INDUSTRY NEWS: MAY 2003

By Robert M. Hausman

ATF Divided Into Two Separate Bureaus

On January 24, 2003, one part of the existing Bureau of Alcohol, Tobacco & Firearms was established in the Dept. of Justice as the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATFE). This new bureau is overseeing firearms, explosives and arsons programs. The new Department of Justice bureau will also deal with the federal criminal laws concerning alcohol and tobacco smuggling and diversion.

Also on Jan. 24th, a corresponding entity was created to handle the regulatory and taxation aspects of the alcohol and tobacco industries. This is known as the Tax & Trade Bureau (TTB), and will remain within the Treasury Dept., where the current ATF and its predecessors have served for some two hundred years.

The origin of the moves are the signing into law (on Nov. 25th) of the Homeland Security Bill by President Bush. The law created a new Cabinet-level agency by consolidating a number of existing agencies. The Bureau of Alcohol, Tobacco & Firearms was not included as a part of that new agency, but the Homeland Security legislation provided for a split of ATF into two separate bureaus.

The move of most of the existing ATF to the Justice Dept. is resulting in a partnering of ATF special agents and inspectors with traditional law enforcement agencies. This should work toward eliminating duplication and giving a stronger unit of direction toward federal law enforcement efforts.

But firearms trade firms should not expect to see any major changes immediately. BATF’s director, Bradley Buckles, may have said it best when he told employees on Nov. 25th, “While the new entities become official in 60 days, two physically separate and distinct units will not magically appear on that date. Almost everyone will be sitting in front of the same computers, behind the same desks, in the same offices on January 24th. While rapidly moving to independent, self-sustaining structures will remain a goal, it will not be pursued at the expense of unnecessary disruption of employees or mission activities.”

Wilmington’s Suit Dismissed

The city of Wilmington, Delaware has become the latest municipality to have a politically motivated reckless lawsuit against manufacturers rejected by the courts.

In December 2000, parts of the Wilmington suit were dismissed, and on Dec.3rd, 2002, Judge Fred S. Silverman dismissed the rest. In his ruling, Judge Silverman stated, “Handgun violence is a scourge. But as much as the court would support efforts to reduce the problem, the court will not twist a jury trial involving municipal costs into a wildly expensive referendum on handgun control. The mayor and the city must find another means to their ends.” While the ruling is yet another victory for the trade, it is possible the case will be appealed.

Debate on Campaign Finance ‘Reform’ Law Begun

Oral argument over the constitutionality of the campaign finance “reform” law enacted earlier this year was begun December 4 in U.S. District Court for the District of Columbia. The law went into effect on November 6th, the day after Election Day 2002.

Attorneys representing a coalition of opponents to the law, including the National Rifle Association, argued the regulations infringe on the rights of individuals to freely associate with political groups, and limits the right of free political speech. Opponents also charged that the law restricts a state’s ability to set its own guidelines for conducting elections.

The NRA’s lead attorney, Charles Cooper, stated, “If the NRA’s voice is loud and reverberates through the halls of Congress, it is precisely because the organization is the collective voice of millions of Americans speaking in unison.” Quoting the late Supreme Court Justice Thurgood Marshall, Cooper said, “That ‘is not a corruption of the democratic process, it is the democratic political process.’”

Floyd Abrams, a noted First Amendment lawyer and one of the attorneys arguing against the law, pointed out the restrictions on certain advertisements 30 days prior to a Primary Election and 60 days prior to a General Election represented a clear infringement on the right to free speech. The court is expected to hand down its ruling early next year, which will be immediately followed by appeal to the U.S. Supreme Court, regardless of what the lower court decides.

S&W Makes Licensing Deals

Smith & Wesson Holding Corp., parent firm of Smith & Wesson Corp., has announced the commencement of trading on the American Stock Exchange effective Nov. 29th. The gunmaker, which previously traded on the OTCBB under the symbol SMWS, now trades under the new ticker symbol SWB.

S&W has entered into a licensing agreement with Defense Industries International, Inc. (OTCBB: DFNS) a manufacturer and global provider of military and civilian protective gear and equipment. The agreement is for armored vests and apparel and a blast-resistant armored wall fabric designed to prevent injuries from explosions. Defense Industries was given exclusive worldwide rights to market its protective and armored vests under the S&W name, including the S&W Bodyguard(r) label. Defense Industries also has exclusive worldwide rights to market its ballistic wall covering under the S&W name.

“Defense Industries products will make an important contribution to our S&W Advanced TechnologiesTM (S.W.A.T.) Division,” stated Mitchell Salz, CEO and chairman of S&W Holding Corp.

The licensing agreement comes at a time when Defense Industries, with its home office and main manufacturing facility based in Ashkelon, Israel, is planning a major expansion program in the U.S. “All of the products being licensed under the S&W name will be produced at our new manufacturing facility in the U.S.,” said Defense Industries’ president. Joseph Fostbinder. “We expect to have this plant up and running in early 2003.”

S&W has also made a licensing agreement with Heritage Safe Co. of Grace, ID, for the development, manufacture and distribution of several Heritage safes and vaults to bear the S&W name.

“These special edition gun safes and vaults will feature an authentic, old-west style with the legendary S&W Model 1 gun as part of the emblem,” disclosed Troy Neilson, Heritage’s president. “We have already received great dealer interest in the line.”

