Stag Arms entered a guilty plea in a Boston federal court for violating federal firearms laws, the Justice Department announced Tuesday.
The plea by the Connecticut gun maker, known for AR rifles, was in response to charges of failing to serialize firearms, including machine gun lower receivers. The violation was discovered by federal inspectors in the summer of 2014, and agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives seized a number of gun parts in May.
According to court documents, ATF inspectors found thousands of unserialized lower receivers, including machine gun lower receivers, during an inspection in July 2014. The agency took a sample of 3,000 and found that more than 300 could not be reconciled. In the end, the investigation revealed that Stag failed to keep records for 136 unserialized lower receivers.
Licensed manufacturers of machine guns are required to stamp a unique serial number on each machine gun and register it with ATF one business day, according to federal law.
On Nov. 16, the ATF revoked both Stag’s federal firearms licenses, but postponed the revocation for 60 days. Stag agreed not to challenge the license revocations in court and to drop all ownership claims to the firearms seized by the ATF. As part of the guilty plea, Stag has also agreed to pay a $500,000 fine.
The company’s founder and chief executive officer, Mark Malkowski, pleaded guilty to a felony charge of possession of an unregistered machine gun, and a misdemeanor charge for failing to maintain proper firearm records. As part of his guilty plea, he will pay $100,000 fine and possibly serve one year in prison.
Also, Malkowski will divest himself of his interest in Stag and to thereafter never again hold an ownership or management position with respect to a firearms business.
The company issued a statement that address the guilty plea and discusses the future of the company. Stag assured its customers that it and Malkowski have “cooperated fully with the government throughout the investigation” and “believe that public safety was never compromised.”
Although Malkowski will step down as owner, he is in advanced talks with a potential buyer and will continue as a marketing consultant for a period after the sale.
Article updated Dec. 26, 2015, at 8:15 p.m.