Automatic Weapons for Fun and Profit

Yves here. This may seem like a “now for something completely different” post, but this story about Blackwater and a much smaller miscreant is yet another window into our American two tier justice system. Plus you will learn something about gun laws.

By Timothy Y. Fong, an attorney in the San Francisco Bay Area who practices in the field of foreclosure defense litigation. His website is

One of the clearest signs that the United States has become irredeemably corrupt is the way that elite-favored entities receive light prosecution when they violate laws that would result in severe penalties for ordinary members of society. A good example of this is the treatment of a famous private military contracting firm that admitted to serious weapons violations. In comparison, a run of the mill firearms maker/dealer that committed much less serious crimes was put out of the firearms business by the government.

On 7 August 2012, the company formerly known as Blackwater entered into a deferred prosecution agreement with the US Government. Criminal prosecutors had charged Blackwater, now known as Academi, with the illegal purchase and possession of dozens of fully automatic weapons. Academi bought the weapons via subverting a local law enforcement agency. The US government is prosecuting the individual managers who conspired to obtain the weapons, but the corporate entity of Academi escaped multiple felony convictions. It did this via the deferred prosecution agreement. The deferred prosecution agreement means that Acaemi paid a fine of 7.5 million dollars and will be monitored for 36 months. However, the corporate entity of Academi also has a firearms dealer license allowing it to possess, import and manufacture fully automatic weapons as of June of 2012. I suspect that it would not have been able to keep the license if it were convicted of a felony. In contrast, Cavalary Arms, a rifle parts manufacturer, lost its corporate firearms dealer license for a much less serious crime.

To really understand how serious this crime is, it’s first important to understand a few technical details about firearms, as well as a background in the relevant federal law.

When you press the trigger on a fully automatic firearm, it will keep firing until the weapon 1) runs out of ammunition 2) you release the trigger or 3) the weapon suffers a mechanical failure.

In comparison, semi-automatic firearms discharge one shot each time the operator presses the trigger. Semi-automatic firearms are very common, and are generally legal everywhere in the United States that firearms are sold. Rifles, pistols and shotguns are all available in semi-automatic format.

Fully-automatic weapons are actually legal, under certain circumstances. Before 1934, there were no federal laws preventing the sale, purchase and ownership of fully-automatic firearms. That’s right. You could purchase a belt fed machinegun (think Rambo) by mail order. Colt’s Firearms sold fully-automatic rifles chambered in cartridges that are used to hunt deer and large game. In Johnny Depp’s film “Public Enemies” you can see a version of this used by Steven Dorff during one of the early scenes.

If you’ve seen any gangster movie set in the 1930s, you’ve probably seen the infamous Thompson sub-machinegun, complete with the big drum magazine that held 50 to 100 rounds of .45 caliber ammunition. In fact, all of the firearms seen in Public Enemies were legal and unregulated by federal law up until 1934.

By 1934 the United States was in the grip of the Depression, as well as the first wave of serious organized crime. In response, Congress passed the National Firearms Act (NFA), which regulated fully-automatic firearms (which it called “machineguns”) as well as a number of other types of firearms and firearms accessories (such as noise reduction devices or disguised firearms). It was not a total ban– rather, it was a tax of $200 on every weapon covered by the NFA. Although it doesn’t seem like much today, in the 1930s the Thompson sub-machine gun sold for approximately $200, so in effect it was a 100% tax. Prospective owners also had to gain permission from their local chief of law enforcement. The government then registered the taxed weapon in a central roll.

This continued for many years, with occasional amnesties. It was not uncommon up to the 1960s for people to seek the amnesty for an old Thompson submachine gun that had been in the family for years, or a German weapon brought back from overseas.

However, in 1986, Congress passed a law which prohibited adding new guns to the list that were made after 1986. The ban was part of the “Gun Owner’s Protection Act.” If you remember, the late 1980s were the height of the “War on Drugs” and there were fears that even legally registered fully-automatic firearms would be diverted into criminal hands. Manufacturers rushed to produce as many examples as they could before the ban, to varying degrees of success. Gun dealers with the proper licensing could still buy “sample” fully-automatic firearms, called “dealer samples.” The idea was that local and state law enforcement might buy from private dealers who would need to be able to show their product. And of course, firearms manufacturers with the right (extensive) licensing could still make fully automatic firearms for sale to various government agencies, or export. The pre-1986 firearms became known in the industry as “transferrable” firearms.

