The Honorable G. Patrick Murphy of the Southern District 

of Illinois, sitting by designation.

In the

United States Court of Appeals

For the Seventh Circuit

No. 10-2927

SHAWANO GUN & LOAN, LLC, d/b/a

SHAWANO GUN & LOAN,

Plaintiff-Appellant,

v.

MARY JO HUGHES, Director of Industry Operations,

Bureau of Alcohol, Tobacco, Firearms and Explosives,

Defendant-Appellee.

Appeal from the United States District Court 

for the Eastern District of Wisconsin.

No. 2:09-cv-00150-WCG—William C. Griesbach, Judge.

ARGUED JANUARY 18, 2011—DECIDED JUNE 7, 2011

Before TINDER and HAMILTON, Circuit Judges, and

MURPHY, District Judge.


2 No. 10-2927

MURPHY, District Judge. Shawano Gun & Loan, LLC

(Shawano) sells fishing equipment and firearms from

its sporting goods store and pawnshop in northern Wisconsin. The Bureau of Alcohol, Tobacco, Firearms and

Explosives (ATF) revoked Shawano’s federal license to sell

firearms in December 2008 after it rejected Shawano’s

administrative appeal from a hearing officer’s finding

that Shawano willfully violated record keeping requirements of the Gun Control Act and pertinent regulations. Shawano filed suit in the district court against

Mary Jo Hughes, ATF Director of Industry Operations,

under 18 U.S.C. § 923(f)(3) for de novo judicial review

of the administrative decision and requested an evidentiary hearing. The district court thought there was

ample uncontroverted evidence that Shawano had willfully failed to comply with the record keeping requirements and granted summary judgment against Shawano

without conducting an evidentiary hearing. The district

court stayed enforcement of the revocation pending

appeal. The question for the district court and the issue

here is whether Shawano’s violations are willful for

purposes of the Gun Control Act. For the reasons that

follow, the district court’s judgment is affirmed.

I. Factual and Procedural Background

In 1998, Timothy Backes obtained a federal firearms

license for his sole proprietorship, now known as Shawano

and reorganized as a limited liability company (LLC). The

Gun Control Act requires firearms dealers to keep certain

records. The general record keeping provisions of the
No. 10-2927 3

Gun Control Act of 1968 (GCA), 18 U.S.C. § 921 et seq., are

found at 18 U.S.C. § 923(g) and its implementing regulations, 27 C.F.R. Part 478 (formerly Part 178). Firearms

dealers are required to ensure that a Firearm’s Transaction Record, ATF Form 4473, is completed properly

to record identifying information about firearm purchasers, to prohibit transfers to persons prohibited from

possessing firearms, and to facilitate the tracing of firearms involved in crimes. A prospective firearm purchaser completes Sections A and C of ATF Form 4473 to

disclose certain identifying information and to answer

questions from which the dealer can determine whether

the firearm legally can be transferred to the prospective

purchaser. The firearms dealer completes Sections B and

D to provide information about the firearm being transferred, the identification documents produced by the

purchaser, and the results of the requisite Brady Law

National Instant Criminal Background Check System

(NICS check). Section D further requires the dealer to

certify that the dealer believes, based upon the information disclosed in ATF Form 4473, that it is not unlawful

for the dealer to transfer the firearm to the prospective

purchaser. Such unlawful transfers are outlined in 18

U.S.C. § 922 and include, among others, transactions

where a dealer knows or has reasonable cause to believe

that the purchaser is a convicted felon, is a fugitive, uses

or is addicted to any controlled substance, has an adjudicated mental defect, is an illegal alien, or has been convicted of misdemeanor domestic violence. 18 U.S.C.

§ 922(d). A dealer violates the GCA if the dealer

transfers a firearm based upon information in ATF Form
4 No. 10-2927

4473 that he knows or has reason to believe is false. See 18

U.S.C. §§ 922(m) and 924(a)(1)(A); see also 27 C.F.R.

§ 478.124(c).

