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In Re Sarco

April 13, 2011


On appeal from Superior Court of New Jersey, Law Division, Morris County*fn1 and a Final Agency Decision of the Superintendent of the Division of State Police.

Per curiam.


Argued November 1, 2010

Before Judges A.A. Rodriguez, Grall and C.L. Miniman.

Petitioner Sarco, Inc., a wholesale and retail firearms, parts, and military surplus dealer, appeals from an order of the Law Division denying its application for renewal of its retail firearms dealer license and from a final administrative decision of the New Jersey State Police Superintendent (the Superintendent) denying its application to renew its certificate of registration to wholesale and manufacture firearms. We affirm the order of the Law Division and the final agency decision of the State Police.


The genesis of this appeal was Sarco's application to the New Jersey State Police for a renewal of its certificate of registration to manufacture and wholesale firearms on November 27, 2007, and its companion application to the court for a renewal of its retail firearms dealer's license. State Police Lieutenant John M. Cunha, Unit Head, Firearms Investigation Unit (FIU), submitted an investigation report to the Law Division judge recommending denial of Sarco's retail license application. The judge reviewed the report and supporting documentation and summarily denied Sarco's retail license application on March 7, 2008. Sarco then sought de novo review by the judge.

Thereafter, the Superintendent decided that Sarco could not "continue to operate without endangering public safety, health and welfare." Cunha sent a letter to Charles Steen III, one of the owners of Sarco, denying Sarco's application to renew its certificate of registration based on the Superintendent's decision. Sarco appealed this final agency action to us on March 20, 2008.*fn2

Evidentiary hearings were held by the judge. The following facts are drawn from the evidence presented at those hearings. Sarco is owned and operated by the Steen family and has been in continuous operation for approximately forty-seven years. It sells firearms to government agencies, the military, and members of the public both by mail and at its retail store. Sarco's retail firearms dealer's license and registration to manufacture and wholesale firearms were last renewed in March or April 2005 for a three-year period.

On August 29, 2005, the Bureau of Alcohol, Tobacco and Firearms (BATF) requested a trace from Sarco on a Star Super 9mm semi-automatic firearm that had been recovered by the Plainfield Police Department on August 17. It was not until August 31 that Sarco reported the theft of this weapon to the Long Hill Police Department. Officer Chris Kisatsky investigated the theft and interviewed various Sarco employees. That October, a former employee, Ramiro Gonzalez, confessed to stealing the gun found by the Plainfield Police and, in March 2006, ultimately confessed to stealing two others as well. The BATF requested traces on these two guns after they were recovered by the Newark and Jersey City Police Departments. These three weapons had been located near Gonzalez's workstation, which had no video surveillance. Gonzalez also had access to the gun room containing unsecured weapons, although he had no license, called a pink card, permitting him to have such access.

Gonzalez had a heroin and substance-abuse problem and had prior arrests in New Jersey and elsewhere for misdemeanor drug possession, kidnapping, and threatening someone with a knife during a drug deal. Gonzalez's criminal background check had been completed for Sarco by a temporary employment agency, which had failed to uncover his drug history and past criminal conduct. As a result of these employee gun thefts, Kisatsky requested that Sarco conduct a complete inventory, but Sarco never conducted one.

In January 2006, FIU Detective Sergeant David Hill went to Sarco to conduct a regulatory inspection. Sarco had "a number of rifles on the wall." There were also glass cabinets that contained handguns and long guns, including rifles and shotguns, on the wall behind a counter on gun racks. Long guns were displayed in the center aisle in an area open to the public; the guns were not secured at all because there were no cable or trigger locks binding them to the display. This was corrected when Hill returned to the store five days later.

Hill also conducted an audit of Sarco's firearms. Because there were approximately 40,000 guns in the building, Hill could not complete a full audit. Instead, he "randomly select[ed] open entries in the acquisition and disposition ledger, and th[e]n ask[ed] that the dealer provide [him] with the gun [and] verify the serial number to the open entry information." No discrepancies were found among the forty weapons Hill selected. However, Sarco had two firearms that were listed as lost or stolen, but it had failed to so notify the State Police within forty-eight hours, as required by N.J.A.C. 13:54-6.6.

