ARMAMENT SERVICES INT'L, INC. et al v. YATES et al
MEMORANDUM AND OPINION. SIGNED BY HONORABLE MICHAEL M. BAYLSON ON 11/27/17. 11/28/17 ENTERED & E-MAILED.(fdc)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
ARMAMENT SERVICES INT’L, INC.,
MAURA ELLEN KELERCHIAN
SALLY Q. YATES, Acting Attorney
General of the United States, THOMAS E.
BRANDON, Deputy Director of the Bureau
of Alcohol, Tobacco, Firearms and
Explosives, JUAN F. ORELLANA, Director
of Industry Operations Bureau of Alcohol,
Tobacco, Firearms and Explosives, UNITED
STATES OF AMERICA
November 27, 2017
MEMORANDUM RE: RESPONDENTS’ MOTION FOR SUMMARY JUDGMENT
Petitioners, Armament Services International, Incorporated (“ASI”) and Maura Ellen
Kelerchian (“Mrs. Kelerchian”), seek Judicial Review of Respondent’s, Alcohol, Tobacco,
Firearms and Explosives’ (“ATF”), December 1, 2016 Final Notices of Denial of Application of
Firearms License for both ASI and Mrs. Kelerchian. For the reasons discussed below,
Respondents’ Motion for Summary Judgment (ECF 13) is granted, and the Petition will be
Factual and Procedural Background
The following facts are either undisputed or construed in the light most favorable to
Petitioners and are based primarily on documents in the administrative record and Petitioners’
Petition. In 2001 and 2002 ASI obtained three Federal Firearms Licenses (“FFL”) for premises
at 103 Camars Drive, Warminster, Pennsylvania: (1) an FFL Type 07 – Manufacturer of firearms
other than destructive devices license, which was renewed every three years; (2) an FFL Type 08
– Importer of firearms other than destructive devices license, which was renewed every three
years; (3) an FFL Type 10 - Manufacturer of destructive devices license. (ECF 1, Petition ¶¶ 5–
6). Since 2002, both Vahan Kelerchian (“Mr. Kelerchian”) and Mrs. Kelerchian were identified
as “responsible persons” for ASI’s Licenses. 1 (Id. ¶ 6).
On May 17, 2013, a Grand Jury for the Northern District of Indiana indicted Mr.
Kelerchian on multiple GCA violations from 2008 to 2010. The indictment included charges for
providing and conspiring to provide false information to a Federal firearms licensee in violation
of 18 U.S.C. §§ 371 and 924(a)(1)(A); and making and conspiring to make false representations
to obtain machineguns for ASI under false pretense in violation of 18 U.S.C. §§ 371 and 1001.
(Administrative Record at 0594–619); See also (Pet. ¶ 14). The court described the indictment
against Mr. Kelerchian:
The Indictment allege[d] that Mr. Kelerchian and his co-conspirators fraudulently
represented to ATF and other federal firearms licensees that the machine guns were for
the Lake County Sheriff’s Department. To back up these claims, they used the Lake
County Sheriff’s Department letterhead, fabricated Lake County Sheriff's Department
purchase orders, and issued false letters in the name of the Sheriff’s Department. The
machine guns were shipped to the Sheriff's department but taken by the co-conspirators
to their homes. There they removed the barrels and sold them. Some of the barrels were
sent to Mr. Kelerchian. On the basis of these allegations, the Grand Jury charged Mr.
Kelerchian with conspiracy to provide false information to other federal firearms
licensees in violation of 18 U.S.C. §§ 371 and 924(a)(1)(A).
Mr. Kelerchian’s conduct is analogous to a straw purchaser of firearms, except that the
roles of the characters are reversed. Whereas the straw purchaser claims to be buying
firearms for himself, the conspiracy here was to claim that the firearms were bought for
someone else, that is, the Sheriff’s Department.
United States v. Kelerchian, No. 2:13-CR-66 JVB, 2015 U.S. Dist. LEXIS 80336, at *2, 4-5
(N.D. Ind. June 22, 2015). No charges were brought against ASI or Mrs. Kelerchian, but the
individual sheriff’s officers from the Lake County Sherriff’s Department who were charged
A responsible person is defined as “any individual possessing, directly or indirectly, the
power to direct or cause the direction of the management, policies, and practices of [a]
corporation, partnership, or association, insofar as they pertain to firearms.” See 18 U.S.C. §
along with Mr. Kelerchian pleaded guilty. Only Mr. Kelerchian went to trial and on October 20,
2015, he was convicted of the GCA violations. (Rec. at 0594–619, 0620–28).