By the late 90s and early 2000s, the cheapest of the transferable firearms were in the range of several thousand dollars. Weapons like the AK and AR platforms could cost much more. The AK and AR are the most common primary personal weapons used in ground combat. Incidentally those are the weapons that Blackwater obtained and possessed illegally. Throughout the 1980s and 1990s the government routinely prosecuted people for illegal manufacture and possession of machineguns, sending people to jail on felony charges.

Blackwater existed before 9/11– it was founded by Erik Prince in 1997, two years after he left the Navy. Prince’s father, Edgar D. Prince had made a small fortune through automative parts manufacturing, and died in 1995. Prince’s mother, Elsa, sold the company for 1.3 billion dollars. Erik Prince eventually sold Blackwater in 2010.

Before starting Blackwater, Prince served as a Navy SEAL. Blackwater was originally known primarily as a training organization. After 9/11 it became known as a pre-eminent provider of private military contractors, known as PMCs. The organization has been very controversial politically, due to alleged human rights violations. However, on an operational/tactical level they had a very good reputation as highly skilled at their job. This distinguished them from a number of other organizations that were known to field less than fully competent forces. The US State Department contracted with Blackwater in 2003 to provide security for embassy personnel in Iraq. By the mid 2000s, Blackwater by then known as Xe, had become the go-to firm for PMCs.

By 2005 Blackwater was a thriving business, and they wanted a suitable stock of fully-automatic firearms for training, specifically the AKs and ARs. Those would be the most common weapons used by its operators, and be the most common weapons on which people would seek training. Most certainly once PMC operators arrived in Iraq or Afghanistan, they would want to use fully-automatic AKs and ARs, and would seek training on same. With the large volume of ammunition shot during most courses, and concomitant wear on the weapons, it is inconceivable to me that Blackwater could have cost effectively maintained a training capability using pre-1986 weapons.

In 2005 Blackwater personnel thought they found a way around the 1986 law. Blackwater approached the local county Sheriff’s Office and convinced it to pose as the purchaser for 17 AK-47s and 17 Bushmaster M4s. The Bushmaster M4 is a clone of the AR type rifle used by the US military. Blackwater then paid for the weapons. The weapons were post-1986 firearms and Blackwater would not have been able to buy them without the Sheriff’s office serving as a “straw man” purchaser.

Gary Jackson, Blackwater’s President, signed a Memorandum of Understanding with personnel at the Camden Sheriff’s Office allowing Blackwater to take possession of the Ak-47s and M4s. When the rifles arrived at the Camden County Sheriff’s Office, Blackwater personnel immediately took possession. The Camden County Sheriff’s Office had fewer than a dozen full-time uniformed deputies. It had no access to the weapons, which Blackwater secured in its own locked armory. Obviously this was an illegal firearms purchase, since the weapons were meant for Blackwater.

I want to state before going further, that I personally think the 1986 restrictions are unconstitutional. If people pay the tax and go through the background check I think it is reasonable to allow them to own a fully-automatic weapon and in fact very few criminals have ever gone through or abused this process. With respect to the intent of the Second Amendment, I believe that there are also significant public policy implications in denying average Americans the right to own the same basic rifle that is used by our armed forces.

Additionally, I have significant sympathy for what Blackwater’s training staff must have been going through. Obviously as trainers they wanted to make sure that their clients and personnel had access to the best possible training before putting themselves in life and death situations. Without being able to run regular fully-automatic shooting courses, it would leave a gap in training. The type of person that runs a shooting instructional course is the sort of person who wants to prepare his or her students to the best of their ability.

That said, my concern here is that the law, if it exists, should be applied equally. In researching this article I found a recent example of a firearms dealer/manufacturer prosecuted by the federal government. In March of 2010, Cavalry Arms pleaded guilty to one “one count of the felony offense of Illegal Sale by a Federally Licensed Dealer to an Out-of-State Resident.” Cavalry Arms agreed to surrender its FFL at that time. FFLs can only sell to individuals within their own states, or to other FFLs. The federal government prosecuted Cavalry Arms, and its owner, Sean Nealon because they sold approximately 40 firearms to an individual outside of Arizona. Cavalry Arms was based in Arizona, and the individual they sold guns to was in California. None of the firearms sold were fully-automatic. Before the indictment and conviction, Cavalry Arms developed, manufactured and sold various semi-automatic rifle parts, including the major parts that are actually registered as a firearm with a serial number. That part is called the lower receiver. Cavalry Arms had a niche product– AR lower receivers made from polymers, versus the more typical aluminum.

