January, 2015

   This week, it was announced that ATF is revoking Stag Arms LLC’s FFL.  This is a big story in the Industry because Stag is a well known firearms manufacturer, which sells its products to civilians, the military, and law enforcement. According to an article by the Hartford Courant, the revocation essentially results from two “bad” ATF compliance inspections, the first in 2007 and the second in 2014:

In 2007, ATF inspectors found instances of poor record-keeping, administrative violations and regulatory violations, but worked with Stag to bring it into compliance, said Nealy Earl, area head of industry operations for ATF.  The problems found during the 2014 compliance review at Stag Arms were similar or worse than those found in 2007.

As a result of the 2014 inspection, ATF pursued criminal charges and the company’s president and owner “pleaded guilty . . . to violating federal firearms laws and . . . agreed to sell the company and have no further ownership or management role in a gun manufacturer.”  (www.courant.com/breaking-news/hc-stag-arms-guilty-plea-federal-court-1223-20151222-story.html)

There are some important tips for Industry members based on the Stag Arms story.

(1) take Compliance Seriously

   Stag had a lot to lose by not ensuring 100% compliance with ATF regulations.  Stag Arms was in business for twelve years and in that time frame grew to supply broad markets and employ 100 people.  Now, its ownership will be selling Stag’s assets in a distressed sale and are forever barred from owning or running another Industry business.  

From what I have read, Stag Arms often spoke of its commitment to compliance.  But, it is one thing to say all of the right things, and another to actually do them. There are a number of cost-effective methods and resources for establishing an ongoing compliance program.  I encourage Industry members to understand and take advantage of them.  I guarantee you that Stag wishes it had.

(2) If ATF gives you a second chance, take advantage of it

   Stag had seven years to learn from its 2007 ATF inspection.  If you have an ATF inspection and ATF finds any violations, address them immediately and develop measures (again, using the various compliance resources) to prevent them from happening again.  And, if the inspection leads to a warning letter or warning conference, I encourage you to consider some long-term solutions that my firm has developed for effectively addressing that adverse compliance history, and reducing your exposure to the kinds of consequences Stag has suffered.

Had Stag Arms followed these two tips, you would not be reading this article.