Cisewski v. DEPT. OF THE TREASURY

• Decision Date: 02 August 1991
• Docket Number: No. 90-C-804.,90-C-804.
• Citation: 773 F. Supp. 148
• Parties: Larry R. CISEWSKI, d/b/a Larry's Guns, Plaintiff, v. DEPARTMENT OF THE TREASURY, BUREAU OF ALCOHOL, TOBACCO & FIREARMS, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

773 F. Supp. 148

Larry R. CISEWSKI, d/b/a Larry's Guns, Plaintiff, v. DEPARTMENT OF THE TREASURY, BUREAU OF ALCOHOL, TOBACCO & FIREARMS, Defendant.

No. 90-C-804.

United States District Court, E.D. Wisconsin.

August 2, 1991.

Marc Polland, Polland, Kohn & Knutson, Milwaukee, Wis., for plaintiff.

Nathan Fishbach, Deputy U.S. Atty., Chief, Civ.Div., Milwaukee, Wis., Larry K. Peterson, Sr. Atty., Office of Regional Counsel, Bureau of Alcohol, Tobacco and Firearms, Chicago, Ill., for defendant.

Decision and Order

AARON E. GOODSTEIN, United States Magistrate Judge.

Larry Cisewski, doing business as Larry's Guns, was a licensed gun dealer until June 21, 1990. On that day, respondent, Bureau of Alcohol, Tobacco and Firearms (hereinafter "ATF" or "respondent") issued a Final Notice of Revocation, revoking Larry Cisewski's license to sell firearms. On August 14, 1990, Cisewski filed a petition for judicial review of the revocation. The case was transferred to this court, upon consent of the parties, on October 26, 1990. A trial to the court commenced on December 19, 1990. Both parties filed post-trial briefs, and the matter is now ready for resolution. This decision shall constitute the court's findings of fact and conclusions of law pursuant to Rule 52, Fed.R.Civ.P.

Brief History

The petitioner initially came into contact with ATF inspectors on September 8, 1986 when ATF Inspector Jerome Neve met with the petitioner to conduct a "forward trace." "Traces" are conducted either to discover the owner of a particular handgun, such as a weapon recovered from a crime scene (backward trace), or as a means of monitoring record-keeping, wherein the ultimate disposition of a firearm is traced starting with the manufacturer of the weapon (forward trace). Neve was able to locate only four of the fourteen firearms requested in the trace. Cisewski informed Neve at that time that his records had been destroyed, although they were later found. Neve testified that at his meeting with the petitioner, he furnished Cisewski with copies of the federal firearms regulations, and that as a matter of practice, he would have discussed the various regulations.

Cisewski next came into contact with ATF when a State of Wisconsin undercover officer and ATF Special Agent Michael Quick visited the petitioner in December of 1988. This visit was subsequent to a gun show in Madison where Cisewski sold handguns to two state undercover officers in violation of Wisconsin's 48 hour law, Wis. Stat § 175.35. Agent Quick confiscated the petitioner's records during the visit. Subsequently, in February, 1989 ATF Inspector Mary Jo Holpit visited Cisewski, and informed him of the recordkeeping and other errors she had found upon inspection of his confiscated records.

In August, 1989 a decision was made by William Earle, then regional director of ATF for the midwest region, to revoke Cisewski's license, and Cisewski was served with a notice of revocation. An administrative hearing was held on November 1, 1989, and on June 21, 1990, Regional Director Earle issued a Final Notice of Revocation. The petitioner then filed this action, and a three day trial to the court was conducted.

Statute and Standard of Review

18 U.S.C. § 923 provides in part:

(e) The Secretary may, after notice and opportunity for hearing, revoke any license issued under this section if the holder of such license has willfully violated any provision of this chapter or any rule or regulation prescribed by the Secretary under this chapter.... The Secretary's action under this subsection may be reviewed only as provided in subsection (f) of this section.

(f)(3) If after a hearing held under paragraph (2) the Secretary decides not to reverse his decision to deny an application or revoke a license, the Secretary shall give notice of his decision to the aggrieved party. The aggrieved party may at any time within sixty days after the date notice was given under this paragraph file a petition with the United States district court for the district in which he resides or has his principal place of business for a de novo judicial review of such denial or revocation. In a proceeding conducted under this subsection, the court may consider any evidence submitted by the parties to the proceeding whether or not such evidence was considered at the hearing held under paragraph (2). If the court decides that the Secretary was not authorized to deny the application or to revoke the license, the court shall order the Secretary to take such action as may be necessary to comply with the judgment of the court.