On June 4, 2013, after Mr. Kelerchian was indicted, Mrs. Kelerchian informed ATF that
Mr. Kelerchian was no longer a responsible person for ASI. (Rec. at 0588); see also (Pet. ¶ 15).
Mrs. Kelerchian remained as a responsible person and assumed the role of President. On August
13, 2013, Mrs. Kelerchian submitted an FFL Renewal Application for the Type 07 –
Manufacturer of firearms other than destructive devices license, and Type 08 – Importer of
firearms other than destructive devices, on behalf of ASI. On July 22, 2014, Mrs. Kelerchian
submitted an FFL Renewal Application for the Type 10 – Manufacturer of destructive devices
license on behalf of ASI. (Rec. at 3342–46, 0583–84). ATF did not approve or deny the renewal
applications for ASI, but ATF did formally issue letters of authorization permitting ASI to
continue operations for a period of over three years as the manufacturer of firearms other than
destructive devices, and as an importer of firearms other than destructive devices; and for a
period of over two years as the manufacturer of destructive devices. 2 On October 19, 2015, Mrs.
Kelerchian applied for her own License as a dealer in firearms for the ASI premises and
inventory. (Pet. ¶¶ 6, 19).
In December, 2015, ATF, through Industry Operations Investigator Philip Perkins (“IOI
Perkins”), began investigating ASI’s applications. IOI Perkins interviewed Mrs. Kelerchian and
obtained documents relating to the criminal action against Mr. Kelerchian. (Rec. at 0181). On
April 14, 2016, ATF denied Petitioners’ application based on the findings of the investigation.
(Rec. at 0441–55, 0466–80, 0492–506, 0518–32); See also (Pet. ¶¶ 21-22.). By letter dated April
25, 2016, Petitioners made timely requests for a hearing to review the denials. (Rec. at 0550–
See copy of the Letters of Authorization attached as Exhibit A to Petitioners’ Brief in
Opposition to Respondents’ Motion for Summary Judgment
58). Petitioners’ letter also included a demand for discovery asking for all documents, including
a list of witnesses to be called at the hearing. (Rec. at 0551). On June 3, 2016, ATF issued
superseding notices to both ASI and Mrs. Kelerchian denying the license applications, and
acknowledging Petitioners’ requests for a hearing on the original Notices as extending to the
Superseding Notices. (Rec. at 0429-549).
On September 21, 2016 ATF convened a hearing to review the application denials at
ATF’s Lansdale Area Office with ATF Hearing Officer Deborah Rankin presiding over the
proceedings. (Rec. at 0132). Prior to ATF presenting its case, Attorney Prince made a number
of objections that the Hearing Officer did not rule on, including most of the claims brought in the
present case. (Rec. at 0162–66). ATF’s only witness was IOI Perkins. Neither ASI nor Mrs.
Kelerchian testified or had any witnesses testify on their behalf. (Rec. at 0171); See also (Pet. ¶
After considering the evidence and argument presented at the hearing, ATF, through the
Director of Industry Operations for ATF’s Philadelphia Field Division, confirmed the conclusion
that Petitioners had willfully violated the GCA. ATF found, among other things:
Between on or about November 2008 and on or about January 2010, in the Eastern
District of Pennsylvania, the Northern District of Indiana and elsewhere, ASI willfully
violated the Gun Control Act by conspiring with Vahan Kelerchian, Joseph Kumstar, and
Ronald Slusser to make false statements and representations with respect to information
required by the Gun Control Act to be kept in the records of Heckler & Koch, a Federal
firearms licensee, in willful violation of 18 U.S.C. §§ 371 and 924(a)(1)(A).
Maura Kelerchian willfully violated the Gun Control Act and regulations by aiding and
abetting this conspiracy between Vahan Kelerchian, Joseph Kumstar, Ronald Slusser, and
ASI to make false statements and representations with respect to information required by
the Gun Control Act to be kept in the records of Heckler & Koch, a Federal firearms
licensee, in willful violation of 18 U.S.C. §§ 2, 371, and 924(a)(1)(A). Maura Kelerchian
participated in the conspiracy as something she wished to bring about. Maura Kelerchian
associated herself with the conspiracy knowingly and willfully. Maura Kelerchian sought
by her actions to make the conspiracy succeed.
On or about the dates stated below, ASI willfully violated the Gun Control Act by
possessing machineguns in willful violation of 18 U.S.C. § 922(o).
