Mr. MANN. I know that under the ATF recordkeeping system at the present time that there are records kept from the manufacturer down to the dealer, where guns go, where guns are shipped. Is there a requirement under the Federal law now that they report thefts of interstate carriers of shipments or does that show on any record in case you have to trace such a gun-well, that gun was manufactured at such and such a time and shipped by Overnite and our records show that the shipment never arrived and was presumably stolen. Do you find that out after the fact or do you get it before?

Mr. LANE. Well, actually you might say it is after the fact. The way the interstate theft program is set up now, the transporter, in the event it is theft from interstate, submits a card to Bureau headquarters in Washington. They fill the card out and then headquarters in turn notifies us of the theft of the shipment. Now in a number of instances, we have asked the transporter to call us direct and they will call us direct.

Mr. PIPER. Mr. Mann, if I could just enlarge on a little. Since June 30, 1975, ATF has received reports of loss or theft of 1,479 reports involving 10,800 firearms. That is from interstate thefts. Mr. MANN. Since what date?

Mr. PIPER. Since June 30, 1975, as of that date. This was the initiation of the project up to that period.

Mr. MANN. That would be the whole 7 years?

Mr. PIPER. Yes.

Mr. MANN. Now I realize that we will be talking in relative terms when I ask these questions, because if we do things like computerize or have waiting periods we substantially change the figures that I am going to ask you about, but first how many of the additional 500 officers is this district going to get?

Mr. LANE. It is my understanding, Mr. Piper can probably answer it better, but it is my understanding we will not get any of the 500.

Mr. PIPER. We are losing 70 special agents, Mr. Mann, to the major cities in the north.

Mr. MANN. Cleaning up the Greenville situation provided that much extra people, did it?

[Laughter.]

Mr. LANE. Actually, I would say this, as far as Georgia we have 93 men. Staff-wise we are probably one of the largest and that is the result of the large liquor problem that used to exist. With the current problem of wagering which takes a tremendous number of man-hours to enforce.

Mr. MANN. You just recently got that primary duty?

Mr. LANE. That is correct.

Mr. MANN. When did you get it?

Mr. LANE. Actually it was passed the latter part of December and we took it over the first of this year and this past May, we made our first large case in Georgia.

Mr. MANN. You said it was passed and I don't know all of the laws that are passed, but how did ATF come by this gambling, wagering responsibility?

Mr. LANE. I will say it was passed in that the jurisdiction was given to the Bureau of Alcohol, Tobacco and Firearms.

Mr. MANN. By whom? The Department?

Mr. LANE. The Treasury Department, yes.

Mr. MANN. Did they have a separate division prior?

Mr. LANE. Intelligence had it and in addition, the wagering law was changed, the tax itself was changed and the percent of profit, income tax, which a person must submit to Internal Revenue was changed. Those two percentages were changed. The license itself as a gambler was changed and increased and the amount of tax an individual paid was decreased 10 to 2 percent.

Mr. MANN. Well, given those additional duties and admitting that the alcohol situation probably is leveling off in the last few years, do you need additional men, Mr. Piper?

Mr. PIPER. We have so many licenses, Mr. Mann, as I said, 33.800 odd licensees, I think if we are going to enforce the firearms laws, we should at least maintain the manpower we have or add to it. In the regulatory area, they only have 52 men down there and they are tied up on liquor, and therefore we do all the compliance work and we receive no help from regulatory at all. Mr. MANN. Who is regulatory?

Mr. PIPER. Mr. Flynn is in charge of that operation; it is the other half of the house, and they just don't have the manpower to do the compliance and this type of thing. Mr. Flynn can probably tell you more about that than I, but I believe he told me the other day they had made a study and they need 150 men to take over the compliance aspect of the license; that would be our shortage in manpower.

Mr. MANN. Do you now try to maintain a schedule on special licensees?

Mr. PIPER. Yes, we do. We do an initial workup on all licensees. We don't issue a license in the southeast region without a background on the licensee and our record in that respect is good. We have done about 31,000. The recalls is another matter. We just don't have the manpower to go back and see the guy once he is licensed.

