ATF Demand 2 Program includes Kentucky, Louisville gun dealers

Of the more than 132,000 federally licensed firearms dealers in the U.S., there is a small group that gets extra attention from the federal government.

It’s because they are dealers who sold a significant number of guns that turned up at crime scenes in the span of a few years.

Some of these dealers are in Kentucky.

They are part of what’s referred to by the Bureau of Alcohol, Tobacco, Firearms & Explosives as the Demand Letter 2 program, commonly referred to as the DL2.

Seven Louisville dealers were in the program in 2023, including those who sold guns used in crimes ranging from a mass shooting to an assassination attempt on the man who would become mayor.

The Courier Journal requested Kentucky DL2s, starting in 2015, from the ATF through the federal Freedom of Information Act. It received the records in May.

While the ATF makes it clear that inclusion on the DL2 program is not necessarily an indication of wrongdoing, it can be a helpful gauge for the bureau when investigating potential gun trafficking or straw purchases.

But not everyone is happy about the records being public. A gun industry trade group and a few dozen members of Congress believe the ATF ignored federal law in releasing the files.

‘The secondary (gun) market basically isn’t regulated at all’

The chain connecting gun maker to gun owner is a simple one.

It links a firearm from manufacturer to distributor to licensed dealer to purchaser — and sometimes to an entire community.

But after a firearm is sold to an individual, that chain’s links turn invisible.

There is no way to trace a gun once it’s sold to the public. Because that would be against federal law. There is no national registry of gun owners. There is no federal, state or local database that tracks a gun after it’s purchased — because that would be a registry and that would be against federal law.

“The governance of gun commerce, even in the private and federally regulated gun market, it’s like Swiss cheese —completely porous,” said David Kennedy, a professor at the John Jay College of Criminal Justice in New York.

There is no way to trace a gun … until it ends up at a crime scene.

That’s when local law enforcement and the ATF begin the process of linking the firearm to its owner. It can be tedious, especially because records are largely kept on paper.

After a dealer — known as an FFL for the Federal Firearms License they hold — sells a gun to a private owner, the firearm could have been sold again, which legally involves no paperwork, or stolen.

Unlike a car, there is no title to transfer. Unlike a house, there is no deed. Once sold from a dealer, a gun can be sold again and again with no trace.

“The secondary market basically isn’t regulated at all,” Kennedy said. “So, law enforcement is trying to investigate by looking at the supply side …

“What’s happened in gun crime research in the last decades is that a whole bunch has been learned about how trafficking and diversion happen,” he said. “There are these markers that something weird is going on — like a small FFL having lots of guns recovered with a short time to crime. That’s an indicator that something needs looking at.”

“Time to crime” is a law enforcement term that refers to the time between a firearm’s last known purchase and when it ends up at a crime scene. A quick turnover from sale to crime scene is often referred to as a “short” or “high” time to crime.

The average time to crime is over 10 years, according to language included by the ATF in DL2 letters sent to dealers. The ATF uses time-to-crime data when looking for potential gun trafficking or straw purchases, which involve a person buying a firearm for someone who is prohibited by law from purchasing one.

That’s where the DL2 program can come to the ATF’s aid.

FFLs as the ‘gatekeepers’

For a firearms dealer to be included in the DL2, two things must happen:

A minimum of 25 guns sold by the dealer must have been recovered from crime scenes within a year.
Those guns must have been sold by the dealer within the last three years.

Gun dealers in the DL2 program are required to submit quarterly reports to the ATF on used firearm purchases. That helps the ATF renew a trace on a firearm that may have been in the public for a decade and gives the ATF a current record of guns entering the dealers’ inventories.

“What investigators want to know — state and local police, including ATF special agents — is what was the life of that firearm from the time it was sold by the FFL?” said Shawn Morrow, the ATF Louisville division’s special agent in charge. “How did it change hands? Who had it? And ultimately, who possessed it at the time of the crime, and were there any violations of the law that occurred in the life of that firearm?”

Of the 1,500 federally licensed firearms dealers in Kentucky, just about 1% had a minimum of 25 firearms recovered in a crime in 2022.

But that 1% equated to at least 525 guns used in crimes that year.

“FFLs play a critical role,” said Yasmin Fletcher Braithwaite, the deputy director for federal policy for Giffords Law Center, which focuses on preventing gun violence. “They are where guns enter communities. …They can keep or help keep firearms out of the hands of people who are prohibited for whatever reason. They are central to that.

