A man purchased a handgun from us last month and when he completed the form 4473 he'd marked yes to having been convicted of a felony.
You might want to have that form corrected. This is from an ATF newsletter (September 1999):
Some licensees have asked ATF whether a “proceed” response from NICS means that they may go ahead and transfer a firearm to a person who has indicated on the Form 4473 that he is prohibited. If the prospective purchaser answers “yes” to any of the questions in 9b through 9k, the licensee has reasonable cause to believe that the transferee is prohibited. Accordingly, the transfer of a firearm to such a person would be in violation of Federal law. This is true regardless of whether the licensee received an “proceed” or “denied” response from NICS. In fact, there is no reason for the licensee to even contact NICS after a person indicates on the Form 4473 that he or she is prohibited from receiving firearms. The licensee should simply advise the prospective purchaser that the firearm may not be transferred.
If his conviction has been expunged or pardoned (it depends on locality), he needs to answer "no" to question 11b.