A federal firearms dealer also must maintain separate

records in bound form for the acquisition and disposition of firearms. This acquisition and disposition book

identifies each firearm that a dealer takes into its inventory and that leaves the dealer’s inventory and the

person from whom it was acquired or to whom it

was transferred. A dealer’s acquisition and disposition

records must be readily available for inspection. See 27

C.F.R. § 478.125(e). In January 2002, ATF granted

Shawano a variance, allowing it to use a specialized

computer software program called Pawnmaster to input

and maintain acquisitions and dispositions of firearms,

provided that Shawano printed the records at least semiannually or when requested by an ATF officer, when

the system memory was purged, and upon discontinuation of the business.

In December 1999, ATF Special Operations Inspector

John Moore conducted the first compliance inspection

of Shawano and noted nine violations: (1) failure to

ensure accurate completion of ATF Forms 4473; (2) failure

to properly maintain completed ATF Forms 4473;

(3) inconsistent dispositions of two firearms; (4) failure

to properly maintain the acquisition and disposition

book from August to December 1999, in that Shawano

kept computerized records without first obtaining a

computer variance; (5) failure to timely record disposition

entries in at least 145 instances; (6) failure to timely
No. 10-2927 5

record acquisition entries in at least three instances;

(7) making a disposition entry when firearm was not

transferred; (8) failure to record acquisition and disposition information of a Browning pistol; and (9) failure to

properly record firearm model and serial numbers into

the acquisition and disposition book in at least twentythree instances. Mr. Backes signed the ATF Report of

Violations, which set forth the nine violations and the

corrective action to be taken.

In June 2004, ATF Inspector Casimir Mleczko conducted a second compliance inspection, which uncovered

six violations: (1) improper transfer of eleven firearms

at a tavern as part of a raffle; (2) failure to provide written notification to non-licensees and to display a sign

required by the Youth Handgun Safety Act; (3) seven

instances of improper transfer of firearms to persons who indicated on ATF Forms 4473 that they were

prohibited; (4) failure to ensure proper execution and

completion of ATF Form 4473; (5) failure to maintain an

accurate record of receipt and disposition; and (6) failure

to make a semi-annual hard copy printout of the computerized acquisition and disposition record as required

by the ATF computer variance. Inspection findings

were reviewed in July 2004, and the federal firearms

regulations were reviewed. Inspector Mleczko cautioned

Mr. Backes, Shawano manager Scott Backes, and another

employee about straw purchasers, incomplete ATF

Forms 4473, and prohibited purchasers. Mr. Backes

signed a second ATF Report of Violations, which noted

the violations and the corrective action to be taken.
6 No. 10-2927

After this second compliance inspection revealed that

Mr. Backes was operating his business as an LLC rather

than a sole proprietorship, Mr. Backes submitted a new

license application disclosing his business entity status

as an LLC. In September 2005, Shawano Gun & Loan, LLC,

was licensed as a dealer, including pawnbroker, in firearms other than destructive devices. Mr. Backes remains

its owner.

In March 2005, ATF Director of Industry Operations

John Jarowski sent Mr. Backes a letter to schedule a

meeting to discuss the violations found during the

second compliance inspection. The letter included a

warning that any willful violation of federal firearms

laws and regulations might result in revocation of the

federal firearms license and that any violations, either

repeat or otherwise, could be viewed as willful. Mr. Backes

responded to the letter with intended corrective action,

and a warning conference was held in April 2005 to

discuss the violations and necessary corrective action.

A follow-up letter from Director Jarowski summarized

the corrective action proposed by Mr. Backes, including

having a second person check each ATF Form 4473

before every transfer and having manager Scott Backes

oversee and maintain the acquisition and disposition

records, and again warned Mr. Backes of the possible

consequence of future violations.

In March 2007, Industry Operations Inspector Mary Jo

Holpit conducted a third compliance inspection. This

inspection revealed seven violations, including repeat

violations found during the earlier inspections: (1) unap-
No. 10-2927 7

According to the Report, Shawano acquired 3896 firearms 1

and disposed of 2942 firearms from January 1, 2006, through

March 15, 2007.

proved use of the Pawnmaster computer program since

moving the location of the business and changing its

license from a sole proprietorship to an LLC; (2) inaccurate

reflection of inventory in the acquisition and disposition records and failure to print the acquisition and

disposition records for over nine months; (3) failure to

provide the required Youth Handgun Safety Notice to

purchasers; (4) Shawano’s new location was less than 1000

feet from a school and within a school zone; (5) failure

to obtain valid identification in at least four instances;

(6) failure to properly execute and review ATF Forms

4473; and (7) knowingly assisting straw purchases by

altering and reprinting pawn tickets. Mr. Backes signed

a third ATF Report of Violations, which set forth the

violations and the corrective action to be taken. In re1

sponse to the violation report, Mr. Backes submitted a

letter addressing each violation and also submitted a

variance request to use the Pawnmaster computer program.