Maura Kelerchian willfully violated the Gun Control Act and regulations by aiding and
abetting ASI to possess these machineguns in violation of 18 U.S.C. § 922(o).
(Rec. at 0002-110). On December 11, 2016, Petitioners’ counsel requested a stay of the effective
dates of the final denials pursuant to 27 C.F.R. § 478.78, so that ASI could continue licensed
operations during the pendency of a judicial review of the denials. (Pet. ¶¶ 53–54). On
December 16, 2016, ATF granted Petitioners’ requested stay, and postponed the effective dates
of the denials of their applications pending the outcome of judicial review. (Rec. at 3394); See
also (Pet. ¶ 55). On January 30, 2017, Petitioners filed their petition asking that this Court
review ATF’s denials of their applications pursuant to 18 U.S.C. § 923(f)(3). (ECF 1, Petition).
After the Petition was filed, Petitioners moved to stay the proceedings so they could
engage in discovery. The Court denied this Motion, and ordered Petitioners to respond to the
Government’s Motion for Summary Judgment with permission to make any arguments
concerning discovery in their response. (ECF 24).
Rule 56(a) of the Federal Rules of Civil Procedure provides as follows: “The court shall
grant summary judgment if the movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law. The court should state on the
record the reasons for granting or denying the motion.” For purposes of Rule 56, a fact is
material if proof of its existence or nonexistence might affect the outcome of the suit under the
applicable substantive law. Haybarger v. Laurence Cnty. Adult Prob. & Parole, 667 F.3d 408,
412 (3d Cir. 2012) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). For an
issue to be genuine, “all that is required is that sufficient evidence supporting the claimed factual
dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at
trial.” Id. (quoting Anderson, 477 U.S. at 248–49). The initial burden is on the moving party to
show that there exists an absence of genuine issues of material fact. Celotex Corp. v. Catrett,
477 U.S. 317, 325 (1986). If the moving party meets this initial burden, then the non-moving
party must set forth specific facts showing that there is a genuine issue for trial in order to defeat
the motion. Anderson, 477 U.S. at 247–48.
Petitioners challenge the ATF's denial of their license applications pursuant to 18 U.S.C.
§ 923(f). A licensee may challenge an ATF revocation by filing a petition for review with the
appropriate federal district court. The GCA provides that review of a revocation decision is de
novo. 18 U.S.C. § 923(f)(3). Under the de novo standard of review for a decision of the ATF,
the district court may give the agency's finding and decision such weight as it believes they
deserve, but need not accord any particular deference to those findings. Gilbert v. Bangs, 813 F.
Supp. 2d 669, 672–73 (D.Md. 2011) (internal quotation marks omitted). In other words, the
decision under review “is not necessarily clothed with any presumption of correctness or other
advantage.” Stein's, Inc. v. Blumenthal, 649 F.2d 463, 466–67 (7th Cir. 1980).
Although the district court’s review must be de novo, it is “not required to hold an
evidentiary hearing and may enter judgment solely based upon the administrative record.”
Arwady Hand Trucks Sales, Inc. v. Vander Werf, 507 F. Supp. 2d 754, 758 (S.D. Tex. 2007); see
also Stein's, 649 F.2d at 466–67. The district court may consider any evidence submitted by the
parties to the proceeding whether or not such evidence was considered at the administrative
hearing. The district court is afforded discretion to receive evidence additional to that contained
in the administrative record “when some good reason to do so either appears in the
administrative record or is presented by the party petitioning for judicial review.” Shawano Gun
& Loan, LLC v. Hughes, 650 F.3d 1070, 1076 (7th Cir. 2011).
Although the motion before the Court is styled as a motion for summary judgment, the
nature of this action, and the federal laws implicated by the agency decision being challenged,
require the Court to treat this motion differently than traditional dispositive motions brought
pursuant to Rule 56 of the Federal Rules of Civil Procedure. Taylor v. Hughes, No. 1:12–CV–
138, 2012 WL 7620316 (M.D. Pa. Dec. 27, 2012). There is a certain tension between the Court's
obligation under the statute to perform a de novo review to determine whether the ATF decision
was “authorized” and the Court's corresponding obligation under Rule 56 to view the facts in the
light most favorable to the non-movant. 18 U.S.C. § 923(f)(3); Fed. R. Civ. P. 56; see also
Sudyam v. U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives, 847 F. Supp. 2d 146,
156 (D.Me. 2012). Noting that § 923(f)(3) permits the district court to enter judgment on the
basis of the administrative record when no substantial reason to receive additional evidence is
present, courts have developed a practice “to grant judgment summarily when the material facts
developed at the administrative hearing, which the court also concludes justify nonrenewal are
not substantially drawn into question by the party petitioning for review.” Stein's, 649 F.2d at
468 n. 7. Therefore, the ATF’s “decision may be upheld when the trial court concludes in its
own judgment that the evidence supporting the decision is substantial.” Id. at 467.
