Learning about FFL / buying and selling

[Frank Ettin]

Originally Posted by johnwilliamson062

...Frank has stated in PM that having worked for an FFL does not qualify me to speak on the subject...

No. What I actually wrote was:

...The fact that you might have been involved in the business is meaningless. A substantial proportion of FFLs have repeated demonstrated significant ignorance on legal matters...

And indeed you told us here:

...I had a 03 FFL with a separate bank "collection" account and all the money went through my "collection" account and no money came out for anything not gun related...

Of course an 03 FFL does not authorize you to engage in the business of dealing in firearms, even C&R firearms (see ATF FAQs):

Does a license as a collector of curio or relic firearms authorize the collector to engage in the business of dealing in curios or relics?

No. A dealer’s license must be obtained to engage in the business of dealing in any firearms, including curios or relics....

Originally Posted by johnwilliamson062

Well, until the ATFE publishes something on the matter or begins to reliably enforce some standard, I think that is what pretty much everyone is doing....

In addition to the federal appellate court cases I cited in post 10, I should point out that ATF has published on the question.

As pointed out by carguychris here:

...the informational flyer rolled out with much pomp and circumstance by the POTUS in January of this year.

Although the document is heavy on disclaimers ("The guidance set forth herein has no regulatory effect...), note the opening statement in the Overview on Page 4 (boldface from original):

....

[johnwilliamson062]

In post 10 I cited federal appellate court decisions in appeals of convictions for dealing in firearms without a required license.

Those links are no clearer than what ATFE has published. The excerpts bolded are, for the most part, actually quoted or paraphrased from ATFE publishing. If a detailed analysis of the facts of the case were attached, it would provide valuable information. I have never seen anyone claim there is a discernible pattern or consistency to the rulings. At least not that leads one to anything like "can't sell more than six guns a year at gun shows," "can't make more than $5,000 a year," "can sell X sporting shotguns, but only Y assault weapons." Very little additional information without any case context. It does us absolutely zero good to know the court upheld a conviction on the grounds of the volume of the defendants transactions without knowing the actual volume of those transactions. Carguychris was, from my understanding, posting to discredit those claiming six was a hard and fast rule that was published "all over the internet." A statement I was clearly also in disagreement with, so I fail to see your point in bringing up his post.

On the 03 FFL FAQ and having a a 03 FFL. A "collection account" is generally regard as one of the "best practices" for 03 FFLs to clearly show your activity is centered around improving a collection. If you aren't taking any money out to support yourself it is hard to argue your motivation is to generate profit/income, which is what must be proved in the end. All the other issues are simply indicative of that single aspect of the transactions. I don't see any reason this would not also be best practices for someone doing private sales. It doesn't preclude entering into business and might in fact provide evidence if you did engage in business, but it provides a history of your transactions and makes it easier not to mix money from your collection which would constitute generation of supplemental income. Similar to a series of direct trades which significantly increase your collections value not qualifying as "economic motivation." If I start with an 1895 Nagant revolver and through a series of trades end up holding a number matching 100% Navy Luger or Colt Python, the ATFE isn't going to be interested. Not a complicated concept.

your motivation is to generate profit/income

It seems to me ones motivation to SELL is actually pretty much irrelevant. One can SELL for almost any reason. If I go to the range Wednesday and someone offer me $2000 for my SKS-M, currently worth maybe $600 in my estimation, because the election results have caused a panic, I don't think accepting the offer is illegal because the motivation to buy was not to profit. The exception there possibly being if I were to sell with the intent to immediately replace the rifle. One must first buy and then sell the item with the intent to profit in both transactions. I chose the SKS-M for this example because I would almost certainly not replace it.

[Frank Ettin]

Originally Posted by johnwilliamson062

Those links are no clearer than what ATFE has published....

Or ATF has based its advice on what the courts have ruled, which is really more likely. And in any case, what the courts have ruled defines the state of the law.

Originally Posted by johnwilliamson062

....I have never seen anyone claim there is a discernible pattern or consistency to the rulings. At least not that leads one to anything like "can't sell more than six guns a year at gun shows," "can't make more than $5,000 a year," "can sell X sporting shotguns, but only Y assault weapons."....

True, which is why people making such claims or giving advice along those lines really don't understand what the law it and really aren't being helpful. The courts have not adopted any sort of "bright-line" test.

Originally Posted by johnwilliamson062

...It does us absolutely zero good to know the court upheld a conviction on the grounds of the volume of the defendants transactions without knowing the actual volume of those transactions....

But that's not the point. People keep looking for some clearly defined threshold -- some line in the sand where, on one sider you're a hobbyist, and on the other you're a dealer. But what the cases tell us is that there is no such line.

