Interesting take on "straw buy" or buy for resale

J

johnwilliamson062

Moderator
I ran into a good deal on an AR. A factory upper from a manufacturer I like and a built polymer lower. I'm not sure if 80% or just installed LPK. I think this brand has both and possibly complete lowers also. I am not sure the seller knows or is the original owner. I'm not sure and don't really care. The upper has the value exceeding the purchase price for me. I'm approaching it from a "if the lower is crap and I end up selling it for $50, it will still be a great deal" perspective because I am interested in trying out the cheap polymer lower before I judge it and decide whether or not to send it to a new home. I can see many people making a similar purchase with definite intent to resell the lower. Of course, the lower is the serialized part and so the "firearm." So that would be an illegal purchase, or at least in a grey area(don't wan to get too directly into the ambiguity of the 'engaged in the business' portion of the law here as there is another active thread on that subject).
 
For starters, unless you bragged on the internet or directly to a Federal agent, how would anyone know you bought it with the intent of selling it later??

And, its the later part that is the key, generally. Along with what is considered reasonable...."I'm gonna buy this, try it, and if I don't like it, sell it" is generally NOT even remotely considered "engaged in the business". Generally.

Despite current efforts to have the Executive branch redefine the law, what CONGRESS has put into law is fairly clear to most of us, and a single instance of buying and selling isn't even close to meeting that definition.

Under current usage, its not a "straw buy" unless you are buying the gun for someone who legally cannot, or you are buying it with someone else's money.
(as I understand it. Legal eagles, please correct me if I'm wrong)

I have heard of "stings" where someone buys a gun at a show, and while walking around with it, is approached by someone (undercover) and offered more than they paid (maybe a couple hundred bucks more) and then arrested when they sold the gun, for "dealing without a license".

I have not heard of any of these cases resulting in convictions, but I suppose it could happen.

The main points that need to be proven are what your intent was before purchase, and if you are doing it on a regular enough basis that indicates you are deliberately doing it for the income generated.

A friend of mine bought one of the mini GLocks in .45 on Friday. Took it to the range on Saturday. Hated it, and "sold" it back to the dealer on Monday.

Not even remotely a violation of law, that any of us could see.

Now, if you buy six identical pistols, then sell them because you "don't like them", then turn around and buy six more of the same thing the next week or month, that sends a much different signal.

In the situation you described, I don't see anything to worry about, unless you are buying, then selling multiple copies of the rifle. That would be fairly clear intent you are doing it to make a profit, which is different from making a profit as a result of doing it.

Not a lawyer, my advice is worth what you paid for it, no more, and possibly less. ;)
 
Buying with an intent to resell is not what makes a straw purchase.

Let me again lay out my explanation of what a straw purchase is. This reflects current law consistent with Abramski.

The actual offense, under the Gun Control Act of 1968, is violation of 18 USC 922(a)(6), making a false statement on the 4473 (specifically about who is the actual buyer), and has nothing to do with the ultimate recipient being a prohibited person.

See the ATF publication Federal Firearms Regulation Reference Guide, 2005, at page 165 (emphasis added):
15. STRAW PURCHASES

Questions have arisen concerning the lawfulness of firearms purchases from licensees by persons who use a "straw purchaser" (another person) to acquire the firearms. Specifically, the actual buyer uses the straw purchaser to execute the Form 4473 purporting to show that the straw purchaser is the actual purchaser of the firearm. In some instances, a straw purchaser is used because the actual purchaser is prohibited from acquiring the firearm. That is to say, the actual purchaser is a felon or is within one of the other prohibited categories of persons who may not lawfully acquire firearms or is a resident of a State other than that in which the licensee's business premises is located. Because of his or her disability, the person uses a straw purchaser who is not prohibited from purchasing a firearm from the licensee. In other instances, neither the straw purchaser nor the actual purchaser is prohibited from acquiring the firearm.

In both instances, the straw purchaser violates Federal law by making false statements on Form 4473 to the licensee with respect to the identity of the actual purchaser of the firearm, as well as the actual purchaser's residence address and date of birth. The actual purchaser who utilized the straw purchaser to acquire a firearm has unlawfully aided and abetted or caused the making of the false statements. The licensee selling the firearm under these circumstances also violates Federal law if the licensee is aware of the false statements on the form. It is immaterial that the actual purchaser and the straw purchaser are residents of the State in which the licensee's business premises is located, are not prohibited from receiving or possessing firearms, and could have lawfully purchased firearms...
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So, if --

  1. X says to Y, "Here's the money; buy that gun and then we'll do the transfer to me [when I get back to town, or whenever else].", or

  2. X says to Y, "Buy that gun and hold it for me; I'll buy from you when I get my next paycheck."
or anything similar, if Y then buys the gun, he is not the actual buyer. He is buying the gun as the agent of X, on his behalf; and X is legally the actual buyer. If Y claims on the 4473 that he is the actual buyer, he has lied and violated 18 USC 922(a)(6). His subsequently transferring the gun to X in full compliance with the law, does not erase his prior criminal act of lying on the 4473.