Pursuant to 18 U.S.C. § 923(e), the Secretary of ATF may, after notice and opportunity for hearing, revoke any license issued under § 923 if the holder of the license willfully violated any provision of Title 18, Chapter 44-Firearms, 18 U.S.C. §§ 921 et seq., or any rule or regulation prescribed by the Secretary under that chapter. The regulations, promulgated by the Secretary under the authority of 18 U.S.C. § 926, can be found in Title 27, Code of Federal Regulations, Parts 178, 179 and 47. "Willfully," as used in the statute, does not require a bad purpose. Stein's, Inc. v. Blumenthal, 649 F.2d 463, 467 (7th Cir.1980).

If, as here, the Secretary revokes a license, the revoked licensee can petition for judicial review of the Secretary's revocation to the federal district court pursuant to 18 U.S.C. § 923(f)(3). Section 923(f)(3) provides that the court shall conduct a "de novo judicial review," and may consider any evidence submitted by the parties to the proceedings whether or not such evidence was considered at the petitioner's hearing before the Secretary. The section further provides that if it is decided that the Secretary was "not authorized" to revoke the license, the court can, as Cisewski requests, order the Secretary to reinstate the license. 18 U.S.C. § 923(f)(3); See also, Al's Loan Office, Inc. v. U.S. Dept. of Treasury, Bureau of Alcohol, Tobacco and Firearms, 738 F.Supp. 221 (E.D.Mich. 1990).

The question of the appropriate scope of review subsequent to the 1984 amendments to § 923(f), which expressly provided for the consideration of evidence not presented to the Secretary, appears to be a question of first impression. While the language of the statute appears explicit, respondent, ATF, urged the court to consider evidence which came into existence after the proceeding before the Secretary. The court noted that the de novo nature of the hearing allows the court to consider any evidence, and the statute does not give any presumption of correctness to the agency decision or its findings of fact. Stein's, 649 F.2d at 466; See also, Hardy, The Firearms Owners' Protection Act: a Historical Perspective, 17 Cumb.L.Rev. 585, n. 419-423 (1987). Nevertheless, the court limited the admission of evidence which came into existence after the hearing before the Secretary to evidence introduced for purposes of Rule 404(b), Fed.R.Evid. since the court's review is limited to determining whether the decision made by the Secretary was authorized.

Violations

Petitioner, as a licensed firearm dealer, is obliged to record the disposition of every firearm on ATF Form 4473, unless the firearm goes to another licensee. 27 C.F.R. § 178.124(a). The receipt and disposition of every firearm possessed by the licensee is to be recorded in a permanent "bound record book". 27 C.F.R. § 178.125(e). The bound record book is maintained to allow law enforcement authorities to "trace" the owner of a firearm which may have been used in the commission of a crime. Also for law enforcement purposes, multiple weapons sales occurring within five consecutive business days are to be reported on ATF Form 3310.4, and forwarded to ATF by the close of business on the day the second gun was sold. 27 C.F.R. § 178.126a. In addition, it is unlawful for a licensed dealer to knowingly make any false entry, or fail to make a required entry in a record which is maintained pursuant to 18 U.S.C. § 923 or regulations promulgated under the authority of § 923. 18 U.S.C. § 922(m).

A licensed dealer may only sell firearms and ammunition to individuals who are not prohibited from the purchase of firearms under 27 C.F.R. § 178.99(c) and 18 U.S.C. § 922(d). The individual must be 18 years of age to purchase a rifle or shotgun, and 21 years of age to purchase any other firearm. 18 U.S.C. § 922(b)(1); 27 C.F.R § 178.99(b).

Any licensee is obliged to abide by State and local laws as well. 27 C.F.R. § 178.58 and § 178.99; 18 U.S.C. § 927. Under the laws of Wisconsin, a firearm's purchaser must wait 48 hours from the time of purchase before he or she may receive the weapon. Wis.Stat. § 175.35 (1989).

The Secretary presented considerable evidence of violations, which generally fall into five categories: sales of firearms to under-age individuals; failure to report and improperly recorded multiple sales of firearms; improper interstate transactions; violations of Wisconsin's 48 hour law; and false entries into the "bound record book" to account for missing firearms. The petitioner disputes the significance of the 48 hour rule violations and the alleged false entries, and asserts that the other violations lacked the requisite willfulness.

A distillation of the testimony establishes the following violations:

— two sales of weapons to underage individuals, one personally by the petitioner, and one by an employee;

— thirty two multiple gun sales in five consecutive business days or less, without the completion of an ATF Form 3310.4 (Report of Multiple Sales);

— one or more ATF Forms 4473 with multiple weapons sales which were altered to reflect sales dates separated by more than five consecutive business days, when in fact the sales occurred on the same day;

— False entries in the "bound record book" reflecting sales or transfers to a Minnesota gun dealer, when in fact the actual transfers were sales to Minnesota residents at a Wisconsin gun show,...