This is perhaps most succinctly stated by the Fifth Circuit in United States v. Brenner (5th. Cir., 2012, No. 11-50432) slip opinion at 5-6 (emphasis added):

..the jury must examine all circumstances surrounding the transaction, without the aid of a "bright-line rule". United States v. Palmieri, 21 F.3d 1265, 1269 (3d Cir.), vacated on other grounds, 513 U.S. 957 (1994). Relevant circumstances include: "the quantity and frequency of sales"; the "location of the sales"; "conditions under which the sales occurred"; "defendant's behavior before, during, and after the sales"; "the price charged"; "the characteristics of the firearms sold"; and, "the intent of the seller at the time of the sales". Tyson, 653 F.3d at 201.

In other words, in any given case whether someone is engaged in the business of a dealer in firearms will ultimately be a question of fact for the jury. The factors to be considered by the jury are listed, including "location of sales", "the quantity and frequency", "defendant's behavior", etc. And the jury must do so without the aid of a "bright-line" rule.

While this sort of uncertainty is not unusual in the law, it does make it very difficult to advise someone who wants to do something and wishes to avoid legal problems. Usually the best a lawyer can do is discuss with the client exactly what the client wants to do and suggest a spectrum of risk -- most commonly narrow bands of little risk and extreme risk on each end of the spectrum with a very wide band of uncertain risk in the middle.

As far as the underlying facts of each case, if anyone wants to do the research I've provide proper citations so that he can find and study the court opinions. These are publicly available.

[Aguila Blanca]

Originally Posted by johnwilliamson062

Carguychris was, from my understanding, posting to discredit those claiming six was a hard and fast rule that was published "all over the internet."

"Those" would be me, and I very clearly did NOT state that six was a hard and fast rule. The reports that BATFE agents have used six as a general guideline has been "published" all over the Internet, but I don't recall anyone ever claiming it was a hard and fast rule. It has always been posted in the context that there is no hard and fast rule, but the BATFE starts to look at you funny if you sell more than six guns in a year. That fits in with the quote Frank provided (immediately above) from Tyson -- the number of sales (6) within a year falling into the category of "the quantity and frequency of sales."

[johnwilliamson062]

If it is all over the internet, and I am not disputing it is written on other forums or other web pages, then you are not alone.

the BATFE starts to look at you funny if you sell more than six guns in a year

I interpret your statements to mean you believe ATFE begins to investigate a person if they are aware of 6 sales in a year, not that they press charges or a person is automatically guilty. That there is a "hard and fast" rule to look deeper if they are aware of six transactions. Federal investigation alone can ruin a life. I was involved in a case last year where a man lost his job, most of his family, his church, his friends, his car, and just about everything else following a spiral down after being raided by federal authorities. Before even being indicted. I do not believe ATFE uses six transactions as a rule at all. I don't think 6 sales in and of itself will garner ATFE attention.

Tyson -- the number of sales (6) within a year falling into the category of "the quantity and frequency of sales."

Maybe you have the full transcript of the case and have reviewed it and drawn conclusions based on that information.
I have seen no citations that support 6 transactions being the reason ATFE launch an investigation. As previously mentioned a single transaction can constitute 'engaging in the business' in certain circumstances. I do not disagree with that claim. In fact, I support it.
I just disagree with any claim that ATFE will begin investigation simply because someone sells six guns in a year. I see people with private sales tables with 6+ guns publicly at gun shows. I see people listing 6+ guns on armslist in single ads with some regularity. Earlier this year a guy listed ten rifles in one ad. Regularly see multiple ads with the same background in the picture. There are MANY circumstances in which a person can legally sell far more than six guns in a year and ATFE is well aware of them.
If ATFE becomes aware of someone buying 6 NIB guns then immediately turning them in a FTF transaction, then that may be something they are interested in investigating. Six "NIB Glocks" posted for sale over retail price? Sure, I'll go along with that. Posting your FFL is transferring a case of six lowers you got a deal on to you the next day and would like to re-sell them? Sure, I'll go along with that. No one has come close to convincing me ATFE has any interest in six sales in and of itself. No one has convinced me six times of:

I bought this a month ago and it was rough. I cleaned it thoroughly, took it to the range a few times, cleaned up the finish a bit and replaced the missing rear sight, but it isn't working out for me. Doesn't fit my hand/have a smooth enough trigger/match my dress belt/shoot as accurately as my Glock/whatever. I want to sell it for $100 more than I paid because I replaced those parts and spent 10 hours working on it, so it is worth $100 more now

