http://www.seattletimes.com/seattle-news/skagit-county-gun-shop-may-have-been-worst-in-us/
Skagit County gun shop may have been worst in U.S.
Originally published April 27, 2014 at 4:01 pm Updated April 30, 2014 at 5:29 pm
Prospective buyers, above, preview guns for sale at the James G. Murphy Co. auction of Kesselring Gun Shop inventory earlier this month in Sedro-Woolley. The shop, seen below, was a fixture in Skagit County for decades but had failed for years... More
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By Mike Carter
Seattle Times staff reporter
BURLINGTON, Skagit County — For more than 65 years, Kesselring Gun Shop has been a firearms fixture in the Northwest, arming hunters, target shooters and police from one of the largest inventories on the West Coast.
Until surrendering its federal firearms license last October, the family-owned gun store also may have been the worst gun retailer in America.
It was nearly a decade ago when inspectors with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) first visited the sprawling gun store — three flat-roofed white buildings clustered on a gravel lot along Old Highway 99, some 70 miles north of Seattle. There they discovered that 2,396 guns — including hundreds of assault-style rifles and handguns — were either stolen, lost or unaccounted for.
Unable to show inspectors the required paperwork about who had the guns, Kesselring’s owners were hindering police efforts to trace any guns found at crime scenes, putting the public at risk.
“Stunning,” said James Zammillo, a former ATF deputy assistant director, placing Kesselring’s lapses in national perspective. “That is just an incredible number.”
Much about the Kesselring store and ATF’s efforts to regulate it defy credulity.
In its 2005 inspection, the ATF not only discovered 2,396 unaccounted-for weapons but also a host of other illegalities: failing to secure caches of explosive powder; selling guns to customers who couldn’t pass background checks; not confirming buyer identity in 78 instances; neglecting to report missing guns to law enforcement.
Over the next five years, the gun store, run by three Kesselring brothers, continued its high-volume business unabated.
Eventually, the ATF found another 94 missing weapons and more gun-law violations. Also troubling, it determined that in two different years, Kesselring exhibited what ATF considers a “red flag” for possible gun trafficking: having 10 or more guns a year with a short “time-to-crime” — from sale to being used in a crime — of under three years.
But only in 2010, a year after the store had a record $14.6 million in sales, did ATF ask Kesselring’s owners to attend a warning conference about the 5-year-old violations. It took another three years — marked by many more background-check and record-keeping violations — before the agency forced Kesselring to surrender its firearms license for “willful” misconduct.
The eight-year, slow-motion enforcement of Kesselring Gun Shop mirrors problems at ATF over the same time. The agency is tasked with regulating the gun industry, but members of Congress — under relentless pressure from the powerful gun lobby — have made it almost impossible for the ATF to do so, cutting funding and imposing regulatory restrictions.
For one, ATF has too few inspectors to do the job, according to the Department of Justice Office of Inspector General.
In 2012, the Seattle division, for example, had only 27 inspectors to cover 4,006 licensed gun dealers in five states and Guam. It was understaffed by 32 jobs, making it the third-worst of ATF’s 25 divisions for understaffing.
“ATF is regulating the industry with one arm tied behind its back and the other one hampered as well,” said Zammillo, who retired from ATF and works as an industry consultant. “Gun laws are weak. I don’t expect it to change in my lifetime.”
The ATF is a “whipping post” for both the anti-gun left and the pro-gun right, said Special Agent Cheryl Bishop, spokeswoman for the Seattle division.
“They say, ‘Here’s a shovel and a pick, now dig a tunnel under Mount Rainier,’ ” Bishop said. “Then they come back a year later and say, ‘Gee, you didn’t get very far.’ ”
Hunting innovation
Kesselring Gun Shop opened in 1947 after Clarence Kesselring, a machinist and self-taught gunsmith, invented and later patented a revolutionary removable scope mount for hunting rifles. In doing so, he made his tiny shop a destination for big-game hunters from around the world. Kesselring mounts are still highly prized and sought after today.
For the past 60 years, the store has sold guns and shooting supplies only. Its aisles bristled with racks of assault-style rifles, shotguns and hunting firearms, and its counter cases displayed hundreds of handguns. Cases of ammunition were stacked thigh-high in every available space in between.
Over the past decade, Kesselring has routinely posted annual sales of more than $10 million, records show. In 2009, after President Obama was elected and the National Rifle Association warned that he was “coming for our guns,” the gun store posted record receipts of $14.6 million. Its inventory routinely included more than 8,000 guns.
