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Thread: Beware of fraudulent Form 4ís

  1. #1
    Administrator John Pierce's Avatar
    Join Date
    May 2006
    Bristol, VA

    Beware of fraudulent Form 4ís

    A few months ago I received a call from a client who wanted to buy a machine gun from a fellow collector but he wanted to know what he could do to protect himself during the time between the submission of the Form 4 and the approval of the tax stamp.

    His concern is a valid one. The regulations governing NFA item transfers makes the sale of those items extremely difficult, even to a licensed dealer.

    Why is that? Letís say that I want to sell a pre-86 machine gun to a fellow member of my gun club; we will call him Joe.

    Joe and I will need to submit a Form 4 to the ATF which will, when the tax stamp is finally approved, change the registration of the machine gun in the NFRTR to Joeís name. Therefore, I am going to want to be paid all, or at least a significant percentage, of the sale price before we ever mail the Form 4s.

    Joe on the other hand is being asked to hand over a large sum of money for an item that will remain in my care and keeping for a significant period of time. He is going to want some assurances that the item will be cared for properly, insured, and promptly delivered when the tax stamp is approved.

    And itís not like you can deliver the item to a dealer to hold during the transaction since that would require a Form 4 to the dealer, doubling both the wait time and the tax expense.

    So what did I do for my client? I prepared a contract that he and the seller could both sign which laid out the terms of the sale, damages for failure to perform, and who would have responsibility for loss or damage and insurance during the period when the Form 4 was being processed.

    An ATF advisory from June reminds us of yet another danger faced by private purchasers and dealers alike; fraudulent Form 4ís.

    According to the ATF, some individuals are presenting altered Form 4ís to prospective buyers in order to obtain a deposit, but never deliver the firearms.

    The ATF provides the following suggestions for identifying possibly fraudulent Form 4ís:

    - The tax stamp has proven to be the most effective way to detect a fraudulent form. The perpetrators often paste a serial number over the serial number on the stamp. Upon closer inspection, it is often possible to detect the outline of the fraudulent serial number.

    - In box 3a (Transferor), if the firearm was previously transferred from an FFL, the name of the FFL is often misspelled. A simple internet query for that FFL may assist those who suspect a scam.

    - If applicable, box 7 (Transferorís FFL) will contain the Federal Firearms Licensee number which should be verified through the FFL eZ Check system.

    If you are purchasing an NFA item from someone who is not a licensed dealer then make sure you get a chance to examine both the item and the Form 4 carefully. And if you would like a contract which will protect you should the item be lost or damaged while you are waiting for the tax stamp to be approved then I invite you to contact me for a free, confidential consultation.

    Read more at my website.
    John Pierce, Esq.
    (276) 206-9615

  2. #2
    Regular Member
    Join Date
    Jul 2015
    West Virginia
    All the NFA guns I've bought were from a reputable Class dealer and or a reputable seller that I knew.
    I've also used contracts and notaries on the high dollar purchases as well.

    Buying title II / FA firearms is truly a leap of faith. The Martinsburg branch appears to be turning around
    Form 4's quicker these days.

    I would suggest that anyone looking to take the leap, to do lots of research and join a club that specializes
    in the firearm you're looking to buy, as in the Thompson Collector's Association for instance.

    You'll be glad you did.

  3. #3
    Campaign Veteran deepdiver's Avatar
    Join Date
    Apr 2007
    Southeast, Missouri, USA
    Would it not be simplest to deposit the money into escrow, probably with a law practice to be held in their escrow account, with an appropriate escrow agreement rather than a contract to purchase? That keeps the funds safe for everyone pending Form 4 approval/transfer.

    Perhaps that is a state law issue though.
    Bob Owens @ Bearing Arms (paraphrased): "These people aren't against violence; they're very much in favor of violence. They're against armed resistance."

  4. #4
    Regular Member
    Join Date
    Jul 2015
    West Virginia
    The escrow option sounds good, just looking at the money.

    A legal notorized contract also covers other important things as;

    Proper storage, no firing or display, natural disasters, theft, death by either principal parties.
    failure to get ATF or State approval, firearm is as closet rewats.
    Default by seller for any reason, court costs, etc.

    There are many other contractual items that I'm sure others will elaborate on.

    Be careful, if the deal or the seller doesn't sound or act right...walk away.


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