';
is grabbing attention either. If it is supposed to ATFE is really missing the ball with my local armslist and gun shows. Is there a supposed limit on the dollar amount one can "profit" on a single sale without attracting the attention of investigators?
I don't have the single sale with large profit case in front of me now and don't care to look it up. I'm not sure I ever read the entire case, but may have just been a summary. From memory the issue which brought about investigation was the middle man arranging or publicly listing the item for sale before even taking possession of the firearm. 'I bought this cheap and it will arrive in 5 days. It isn't immediately available b/c I am not in possession. I'd like to sell it to someone in five days though.' Clearly demonstrating intent to profit from the transaction and no intent to keep the item. Little to do with number of transactions or amount of profit.
If there is such a case, which is undisputed in this thread, than anything over "0" can qualify, so six does qualify. So does two, three, four, and five. Citing one case in which the number of transactions happens to have been six, does not mean it is a rule ATFE follows.

If you have a case in which an ATFE agent answered a question to the effect of 'why did you begin investigating Mr. Tyson?'
With testimony to the effect of 'We became aware Mr. Tyson had sold six guns in the last year."
I am very interested. If there was such testimony I believe someone would have posted it previously.

[Frank Ettin]

Originally Posted by johnwilliamson062

Maybe you have the full transcript of the case and have reviewed it and drawn conclusions based on that information.....

First, you need to quote things properly and in context, instead of editing the quote phrase in a misleading way. Aguila Blanca did not write what you attributed to him. What he actually wrote, in post 21, was:

Originally Posted by Aguila Blanca

...It has always been posted in the context that there is no hard and fast rule, but the BATFE starts to look at you funny if you sell more than six guns in a year. That fits in with the quote Frank provided (immediately above) from Tyson -- the number of sales (6) within a year falling into the category of "the quantity and frequency of sales."...

So he was referring to the [mis]information floating around the Internet, and not stating a fact or a personal opinion.

Second, this illustrates the fact that folks need to read cases and not rely on Internet drivel. Tyson is a lot more complex than "selling six guns in a year" (U.S. v. Tyson, 653 F.3d 192 (3rd Cir., 2011), at 194--195):

A jury in the District of the Virgin Islands convicted defendant Shawn Tyson of numerous federal firearms offenses, including twelve counts of transporting a firearm in the course of dealing firearms without a license, one count of transporting a firearm with knowledge or reasonable cause to believe that it would be used to commit a crime, one count of transferring a firearm to an out-of-state resident, and one count of conspiring to unlawfully transport firearms. The jury also found Tyson guilty of ten counts of unauthorized possession of a firearm under Virgin Islands law. Following pronouncement of the verdict, the District Court granted Tyson a judgment of acquittal on each of the federal counts. Such relief was denied with respect to the convictions charging violations of the Virgin Islands Code.

We are presented with cross appeals from the final judgment entered by the District Court. Tyson challenges the sufficiency of the evidence introduced in support of the counts arising under local law, while the government contends that we should reinstate the jury's verdict on the federal firearms counts. For the reasons set forth below, we conclude that Tyson's appeal is without merit. We also conclude that the District Court was correct to enter judgment of acquittal on the conspiracy count sounding in federal law. With respect to the remaining federal counts, however, we agree with the government's contention that the District Court erred by granting Tyson Rule 29 relief. Accordingly, we will reverse the judgment in part and remand the matter with instructions to reinstate the jury verdict on each of the federal counts save that charging Tyson with conspiracy to transport firearms in violation of federal law.
...

Now let's take a look at what the Third Circuit said with regard to Tyson's claim on appeal that the government produced insufficient evidence to prove that he engaged in the business of a dealer in firearms (Tyson, at 200--201, footnotes omitted):

...Tyson was charged and convicted on twelve counts of transporting a firearm in the course of dealing firearms without a license—a violation of 18 U.S.C. § 922(a)(1)(A). Section 922(a)(1)(A) states that it is unlawful for any person except a licensed importer, licensed manufacturer, or licensed dealer, to engage in the business of importing, manufacturing, or dealing in firearms, or in the course of such business to ship, transport, or receive any firearm in interstate or foreign commerce[.] To obtain a conviction under this provision, the government must show that the defendant (1) engaged in the business of dealing in firearms; (2) was not a federally licensed firearms dealer; and (3) acted willfully. United States v. Palmieri, 21 F.3d 1265, 1268–70 & n. 4 (3d Cir.), vacated on other grounds, 513 U.S. 957, 115 S.Ct. 413, 130 L.Ed.2d 329 (1994); see also United States v. Sanchez–Corcino, 85 F.3d 549, 554 (11th Cir.1996); 18 U.S.C. § 924(a)(1)(D) (providing mens rea requirement).

