues it was a Xerox copy of an original=97a fact I had never noticed before since receiving it from the partnership in 1985 in a package containing 31 other original Forms 3 which were all approved at the same time). When BATF sent the form to its laboratory, it was determined that it was not a forgery, but a Xerox copy of an authentic original. A true copy of that laboratory report is attached as Exhibit 1. BATF has never accounted for the original from which the Xerox copy must have been made, nor revealed why the partnership was unknowingly sesnt a Xeros copy of that original in 1985 instead of the original that should have been sent according to Treasury Regulations. 7. Confronted with apparently irrefutable proof that the gun was lawfully registered, even though their records apparently neglected to show that fact, BATF then switched theories and contended that the gun must have originally been registered as a "remanufactured" gun, and because it showed no signs of welding it must have originally been registered under false pretenses and was therefore contraband. No further argument was raised that it was not registered to me and no explanation was ever forthcoming as to why the national registry apparently showed no evidence of the gun at all. 8. My attorneys and my congressional delegation pointed out to BATF that (1) "remanufacturing" was not the only legal way the gun could have been originally registered; (2) only the original registration (by a defunct Ohio company) would show how the gun was registered, and therefore whether the registration was false; and (3) BATF had apparently lost or destroyed the very documents which would settle the issue. 9. BATF remained both adamant and obstinate. It never conceded that it must have lost or destroyed the original registration (and all subsequent transfers). It never acknowledged that it had falsely suspected me of forgery. It would never acknowledge that my "unforged" transfer form had to be a copy of an authentic original transfer form. It never revealed why the partnership had been sent a Xerox copy of the form rather than the original. Instead it seized and kept (and presumably destroyed) my valuable machinegun. 10. I brought a lawsuit for the return of my gun but with the Waco and Ruby Ridge tragedies happening at that time, the fear of BATF was paramount in my mind. This, added to the cost, strain and pressure of dealing with an unresponsive govnerment which obviously considered me a liar and forger became too much and I ultimately put an end to it by dismissing my suit. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on September 3, 1998 (signed) Noel E. Napolilli.