Furthermore, the court in Stein’s recognized that under the traditional summary judgment
standard, “fact finding is inappropriate and all reasonable inferences must be drawn in favor of
the party opposing the motion.” Id. at 468 n. 7. In contrast, § 923(f)(3) authorizes the court to
hear any evidence it wishes and make findings of fact, even without the benefit of conducting an
evidentiary hearing. Id. at 466. Thus, while the court's decision may be “summary” in nature as
a matter of form, procedurally the Court may issue a decision even if material issues of fact exist,
based upon its evaluation of the record and any additional evidence it has received. Taylor, 2012
WL 7620316, at *8. This is so because the legal standard requires only that there has been
evidence of even a single violation committed willfully, and if there are undisputed facts that
establish a willful violation then summary judgment is authorized. See Am. Arms Int'l v.
Herbert, 563 F.3d 78, 86 (4th Cir. 2009)
In conducting a de novo review of ATF's decision, the question is whether ATF was
authorized to deny Petitioners’ applications for licenses. In order to uphold ATF’s decision, a
district court must be satisfied that ATF appropriately found that (1) the licensee violated one or
more provisions of the GCA, and (2) the licensee willfully committed the violation. 27 C.F.R. §
478.73. A licensee's violation is willful "where the licensee knew of his legal obligation and
purposefully disregarded or was plainly indifferent to the requirements." In re Taylor, 548 F.
App'x 822, 824 (3d Cir. 2013) (citing Borchardt Rifle Corp. v. Cook, 684 F.3d 1037, 1042 n.9
(10th Cir. 2012)). Willfulness is synonymous with "plain indifference" to the legal requirements
imposed by federal firearms laws. Vineland Fireworks Co. v. ATF, 544 F.3d 509, 517–18, n.16
(3d Cir. 2008).
Respondents have moved for summary judgment contending that ATF was authorized to
deny Petitioners’ applications based on Petitioner’s willful violations of the GCA because “a
single willful violation of the [GCA] by an applicant authorizes ATF to deny an application for a
License or renewal of a License.” (ECF 13, Resp’ts’ Mot. for Summ. J. at 1–3) (citing 18 U.S.C.
§ 923(d)). In opposition, Petitioners argue that: (1) ATF is collaterally estopped from finding
Petitioner Mrs. Kelerchian a co-conspirator because no charges were brought when Mr.
Kelerchian was charged; (2) the five-year statute of limitations in 28 U.S.C. § 2462 bars
consideration of any acts by Petitioners under the previous license; (3) under 18 U.S.C. §
923(f)(4), ATF’s denial of their applications is legally barred both because it is beyond a statute
of limitations and because it is premature; (4) ATF deprived Petitioners of their constitutional
rights to due process and equal protection of the law; (5) the facts presented and relied on by the
ATF cannot establish willful violations of the GCA by Petitioners. (ECF 25, Petitioner’s Brief in
Opposition to Defendants’ Motion for Summary Judgment).
Collateral estoppel bars the subsequent relitigation of the same fact or same issue
between the same parties or their privies where that fact or issue was necessarily adjudicated in a
former suit and the same fact or issue is presented in a subsequent action. It applies where the
causes of action are not the same, but the same fact or question is again put in issue in a
subsequent suit between the same parties.
Petitioners’ argument that ATF is estopped from denying the license on the basis that
Mrs. Kelerchian was a co-conspirator to her husband’s violations need not be analyzed because
the basis for ATF’s denial was that Mrs. Kelerchian aided and abetted her husband in the gunrelated crimes. These are two different issues. Assuming arguendo, ATF would be estopped
from finding that Mrs. Kelerchian was a co-conspirator, this would not stop ATF from proving
she was an aider and abettor in the violations. Petitioners further argue that neither the statute,
nor the regulations, provide a mechanism for ATF to issue a notice of denial and then
subsequently change it with a superseding notice. (Pet’rs’ Opp’n at 17–18). However, there are
cases in which the court has accepted ATF’s superseding notice as a valid revocation of a
person’s license. The court in Simpson v. Lynch, 2016 WL 1660842 (M.D. Pa. 2016), focused
on ATF’s Superseding Notice of Revocation to determine whether ATF was authorized to
revoke the license with no mention of any statute or regulation prohibiting ATF from using this
type of revision. Thus, this does not seem to be an uncommon action by ATF in determinations
on license applications.