The District Court held that there was sufficient evidence to prove Tyson was not a federally licensed firearms dealer, but insufficient evidence to demonstrate that he was “engaged in the business of dealing in firearms.” But what does it mean to be “engaged in the business of dealing in firearms”? According to the statute, a person is so engaged when he or she “devotes time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms.” 18 U.S.C. § 921(a)(21)(C). To conduct business “ ‘with the principal objective of livelihood and profit’ means that the intent underlying the sale or disposition of firearms is predominantly one of obtaining livelihood and pecuniary gain, as opposed to other intents, such as improving or liquidating a personal firearms collection.” 18 U.S.C. § 921(a)(22). In this vein, the statute explicitly exempts those who “make[ ] occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sell[ ] all or part of [their] personal collection of firearms.” 18 U.S.C. § 921(a)(21)(C).

By the statute's terms, then, a defendant engages in the business of dealing in firearms when his principal motivation is economic (i.e., “obtaining livelihood” and “profit”) and he pursues this objective through the repetitive purchase and resale of firearms. Palmieri, 21 F.3d at 1268 (stating that “economic interests” are the “principal purpose,” and “repetitiveness” is “the modus operandi”). Although the quantity and frequency of sales are obviously a central concern, so also are (1) the location of the sales, (2) the conditions under which the sales occurred, (3) the defendant's behavior before, during, and after the sales, (4) the price charged for the weapons and the characteristics of the firearms sold, and (5) the intent of the seller at the time of the sales. Id. (explaining that “the finder of fact must examine the intent of the actor and all circumstances surrounding the acts alleged to constitute engaging in business”). As is often the case in such analyses, the importance of any one of these considerations is subject to the idiosyncratic nature of the fact pattern presented.

Here, the government presented substantial indirect evidence of repetitive sales. Over the course of approximately seven months, Tyson flew to the Virgin Islands four times. Directly before each of these trips, he purchased several firearms in Tennessee. Tyson carried some number of these weapons on at least three of his flights and he never registered a single gun with the local police when he landed in St. Thomas. In total, Tyson purchased thirty-five firearms during the relevant time period. Only twelve were ever recovered; eleven guns were seized on July 31 and one weapon—with its serial number obliterated—was confiscated from Jelani LaTorre. A reasonable jury could conclude from this evidence that Tyson sold the twenty-three unrecovered (and unregistered) firearms during his first three trips to the Virgin Islands. A jury could further infer that Tyson had similar intentions for the eleven guns with which he was apprehended on the day of his arrest.

There was also evidence that Tyson's repetitive sales were driven by a pecuniary motive. In January 2008, LaTorre wired $330 to Tyson in Tennessee. Several weeks later, Tyson purchased a Hi–Point 9mm handgun for $139. The jury was free to infer from this evidence that Tyson had not only sold LaTorre the weapon, but that he did so for a sizeable markup. Such profit-seeking behavior falls squarely within the statutory definition of firearms dealing. See 18 U.S.C. § 921(a)(22). In addition, the government introduced a notepad seized from Tyson's residence in Tennessee. One page of the pad contained the notations “AK” and “AR,” along with two columns labeled “Spent” and “Profit.” Agent Jenkins testified that the AK–47 and AR–15 assault rifle were two of the more common semiautomatic firearms available for sale in Tennessee. Tyson bought several of each. On the notepad, the number “2000” appeared below the “Profit” column next to “AK”; the number “1900” was written in the “Profit” column corresponding to “AR.” The jury could well have reasoned that the word “Profit” meant exactly what it said and that the numbers appearing in this column reflected a positive monetary yield. What is more, the overall timing and condition of the sales strongly suggests a pecuniary motive. ....

Each of the cases cited presented unique fact, but each also has a consistent, "take-home" message: There is no bright-line test or magic number.

Originally Posted by johnwilliamson062

....I see people with private sales tables with 6+ guns publicly at gun shows. I see people listing 6+ guns on armslist in single ads with some regularity. Earlier this year a guy listed ten rifles in one ad. Regularly see multiple ads with the same background in the picture. There are MANY circumstances in which a person can legally sell far more than six guns in a year and ATFE is well aware of them.

If ATFE becomes aware of someone buying 6 NIB guns then immediately turning them in a FTF transaction, then that may be something they are interested in investigating. Six "NIB Glocks" posted for sale over retail price? Sure, I'll go along with that. Posting your FFL is transferring a case of six lowers you got a deal on to you the next day and would like to re-sell them? Sure, I'll go along with that. No one has come close to convincing me ATFE has any interest in six sales in and of itself....

Again, one's personal experience or observations are no basis from which to infer what the law is or how it is applied.

This thread appears to have taken constructive discussion as far as possible in light of the overall unsettled state of the law.