“They’re that gatekeeper, if you will.”

According to Kentucky DL2 records dating to 2015 (which is based on 2014 numbers):

Thirty-seven dealers have landed in the DL2 at some point in the last decade;
Six were on the list for only one year, including two that first landed in the program in 2023, which is the most recent year data is available;
Twenty-one dealers were included in the program in 2023;
Those 21 dealers had a minimum of 2,235 guns recovered from crime scenes in the last decade;
Three dealers have been on the list every year: Kentucky Gun Co. in Bardstown, Knob Creek Gun Range, Inc. in West Point and Stewart’s Pawn Shop on West Broadway in Louisville. Those dealers alone have had a combined minimum of 585 crime guns with a time-to-crime of three years or less recovered in the last decade.

Of those 37 dealers, 22 had active federal firearms licenses as of August 2024.

While it takes a minimum of 25 crime guns traced back to a dealer in three years to land in the program, the specific amount of crime guns recovered is not publicly available.

Only the ATF knows.

“Remember, the purpose of the Demand 2 program is to aid law enforcement in their criminal investigations ― the purpose of tracing a firearm is to determine the source of the gun, where it came from, who was the first purchaser,” Morrow said.

Representatives for Kentucky Gun Co. could not be reached.

Chad Sumner, whose family owns Knob Creek Gun Range, said it’s not hard to comply with the DL2 program.

“It’s not that it’s a problem or anything,” he said. “It’s just extra work…”

When a gun ends up at a crime, Sumner said, the ATF begins tracing the links in the chain. They ask the manufacturer for the name of the distributor, and they ask the distributor the name of the FFL.

“The gun stores are the true database of guns,” he said. “Every gun store is a database because they have all the serial numbers of all the guns that have ever come into our stores.”

And if a dealer’s paperwork isn’t up-to-date, Sumner said, the ATF could decide it won’t renew their license.

“You just got to fly straight and narrow,” Sumner said. “Everything has to be done perfectly every time. That’s a lot of paperwork to not mess up on every day.”

Congressional pushback over ‘name and shame’ lists

Gun industry trade group The National Sports Shooting Foundation and some members of Congress believe the ATF should keep DL2s hidden.

This comes after the ATF released nationwide DL2s for 2022-23 to USA TODAY and Brady, another group dedicated to gun violence prevention, following open records requests. USA TODAY reported on those records in February.

In an April letter, written by South Carolina Republican Jeff Duncan to the ATF’s director Steven Dettelbach, and signed by 30 other congressional Republicans, Duncan wrote: “The Tiahrt Amendment protects FFLs from unnecessary reputational damage while allowing information to be transmitted to law enforcement agencies for legitimate investigations into firearm related crimes.

“Unfortunately, ATF decided to ignore this important protection, and USA TODAY and Brady United are now using this information to negatively influence public opinion of FFLs by releasing ‘name and shame’ lists of honest businesses.”

The Tiahrt Amendment passed in 2003. It prohibits the ATF from releasing firearm trace data.

“We’ve been concerned about the articles that are written that have impugned the integrity of licensees because they were within the parameters that ATF set with this program,” Larry Keane, who serves as general counsel for the National Sports Shooting Foundation, told The Courier Journal. “ATF has never released this list before. We’re very disappointed they did because it clearly violates what is known as the Tiahrt Amendment.

“The Demand Letter 2 program, which ATF itself acknowledge does not mean anybody, any dealer that’s on that program, has done anything wrong — and it is wrong to suggest and impugn any sort of inappropriate, unlawful conduct of a licensee that happens to be on the program,” Keane said.

The DL2 program, which began in 2000, has seen the minimum threshold for guns recovered in crimes change multiple times.

In 2014, according to ATF DL2 letters sent to dealers, that threshold was 25 guns. That decreased to 10 guns in 2015-16 during the Obama administration, when a flood of FFLs had to report. The threshold returned to 25 under the Trump administration in 2017, again lowering the number of dealers required to report.

“It’s a minimum of 25 guns, and it makes you wonder about their practices as a company,” said Braithwaite of Giffords Law Center. “What are the other practices that this FFL is doing or not doing that’s jeopardizing the community’s safety?”

This is where the ATF argues that context matters when it comes to the DL2 program.