Mr. MANN. You don't have a schedule for doing that?

Mr. PIPER. We do have in the sense that we have priority dealers who we feel should be looked at. We go back and recontact them but I believe it is about 14 percent recalls.

Mr. MANN. Thank you, Mr. Chairman.
Mr. CONYERS. Yes. Counsel Chris Gekas.

Mr. GEKAS. I am sure you gentlemen are aware that the 16 cities project identification have just recently been off, the last phase was just recently completed, and three of the cities of the Northeast were New York, Boston, and Philadelphia and doing some rough computation the other day, it has been demonstrated from those statistics, that about 60 percent of the guns that were traced, in those three cities, came from four Southeastern States including South Carolina, Florida, Georgia, and Virginia and I think roughly in that order, although I am not certain; so the origin of the problem of handguns in the Northeast or eastern cities is the South

eastern States. I think that has been very clearly established even here today.

Now, of the 500 agents, I understood one of you to say that you will be getting no new agents.

Mr. PIPER. We are losing 70 special agents in transfers to the major northern cities because of the impact of hiring new people. You have to have a 1-on-1 situation on a training-type thing. We are moving 70 experienced special agents to 10 designated major cities.

Mr. MANN. Excuse me, is that supposed to be temporary because of the training situation?

Mr. PIPER. No, sir, that is permanent; our staff is being reduced. Mr. GEKAS. Let me make sure if I understand you; is that a net loss then of 70 agents or will new agents be hired to fill those slots? Mr. PIPER. Sure, that is a net loss. We are losing 70 special agents. They are reducing our staff. We can hire, once our attrition drops below that staffing, then we can hire back to it, but our staffing is being reduced by 70 special agents.

Mr. GEKAS. They are going to reduce your slots?

Mr. PIPER. Yes, sir.

Mr. GEKAS. By 70.

Mr. PIPER. They are.

Mr. GEKAS. I understood from the Washington Bureau of ATF that the concept of fighting gun use in the 10 large metropolitan areas would include the sending of strike forces out to those areas of the country which are identified as sources of guns; is that something that is a part of the program that you gentlemen have heard of?

Mr. PIPER. Of course, that was the type thing that was set up in the Greenville project; that was initiated by the national office; they sent people down to direct the project but we furnished the manpower. I haven't heard of this strike force concept; no.

Mr. GEKAS. Well, I think to move on just to clear up one other area. I think it was Mr. Russell in his statement who discussed the method by which illegal purchasers obtain handguns in South Carolina and includes presentation of false identification, including social security cards.

When we were in Denver there was a situation of someone testifying about a situation about someone selling a felon who was just released from the State penitentiary who went to a store outside of Denver and used proof of his residence in the State of Colorado, his prison discharge papers, and one of the ways around that kind of situation as listed here, discussed or described in Mr. Russell's report where you say that it is prevalent to find that a convicted felon or a nonresident purchaser would pay a local derelict a small sum of money to make the firearms purchase.

Now if we, if the subcommittee and then the Congress, decided to establish some kind of system of prechecking of retail sales, one of the ways that criminals and nonresidents would get around it would be this, wouldn't it, to go to South Carolina and then pay someone, a resident or a derelict as you call it, to go in and buy the weapon for him, even if there was a precheck procedure; that sale

would be, would appear to be, valid. Indeed, would be legal, wouldn't it?

Mr. RUSSELL. If he had no prior felony conviction, it could very easily be so. Now-but we have got to remember that most of these things are almost spontaneous. We have found so many where the transactions are made in one day, whereas if the man talked to a local derelict and said I'll give you $2 to buy me a gun; if this derelict knows that his name is going to be submitted for a record check, I doubt very seriously if he would go through with it; he may; but as I say, so many are spontaneous that if you arrived in a town, cruised the pool halls or wherever these people are, on the street, he finds him, he gives him a couple of dollars and we have found this, he'll actualy write down the description of the firearms. he wants; he'll go to the stores; he will look in the case; he will get exactly the description of the gun, write it on a piece of paper; the derelict goes to the man and says this is the gun I want. The man delivers the gun, the derelict signs the 4473, and so forth, the man pays him, he brings it out, walks down two blocks or one block or maybe in front of the store and he gives the man the gun and the man is off and gone. That is, it is just so common, a common practice.