I also searched for other cases where a corporate entity had suborned a law enforcement agency in order to purchase fully-automatic firearms, and I could not find any such federal court cases. There are plenty of cases where the government has caught and severely prosecute an individual (natural person) for buying or making an unregistered machinegun.

Cavalry Arms was a small maker of a niche product. Cavalry Arms sold a few dozen semi-automatic firearms to someone out of state. For this it lost its license. It appears that Academi’s treatment by the federal government is significantly at variance from its treatment of Cavalry Arms. Academi is a major provider of security personnel and training to the US government and its allies. Academi’s predecessor corporation broke the law by suborning a local law enforcement agency to buy fully automatic firearms, and got a deferred prosecution agreement and paid a fine. It now holds a federal firearms license allowing it to manufacture and import fully automatic firearms.

Perhaps the secret is, Cavalry Arms should have first gotten a big State Department contract, and then suborned its local sheriff’s office to buy a few dozen new fully-automatic firearms.. Or something like that.

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  1. psychohistorian

    You just did this to get on more folks shit list….grin.


    I suspect you would be still fun to read even if you didn’t write about depravity like this in our “civil” world….maybe less passion though.

  2. Nathanael

    Corruption of the legal system appears to be an endemic problem in the US.

    The root of it is the following distortions of the English system:
    (1) DAs are allowed to not prosecute if they don’t want to, giving them vast opportunities for corruption by letting off criminals who they’re friendly with; this is a violation of basic common law principles
    (2) DAs / attorney generals have been given a *monopoly* on prosecution (unlike in the UK, which has private prosections) meaning that there’s no recourse against selective non-prosecution by DAs; effectively, DAs can give anyone a “license to kill” at will;
    (3) Grand juries, originally designed as a protection *against* the DA, have been neutered, lied to, manipulated, and put under the control of the DA, so they are unable to do their job: which is prosecuting people the DA doesn’t want prosecuted, and prosecuting DAs who are harassing innocent people.

    1. citalopram

      It’s even worse than that. DA’s have been in some instances withholding evidence from the defense resulting in convictions that are later overturned, albeit not without damage to the accused.

      Nothing happens to DA’s and judges who behave badly either. A justice system is a farce.

  3. alex

    Two questions:

    1. It seems to imply that a corporation can be prosecuted for a criminal offense. If so, what sorts of penalties can be applied?

    2. What happened to the sheriff’s office that was involved in this?

  4. The Infamous Oregon Lawhobbit

    Not only interesting for being something “outside the box” for NC, but … that was written by a California attorney? In the SAN FRANCISCO AREA??? Truly, Armageddon is upon us now and it’s only a short step to cats and dogs living together. One simply does not associate California, San Francisco, nor attorneys* with accuracy in firearm discussion like that! Massive kudos to Mr. Fong for refuting that particular belief!

    @citalopram: Frequently, but not always. Google “Nifong” for further explanation.

    @alex: Officers of the corporation usually get hosed with the criminal penalties upon conviction, if it’s jail time.

    *yeah, I’m an exception. But I’m not in California, so it doesn’t count as much…

  5. Lambert Strether

    Sounds like the “market state” in action, to me. Corporations using governments as straws would be a feature, not a bug. I wonder if there are other examples of this technique in other fields?

  6. F. Beard

    By 1934 the United States was in the grip of the Depression, as well as the first wave of serious organized crime. In response, … Timothy Y. Fong

    The first two words of the second sentence should be appended to the first sentence?

    I notice in “The Telegraph” a move toward pushing morality. In order to keep bank robberies down?

  7. Caroline M.

    Whos head is in the sand? The fact that money buys justice or there is actually justice in the USA?

    How pathetic the readership if they don’t realize the former is a symptom of the non-existant latter.

    There is no justice money can’t buy — look no further than affirmation from the highest court in the land.

    So if there is no justice, what is there?


    No money, no justice in the land of the “law.”

  8. Jeff N

    never mind the little company making lower receivers… The only thing that needed to be in this article is Blackwater and the local PD breaking the law. That’s it. It’s the law. Go directly to jail.

  9. steelhead23

    Umm. Look, using local law enforcement authority to purchase automatic weapons is criminal, but you know what – so is shooting innocents to provide “security”. It is a tad difficult for me to get upset about obvious violations of firearms laws when the very same folks flat shot anything that moved in Iraq and were never prosecuted, either here or in Iraq. And Americans paid the price for this – in blood. Guns don’t kill people, Blackwater kills people.

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