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Smith & Wesson Holding Corp
One weekend in February 2006, a young man approached Mike Detty and asked about buying some AR-15s. Detty, the proprietor of Mad Dawg Global Marketing in Tucson, Ariz., is a federally licensed firearm dealer who sells the high-capacity, military-style rifles at gun shows or from the living room of his Spanish colonial-style home on the outskirts of town. AR-15s are semiautomatic, meaning that they fire one bullet for each pull of the trigger; they typically accommodate 30 rounds of .223 ammunition. This buyer said he’d pay cash for six of the rifles. Then he asked Detty when he could buy more. Detty said he’d have 20 new ones in stock the following week. The customer said he’d take them all.
“Something wasn’t right,” Detty says. “This kid is like 20 years old. Where’s the money coming from? Where are the guns going?”
Despite his suspicions, Detty decided to sell the guns. The federal background check he conducted via telephone didn’t turn up a felony conviction, protective order, or determination that the customer was mentally ill. But the following Monday morning, Detty did call the local field office of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the arm of the U.S. Justice Dept. charged with enforcing gun-trafficking laws.
During a series of meetings at the federal building in Tucson, ATF agents concurred with Detty that this buyer almost certainly was working for a Mexican drug organization. Tucson is 60 miles from the border. The ATF agents asked Detty to keep selling rifles to the young man and any friends he brought around. The agents said they would wire Detty’s home, trace the traffickers’ movements across the border, gain the cooperation of Mexican authorities, and eventually confiscate the guns.
“Mike, I think we have a chance to take out a powerful cartel,” a supervisory agent told Detty. “Can you help us?”
“Yeah, I’ll help you guys,” Detty replied.
In March 2006 he signed a contract making him a confidential informant, with the promise that he would be paid unspecified rewards for helping to shut down a weapons pipeline to Mexico. “I thought I was doing something good,” says Detty, 52, a tall man who favors a basic firing-range wardrobe: solid-colored shirt, khaki trousers, and tan, high-laced combat boots. Beyond any rewards, he would also make a profit—in the form of his take from the undercover sales.
Over the next 19 months, Detty sold a series of suspected traffickers some 450 rifles and handguns—AR-15s, knockoff AK-47s, Colt .38s—all under the aegis of the ATF investigation. Hundreds of hours of conversations were taped. The guns were tracked, court filings show, and U.S. agents had fleeting contacts with Mexican police. But the investigation did not achieve its ambitious goals. The vast majority of the guns were never recovered by U.S. authorities. No kingpins were apprehended, no cartel taken down. Mexico’s drug war raged on.
Detty now accuses the ATF of misleading him about whether the guns he sold would be recovered. He also complains that the government shortchanged him on reward money. The Justice Dept. has admitted in federal court filings in Tucson that at least two of its prosecutors in Arizona had in 2007 and 2008 questioned the wisdom of ATF’s work with Detty, which was part of an investigation called Operation Wide Receiver. But no one tried to stop it.
Firearms agents have a shorthand for trafficking investigations of this sort: “gun walking.” Wide Receiver was a preview of an even bigger, equally misbegotten gun-walking probe conducted by the Obama Administration in 2009 and 2010: Operation Fast and Furious, which unleashed 2,000 weapons in just over a year. Last December, two of those guns were found at the scene of the murder of a U.S. Border Patrol officer near Rio Rico, Ariz. A subsequent congressional inquiry has led to a shake-up in ATF management and the resignation of the U.S. attorney for Arizona. Republicans in Congress have called for Attorney General Eric Holder to step down as well, accusing him of concealing his knowledge of the Fast and Furious program and lying to Congress. In testimony before the Senate Judiciary Committee on Nov. 8, Holder denied covering up anything but condemned tactics used by his department’s gun-trafficking investigators. “I want to be clear,” the Attorney General said. “Any instance of so-called gun walking is unacceptable.” Fast and Furious, he added, “was flawed in its concept and flawed in its execution.”
Until now, the feds haven’t shown much willingness to learn from their mistakes. After all, Operation Wide Receiver, the caper involving Mike Detty, was launched in the Bush Administration.