On November 5, 2007, Shawano was served with a

Notice of Revocation issued on October 20, 2007, by

Mary Jo Hughes, ATF Director of Industry Operations,

stating that its federal firearms license was being revoked. The Notice of Revocation lays out five counts of

willful violations of the GCA and applicable regulations.

Count 1 charges that in 2006 and 2007, Shawano failed to
8 No. 10-2927

properly record the disposition of at least fifty-four firearms in the acquisition and disposition book. This is a

repeat violation from the 1999 and 2004 compliance

inspections and the 2005 warning conference. Count 2

charges Shawano with failure to obtain complete and

correct responses to questions on ATF Forms 4473 on

thirteen occasions in 2006 and 2007. This also is a

repeat violation from the 1999 and 2004 compliance

inspections and the 2005 warning conference. Count 3

charges Shawano with willfully making false record

entries and aiding and abetting the making of false

record entries by another on five occasions by allowing

firearm transfers through straw purchases. Count 4

charges Shawano with selling or otherwise transferring

firearms to prohibited persons. This is a repeat violation from the 2004 compliance inspection and the 2005

warning conference. Count 5 charges Shawano with

willfully selling or otherwise disposing of firearms

where the transferee indicated that he/she was not the

actual purchaser. Shawano timely filed a request for an

administrative hearing to review the revocation decision

under 18 U.S.C. § 923(f)(2) and 27 C.F.R. § 478.73 and

was granted a stay of revocation pending ATF’s administrative review hearing and decision.

On August 7, 2008, ATF Hearing Officer Michael R. Price

conducted an evidentiary hearing at ATF’s field office

in Milwaukee. Hearing Officer Price issued a Report and

Recommendation on August 15, 2008, concluding that

ATF established (1) a willful failure to properly record the

disposition of at least fifty-four firearms into the acquisition and disposition record; (2) a willful failure to obtain
No. 10-2927 9

complete and correct ATF Forms 4473 on thirteen occasions; (3) willful making of false record entries and aiding

and abetting the making of false record entries on five

occasions by allowing straw transfers; (4) willful transfer

of firearms to three individuals who indicated on ATF

Forms 4473 that they were prohibited from possessing

firearms; and (5) willful transfer of firearms on three

occasions to persons who indicated on ATF Forms 4473

that they were not the actual buyer of the firearms. The

willfulness finding was based on Mr. Backes’s awareness

of his legal obligations and indifference to becoming

personally involved to ensure corrective action. Hearing

Officer Price recommended that the license be revoked.

ATF rejected the administrative appeal and served

Final Notice of Revocation on Shawano in December 2008.

In February 2009, Shawano filed suit in the district court

under 18 U.S.C. § 923(f)(3) for judicial review of the

administrative decision to revoke its federal firearms

license and requested an evidentiary hearing as part of

the de novo judicial review. In its decision granting

summary judgment without an evidentiary hearing,

the district court accepted affidavits from Mr. Backes,

Shawano’s counsel, and the individuals who bought

the firearms that are charged in Count 3 as straw purchases. The district court described the five counts set

forth in the Notice of Revocation and found that

Shawano’s violations were willful because the repetitive

nature of the violations showed purposeful disregard or

plain indifference to federal rules and regulations. Enforcement of the revocation decision is stayed pending

this appeal.
10 No. 10-2927

By final rule of the Department of the Treasury and the 2

Department of Justice effective January 24, 2003, the governing

regulations were reorganized to reflect the division created by

the Homeland Security Act of 2002 of the Bureau of Alcohol,

Tobacco and Firearms, Department of Treasury, into two

separate agencies: the Bureau of Alcohol, Tobacco, Firearms,

and Explosives (ATF) in the Department of Justice and the

Alcohol and Tobacco Tax and Trade Bureau (TTB) in the

Department of the Treasury. Reorganization of Title 27, Code

of Federal Regulations, 68 Fed. Reg. 3744-01, 2003 WL 158517

(Jan. 24, 2003). ATF is tasked with inspecting and examining

the records of licensed firearms dealers to ensure compliance

with the Gun Control Act’s implementing regulations. 27

C.F.R. § 478.23.