“We’re not saying, ‘yes, they’re operating in the law’ or ‘no, they’re not,'” Morrow told The Courier Journal. “What we’re saying is that’s an indicator, and we have to look at that indicator in context.

“You sell 10,000 guns a year and 30 traced with a time-to-crime less than three years — that means something different than if you sell 50 a year and you have 25 that are recovered with a short time to crime. Very different. So it’s not a statement for or against. It’s just an indicator.”

Louisville dealers in the DL2 program

A dozen Louisville dealers have made the program in the past decade, accounting for a combined minimum of 1,135 crime guns:

Stewart’s Pawn Shop, with locations on West Broadway and formerly on Jefferson Street, has been in the program consistently over the past decade, with a minimum of 365 crime guns.
River City Firearms and its owners are the only other local dealer with a minimum of 125 crime guns recovered in the last decade.
Ops Supply, located inside the Louisville Armory off of Kiln Court, is Louisville’s latest dealer to land on the program, joining in 2022 and continuing in 2023.

“There’s no way to tell from a crime gun trace what the FFL is doing and whether the FFL is doing anything wrong,” said David Kennedy, the John Jay professor. “If guns from your Louisville FFL are showing up in crimes … all the ATF and the investigators know is that the gun came from that FFL, which is important to know but it doesn’t establish criminality or wrongdoing.”

Stewart’s Pawn Shop and Louisville’s mayor, though, will forever be linked.

Court documents show Quintez Brown bought his gun at a Stewart’s Pawn Shop location the same morning in 2022 he fired it at Craig Greenberg inside his campaign office. (Brown, a former Courier Journal intern, would eventually plead guilty to federal charges in connection to the crime.)

“I think it’s important that anyone, any business that sells guns be held to an incredibly high standard,” Greenberg told The Courier Journal. “I think we need to enhance those standards from where they are today to ensure that guns aren’t sold to the wrong people at the wrong times.”

The Jefferson Street Stewart’s Pawn location closed on Jan. 12, according to a manager at the Broadway location who identified herself only as Jennifer. She said she recognized that both locations had been in the DL2 program for many years.

“The (Demand Letter 2 Program) is a good program,” she said. “It’s not a hard program. Our computer system automatically spits out the information they need, monthly. They’re not asking us specific information about somebody who bought the gun or anything like that… They want to know that if a crime happened with this gun five years ago, that it isn’t the person who is now in possession of the weapon.”

She said she didn’t know why the Jefferson Street location closed.

“We’re trying to help keep people from having guns that shouldn’t have guns,” she said. “I know it probably doesn’t sound like that, but we really are. If a person shouldn’t have a gun, we are not going to give them a gun. I don’t want it to come out bad because we’re on that list… I’d hate for it to sound derogatory toward us. We’re literally trying to do the most we can to help.”

The ATF’s Morrow said the perception is that the DL2 program carries a negative connotation, “and what we’re saying is ‘that depends.’ And (it) might not be a fair sort of description of a particular FFL who remains in the DL2 program for a particular amount of time.”

Connection to mass shootings

Both River City Firearms, previously off Preston Highway in Louisville, and Lexington-based Buds Gun Shop & Range, whose FFL is listed as Bud’s Police Supply, have participated in the program since at least 2014. (River City has been on the list each year, and Bud’s has been in and out of the program over the years.)

Both stores sold guns that were eventually used in mass shootings, one at Louisville’s Old National Bank shooting in April 2023 and the other at the Highlands Park parade shooting near Chicago on Independence Day 2022.

In the Old National Bank shooting, the gunman purchased the gun on April 4, 2023, six days before he shot and killed five and wounded several others.

Now, River City Firearms is facing a lawsuit for allegedly ignoring red flags when the gunman arrived to purchase the AR-15-style rifle.

“FFLs are instructed by the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) that they are the first line of defense in preventing firearms from falling into the wrong hands …,” the lawsuit states.

ATF representatives said the agency hosts seminars and outreach, including educating dealers on licensing regulations and straw purchases.

An attorney for River City Firearms didn’t return a request for comment.

River City Firearms Inc. closed its doors off Preston Highway earlier this year. ATF records show its license was last active in June 2024. The owners of the shop opened a new location in Bullitt County called River City Firearms of Mt. Washington Inc. ATF records also show the new license was active in January 2024.

Bud’s Gun Supply spokesman Steve Reed said they had no comment about being in the DL2 program.

Kentucky dealers in the DL2 with multiple inspection violations

The ATF also does on-site inspections of gun shops to make sure local, state and federal laws are being followed.