Despite Kesselring’s high volume, there is no evidence ATF inspected the store until 2005. Following its own guidelines, the agency should have inspected Kesselring in the 1990s, according to a Seattle Times analysis of ATF crime-gun trace data from 1993 through 1997. In one year alone, 1997, ATF sought records on 20 guns sold by Kesselring that were used in crimes. Half of those traces were for guns that The Times determined to fall within the troubling three-year “time-to-crime” indicator.
Likewise, Kesselring should have raised red flags with the ATF back then for repeatedly selling multiple handguns in a single transaction. Over those five years, Kesselring sold 910 firearms in multiple sales, putting it in the top 1 percent of all gun dealers, according to a Times analysis. The ATF sees numerous multi-weapon sales as an indicator of possible illegal gun trafficking. At least in theory, such sales should trigger a visit from ATF inspectors.
The agency declined to discuss these red flags from the 1990s or details of its later Kesselring investigation.
“Vindictive lie”
In August 2004, a seemingly innocuous workplace injury at the Kesselring store set in motion a cascade of events that not only drew the ATF’s attention but set brother against brother and led to tragedy and the end of an era.
That month, the store’s wholesale manager, a trusted employee named Shawn Hoines, said he hurt his back on the job, stooping to pick up a 60-pound case of ammo. Hoines, the store’s only nonfamily member in management, filed a workers’ compensation claim and the state Department of Labor and Industries got involved.
A week later, company Vice President Keith Kesselring fired Hoines, calling his injury claim a “vindictive lie.” In early September, Kesselring went to the Skagit County Sheriff’s Office and accused Hoines of stealing 127 guns, mostly assault-style rifles.
Kesselring gave Detective Dave Tiscornia a “stack of papers and firearms acquisition and disposition logs” that he said proved the thefts. The detective, however, wrote in his report that it “became clear” from the incomplete and jumbled documents that any case would be difficult to prove. Even so, the investigation continued and Hoines was later charged with theft.
Most firearms dealers never lose track of a gun. There are 1,093 firearms dealers in Washington state and in 2012 they reported only 200 missing guns to ATF. The agency also requires gun stores to report any missing or stolen firearms to the agency’s National Tracing Center and to local law enforcement within 48 hours.
It’s not clear whether the Skagit County Sheriff’s Office immediately alerted the ATF about the suspected thefts at the gun store. In December 2004, however, records show that Keith Kesselring reported the thefts to ATF inspector Bobby Reyes from the Seattle office.
A primary goal of the agency’s inspection program is to “prevent and detect diversion of firearms from lawful commerce to the illegal market,” according to the ATF. “… Failing to account for firearms is a serious public safety concern because unaccounted-for firearms cannot be traced.”
In November 2005, 11 months after Keith Kesselring filed the ATF theft-and-loss reports, its inspectors showed up at his busy gun store.
Don Kesselring, the company’s 59-year-old president — who had worked there behind the counter since he was a teen — said until that day he’d never seen an ATF inspector at the store. Bishop, the ATF spokeswoman, said no history of inspections before 2005 could be found.
What the inspectors discovered was a jumble of paperwork and a slipshod accounting system.
According to court records, the shop ran on a system of cash-stuffed envelopes kept by Frances Kesselring, the boys’ mother. When receipts came up short, cash would come out of an envelope to make up the difference. When there was an overage, money was tucked into an envelope for a rainy day.
The Kesselrings routinely took cash from the till, buying everything from guns to cars and property, according to documents.
Gun dealers are required by the ATF to keep a master “acquisitions and dispositions” ledger, commonly called an “A & D book,” to track each gun the store acquired and sold. Inspectors should be able to look at it, whether online or in hard copy, to quickly get a count of the inventory, then match it against what’s on the shelves.
Not so at Kesselring. ATF had to bring in a cadre of inspectors who spent nearly four months untangling the mess. When the inspection was complete, ATF found violations in virtually every aspect of the shop’s operation:
• Hundreds of times Kesselring employees failed to have gun buyers provide key information on purchase forms.
• The store sold guns to non-Washington residents.
• In more than 500 cases, Kesselring workers did not document the outcomes of instant background checks.
• In six instances, they failed to document when a customer purchased multiple handguns in one transaction.
But the most pressing problem was Kesselring’s inability to provide paperwork for 2,396 guns to indicate whether they were stolen, lost or sold to persons unknown.
It was a stunning number, an affront to law-enforcement officials who rely on gun traces to fight violent crime. Zammillo, the former ATF official, said he’d never heard of such a high number.
Troubles not over
So lackadaisical were the store’s operators that nearly 10 months after the inspection began, Kesselring Gun Shop still hadn’t sent in a list of 2,396 missing weapons to the National Tracing Center. In May 2006, the ATF wrote and told them to do so.