Accordingly, the Court finds no basis for a collateral estoppel argument in this case.
28 U.S.C. § 2462—Statute of Limitations
Petitioners’ contend that the ATF improperly relied on the alleged violations occurring
from 2008 through January, 2010 in denying Petitioners’ applications in 2016 because of a five
year statute of limitations contained in 28 U.S.C. § 2462. (Pet’ts’ Opp’n at 21). 28 U.S.C. §
2462 provides in full:
Except as otherwise provided by Act of Congress, an action, suit or proceeding for the
enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be
entertained unless commenced within five years from the date when the claim first
accrued if, within the same period, the offender or the property is found within the United
States in order that proper service may be made thereon.
Furthermore, Petitioners’ argue that ATF implemented the proceedings against Petitioner ASI,
rather than ASI implementing the proceedings against the Government. After ASI applied for
the renewal of its licenses, ATF granted letters of authorization for ASI to continue business.
Subsequently, over two years later ATF constructively revoked ASI’s licenses. (Pet’ts’ Opp’n at
However, Petitioners provide no authority that persuades this Court that this limitation
statute would apply in this case and this Court finds no authority that would substantiate
Petitioners’ argument. Moreover, Respondents cites several different cases that directly counter
Petitioners’ argument that this statute of limitations applies here. See, e.g., Barany v. Van
Haelst, No. CV–09–253–RMP, 2010 WL 5071053 at *8 (E.D.Wash. Dec. 6, 2010), aff’d, 459 F.
App’x 587, 588 (9th Cir. 2011) (ATF’s denial of an application for a License, or the renewal of
one, is not an “an action, suit or proceeding for the enforcement of any civil fine, penalty, or
forfeiture” to which the provision applies in the first instance); see also Lortz v. Gilbert, 451 Fed.
Appx. 503, 504 (6th Cir. 2011) (finding ATF’s refusal to renew License not subject to § 2462;
applicant, not ATF, commenced proceedings by filing its renewal application, and denial of a
federal firearms license is not an action to enforce a penalty).
The court in Gilbert also held that ATF’s action in denying a License application was not
an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, but “part
of ATF’s duty to protect the public by screening applicants whose conduct may pose a safety
risk.” 813 F. Supp. 2d at 675. The court concluded that interpreting ATF denials of license
applications as remedial measures rather than penalties is correct because it upholds ATF's
discretion, granted by the Attorney General, to make such determinations based on all the
evidence before it. Id. This Court cannot ignore overwhelming authority holding that the five
year statute of limitations in 28 U.S.C. § 2462 would not apply to ATF’s decision to deny the
License applications in this case.
Accordingly, the Court declines to interpret 28 U.S.C. § 2462 as barring ATF from
considering Petitioners’ alleged violations that occurred more than five years prior to ATF’s
decision to deny Petitioners’ applications.
18 U.S.C. § 923(f)(4)—Criminal Prosecution
Petitioners argue that 18 U.S.C. § 923(f)(4) bars ATF from denying ASI’s applications to
renew its licenses because (1) ATF instituted proceedings against ASI’s Licenses more than one
year after the 2013 indictment against Mr. Kelerchian and (2) Mr. Kelerchian has not exhausted
all of his appeals so there is not currently a final determination in his case. (Pet’rs’ Opp’n at 18–
19). 18 U.S.C. § 923(f)(4) provides in full:
If criminal proceedings are instituted against a licensee alleging any violation of this
chapter or of rules or regulations prescribed under this chapter, and the licensee is
acquitted of such charges, or such proceedings are terminated, other than upon motion of
the Government before trial upon such charges, the Attorney General shall be absolutely
barred from denying or revoking any license granted under this chapter where such denial
or revocation is based in whole or in part on the facts which form the basis of such
criminal charges. No proceedings for the revocation of a license shall be instituted by the
Attorney General more than one year after the filing of the indictment or information.
Neither side presents any case law on this issue nor is the Court able to find any cases
that would provide assistance in its decision. Therefore, the Court will look to the plain language
of the statute. The statute specifically states that criminal proceedings must be instituted against
the licensee for this provision to be useful. In the present case, Petitioner was not charged
criminally with any violation of the GCA. Mr. Kelerchian exclusively was charged with
violations. Additionally, the statute requires that the proceedings be instituted by the Attorney
General for the purpose of revoking a license. Here, the ATF is not instituting a proceeding as
Petitioners’ filed the applications for the licenses, and the ATF is not revoking the licenses, it is
denying Petitioners’ applications for a license and for renewal of a license.