“You’ve got an out-of-control situation here that started years earlier than most people understand,” says John Kaufmann, a Tucson criminal defense lawyer who has represented one of the defendants in the Wide Receiver case. Perhaps even more alarming than the degree of government incompetence demonstrated in Fast and Furious and Wide Receiver are the basic procedures for overseeing bulk sales of guns. It’s a patchwork system that effectively encourages dealers like Detty to allow buyers to purchase batches of military-style weapons and forces the authorities to try to scramble after the fact to figure out whether there’s anything suspicious going on.
Detty’s account of his involvement in the Operation Wide Receiver scheme is a window into the ATF’s failures to track and cut off the flow of deadly weapons into Mexico. It provides details on the risky nature of gun walking and the ground-level workings of the gun business. Detty, who is not accused of any wrongdoing, stresses that he always follows the law. But it’s hard to know whether his fellow dealers do the same.
As a boy growing up near Philadelphia, Mike Detty lifted weights and worked out relentlessly to compensate for the pediatric arthritis he developed early on. In college he majored in criminal justice, with ambitions to someday join the FBI. He enlisted in the U.S. Marines, but hindered by flare-ups of his childhood arthritis, he lasted less than two years. “The medical discharge meant no FBI,” he says, sounding as disappointed today as he was 30 years ago. He went to work for a medical-supply business. In the late 1990s the business changed ownership, and Detty, who had moved to Arizona, decided to turn his hobby of collecting guns into a full-time vocation. Mad Dawg Global Marketing was born.
In commercial terms, his timing was good. In addition to contributing freelance articles to firearm magazines and websites, Detty, who already had a federal license to sell guns, stepped up his retail activity at weekend gun shows. These gatherings at fairgrounds, armories, and other locations attract a combination of licensed dealers obliged to conduct background checks and unlicensed gun owners who are permitted by federal law to sell weapons from their “personal collections,” with no federal oversight. Owners of brick-and-mortar gun shops generally resent—but can do little to stop—the competition from cut-rate gun show salesmen, who have lower overhead.
Detty had an extra advantage: Rifle manufacturers knew him from his gun writing. Angling for favorable coverage, some companies were willing to sell him merchandise at wholesale prices, improving his margins. “He has credibility as a writer,” says Jim Shepherd, publisher of The Outdoor Wire, a well-known online gun industry newsletter.
In 2001, Detty gambled on AR-15 military-style rifles, pouring tens of thousands of dollars of his savings into new inventory. It was a good bet. After the 9/11 attacks, a lot of American gun owners decided they needed exactly the sort of semiautomatic weapon Detty had in stock. “Everyone was talking about security and terrorism,” he recalls. He sold out of AR-15s, replaced his inventory twice over, and sold out again. “It was kind of a relief. I’m making house payments, making car payments; the gun business is working for me.”
Also working for him was the striking ineffectiveness of federal gun laws. The assault weapons ban of 1994 prohibited the manufacture and sale of 19 semiautomatic rifle models by name and any gun that had two or more cosmetic military-style attributes (such as a folding stock or bayonet mount). In response, manufacturers renamed the targeted models, dropped the superficial attributes Congress singled out, and went right on with business as usual. Modified versions of the AR-15 gained in popularity specifically because gun control advocates had zeroed in on them.
Equally ineffective was the 1994 law’s ban of new magazines that could accommodate more than 10 rounds. The ammo restriction merely drove up the price of the hundreds of thousands of large-capacity magazines that manufacturers pumped out before the law went into effect. (All of the stockpiled merchandise was grandfathered in.)
In 2004 the assault weapon statute expired by its own terms, and Congress chose not to renew it. Over the last seven years, military-style rifles, now equipped with 20- or 30-round magazines, have been steady sellers in Main Street gun shops, outdoors superstores, and at gun shows, according to the National Shooting Sports Foundation, an industry trade group. Detty sells AR-15 models such as the DPMS Panther Oracle for as little as $699 plus tax. His more expensive offerings cost more than $2,000.