Some more examples --

  • If X takes his own money, buys the gun and gives the gun to someone else as a gift, free and clear without reimbursement of any kind, X is the actual purchaser; and it is not a straw purchase.

  • If X takes his money and buys the gun honestly intending to keep it for himself and later sells it to another person, X is the actual purchaser; and it is not a straw purchase.

  • If X takes his money and buys the gun intending to take it to the gun show next week to see if he might be able to sell it to someone at a profit, X is the actual purchaser; and it's not a straw purchase. He may, however have other problems if he manages to sell the gun at the gun show, and the transfer there isn't handled properly. He might also have problems if he does this sort of thing too frequently, and the ATF decides he's acting as a dealer without the necessary license.

  • If X takes his money and buys the gun with the understanding that he is going to transfer the gun to Y and that Y is going to reimburse him for it, X is not the actual purchaser. He is advancing X the money and buying the gun for and on behalf of Y, as Y's agent. So this would be an illegal straw purchase.

Whether or not a transaction is an unlawful straw purpose will often be a question of intent. But prosecutors in various situations can convince juries of intent, often from circumstantial evidence. A slip of the tongue, posting something on the Internet, tracks left by money transfers have all, in one way or another, and in various contexts, helped convince a jury of intent.

It would also be unlawful to buy a gun privately (without a 4473) for the purpose of transferring the gun to a prohibited person.
 
Can you even sell those
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You can legally. ATFE prefers you mark them before selling. I don't think it is legally required you do so.
In practice very few FFLs will touch them, so you may be limited to local FTF sales. State laws vary.

a single instance of buying and selling isn't even close to meeting that definition
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I wouldn't want to leave a clear trail I was making income off a single firearm. What if it is a single shotgun you buy for $30,000 and then immediately list for $50,000 and make the sale? Does the "single instance" exclusion still apply?

In my case I do not own any lower receivers. The gun fund is a little low at the moment, so I won't be building one in the near future. I will need the one that comes with the upper for at least a short period of time even if it is junk. If it isn't junk I will probably hold onto it as this isn't intended to be an expensive project. So, I am not really on the illegal side of it whether "straw purchase" is the correct term or not. I was under the impression marking "Yes" to being the actual buyer when intending to turn the item was a straw buy. I can see where it isn't.

I knew a guy who bought a rifle for the old scope on it. I am sure this happens often. Sure it is very hard to prove, but it happens and I never thought about it before.
 
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An 80% lower can be sold if it is first serialized according to federal law. What that process is I have no clue. I would guess that it requires registering the number with the ATF, and further requires that the number be "permanently affixed" to the firearm, usually by engraving or stamping. I have a vague recollection--but this may just be an oddity or proposed oddity of California law, that the serial number for a polymer lower had to be embedded in some unknown fashion into the polymer.
 
if it is first serialized according to federal law
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I don't have citations and haven't researched this in year, but as I remember, by federal law a manufacturer is required to mark a firearm at the time of manufacture. A private individual is not. There is no requirement to mark a firearm at the time of sale. Firearms manufactured before manufacturers were required to serialize their arms are regularly transferred without a serial number being added just as a home made rifle can be transferred.
 
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Firearms manufactured before manufacturers were required to serialize their arms are regularly transferred without a serial number being added just as a home made rifle can be transferred.
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While I also have not researched this (perhaps some one has, and will presently be along to set us straight), I think it works a little differently than what you are saying.

Home made firearms are not the same thing as guns made before the serial # requirement became law (68, IIRC). Those guns, are grandfathered, specifically exempted in law. NEW made (post 68) homemade guns are in a different classification.

I THINK you are supposed to put a serial number (more than 3 characters) on the gun when you make it. But I don't think you are required to, until you sell it. At that point, its no longer your personal property, and is now in commercial commerce, and the law requires the number then.

I KNOW you are not required to put a serial number on an old gun that never had one. I have had such guns, and even taken some to gunsmiths for repair work. They put "no ser#" in the ser# block on all the paperwork, and its totally legal and correct.
 
ATFE decision homemade firearms DO need to be serialized before transfer:
http://www.victorinc.com/images/ATF's AMD-65 Response - Pg 1.jpg
http://www.victorinc.com/images/ATF's AMD-65 Response - Pg 2.jpg
I pulled those links from a thread on calguns:
http://www.calguns.net/calgunforum/archive/index.php/t-501174.html

As noted in that thread, the law reads:
27 CFR § 478.92 How must licensed manufacturers and licensed importers identify firearms, armor piercing ammunition, and large capacity ammunition feeding devices?

(a)(1) Firearms. You, as a licensed manufacturer or licensed importer of firearms, must legibly identify each firearm manufactured or imported as follows:
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Bold and underline mine. ATFE does what ATFE wants though, so you better mark before you sell.
 
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