The possibility that Mr. Kelerchian’s appeal is heard and his conviction is overturned has
no relevance in the present case because the licenses at issue were for ASI and Mrs. Kelerchian.
Moreover, Mr. Kelerchian was specifically removed as a “responsible person” from the ASI
license before Petitioners’ applied for renewal. Although Mr. Kelerchian’s actions may be
tethered to Petitioners’ alleged GCA violations, Respondents have made clear that there was
enough undisputed evidence that even if Mr. Kelerchian’s conviction is overturned, there will
remain substantial evidence that Petitioners willfully violated the GCA.
Accordingly, the Court declines to follow Petitioners’ interpretation. The plain language
of the statute controls. Petitioner has no claims based on the criminal proceedings.
Denial of Constitutional Rights
Petitioners’ argue that the ATF hearing was deficient in providing due process and that
the Government failed to provide a pre or post-deprivation hearing in violation of Due Process.
(Pet’rs’ Opp’n at 22–25). Along with this due process argument, Petitioners also argue that they
were denied the opportunity to prepare a defense for the hearing because the demand for
discovery was never answered.
As noted by Respondents, courts have found that ATF's administrative hearing process
comports with the requirements of due process. See DiMartino v. Buckles, 129 F. Supp. 2d 824
(D. Md. 2001), aff’d, 19 F. App’x 114 (4th Cir. 2001) (rejecting petitioners’ contention they
were denied due process rights because, among other reasons, the ATF combined the
investigatory and adjudicatory roles in one entity, finding argument foreclosed by Supreme
Court jurisprudence); Weaver v. Harris, 486 F. App'x 503, 506 (5th Cir. 2012) (acknowledging
that the petitioner had provided "generalized examples of additional procedures he wishes were
in place during his revocation proceedings, [but] fails to provide any persuasive reason as to why
those procedures are mandated by the Due Process Clause.").
ATF’s notice process and hearing procedures comport with due process. Petitioners
received notice of the violations, had an opportunity to be heard, had an opportunity to present
evidence on their behalf, and to challenge the government's evidence, prior to ATF revoking the
licenses. Petitioners also exercised their right to seek de novo review in federal court. Courts
have found that these procedural protections satisfy due process. See Sovereign Guns, Inc. v.
U.S. Dep't of Justice, No. 5:16-CV-182, 2016 U.S. Dist. LEXIS 170394, 2016 WL 7187316, at
*5 (E.D. N.C. Dec. 9, 2016) ("[I]n light of a licensee's opportunity to present evidence, crossexamine witnesses, and seek de novo judicial review, it is readily apparent that the GCA offers
licensees adequate opportunity to demonstrate any deficiencies or inaccuracies [in] the
government's evidence."); see also Shaffer v. Holder, No. 1:09-0030, 2010 U.S. Dist. LEXIS
31415 (M.D. Tenn. Mar. 30, 2010) (due process rights not violated where ATF did not apply
rules of discovery, did not provide the petitioner with copies of exhibits prior to hearing, and did
not apply the APA’s standards). The Court reaches the same finding here.
Petitioners also contend that Respondents violated their right to equal protection under
the Fifth Amendment by treating them differently from other similarly situated federal firearms
licensees. Petitioners’ argument is based on the assertion that ATF is inconsistent in its
inspection and enforcement activities. Specifically, with respect to another licensee, petitioner
claims that ATF allowed him to continue to operate while having engaged in the same conduct
that ATF alleges precludes Mrs. Kelerchian from being granted a license, and that forms the
basis for the revocation of ASI’s licenses. Thus, Petitioners are making a class of one argument,
which the Supreme Court has found may be a cognizable equal protection claim in some
instances. See Village of Willowbrook v. Olech, 528 U.S. 562, 564 (2000) (per curiam) (finding
an equal protection claim brought by an individual where it was alleged that the claimant "has
been intentionally treated differently from others similarly situated and that there is no rational
basis for the difference in treatment."); see also Overly v. Garman, 599 Fed.Appx. 42 (3d Cir.