Don Kesselring, in a recent interview, refused to believe all those guns were stolen, although he cannot say what happened to them. Bishop, of the ATF, said many of the guns were likely sold, but the store lost the federal paperwork.
Hoines, the former warehouse manager, believes staff and customers engaged in routine thievery. Many weapons were stored on open racks in the middle of the store, he noted. “Thousands of dollars went out the back door,” Hoines said. “Most of it was guns, I’m sure.”
Meanwhile, the Skagit County Prosecutor’s Office dismissed the gun-theft case against Hoines in September 2006 for “failure to provide sufficient evidence” of a crime. Hoines soon sued his ex-employer, alleging wrongful termination and slander, and reached a $200,000 settlement.
He also claimed that the youngest Kesselring brother, Brad, was responsible for thefts at the shop. As it would turn out, Hoines was right.
In October 2009, Keith Kesselring reported to the Skagit County Sheriff’s Office that Brad had been embezzling from the business. He had taken over the company’s payroll duties in 2003 and since then had been writing big checks to himself, including one for $130,000, according to a police report.
On Oct. 13, 2009, brothers Keith and Jerry Kesselring went to Brad’s home to ask him about the missing money. He came to the door with a handgun and a “thousand yard stare in his eyes,” according to a police report.
A few hours later, Brad Kesselring texted his girlfriend in Chicago, “I love you my baby always remember that.”
Three days later, Brad Kesselring was found dead in his bedroom from a self-inflicted gunshot wound. He left a note admitting to the thefts, which totaled nearly $850,000, according to court documents.
Violations persist
The gun store continued to attract unwanted attention from the ATF in 2009. The ATF said the store had a year with 15 guns with short time-to-crime. Barely 1 percent of gun dealers have more than 10 crime guns a year.
In July 2010, nearly five years after the store’s first inspection and myriad violations, the ATF held a warning conference with the Kesselrings, who agreed to bring the store in compliance.
That it took the ATF nearly five years to bring Kesselring’s owners in for a warning conference may appear negligently lax. But the agency has said for years it needs at least 500 more compliance inspectors just to visit each gun dealer within five years, an ATF goal.
Nationally, three of five dealers haven’t been inspected in five years or longer. In 2012, only 8.4 percent of dealers were inspected.
Janet Van Haelst, director of industry operations for the ATF’s Seattle Division, said “it should not have taken that long” to bring action against Kesselring, but enforcement had to go through “many levels of review” while the division struggled with staff shortages and “mission emphasis” changes.
Around the time of the warning conference, Jerry Kesselring, the only brother not actively involved in the gun shop, sued the store and his brothers. He accused them of running the family business into the ground while taking exorbitant salaries. The lawsuit alleges the brothers “have known about internal theft and mismanagement for more than a decade, and yet they have failed to remedy the problem.”
In March 2011, inspectors revisited and found more of the same: 94 missing firearms, sales to restricted persons, dozens of faulty background checks.
In October 2012, the ATF filed a notice of revocation for “willful” violations of federal gun laws.
Out of business
The company surrendered its license effective Oct. 1, 2013. Don Kesselring blamed the downfall of the 66-year-old business on dishonest employees, lax security, an outdated paper accounting system, and what he termed an “unprofessional” ATF audit.
“Given what happened to us, I think ATF could come into any place and make it hell on anybody,” he said.
Keith Kesselring, 54, now works at recently opened Northwest Performance Firearms in Skagit County, owned by an Anacortes businessman, Brent Straight. The new store initially was to be called Kesselring Pro Shop, according to its October 2013 news release. But the name was changed after news accounts of the Kesselring problems with the ATF.
“I just want to get on with my life,” he said.
The lawsuit among the brothers required that the inventory from the defunct store be sold and the proceeds distributed.
Earlier this month at a Sedro-Woolley warehouse, an auctioneer sold nearly 900 weapons, mostly handguns, and about 70 silencers.
Just before the auction, said Andrew Wilson, a court-appointed receiver overseeing the sale, ATF inspectors combed through the inventory one more time.
A testament to the troubled history of the gun shop, the inspectors turned up 17 guns earlier believed to have been lost, stolen or missing.
At least this time they’d be able to learn who bought those guns, enabling the weapons to be traced if someday they end up at a crime scene.
Mike Carter: mcarter@seattletimes.com or 206-464-3706. Staff reporter Justin Mayo provided data analysis.
Mike Carter: 206-464-3706 or mcarter@seattletimes.com; on Twitter:@stimesmcarter.