Another issue that arose during Hill's inspection was the fact that Sarco "was selling high[-]capacity magazines that had been listed or made to be temporarily blocked to hold only 15 rounds." Hill informed Sarco that it should discontinue sales of temporarily blocked high-capacity magazines.

The last issue related to pink cards. Although sixteen Sarco employees had pink cards, most of the forty employees had access to guns. Hill advised Steen of the pink-card licensing requirements for any employee with access to firearms. Over the next few months, some applications slowly arrived. Subsequently, two employees were denied pink cards for past criminal histories and were charged with falsifying their applications as they did not disclose their criminal backgrounds.

Various police departments continued to recover Sarco's Star Super handguns. For example, on August 10, BATF requested a trace on another Star Super handgun that had been recovered by the Newark Police Department. On August 16, Steen called FIU Detective Sergeant Eric Baumgarten and the Long Hill Police Department to report that this handgun had been stolen.

In September 2006, BATF requested another trace of a Star Super handgun that proved to be missing from Sarco's inventory. Baumgarten asked Sarco to conduct a complete inventory in mid-September to provide "the current status of all of the Star handguns that they had originally attained to see if any more were missing." In January 2007, Steen reported that a total of fifty-seven Star Super handguns were missing, including the two reported missing in August and September 2006. Some of these were later recovered in inventory. Baumgarten worked with BATF to investigate the missing guns and some more guns were located.

Baumgarten scheduled another random inspection at the end of January 2007 and reviewed Sarco's acquisition and disposition ledger. He looked for open entries, where a gun had been acquired but not yet sold, and checked serial numbers against the inventory to confirm that the weapon was still in inventory. Of 118 weapons audited on the ledger, seven weapons were missing. The next week, Sarco located all seven weapons and accounted for three more of the fifty-seven missing handguns it had reported missing--two were inventory and one had been sold.

Baumgarten conducted another inspection on February 9 and audited approximately eighty handguns, for which Sarco could account for all. Also in February, Sarco reported that one missing Star Super handgun had been lawfully sold, and another had been recovered by the Newark Police Department. Later, Sarco reported that some more handguns had been located in inventory. As of March 12, 2007, forty-two Star Super handguns were missing.

FIU Detective Donald V. Mundorff completed a prerenewal inspection of Sarco in October 2007. Mundorff found that Sarco met the required standards pertaining to security systems and procedures required for renewal. Although there were "some minor discrepancies," he found the condition of Sarco's ledgers to be acceptable. The FIU also conducted a random audit of approximately 278 weapons around that time, which revealed that one Ballister Molina .45 caliber gun was missing, the forty-third missing weapon.


After Sarco filed its renewal applications on November 27, 2007, Cunha reviewed both applications. This entailed criminal background checks on each corporate officer and each employee seeking a pink card and an examination of firearms purchase documents, posted notices, and permit procedures.

Cunha was aware of past reports of missing guns and, in terms of public health and safety, he was concerned that it took Sarco several months to comply with Baumgarten's request to conduct an audit of its Star Super gun inventory. He was also concerned that Sarco had failed to comply with the forty-eight-hour reporting requirement for stolen or missing firearms. Moreover, Sarco had failed to comply with the requirement in N.J.A.C. 13:54-3.14(a) for logging out firearms that had been sold and recording the date of sale. According to Cunha, even though Sarco was ultimately able to account for randomly audited guns during the FIU's inventories, "it took them a while to find out where they're at and then so many open entries were, in fact, sold, but . . . they didn't log it in their ledger." He believed that this "highlighted [Sarco's] inability . . . to safeguard or . . . to record disposition of handguns." Cunha stated that it was "[u]nacceptable" to have open weapons in the registry with no indication of each item's disposition.

Cunha also had concerns about Sarco's ability to safeguard its inventory. Although, Sarco was in compliance with regulations concerning external security and the safeguarding of firearms and ammunition during non-business hours, it still had not resolved the known missing weapons. At the time of the renewal application, a total of forty-three firearms listed on Sarco's disposition ledger did not have disposition dates. FIU members informed Cunha that Sarco's security systems were deficient.

Cunha prepared an investigation report dated March 3, 2008, which he submitted to the Superintendent and the judge. In the "Summary of Investigation" section of his report pertaining to the ...

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