If not, the ATF issues violations, and those violations can result in the ATF taking administrative action, ranging from warning letters to license revocation.

More than a half-dozen Kentucky dealers in the DL2 program also have violations following ATF inspections, ranging from administrative errors to blatant disregard of the law.

The ATF has three offices — in Louisville, Lexington and Charleston, West Virginia — to inspect and investigate all the FFLs across Kentucky and West Virginia.

The ATF said there are about 40 investigators for Kentucky and West Virginia’s more than 2,500 licensed firearms dealers. The ATF’s goal is to inspect each dealer once every three years.

Of the nearly 137,000 active dealers in 2022, only about 7,000 received an inspection, according to ATF records obtained and processed by Brady. That’s about 5%.

Both Stewart’s locations have also received warning letters from the ATF for violations. The Jefferson Street location received one in 2017 for eight violations. The West Broadway location received a letter in 2015 for six violations.

The last available inspection for River City Firearms made available by the ATF through open records requests is from 2017. That inspection resulted in nine separate violations, including failure to obtain accurate transaction forms and failing to comply with reporting requirements.

It resulted in a warning letter from the ATF, the least severe form of the ATF’s administrative remedies.

ATF representatives said the seriousness of a violation is based on one word:

“Willfulness is our threshold,” said Adam Rogers, the ATF’s Director of Industry Operations, who oversees inspections of Kentucky FFLs.

River City Firearms has been on the DL2 list from 2015 to 2023 (except for 2018 when the reporting requirement changed.) It has had a minimum of 170 guns recovered in crimes.

The gun shop has been a federally licensed dealer in Kentucky since at least 2014, according to listings on the ATF’s website.

Ops Supply is one of the dealers to more recently make the DL2 program. The dealer became a business, according to Secretary of State records, in 2017 and is owned by Aaron Reed, who is running for state Senate in Shelby County.

Along with Stewart’s Pawn Shop and River City Firearms, it’s one of the locations to receive a warning letter from the ATF following inspections.

Ops Supply has different federal licenses for two locations: One is a manufacturing license in Simpsonville at the Shelby Flea Market location and the other is a dealer license for its location inside the Louisville Armory, off of Kiln Court.

In 2019, the ATF inspected Ops Supply in Simpsonville and found 10 violations of the Gun Control Act during its compliance inspection. It received a warning letter. A manufacturing license is not eligible for the DL2 program.

In 2022, Ops Supply’s Louisville location received a DL2 letter.

That same year, the ATF conducted a compliance inspection of the location in May and found nine violations, including failure to report multiple sales, failure to obtain a completed firearms transaction record and failure to perform background checks. The violation report also noted missing guns.

The Courier Journal contacted Reed for this story in August. He said he would call back after he spoke with the gun shop, but he did not return the call. A follow-up call and voicemail left for Reed were also not returned.

Kentucky dealers with guns traced to Mexican cartels

Guns trafficked internationally, including those that end up in the hands of violent Mexican drug cartels, can also be included in the minimum 25-crime-gun count for the DL2 program.

“We have a number of investigations every year where firearms originate in Kentucky and are trafficked internationally,” Morrow said. “So, to the extent that those foreign law enforcement agencies participate in firearms tracing, then obviously those numbers would show up on an FFL’s traces and could contribute to them being added to the Demand 2 program.”

In May, USA TODAY and The Courier Journal acquired and sifted through about 10 million records obtained through a massive leak of Mexican military intelligence, exposing for the first time in two decades those U.S. gun shops tied to 78,000 firearms recovered south of the border.

Among those records were 61 guns traced to FFLs across Kentucky — from Horse Cave to Hebron and Pikeville to Paducah, including five in Louisville.

Two of the five Louisville guns had distributor names listed: Allied Sporting Goods, which sold or closed its 17 Louisville-area stores in 1997. And Service Merchandise Co., which went out of business in 2002.

The other three had addresses that couldn’t exactly be matched to dealers.

“People don’t understand traces,” said Kennedy, the John Jay professor. “It takes really serious study to understand it. It’s really complicated and nonsensical by any common-sense standard. Then what that means about how you try and do anything about it is even more complicated.

“In a very real way, that’s the story.”

Stephanie Kuzydym is an enterprise and investigative reporter. She can be reached at [email protected]. Follow her for updates at @stephkuzy.