2015) (holding that in order to establish a class of one equal protection claim a plaintiff must
show that (1) the defendants treated him differently than others similarly situated, (2) the
defendants did so intentionally, and (3) there was no rational basis for the difference in
The Third Circuit addressed a similar argument in In re Taylor, 548 Fed.Appx. 822 (3d
Cir. 2013). In that case petitioner requested files on every FFL holder whose license had been
revoked by ATF, as well as files on FFL holders who violated the GCA but whose licenses had
not been revoked, in order to analyze ATF’s internal policies and treatment of other licensees.
The Court held that there is no basis to require a district court “to undertake an analysis of ATF’s
policies and the application of those policies to other [License] holders when the court has
concluded that the statutory requirements for revocation have been met.” Id. at 825.
Furthermore, whether ATF did or did not investigate any other License holder with respect to
any allegedly similar transaction is not relevant to the Court’s inquiry into whether Petitioners
willfully violated the GCA, and to whether ATF was authorized to deny Petitioners’ applications
for licenses. Id. For the same reasons, this Court rejects Petitioners’ unsupported argument.
Evidence of Willful Violations
Petitioners argue that ATF cannot establish a “willful” violation of the GCA against Mrs.
Kelerchian or ASI as required in denying or revoking an FFL. (Pet’rs’ Opp’n at 34–58).
However, Petitioners do not dispute the facts established in the administrative proceedings
including the evidence presented in the criminal action against Mr. Kelerchian.
Under the GCA, anyone engaged in the business of importing, manufacturing or dealing
in firearms needs a Federal firearms license. 18 U.S.C. § 923(d)(1). The Attorney General must
approve any application for a License if the applicant meets the legal requirements. 3 Id. One
requirement is that the applicant has not willfully violated a single provision of the GCA or
regulations issued thereunder. 18 U.S.C. § 923(d)(1)(C). A violation of the GCA is willful
“where the licensee knew of his legal obligation [under the GCA] and purposefully disregarded
The Attorney General has delegated his licensing decisions to ATF. 28 C.F.R. §
or was plainly indifferent to the requirements.” In re Taylor, 548 Fed. Appx. at 824. See also
Borchardt Rifle Corp., 684 F.3d at 1041; Armalite, Inc. v. Lambert, 544 F.3d 644, 648 (6th Cir.
2008); RSM, Inc. v. Herbert, 466 F.3d 316, 321–22 (4th Cir. 2006); Article II Gun Shop, Inc. v.
Gonzales, 441 F.3d 492, 497 (7th Cir. 2006); Willingham Sports, Inc. v. ATF, 415 F.3d 1274,
1277 (11th Cir. 2005); Perri v. ATF, 637 F.2d 1332, 1336 (9th Cir. 1981); Lewin v.
Blumenthal, 590 F.2d 268, 269 (8th Cir. 1979).
Through its investigation, ATF found that Petitioners conspired, and aided and abetted a
conspiracy, to violate 18 U.S.C. § 924(a)(1)(A) by causing Heckler & Koch to keep false
records. Petitioners argue that the acts committed by Mr. Kelerchian were not within the scope
of his employment and therefore cannot be attributed to ASI. Thus, ASI was not involved in a
conspiracy in any “knowing capacity.” Further, Mrs. Kelerchian was merely relaying the
information that Mr. Kelerchian told her to provide to customers and did not share “the criminal
intent of the principal.” Both Petitioners were also not charged in the criminal action brought
against Mr. Kelerchian. (Pet’rs’ Opp’n at 39–50).
Title 18 U.S.C. § 2 makes punishable as a principal one who aids or abets another in the
commission of a substantive offense. United States v. Greatwood, No. 98-10079 1999 U.S. App.
LEXIS 14942, *3 (9th Cir. June 29, 1999); See also Harris News Agency, Inc. v. Bowers, 809
F.3d 411, 413–414 (8th Cir. 2015). Mrs. Kelerchian served as ASI’s Vice President and was a
responsible person on ASI’s Licenses since 2002. She was mainly responsible for the billing,
email communications, and payments for the firearms. (Rec. at 3052–228). One of Mr.
Kelerchian’s co-conspirators, Chief Kumstar, testified that Mr. and Mrs. Kelerchian were
basically interchangeable when he communicated with ASI. (Rec. at 0888–90). The undisputed
evidence obtained by ATF shows that Mrs. Kelerchian was directly involved in the illegal
purchases under the GCA. She explained to the conspirators what paperwork was required to obtain
the guns illegally, how to prepare the false documentation, and where to send it; she pointed out a
misspelled word on one of the false letters; she provided Chief Kumstar with a prepaid FedEx label
to send the fraudulent paperwork; she sent out invoices from ASI to the purchasers of the
machineguns; she collected money from various sources other than the Sheriff’s Department for guns
purportedly being purchased by the Sheriff’s Department, deposited those funds into ASI’s account,
and paid H&K or its agents with ASI funds for the illegally purchased guns; she sent Chief Kumstar
pictures on how to cut up a machinegun. (Rec. at 3141–55, 3193, 3210, 3216, 3218, 3229–31).