By the time Detty signed on as an ATF undercover informant in 2006, demand for AR-15s in Arizona was picking up. Young Mexican-American men were offering to pay cash for large batches of guns, which then found their way to drug gangs across the border. By 2010 the annual homicide toll from this mayhem exceeded 10,000, according to Mexican authorities. It’s difficult to estimate the total size of the illicit drug market, but in a crackdown on just one smuggling ring operating in the U.S., American law enforcement officials announced in October the arrest of 76 people allegedly linked to an operation that generated $2 billion in profits over five years.
The gun buyers who approached Detty were American citizens with clean records. They passed the computerized federal background check. They swore in writing that the guns were for their own use. In conversation with Detty, however, they sometimes indicated a different reality. (Many of the transactions in his living room were recorded on an ATF surveillance device hidden in a Kleenex box.)
One buyer, Carlos Celaya, spoke freely with Detty about the true destination of the guns he was purchasing. According to a Justice Dept. court filing, Celaya said to an associate on Feb. 11, 2007, “Tell [Detty] this is going to Mexico, and they tell me to buy.” Eleven days later, Celaya told Detty that people had to be careful smuggling guns into Mexico because in that country only soldiers and police officers are allowed to have firearms. During an Apr. 11, 2007, transaction involving 28 assorted guns, Celaya spoke of weapons going to Sonora, Mexico, in a hidden compartment in a vehicle. On several occasions, Celaya was recorded saying that he received gun-buying commissions from Mexicans. He and his circle bought more than half the 450 weapons Detty sold in 2006 and 2007 as a part of Wide Receiver, government court filings show.
“Carlos was the nicest, politest, most respectful young guy you’d ever meet,” Detty recalls. Celaya carried his cash in wads in the front pocket of his blue jeans. “I told him: ‘Get these guns to Mexico as fast as possible,’” Detty says. “The ATF told me to do that. The idea was that the ATF would follow the guns and get the cartel. That’s what they told me, anyway.”
The ATF wrapped up the investigative portion of Operation Wide Receiver in late 2007. Detty says he collected more than $16,000 in cash payments from the agents running him. He also was allowed to keep the thousands of dollars in profits on the guns he sold to Wide Receiver suspects.
To Detty’s consternation, though, the Justice Dept. didn’t move promptly to round up or prosecute the targets of his undercover work. The gun dealer says he was motivated by a desire to see justice done; he also expected additional cash from the government when prosecutors notched convictions. At gun shows in Tucson and Phoenix, where retailers often mingle with law enforcement agents dressed in plain clothes, Detty asked his ATF contacts what was going on with Wide Receiver. The agents, he says, rolled their eyes and blamed the delay on personnel reassignments within the U.S. Attorney’s Office in Phoenix.
Detty heard a different story from one of the prosecutors in that office. The prosecutor, whom Detty also met at a gun show, said the case had gotten bottled up because the ATF had not been fully candid about failing to intercept most of the weapons Detty sold during Wide Receiver. Prosecutors hesitated to admit to a jury that the government had allowed hundreds of weapons to be smuggled across the border and now couldn’t get them back.
In mid-2009, the Justice Dept. in Washington dispatched Laura Gwinn, a member of the Criminal Div,’s Organized Crime and Gang Section, to sort out the mess. In a court filing in Tuscon in October 2011, Gwinn acknowledged that the case had passed through the hands of two assistant U.S. attorneys in Arizona. Both had misgivings about the ATF agents’ “failure to interdict guns that ultimately were transported into Mexico.”
Gwinn obtained indictments against nine individuals charged with buying guns from Detty under the false pretense that the firearms were for their own use. So far, five of those defendants, including Carlos Celaya, have pled guilty to lying on government forms. One has been sentenced to a year and a day in prison; Celaya and three others await sentencing. Two defendants are fugitives, according to the Justice Dept. In October, Gwinn moved to drop all charges against one man, Ricardo Mendez. John Kaufmann, the Tucson lawyer, represented him. “What the Justice Dept. ended up with was a lot of small-time guys convicted of relatively low-level charges, and my guy, who is actually innocent, because the one gun he bought really was for himself,” Kaufmann says. “No cartel, no big-time drug traffickers, but a lot of guns going to Mexico.” Lanny Breuer, the Justice Dept.’s Assistant Attorney General for criminal matters, acknowledged in a written statement on Nov. 1 that Wide Receiver relied on “a pattern of unacceptable and misguided tactics used by ATF.”
