HARTFORD, Conn. – New Britain-based Stag Arms LLC pleaded guilty Tuesday to violating federal firearms laws and as part of a plea agreement president and owner Mark Malkowski agreed to sell the company and have no further ownership or management role in a gun manufacturer.
Malkowski pleaded guilty on behalf of the company in federal court in Hartford to a felony count of possession of machine guns not registered to the company.
The Bureau of Alcohol, Tobacco, Firearms and Explosives is also revoking Stag’s federal license to manufacture firearms. A new owner could regain a license.
Malkowski is scheduled to plead guilty Wednesday in federal court in New Haven to a misdemeanor charge of failure to maintain firearms records. For his guilty plea, Malkowski, 37, will pay a $100,000 fine and will not be permitted to own, operate or manage a firearms company.
The federal government began its investigation of Stag in July 2014, after a routine ATF compliance inspection turned up a variety of record-keeping violations, missing firearms and unregistered machine guns, the government said.
The guilty plea, Stag said in a prepared statement, was in the best interest of the company and its approximately 100 employees. Malkowski is in advanced talks with a New York private equity firm to sell the company, Stag and the government said.
“For the first time in Connecticut, and there have only been a few of these prosecutions throughout the nation, a large manufacturer is pleading guilty to a felony charge relating to record-keeping violations,” Connecticut U.S. Attorney Deirdre M. Daly said Tuesday.
The company will pay a fine of $500,000 as part of its plea agreement. Sentencing is scheduled for March 15.
“This company did not just manufacture small firearms. They manufactured semi-automatic weapons, machine guns, assault weapons,” Daly said. “This is not an industry where sloppiness will be tolerated.”
The government said about 200 firearms could not be accounted for at Stag’s facilities. “We don’t know where they are, whether they were stolen, whether they’re on the streets, or whether they’re just in the wrong hands,” Daly said.
The company pleaded guilty to possession of 62 machine guns and machine gun receivers that were registered to another entity or not registered at all. ATF agents found the automatic rifles and receivers at the New Britain factory during an inspection July 15, 2014.
Eleven machine guns were registered to the Philippines, one to a police department and 25 to another manufacturer. The remaining 25 machine gun receivers – the portion of the firearm that houses the operating parts and on which the serial number is engraved – did not have serial numbers, the government said.
Malkowski told U.S. Magistrate Judge Donna F. Martinez during the company’s plea hearing that the machine guns in question were to be sold, but the sales agreement fell through. Stag Arms kept the weapons and failed to update records, he told the judge.
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, prompting the recommendation for criminal action, Earl said. Assistant U.S. Attorney S. Dave Vatta described the new violations as “egregious and systemic.”
Some of the firearms found at Stag also had obliterated serial numbers, a serious violation of the law, Vatta said. The government has not determined why the serial numbers were scratched out.
Stag, in a statement, said the company “takes its obligations to comply with all laws and regulations very seriously and has made comprehensive changes to ensure that similar problems cannot happen again and that best compliance practices are maintained in all of its operations.” The company also said it does not believe public safety was ever compromised.
Malkowski founded Stag in 2003 and the company pioneered manufacturing AR-15 rifles for left-handed people and those who use their left eye to aim. The left-handed weapons remain an important product for the company. Stag Arms has sold its rifles to police agencies and militaries around the world, and to law enforcement agencies in the U.S. It also serves the civilian firearms market.
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