December 29, 1997 Ms. Carol Bergen Department of the Treasury Inspector General 55 W. Monroe Street Chicago, Illinois 60603 Dear Ms. Bergen: I am writing to advise you of documentation of an example where the Bureau of Alcohol, Tobacco and Firearms (ATF) has apparently re-registered a National Firearms Act (NFA) firearm that had, in the past, already been registered. The firearm in question is a .410-bore H&R Handy-Gun bearing serial number 52551, and ATF possesses all the original documentation. In my 1997 testimony before the House Subcommittee on Treasury, Postal Service and General Government Appropriations (see pages 91-92 in the printed hearing record) I noted that ATF had registered five H&R Handy-Guns on April 16, 1986, on behalf of H&R, bearing serial numbers 5592, 43950, 50885, 52551, and 53637. All of these guns were registered using a single Form 2 that was submitted by H&R; I also have a copy of this Form 2, but did not reproduce it in my testimony for reasons of space. Although ATF claims through its acceptance of this Form 2 that serial number 52551 was originally registered on April 16, 1986, I possess copies of other records which I obtained from ATF that indicate otherwise. These records are H&R factory records held in ATF's out-of-business operation and are, specifically, Book 48, Model 625 Handy-Gun, 51801 to 53400, 1947-52, 1953. The ATF obtained these and all other firearms records of H&R when H&R went bankrupt. I am giving you the original reference because I am sure you will need to see the original record, rather than the copy that I possess, for purposes of your examination of records. Book 48 is a collection of shipping records. These are serial number records of guns that H&R shipped to individual persons, wholesale distributors, and retail distributors. These records also reflect some guns that were returned to H&R as unsold. H&R apparently retained some of these guns in its Worchester, Massachusetts, headquarters, and shipped others to its factory at Drummondville, Ontario, Canada, for sale in that country. Some knowledge of the situation at the time these records were created is necessary to interpret them. When the NFA was enacted in 1934, H&R and other manufacturers were required to register certain NFA firearms that they currently possessed on July 26, 1934, or had possessed in the past. Because the NFA at that time required a $200 transfer tax on the Handy-Gun, the NFA had the effect of freezing registered guns in the hands of their owners. While there was no tax on actually registering the gun, the $200 transfer tax on selling (or even giving away) the firearm virtually destroyed the market for this type of gun. Thus, both H&R and various wholesale and retail gun dealers who possessed H&R Handy-Guns when the NFA was enacted were basically stuck with a product they were unable to sell (in 1934, the price of a new H&R Handy-Gun was about $16.50). Individual persons who owned these guns could not sell or give them away without paying a $200 transfer tax. The Congress amended the NFA on August 6, 1945, effective retroactive to July 1, 1945, to provide for a $1 transfer tax on the smooth bore H&R Handy-Gun, provided the barrel was at least 12" in length, effective July 1, 1945. In response to this change in the law, H&R and other gun distributors and dealers were again able to sell the H&R Handy-Gun at a reasonable price that reflected its actual commercial value. It seems likely that virtually all of these records are for H&R Handy-Guns with 12 1/4" barrels. The reason is that the transfer tax reduction did not apply to the 8" barrel variation, which was taxed at $200 from July 26, 1934, to June 30, 1960. Effective July 1, 1960, however, the Congress changed the transfer tax to $5 for all firearms in the "Any Other Weapon" category. The $5 tax remains in effect today. These shipping records largely reflect an activity of moving long-stale inventory through sporting goods, hardware and gun stores, and that most of the guns were sold in the United States and in Canada from 1947 to 1953. The latest sale that I have observed was that of serial number 53272 to Ricks, Inc., of Atlanta, Georgia, on November 1, 1957. While these records describe a number of H&R Handy-Guns that were shipped to Canada, they also reflect sales in the United States, such as to the Alaska Trading Co., Anchorage, Alaska; and to Western Auto, Laurel Mississippi. If H&R was in possession of serial number 52551 at the time the NFA was enacted, it would have registered the firearm. While the shipping records I have cited do not disclose any date of original registration, they document that serial number 52551 was shipped to two different persons on at least two different dates: September 15, 1947, and May 3, 1948. Since the NFA requires advance approval for a transfer to occur, even to a licensed dealer, it would logically hold true that ATF would have a record of these transactions in its master NFA files. It appears that H&R shipped serial number 52551 at least two individuals, who may have been firearms dealers, and that the gun was returned to H&R after the distributor/retailer was unable to sell it. Book 48 reflects a number of these situations, as well as situations where the guns were successfully sold by H&R. I have reproduced the information in Book 48 regarding serial number 52551 below. Note there are two entries for "page," which I have included for ease of locating these data. The reason is that the original data are handwritten, entered in nonsequential blocks, and required entry and editing on a computer to put them in consecutive serial number order as I have done in my research files. Consequently, there are two sets of page numbers