II. Discussion

The Attorney General of the United States may, after

notice and opportunity for hearing, revoke a dealer’s

federal firearms license if the dealer has willfully

violated any provision of the GCA or any rule or regulation prescribed by the Attorney General thereunder. 18

U.S.C. § 923(e). The dealer may file suit in the district 2

court for “de novo judicial review” of the revocation

decision. Id. at § 923(f)(3). In a proceeding brought under

§ 923(f)(3), the district court may consider any evidence

submitted by the parties to the proceeding whether or

not such evidence was considered at the administrative

hearing. The district court is afforded discretion to

receive evidence additional to that contained in the administrative record “when some good reason to do so

either appears in the administrative record or is presented
No. 10-2927 11

by the party petitioning for judicial review.” Stein’s Inc.

v. Blumenthal, 649 F.2d 463, 466 (7th Cir. 1980) (affirming

the district court’s summary disposition of the case based

on the administrative record without taking additional

evidence). Where the district court exercises its discretion to admit additional evidence and no substantial

credibility questions are presented, it may receive the

evidence in the form of affidavits rather than testimony.

Id. at 466 n.5.

[T]he district court, consistent with its obligation to

review the matter de novo, may accord the Secretary’s

findings such weight as it believes they deserve in

light of the evidence in the administrative record and

the evidence, if any, the district court receives to

supplement that record. In this sense, the Secretary’s

decision may be upheld when the trial court concludes in its own judgment that the evidence supporting the decision is “substantial.”

Once the district court has reviewed the decision of

the Secretary, the role of the appellate court is limited.

It may review as in any other action the judgment of

the district court to insure that it correctly applied

the law including the appropriate scope of review.

The district court’s findings as to the facts, however,

may not be upset unless clearly erroneous.

Id. at 467.

In this case, Shawano does not dispute the violations

charged in Counts 2, 4, and 5. With respect to Count 1, the

district court accepted Shawano’s explanation that the

fifty-four transactions did not appear on the acquisition
12 No. 10-2927

and disposition record because of a computer software

error. Nonetheless, the district court found, and it is

undisputed, that Shawano failed to print the acquisition

and disposition record every six months as required.

With respect to Count 3 relating to straw purchases, the

district court accepted at face value the affidavits submitted by the purchasers and presumed that they

bought the firearms for themselves. Nonetheless, the

district court concluded that Shawano had reason to

believe that the purchaser was purchasing the firearm

for another person because the purchaser had the same

last name and/or address as a person whose application

to purchase the firearm was denied either that day or

the previous day. There is no credibility question to

warrant an evidentiary hearing, and the district court

did not abuse its discretion in declining to conduct one.

See Stein’s, 649 F.2d at 466 n.5, 467. The question before

the district court was, “as in most actions brought

pursuant to 18 U.S.C. § 923(f),” whether Shawano’s violations were willful. Id. at 467.

A violation is willful under 18 U.S.C. § 923(e) if

ATF shows that the firearms dealer “ ‘knew of [its] legal

obligation and purposefully disregarded or was plainly

indifferent to the recordkeeping requirements.’ ” Article II

Gun Shop, Inc. v. Gonzales, 441 F.3d 492, 497 (7th Cir. 2006),

quoting Stein’s, 649 F.2d at 467. To act willfully, a firearms dealer is not required to act “with a ‘bad purpose

or evil motive.’ ” Article II, 441 F.3d at 497, quoting Stein’s,

649 F.2d at 467. This is the standard applied by the

district court; nonetheless, Shawano disputes the district court’s interpretation of willful.
No. 10-2927 13

The next sentence in the Senate Report, which Shawano does 3

not quote, states: “However, the Committee was receptive to

concerns expressed by the Administration that requiring a

(continued...)