These are not the actions of someone doing what any effective employee would have done in the
same situation, as Petitioners argue. Mrs. Kelerchian was directly involved and assisted in the
purchase of these illegal firearms.
ATF also found that ASI illegally possessed five machineguns in violation of 18 U.S.C. §
922(o), and Mrs. Kelerchian aided and abetted that illegal possession. Petitioners argue that
pursuant to 27 C.F.R. § 479.105(d), a licensee may possess a machine gun manufactured after
May 18, 1986. The request for the transfer of these five firearms was sent to ATF with the
proper documentation and ATF approved the transfers. In certain circumstances ATF has been
known to allow samples to be purchased without demonstration letters. Mrs. Kelerchian was
merely sending information to a customer and providing any necessary follow up response,
Petitioners argue. (Pet’rs’ Opp’n at 50–53).
The GCA provides, in relevant part: “(1) Except as provided in paragraph (2), it shall be
unlawful for any person to transfer or possess a machinegun. (2) This subsection does not apply
with respect to— (A) a transfer to or by, or possession by or under the authority of, the United
States or any department or agency thereof or a State, or a department, agency, or political
subdivision thereof.” 18 U.S.C. § 922(o). During its investigation, ATF found that ASI acquired
machineguns by presenting to ATF fake letters in the name of the Sheriff's Department falsely
requesting “demonstrations” of these machineguns in connection with their purchase for law
enforcement purposes; the fake demonstration letters were merely a mechanism to get the
weapons, which were only legal in the possession of law enforcement, into ASI’s inventory.
(Rec. at 3232–33). Mrs. Kelerchian was directly involved in obtaining the five machineguns for
ASI. She explained to Mr. Kelerchian’s co-conspirator Chief Kumstar the process for obtaining
the machineguns by sending a demonstration letter to the ATF, and also updated Kumstar that
more letters were needed.
Under 18 U.S.C. § 924(a)(1)(A), it is a crime to “knowingly make any false statement
or representation with respect to the information required by [the GCA] to be kept in the records
of a person licensed under this chapter.” The statute does not require that the perpetrator
transfer, receive, or possess the firearms that are the subject of the false statement or
representation, or come into contact with those firearms in any way. The court in Mr.
Kelerchian’s criminal action analyzed this issue: even if the conspiracy had been only about the
barrels, because they were imported into the country, as opposed to having been manufactured
here, their sales were still restricted only to military or law enforcement agencies, and any
attempt to deceive the federally licensed importer about the identity of the buyer violated §
924(a)(1)(A). Kelerchian, 2015 U.S. Dist. LEXIS 80336 at *4.
ATF denied the licenses after concluding, based on the undisputed evidence, that
Petitioners had committed these violations willfully. A violation of the GCA is willful “where
the licensee knew of his legal obligation [under the GCA] and purposefully disregarded or was
plainly indifferent to the requirements.” In re Taylor, 548 Fed. Appx. at 824.
Accordingly, the undisputed evidence supports the conclusion made by ATF that
Petitioners violated both 18 U.S.C. § 924 and 922(o) willfully.
Following the Petitioners’ response to the Government’s Motion for Summary Judgment
reviewed above, the Court noted that Petitioners requested this Court to suspend indefinitely its
consideration of the Government’s summary judgment motion, including the requests for
discovery, until Petitioners could cross move for summary judgment. The Government is correct
that there is no bar to Petitioners making a cross motion for summary judgment, but they did not
do so. However, this is a question of form over substance. Petitioners filed a comprehensive
response to the Government’s Motion for Summary Judgment, which is the basis of the rulings
in this foregoing Memorandum. There is no reason to delay any further. The Court notes also
that even though this a de novo review, that if the Court had considered this issue on the
administrative record, it would have also found that the Petition would have to be denied under
applicable law. The Court repeats its prior rulings that no discovery is necessary under settled
For the foregoing reasons, Respondents’ Motion for Summary Judgment (ECF 13) is
GRANTED and the Petition for Judicial Review will be DISMISSED, with prejudice.
O:\CIVIL 17\17-mc-10 Armament Services v Yates\17mc10 Memorandum re MSJ.docx
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