Tacoma gun shop repeatedly broke law

The Tacoma gun store that owned the rifle used in the Beltway sniper shootings was allowed to remain in business despite failing three federal inspections in which investigators couldn't find scores of guns as well as forms they need to track criminals.

According to court records made public yesterday, the owner of Bull's Eye Shooter Supply showed little interest in fixing problems at a time when his employees noticed one of the sniper suspects,

17-year-old Lee Boyd Malvo, in the store before the sniper attacks.

The documents also show that Bull's Eye had one or two guns stolen or routinely disappear from its tables at weekend gun shows it attended.

Brian Borgelt, the owner, hasn't filed personal income-tax returns for the past eight years, even though $1.5 million has been deposited into the company's KeyCorp bank account at various branches around the country, the document alleges.

Borgelt's record-keeping violations could have led to criminal charges against him and his partner, Charles N. Carr, or to the revocation of their federal firearms license two years ago.

But the federal Bureau of Alcohol, Tobacco and Firearms (ATF) repeatedly let them off with warnings, even after Borgelt promised several times to comply with the law and then didn't, the documents show.

The investigation of Bull's Eye, which began with a routine effort to track the sniper rifle, has now expanded into a wide-ranging criminal probe into evidence of suspected tax evasion and illegal gun sales.

Federal prosecutors plan to subpoena store employees to testify before a grand jury to determine, among other things, how the sniper rifle got out of the store, said a law-enforcement official familiar with the investigation.

Borgelt didn't return a phone call yesterday.

Documents filed by prosecutors in U.S. District Court in Tacoma yesterday show that the shop has been under scrutiny since the sniper killings and robberies left 14 people dead and five wounded in five states and the District of Columbia. The filing included a

20-page affidavit agents used to search Bull's Eye and Borgelt's luxury lakefront home in Lakewood on Wednesday.

Maryland police arrested Malvo and John Muhammad, 41, both former Tacoma residents, and have matched the military-style .223-caliber Bushmaster to most of the slayings.

The rifle was traced to Bull's Eye, which acquired it from the manufacturer July 2. The weapon was found behind the backseat in Muhammad and Malvo's car when they were arrested Oct. 24. No sales records could be found when ATF agents went to Bull's Eye.

Three current and former store employees are quoted in the search-warrant affidavit as saying they noticed the customized rifle missing from a display area in August or September, but the document doesn't indicate whether they reported the disappearance.

No theft report was filed with police until Nov. 5, and then only at the request of ATF agents.

Two of the employees recalled seeing Malvo in the store, although the affidavit doesn't provide dates or any other details.

It would have been illegal for either Muhammad or Malvo to buy the gun, and the shop would be required to conduct background checks on them. Muhammad was the subject of a domestic-violence protective order, and Malvo was a juvenile and illegal immigrant.

Before Wednesday's search, ATF investigators audited Bull's Eye from Oct. 25 to Nov. 2, matching manufacturers' purchase orders to retail sales records.

Firearms dealers are required to keep a federal transaction form on each gun sale, as well as a bound ledger with chronological entries, so weapons can be quickly traced in the event they are used in a crime. The ledger also demonstrates that the buyer underwent a background check.

Most of the time, authorities are able to trace a criminal's gun through all of its transactions and back to its last legal owner. Being unable to track a weapon when a dealer admits owning it but cannot find a subsequent sales record — the case with Bull's Eye and the sniper rifle — happens in fewer than 1 percent of all traces, according to a Times analysis of the ATF's gun-trace database.

Current and former Bull's Eye employees, in interviews with ATF agents, described numerous irregularities, according to the affidavit.

A former bookkeeper told investigators that "the paperwork processing in the business was kind of a mess and the computer system was not secure," the affidavit says.

When agents searched the store, they found more than 1,400 transaction forms randomly stuffed behind the store's cash register. ATF regulations requires those forms to be carefully stored and filed for easy retrieval.

The former bookkeeper, Susan Haft, told Borgelt about missing paperwork, but he never did anything about it and didn't seem to care, she said.

One current employee told the ATF that the shop has no procedures for regularly auditing inventory, and another recounted that one or two of the store's handguns would routinely be stolen at gun shows. Gun dealers are required to report stolen guns within 48 hours.

Borgelt's problems with keeping required paperwork dates to 1995 and 1998, when he was warned for similar violations at Bull's Eye and another store he previously operated in Tacoma, according to the affidavit.

Failure to keep adequate records is a federal misdemeanor and can also result in administrative sanctions that could include revocation of his federal dealer's license.

Borgelt's most serious problems arose in May and June 2000, when the ATF found not only that his records were not in order but that he could not account for 160 guns. According to the affidavit, he was issued a warning letter stating that future violations "will be viewed as willful and may result in the revocation of your license."

But a year later, after a third ATF inspection uncovered records violations, the agency allowed Borgelt to remain in business.

When ATF investigators returned to the store after the sniper shootings, they discovered that another 78 weapons were missing, without any record of sale.

During the previous and recent audits, Borgelt told investigators that his employees might be stealing guns.

Investigators also discovered that tax forms had not been filed by the business, and that Borgelt had not filed personal federal income-tax returns for the past eight years, although he paid three estimated-tax payments totaling $10,500.

Borgelt's financial records show he spent large sums during that time, including $199,000 in down payments for property and $400,000 for his house.

Staff reporter Jusin Mayo contributed to this report. Steve Miletich: 206-464-3302 or smletich@seattletimes.com. Mike Carter: 206-464-3706 or mcarter@seattletimes.com.