Shawano argues that under the Firearms Owners’

Protection Act (FOPA), Pub. L. No. 99-308, 100 Stat. 449

(1986), which added “willfully” to 18 U.S.C. § 923(e), ATF

must show more than that a licensee acted with

disregard or indifference to the law and that a licensee’s

acts were more than inadvertent errors or technical mistakes. Shawano suggests that “willful” requires an intentional act. Shawano relies on the Senate Report

relating to the inclusion of “willfully” in § 923(e) and

contends that the Senate Report’s reference to “current

caselaw” means the definition of willfulness set out in

Rich v. United States, 383 F. Supp. 797 (S.D. Ohio 1974).

See S. Rep. No. 98-583, at 14 (1984). The court in Rich

adopted a “purposeful, intentional conduct” definition

of willful. Shawano also relies on Bryan v. United States,

524 U.S. 184 (1998), which involved a criminal charge

under 18 U.S.C. § 924(a)(1) for dealing in firearms without a federal firearms license. Shawano argues that

FOPA’s addition of a willfulness element to the criminal

penalties provision of the GCA, 18 U.S.C. § 924(a)(1), which

according to the Senate Report was added “to avoid

prosecutions in cases where, for instance, a licensee

carelessly committed a technical recordkeeping violation or other minor, inadvertent infraction,” supports

a specific intent requirement under § 923(e). See

S. Rep. No. 98-583, at 20. Shawano urges courts to

3
14 No. 10-2927

(...continued) 3

‘willful’ state of mind in some instances could pose legitimate

law enforcement problems.” S. Rep. No. 98-583, at 14 (1984).

Notably, after the paragraph governing judicial review of 4

a decision to revoke a license, 18 U.S.C. § 923(f)(3), paragraph (4)

states: “If criminal proceedings are instituted against a

licensee . . . .” This language highlights the decidedly civil

nature of § 923(f)(3).

apply the single meaning rule such that “willful” has

the same definition under the civil and criminal provisions of the GCA.4

Shawano’s argument bucks this Court’s holding in

Article II that the appropriate standard for willfulness

for purposes of revoking a firearms dealer’s license

is purposeful disregard of, or plain indifference to, a

known legal obligation. 441 F.3d at 497. Other circuits

similarly apply this standard. See generally Armalite, Inc.

v. Lambert, 544 F.3d 644, 647 (6th Cir. 2008); On Target

Sporting Goods, Inc. v. Attorney General, 472 F.3d 572, 575

(8th Cir. 2007); RSM, Inc. v. Herbert, 466 F.3d 316, 321-22

(4th Cir. 2006); Willingham Sports, Inc. v. Bureau of Alcohol,

Tobacco, Firearms and Explosives, 415 F.3d 1274, 1277

(11th Cir. 2005); Perry v. Department of the Treasury, 637

F.2d 1332, 1336 (9th Cir. 1981). Shawano’s assertion that

it is not asking this Court to overrule Article II is puzzling. Not only did this Court define “willfulness” for

purposes of § 923(e)—after enactment of FOPA and the

Supreme Court’s decision in Bryan—but the Court

also rejected the Bryan argument pressed by Shawano.

Article II, 441 F.3d at 487-98.
No. 10-2927 15

In Bryan, the defendant had been convicted of conspiring to sell firearms without a license and

engaging in the sale of firearms without a license, in

violation of the provisions of the Gun Control Act

that contained a willfulness requirement. See 18

U.S.C. §§ 922(a)(1) and 924. The defendant claimed

that he had no knowledge of the Act’s requirements,

so that his violations could not be willful. The Court

held that the defendant’s bad purpose was sufficient

to satisfy the willfulness requirement under the facts

of that case, where the defendant had used straw

purchases, filed off guns’ serial numbers, and sold

guns on the black market. Bryan, 524 U.S. at 189, 194-

96, 118 S. Ct. 1939.

The Bryan Court recognized that this Court in

Stein’s “stated that willfulness in § 923(d)(1) is satisfied by a disregard of a known legal obligation.” Id.

at 196-97, 118 S. Ct. 1939. The Court found that while

cases like Stein’s “support the notion that disregard

of a known legal obligation is sufficient to establish

a willful violation, they in no way stand for the proposition that it is required.” Id. at 197-98, 118 S. Ct.