Mr. GEKAS. The word "spontaneous" is a bit misleading I think. The sense that I got from the situation that you described that the person who went into the store and described it went through a very elaborate procedure. In other words, he came down into South Carolina intent on getting a handgun and this is the way he did. it.

Mr. RUSSELL. Yes, sir.

Mr. GEKAS. So the spontaneity involved would be just in locating which derelict.

Mr. RUSSELL. Yes, that's right. I don't mean just the gun right then but it takes reconnaissance, a little planning, and then it's done. Mr. GEKAS. Well, I think one of the things we have to be concerned about is not drawing up a law that just changes the method of illegal acquisition of handguns. If we establish prechecks of retail sales, well then the criminals and nonresidents would just go around it a different way and what it suggests, I guess in theory at least, is that there has to be some subsequent controls and regulations of transfers, at least in theory; wouldn't you agree with that?

Mr. RUSSELL. Yes, sir.

Mr. CONYERS. Mr. Barboza.

Mr. BARBOZA. Mr. Lane, Mr. Mann engaged you in a discussion of dealer qualifications; presently under the existing law, there are five qualifications for a dealer; he must be 21 years of age, not be prohibited from transporting or shipping firearms, not be in willful violation of the Gun Control Act, and not have failed to disclose material information, and he must have premises within the particular State in which he intends to do business in. Is there a requirement that a federally licensed firearms dealer comply with all State and local laws prior to acquiring a Federal firearms license?

Mr. LANE. I think, now I am not positive, but it is normally that it will not be in conflict with State law normally.

Mr. BARBOZA. It is not a requirement.

Mr. LANE. No.

Mr. BARBOZA. That he have obtained the requisite State or city license?

Mr. LANE. To my knowledge, it is not.

Mr. BARBOZA. It is a violation if he sells firearms in violation of city or local ordinances?

Mr. LANE. To my knowledge, it is; that is correct.

Mr. BARBOZA. So then you have mentioned also that there is difficulty in making compliance inspections, so that there is no guarantee that an individual who possesses a Federal firearms license and fails to obtain the required city or State licenses is not indeed engaged in the sale of handguns. I don't have the State or city ordinance for the State of South Carolina or for Georgia, but I do believe you said that it was required that they obtain a license to sell handguns.

Mr. LANE. That is my understanding. It is just a simple license that if you engage in selling handguns, you have a license.

Mr. BARBOZA. A firearms dealer then could be selling handguns without the required State license.

Mr. LANE. That is correct.

Mr. BARBOZA. Have you run across in any of your compliance inspections, any licensed firearms dealers who have indeed sold handguns in violation of the State laws in either Georgia or South Carolina. Mr. MANN. As far as making such cases.

Mr. LANE. Actually we have made no cases, no.

Actually we are probably more intent when we go into a place to make certain that they were complying with Federal regulations; there are so many, that we probably don't become involved as to whether or not State law is being complied with too.

Mr. BARBOZA. What kind of premises do firearms dealers have? Mr. LANE. Well actually

Mr. MANN. Excuse me, let me interrupt you. The point you were just on, you know, I have a sneaking suspicion that the Internal Revenue Service makes available to the State tax commission any problems they find on income taxes, is there any reason you shouldn't obtain from the State of Georgia a list of their handgun licensees and use it as a cross check as you go about your business advising them of any obvious violations?

Mr. LANE. I think provisions could be made for that. We have this disclosure act where you have to be extremely careful relative to information that you disclose relative to occupational tax stamps. and such.

Now

Mr. MANN. You know, there is honor among thieves.

Mr. LANE. Yes.

Mr. MANN. We don't tell tales on any people, that is not our business, but isn't it about time we started doing that?

Mr. LANE. I can say this. There has been no

Mr. MANN. Coverup.

Mr. LANE. No, there has been no agreement between the State of Georgia and ATF relative to this, does this individual hold a State as well as a Federal.