Detty says he regrets participating in Wide Receiver. “I feel sick about it,” he says. “I tried to do the right thing. I took a risk letting these dirtbags into my house. Then it turns out there was never a real plan to trace the guns to Mexico.”
There’s something else troubling, too. Detty thought to pick up the phone back in 2006 and alert the ATF to the initial dubious AR-15 buyer. But he wonders if other dealers would have taken that step: “You know, if the buyer passes the background check, a lot of guys will say, ‘It’s not my job to question him further. That’s ATF’s job.’ Well, from Wide Receiver and Fast and Furious, you can see what a good job ATF does.”
Detty speculates that the ATF purposely let semiautomatic rifles walk across the border as part of an Obama Administration plan to justify reinstatement of the assault weapons ban. One problem with this theory, which has many adherents among gun rights advocates, is that the gun walking began during the Bush Administration. This summer, the ATF imposed a new regulation that requires licensed firearm dealers in four Southwest border states—California, Arizona, New Mexico, and Texas—to notify the agency of multiple sales of certain semiautomatic rifles. If it chooses to do so, the ATF can then look into a bulk sale. The gun industry, represented by the National Shooting Sports Foundation, filed suit in August to stop the new regulation, claiming that the ATF had exceeded its authority. That case is pending in federal court in Washington. In his testimony on Nov. 8, Holder called on lawmakers to toughen “statutory tools” to stem the gun trade. “Beyond identifying where errors occurred and ensuring that they never occur again, we must be careful not to lose sight of the critical problem that [Fast and Furious] has highlighted,” Holder said. “We are losing the battle to stop the flow of illegal guns to Mexico.”
Visiting the places where retailers like Mike Detty legally sell their products illustrates just how difficult it will be to win that battle, absent more stringent government oversight. On a Saturday in late October, the line for the Crossroads of the West Gun Show takes shape at 8:30 a.m., a good half-hour before the gates open at University of Phoenix Stadium, the bulbous silver-colored arena that is home to the National Football League’s Arizona Cardinals. There are men of all ages, some with their wives or girlfriends, some with their kids.
On the way in, attendees carrying firearms are directed to tables where the guns are checked to assure they’re not loaded. Then it’s down the escalators to field level, where the turf has been mechanically retracted for the weekend (the Cardinals are on the road), and dealers have set up displays on the bare concrete. There are pistols, revolvers, rifles, and shotguns as far as the eye can see. Banners advertise Smith & Wesson (SWHC), Colt, and other storied American brands; Sig Sauer, Beretta, and Glock from abroad. Along with firearms and ammunition, some merchants are hawking T-shirts supporting the Second Amendment and comparing Barack Obama to Hitler and Stalin. Another display, largely ignored by passersby, offers swastika-festooned knickknacks.
Occupying one of the larger exhibitor booths, Mad Dawg Global Marketing presents racks and racks of black-matte-finished AR-15s. An employee completes the first sale of the morning: a DPMS Oracle, with two 30-round magazines, to a guy who looks to be in his twenties wearing shorts and a baseball cap. “Good starter rifle,” Detty comments, out of earshot of his customer. “Reasonable price, good for plinking, shooting varmints.” The buyer signs a Form 4473, swearing that the weapon is for personal use. A few minutes later, off he goes.
Calculating his expenses, including pay for three part-time salesmen, Detty says he’ll break even this weekend if he sells another 14 or 15 rifles, plus some sights, flashlights, and other accoutrements. He makes a gross margin of about 20 percent on each rifle.
Late on Sunday, Detty takes stock. The show has gone pretty well, profit-wise. He won’t share specific dollar figures, but he says he has sold 36 rifles and a pile of other gear. None of his customers bought more than one gun, he says, and they all passed the background check. What they do with the firearms is their business. He packs up his remaining inventory and trucks it back to Tucson to get ready for the next show.