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Gun Maker Busted for Shoddy Recordkeeping

HARTFORD, Conn. (CN) - A Connecticut gun manufacturer pleaded guilty in Federal Court Tuesday to charges that he failed to register 62 machine guns, though court records suggest that there were numerous other violations to which he did not plead.

Mark Malkowski, 37, pleaded guilty to a felony charge of failing to register machine guns to his company, Stag Arms LLC. As part of the plea agreement Malkowski will pay a $500,000 fine and faces up to five years probation.

Malkowski also will have to sell the company he founded in 2003 as part of the plea deal.

Additionally, Malkowski is expected to plead guilty to misdemeanor charges on Wednesday in New Haven for failing to maintain proper firearm records, an offense that carries a maximum term of one year in prison and a $100,000 fine.

The man told U.S. District Magistrate Judge Donna Martinez on Tuesday that when the sale of the machine guns to a third party fell through he failed to register the firearms to Stag Arms.

But inspectors from the Bureau of Alcohol, Tobacco and Firearms uncovered a number of other violations during a compliance check in July 2014.

Inspectors discovered more than 3,000 unserialized "receivers" - which is the word federal authorities used to describe the functional frame of a firearm - on the premises without any record of their manufacture or acquisition, and more than 3,000 firearms that were transferred by Stag without being properly recorded.

While inspectors eventually reconciled the majority of these transfers from other paperwork on site, they were unable to do so for more than 300 weapons. Another 200 firearms are considered lost or stolen.

According to the plea agreement Malkowski, who is the sole owner of the company, agreed to forfeit 109 firearms to the federal government. Many of the weapons had no serial number or markings.

At a press conference following Malkowski's plea agreement Tuesday, U.S. Attorney Deirdre Daly said this is the first time in Connecticut that a "large manufacturer is pleading guilty to a felony charge relating to recordkeeping violations."

ATF is in the process of revoking Stag Arms' federal firearms license and Malkowski is being "barred" from the industry. According to Daly, he will no longer be able to own or manage a firearms company and has been ordered to divest his interest in the company.

"It's important to recognize that this company did not just manufacture small firearms," Daly said. "They manufactured semi-automatic weapons, machine guns, assault weapons. This is not an industry where sloppiness can be tolerated."

She said the conduct was particularly egregious for three reasons. In 2007, ATF conducted an inspection and identified many recordkeeping violations. In 2014, inspectors again identified thousands of recordkeeping violations.

In addition, agents found over 60 machine guns that were not registered to Stag when the ATF obtained a warrant and conducted a search and 200 guns were lost and never recovered. Daly said they have no idea where the missing guns are.

Daniel Kumor, Special Agent in Charge of the ATF Boston Field Division, said that when they are unable to trace guns it makes their job much more difficult.

"What occurred in this case is absolutely unacceptable and will not be tolerated," Kumor said.

Kumor said the machine gun receivers found at the Stag Arms facility in New Britain are defined as fully automatic machine guns, and need to be registered.

Stag manufactured fully automatic rifles for sale to police departments and the military.

Kumor said they don't revoke the license of firearms manufacturers very often, so the violations they discovered were "egregious" and required not only the revocation of the license but criminal prosecution.

Assistant U.S. Attorney Dave Vatti said there's a private equity firm in New York looking to acquire the Stag Arms.

"Mr. Malkowski has also agreed to transition the business to new ownership and is in advanced talks with a potential buyer," the company said in a statement. "Mr. Malkowski will continue as a marketing consultant to the business and the industry for a period of time following the sale."

The company said it believes "public safety was never compromised."

Federal officials said Malkowski can maintain a consulting role during the transition and sale of the company.

Malkowski is scheduled to be sentenced on March 15, 2016.

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