listed below: the first one, next to the serial number, was applied by H&R; the second was applied by ATF; and I have listed it following the date of shipment. Either one may be used to locate the entries that I have cited. There are many duplicate entries in Book 48, which may have been done for quality control purposes. While I have eliminated duplications for my own research purposes in a book that I am writing I have, however, reproduced all of the information about serial number 52551 below. These records ought to be readily retrievable by ATF. H&R Serial ATF page number Shipped to: Shipment date page 798 52551 N. E. Marcum September 15, 1947 22 1014 52551 Mr. C. Francis Cowdrey, Jr., New York, New York May 3, 1948 26 1535 52551 N. E. Marcum September 15, 1947 47 These records, and ATF's self-described original registration of serial number 52551 on April 16, 1986, raise troubling questions about the accuracy and integrity of the National Firearms Registration and Transfer Record (NFRTR), for at least three reasons: 1. In this instance, the ATF has apparently quietly registered (or re-registered) at least five H&R Handy-Guns many years after they were originally manufactured, and in apparent contradiction of the law under which ATF claims that unregistered NFA firearms may not be registered . . . or even re-registered if there is no record of the original registration. According to ATF's most recent (December 31, 1996) data, a stunning 108,566 NFA firearms registered during 1934 to 1971 are still owned by the same people who registered them (see page 78 of my 1997 testimony). Consider further that 50,314 of these guns were registered during the 1968 Amnesty Period. Thus, for these 50,314 guns alone, there is just a single record (an approved Form 4467) in the NFRTR. If ATF and the lawful owner both lose their copies of a registration, the gun in question is immediately transformed into contraband that nobody can own. But did ATF make an exception for H&R? 2. As an out-of-business record, why were these records not inspected by ATF to determine the extent, if any, to which the guns involved were legally registered under the NFA? The records clearly disclose that a significant number of shipments and, presumably, completed sales occurred in the United States. Are there any other guns listed in Book 48, for which there is absolutely no record that can be found in the National Firearms Registration and Transfer Record? If so, for H&R Handy-Guns that clearly were sold in the United States, I believe there may be much more proof of registrations that ATF has lost or deliberately destroyed. Unfortunately, as you know, the law does not allow me access to the NFRTR data to determine if, in fact, more registration records are missing or destroyed. You, however, would have access to all of these records. In the interest of justice I have, therefore, enclosed a computer printout of all these firearms, so they can be checked out. Just this alone would make an interesting report to the Congress. In theory, Ms. Bergen, A L L of the H&R Handy-Guns on this list must, by definition, be in the NFRTR, because H&R was required, in 1934, to have registered them. I understand that records are never destroyed in the NFRTR; that is, there is a "paper trail" for every gun that was ever registered. Perhaps these data will provide some independent look at how accurate the NFRTR is from an "outside" source, and with the best possible evidence a manufacturer's inventory. The printout I have sent you is "raw," in the sense that it was my initial best effort to transcribe sometimes-illegible writing and serial number entries. You will note that in most cases, duplicate entries for the same serial number pretty much clear up the name of the person or organization to whom the firearm was shipped. In just a few cases, the identity of the person or business seems ambiguous. I believe that you will find this printout, despite whatever shortcomings it may have, to be an excellent guide to the original Book 48 which is in custody of ATF. 3. ATF's acceptance of the Form 2 submitted by H&R for registration of the five H&R Handy-Guns identified above, by definition surely must mean that these firearms were not identifiable anywhere in the current NFRTR, which by definition is a comprehensive record of all NFA firearms that were ever registered. Thus, in view of Book 48 records, ATF's registration of serial number 52551 on April 16, 1986, can only be properly deemed a voluntary re-registration by the possesor of an unregistered NFA firearm a corporate manufacturer. Is this in conformity with the law as ATF has applied it and understands it? Could a person who inherited an H&R Handy-Gun and lost the registration, also re-register it as has apparently been done here? The records do not disclose the address of N. E. Marcum, one of the possessors of serial number 52551; however, the address of C. Francis Cowdrey, Jr. is listed as New York, New York, and he is listed in the Book 48 records as having received a number of other H&R Handy-Guns as well. It is difficult to be certain, but seems highly probable that serial number 52551 is also still listed somewhere in New York City Police firearm registration records, with some documentation as to its origination. The NYC police might not open its records to me for inspection, but I think that the requirements of a criminal investigation and/or a Congressional hearing would override whatever concerns might be involved. I will appreciate it very much if you can look into this matter as part of your current evaluation of the firearm registration practices of ATF. Very truly yours, Eric M. Larson P.O. Box 5497 Takoma Park, Maryland 20913 (301) 270-3450