The Heritage made units will be larger, 300-lb. and heavier safes, rather than portable safes such as the S&W VersaVaultTM model.

LAPD’s Retailer Crackdown Nets Leathersmith

In an outlandish enforcement action, detectives from the Los Angeles Police Dept. Gun Unit, working with a new City Attorney Task Force, recently performed a plain-clothes undercover “sting” on leathersmith Omar Pineda’s family business: Alfonso’s of Hollywood Leather Co., according to the California Rifle & Pistol Assn., Inc. Pineda, in business in North Hollywood for 43 years, makes custom holsters and other leather goods. In fact, he has been servicing LAPD officers for many years.

But he does not sell guns, nor possess a firearm dealer’s license – which isn’t necessary for his leather business. Pineda’s “crime?” He unwittingly sold two leather holsters for .380 ACP handguns to the undercover officers, not realizing that the recently enacted L.A. Municipal Code section that bans the sale of “ultra-compact” handguns (under either 6 3/4-inches long or 4 3/4-inches tall) also bans the sale of holsters for these guns. Particularly ironic is the date of detection of Pineda’s offense: Sept. 11th, 2002, the first anniversary of the terrorist attacks.

The sting against Pineda was part of a new effort to crack down on gun dealers in the city. Using federal “Project Safe Neighborhoods” funds, the L.A. City Attorney’s office has formed a gun prosecutor “task force,” and, working with the LAPD “Gun Unit,” is performing regulatory “inspections” of the approximately 200 FFL-holders in the City of L.A. Dealers fear the effort is a pretext to put them out of business.

The federal money, some $360,000 annually for five years, is supposed to be used to fund special prosecutor positions to crack down on violent gun crime. Instead, large and small retailers, ranges, collectors, and ammo sellers have been “inspected” and cited by LAPD, mostly for violating relatively new and obscure city ordinances – of which the retailers were never made aware! Even the anti-gun California Attorney General at least notifies FFL’s to advise them as the increasingly complex firearms laws change, but not Los Angeles. Misdemeanor criminal charges are pending in several cases.

Swiss Firearms Laws May Be Revised

The government is considering revising Switzerland’s gun laws over one year after the shooting spree in which 14 people were killed in the city of Zug. It has opened consultations on a series of measures to tighten control over gun sales and ownership. But critics say that the revisions do not go far enough and fail to address the “fundamental problem” of widespread private ownership of firearms.

The measures, which are in the consultation process until the end of the year, include tighter controls on members of the public wishing to buy guns from licensed gun shops and private individuals, as well as a ban on imitation and soft air guns. It would also be forbidden to sell arms though the Internet or newspaper advertisements, and the possession of dangerous objects such as baseball bats in public places would be outlawed. But although a permit would be needed to buy a gun, Swiss men would still be allowed to bring their rifles home after leaving the army and in between periods of active service.

The proposal has been criticized by some for not going far enough towards preventing another massacre like the one in Zug because it does not tackle what they believe is the essential issue: the right to keep a gun at home. The tradition of having weapons at home stems from the long-held notion that if Switzerland is invaded, every reservist could be called up, armed and ready to defend the country. About 500,000 Swiss keep a rifle at home, mainly because the militia system requires men over 20 to be ready for military service. Soldiers who have been demobilized have the right to keep their rifles for annual summer shooting practices held in nearly every Swiss town and village.

The gunman who ran amok in Zug, Friedrich Leibacher, used a Swiss army-issue assault rifle – a 5.56x45mm SIG Sturmgewehr 90 – to kill his victims. Social Democrat parliamentarian, Paul Günter, thinks any revision of the gun law should ban Swiss soldiers from taking their guns home when they leave active service. “What in Zug was really bad was that this man had an assault rifle and this sort of rifle will be restricted in the future,” Günter said. “But one of the problems which is not solved in the new proposal is that up till now the soldiers of the Swiss army, which is every man, could keep their own gun when they left the army. And those who are coming out now have an assault rifle.”

But the country’s main pro-gun organization, Pro Tell, is firmly against any changes to the law, arguing that putting them into practice would mean too much red tape. It also says the state would have too much power to decide whether an individual should have the right to carry a gun. Ferdinand Hediger, a spokesman for Pro Tell, says there is no need to reform the 1999 gun law and maintains that it is impossible to make a direct link between the Zug shootings and the country’s liberal gun laws.

“With all the military weapons that are given to the soldier when he quits army service, there are many guns scattered all over Switzerland,” said Hediger. “We have hundreds and thousands of guns around and yet the crime rate is among the lowest in Europe. Whereas in countries like Italy, they have much tighter gun laws and they still have a much higher crime rate. So it cannot be linked together. There are so many factors that lead to increased crime that have nothing to do with the gun law.”

The strength of feeling on both sides may explain why Switzerland has not rushed to change its gun laws since the Zug killings. “I think that times have changed. But the reason that it moves so slowly in Switzerland is that the right to have a gun at home is a very long tradition in our history,” Gunter lamented.

The author publishes two of the small arms industry’s most widely read trade newsletters. The International Firearms Trade covers the world firearms scene, and The New Firearms Business covers the domestic market. Visit www.FirearmsGroup.com. He may be reached at: FirearmsB@aol.com.