1939. The Bryan Court did not hold that a showing

of “bad purpose” is required before ATF can revoke

the license of a gun dealer who violates the Act

despite knowledge of its requirements. Id. Rather,

the Court simply held that a bad purpose may be

sufficient to demonstrate purposeful disregard for

or plain indifference to the law, where there is no

evidence a party was aware of the requirements of
16 No. 10-2927

the law. In this case, it is clear that [the firearms

dealer] was aware of its obligations under the Act.

Article II, 441 F.3d at 487-98.

Finally, we reject Shawano’s argument that its violations were not willful based upon the infrequency of the

errors in comparison to the number of transactions conducted, the fact that a computer glitch prevented it

from showing at the time of the compliance inspection

the disposition of fifty-four firearms, and the showing

that the alleged straw purchases were proper transfers.

There is no de minimis exception to § 923(e). See Article II,

441 F.3d at 498 (“The revocation provision applies regardless of whether a firearms dealer’s failure to comply with the Act actually results in illegal possession

or usage of a firearm or an inability to track a firearm

that has been sold.”). Moreover, any computer malfunction during the inspection does not explain Shawano’s

failure to print the acquisition and disposition report

every six months as required. Similarly, whether certain

purchases were straw purchases is beside the point:

Shawano had reason to believe, at the time the second

purchaser applied to purchase the firearm, that the individual was not the intended purchaser.

Shawano also points to Inspector Mleczko’s testimony

at the administrative hearing that he saw no indication

of willful or intentional disregard of ATF regulations by

Mr. Backes or other employees at Shawano. Mr. Backes

disputes that he was given regulatory material when

he applied for the license. The record is clear that it was

Mr. Backes who applied for the license in 1998, partici-
No. 10-2927 17

pated in the compliance inspections in 1999, 2004, and

2007, and attended the warning conference in 2005.

After each inspection, he acknowledged the corrective

action that needed to be taken. Mr. Backes testified at

the administrative hearing and submitted an affidavit

for the district court’s consideration. His affidavit establishes that he hired counsel after receiving the 2007

Notice of Revocation and that, since that time, he has

imposed many workplace changes to ensure compliance

with federal firearms laws. These measures come too

late. Despite being given multiple opportunities to take

corrective action, Shawano continued to repeat its violations. The suggestion in its brief and in Mr. Backes’s

affidavit that, basically, Shawano gets the message loud

and clear and will do better if given another chance is

not an argument that reaches the merits of the case. ATF

has the authority to revoke Shawano’s federal firearms

license, and its decision to do so in this case is fully supported, as a matter of law, by the record submitted to

the district court.

We make one final comment regarding Shawano’s

evidentiary hearing argument. Shawano submitted materials to the district court that were not submitted to

the Hearing Officer, and the district court accepted

those materials. Shawano now argues that it was denied

requested discovery—specifically, other instances where

ATF has revoked firearms dealers’ licenses to enable a

comparative analysis of the history of violations in each

instance—and that, had a hearing been held, it could

have asked witnesses about this information. Supporting

its comparative analysis argument, Shawano contends
18 No. 10-2927

that its score for correct completion of ATF Forms 4473

was 99.2 percent and that, comparatively speaking, such

a high percentage does not warrant revocation. Shawano

further argues that the district court was required to

evaluate Mr. Backes’s credibility in person before

deciding that he purposely disregarded or was plainly

indifferent to federal rules and regulations.

The district court entered a scheduling and discovery

order on August 7, 2009, setting the discovery deadline

for November 6, 2009. Shawano never sought relief in

the district court relating to its discovery request for

comparable cases that ATF allegedly refused to provide.

It cannot now argue that the district court abused its

discretion in failing to conduct an evidentiary hearing

to consider such evidence when it failed to pursue

such evidence during discovery. The district court

accepted Mr. Backes’s affidavit and did not abuse its

discretion by considering the affidavit rather than testimony. See Stein’s, 469 F.2d at 466 n.5.

III. Conclusion

The district court properly concluded, as a matter of

law and without an evidentiary hearing, that Shawano

willfully violated the GCA and that ATF was authorized

to revoke Shawano’s federal firearms license. The district

court’s judgment affirming ATF’s final administrative

decision is AFFIRMED.

6-7-11