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Local gun dealers to face New York City in court
By Dan McCue
Staff Writer
A federal judge has ruled that more than two dozen gun dealers, including at least three in the Charleston area, must square off against the city of New York in January to answer charges that by selling guns later used in crimes, they aided and abetted the perpetrators of those crimes.
The businesses, which include Mickalis Pawn Shop in Summerville, Trader World in North Charleston and Woody’s Pawn & Jewelry in Orangeburg, had argued they couldn’t be sued in a New York court because they do not do business in the city.
But U.S. District Judge Jack B. Weinstein, presiding in the U.S. District Court for the Eastern District of New York, ruled against the businesses, holding that the city had presented ample evidence that through their handling of gun sales, the merchants “have been responsible for the funneling into New York of large quantities of handguns used by local criminals to terrorize significant portions of the city’s population.”
According to the 99-page ruling, the defendant merchants “de facto serve” the New York market “through regular sales to straw purchasers, through multiple guns sales, or through internet sales.”
Weinstein went on to set a Jan. 7, 2008, trial date for the case, a move that angered Carl Pierce, one of two local attorneys representing Mickalis Pawn Shop and Trader World.
“This ruling, in fact this entire lawsuit, is a travesty,” said Pierce, of the Pierce, Herns, Sloan & McLeod law firm in Charleston.
The other attorney representing the gun dealers is Justin S. Kahn of the Kahn Law Firm in Charleston.
“Not only are the allegations without merit—something even the U.S. attorney’s office in South Carolina has agreed with—but the setting of such a speedy court date, in my view, is merely an attempt by Judge Weinstein to preempt a slander-and-defamation suit we’ve filed against New York City and Mayor Michael Bloomberg here in South Carolina.
“I definitely believe, and think a reading of this decision will show, that Weinstein has already sided with the city of New York, and if this case goes against us before our slander suit is heard, our suit will be dead in the water,” Pierce said.
“It just goes to show how power can be used against you when you don’t have any money and the other side has unlimited resources,” he added.
Not surprisingly, Mayor Bloomberg’s spokesman, Jason Post, had a markedly different response to Weinstein’s decision.
“The city is pleased with the judge’s ruling,” Post said. “It will allow us to have our day in court to prove that common-sense sales practices that comply with federal law, and that don’t interfere with anyone’s constitutional rights, can make individuals safer from the crime caused by illegal guns.”
The case, City of New York v. A-1 Jewelry & Pawn, et al, was filed in May 2006 against 15 gun retailers in South Carolina, Georgia, Ohio, Pennsylvania and Virginia. It is the companion case to a second action against 12 retailers filed in December 2006 in the City of New York v. Bob Moates Sport Shop, et al.
In both cases, the city of New York asserts that the dealers sold guns in violation of federal statutes and in ways that are directly against industry standards.
The lawsuits seek no money damages but ask that the court appoint a “special master” to monitor the dealers and require them to submit to enhanced training. The dealers were targeted because of the large number of New York City crime guns that were traced back to them shortly after sale and the dealers’ willingness to sell guns in simulated “straw
purchases.”
In the city-financed operation, one investigator filled out the paperwork for a gun while making it clear the purchase was for someone else, in this case a second investigator.
The lawsuits stem from independent research that suggests more than 90% of the guns used in crimes in New York City come from out of state, and the litigation is part of Mayor
Bloomberg’s larger safe-streets agenda, Post said.
“When our gun litigation is combined with tough new laws the mayor helped pass in New York City and New York state, and through increased enforcement by the New York Police Department, we believe that the mayor’s illegal-gun agenda will indeed make New Yorkers safer,” he said.
“The distribution practices targeted in the lawsuits have a substantial effect on crime in New York.”
Investigators focused on shops that had been linked to the sale of one or more of 800 guns seized in New York in recent years after the commission of killings, muggings and other crimes, he said.
So far, 14 of the 27 defendants named in the two suits—including Dick’s Pawn Shop in North Myrtle Beach—have settled with the city, allowing a court-appointed “special master” to monitor their future transactions. The settlements also establish a penalty structure for noncompliance with federal, state and local firearms laws.
Rick Morketter, manager of Dick’s Pawn, who continues to contend he did nothing wrong, said his decision to settle was based purely on financial considerations.
Under the settlement agreements, each participating dealer will be required to post a bond. Fines incurred for each violation will be deducted from the bond, with the added requirement that the dealer replenish the original bond amount upon each violation.
Fines for each violation vary in each individual settlement and range from $1,000 to $10,000 for a first violation, $2,000 to $15,000 for a second violation and $3,000 to $20,000 for a third violation. The agreements will expire after three consecutive years without a reported violation.
At least every three months, the special master will certify whether the dealers have met their obligations.
But Pierce, who denies any wrongdoing on behalf of his clients, vows to fight on despite that fact he believes the suit will ultimately cost $1 million to defend.
“This is a mom-and-pop store in Summerville we’re talking about literally taking on City Hall in one of the most expensive legal venues in the world,” he said. “We have fancy New York lawyers offering to represent us for $200,000, but that’s just $200,000 to get started.”
Given the cost of waging a legal battle up north, Pierce seemed to be placing most of his hope of a victory in his countersuit, pointing out that the dealers targeted in the lawsuits were subjected to investigations involving “straw purchases” while other gun dealers, particularly those within the boundaries of New York City, were not.
He also referred to a U.S. Justice Department letter that informed the city that evidence of “straw” sales produced by the sting operations would not support criminal prosecution of the targeted dealers.
“The letter even went so far as to warn the city that such stings could themselves run afoul of the law,” Pierce said. “That’s a pretty stinging indictment of the whole matter.”
Pierce’s countersuit on behalf of Larry Mickalis, owner of Mickalis Pawn Shop, and Bill
Dukes of Trader World argues that statements made by Bloomberg that Mickalis’ business “engages in criminal behavior” and is a “rogue gun dealer” are false and defamatory.
It goes on to allege that Bloomberg and others involved in the sting operation committed fraud, libel and slander, and intentionally inflicted emotional distress on his clients.
“Sadly, this is a case of a small-businessman who’s done nothing wrong but is now dragged into the legal system by a seemingly unstoppable adversary, and you know, once they’ve got you, it’s all about how much you have to pay,” Pierce said. “A lot of these businesses might actually go under as a result of this litigation.”
Post responded by saying the city is only seeking compliance with the law.
“We don’t want to drive anyone out of business,” he said. “We know that most gun dealers are hard-working, law-abiding small-business owners. In fact, according to the U.S. Bureau of Alcohol, Tobacco and Firearms, one percent of gun dealers are responsible for selling 60 percent of crime guns. That is why, instead of lengthy litigation, we have entered into settlements with over half of the dealers we have sued.”
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.
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