Gun Businesses Seek Ways To Survive While Denied Basic Business Services

Kerry Picket Political Reporter
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LAS VEGAS — Josh Karrasch, a small business owner in Falls Church, Va., discovered quickly that making an honest living within the firearms industry does not prevent his bank account from being closed or from being kicked out of commercial real estate space.

Despite favorable legal decisions, the popularity of concealed carry permits and a recent spike in firearm and ammunition sales, firearms business owners find they are being pressured out of business by being cut out of basic financial, real estate and advertising services.

The House Oversight and Government Reform Committee released a report last month showing the Federal Deposit Insurance Corporation (FDIC) targeted gun dealers and other businesses like payday lenders and pawn shops as illegal operations, and pressured banks to halt dealing with these businesses. The administration’s program is now known as Operation Choke Point, which is run by the Departments of Justice and Treasury.

Karrasch is the CEO of The Gun Dude, a firearms business that offers weapons transfers and training among other services. Karrasch told The Daily Caller at the National Shooting and Sports Foundation’s annual Shot Show that after leaving a government job he decided to start a business with the idea of building AR-15s. He quickly discovered he was entering a saturated market.

“And so we start off with the AR-15 thing and quickly realized it wasn’t going to happen. We were doing transfers for 20 dollars a gun and that rapidly overtook Northern Virginia. People loved it and we automated the process,” he said, noting that many Federal Firearms License holders (FFLs) are protective about giving their license number over the phone or through email.

He explained, “In Virginia it’s rare that you come across an illegal gun. Most of them are pretty OK. So we automated it. I set up a form on my site that automatically sends my license without a problem. It saves my customers two-and-a-half days in the process.”

Karrasch says business grew rapidly as a result of his customer-oriented approach and he soon outgrew his residence location.

“Our customers love the customer service. We rapidly took over the Northern Virginia market out of our residence. We saw a 100 percent growth in our first three months. We were doing 200 transfers a month, which is the equivalent to five to ten percent of the Northern Virginia market doing transfers alone, based off of state police numbers.”

Soon, Fairfax County began noticing Karrasch’s success, and county officials were not pleased. Karrasch was told by Fairfax County he would have to find commercial space to continue doing business.

“We’d been looking for commercial space with a storefront or at least an office space to do transfers. In Springfield we talked with almost every commercial property owner, and none were interested in a firearm store.”

He explained, “When the county finally told us we needed to stop, we had three solutions — three different landlords. The first one got shut down because Bank of America is in the building and Bank of America has in their clause that no gun stores could be in the same building. They kicked us out.”

Karrasch looked at an office space and, he said the management there “balked at us.”

Karrasch and his staff went on to another office space and quickly signed the lease.

“The ATF won’t do any pre-approvals for a space. It requires you to have a signed lease on hand. You got to have your permits on hand and then you can apply for your FFL. There’s a lot of money and time involved and legal obligations. Before you get to ask, you have to have permission.”

Soon after, Fairfax County revoked Karrasch’s non-residential use permit and office space, leading to a back and forth with not only the county of Fairfax but also the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

“I said, ‘Well you can’t do that. I made obligations based upon your word.'”

“So they said, ‘Alright not a problem. We’ll approve it.'”

“So the ATF revoked us, because they said, ‘you can’t do retail.'”

“I said, ‘I’m not doing retail. I’m doing services—transfers only.’ There’s a law that requires you to be in a retail space. So, I said, ‘It would have been nice if your agent would have mentioned that when I initially mentioned my idea.'”

“What you get is one agent talking to you in the field and another set of agents are approving your license and there’s no pre-approval process. So I had to break lease and lose $500, plus my lawyer’s fees for fighting the county.”

The business was shut down for a period of time until Karrasch received word from a client there was a real estate opportunity for him in Falls Church.

“We engage the landlord. He’s cool about it. We go through the whole process all over again, and ATF approves us this time. That was our most humongous challenge that didn’t have an easy solution. Finding commercial space was not a challenge that I anticipated. I thought a landlord would be happy to have a business that was making profits its first six months.”

The obstacles to finding a legitimate location were just the beginning. As a tech savvy young entrepreneur, Karrasch felt severely hampered when it came to advertising his online services — starting with the largest Web search engine, Google.

“Google could be doing business with firearms businesses. The thing is they won’t because of their stance [against firearms]. I can’t advertise on Google. I can’t advertise on Facebook. I can’t use Amazon, because they prohibit the majority of my products. I closed down that account over a year ago, and I still get notices from them, regardless of the emails I sent to them telling them that I’m not selling with them.”

Businesses like Karrasch’s cannot even advertise on local Comcast cable providers. In March of 2013, Comcast said it would not accept firearm and ammunition TV ads. California gun dealers are prohibited from even displaying their products within advertisements on their store windows. Four gun dealers in the state are suing the Golden State on First Amendment grounds, as a result of the law.

Online transaction services that sometimes provide business owners small pieces of hardware to process credit cards through phones or tablets also refuse to do business with gun-oriented businesses.

“The PayPal, Square, those are all fall-outs from Operation Choke Point. The banks grouped us in with weed and pornography. So here we are lumped in to theses groups, and now a bank that chooses to do business with us has higher scrutiny from federal government.”

“It’s appalling that our government is working around the law to vindictively attack businesses they find objectionable,” then-House Oversight Chairman Darrel Issa said in December.

“Internal FDIC documents confirm that Operation Choke Point is an extraordinary abuse of government power,” Issa said. “In the most egregious cases, federal bureaucrats injected personal moral judgments into the regulatory process. Such practices are totally inconsistent with basic principles of good government, transparency, and the rule of law.”

Karrasch also found he could not use the popular accounting software QuickBooks to pay receipts because of the nature of his business. Additionally, his merchant account with PNC Bank was shut down even after Karrasch said a banking specialist reassured him that his type of business should not be an issue.

“So I had that conversation with PNC. ‘I sell guns. Is that a problem? No? Good. I need a business banking account and a merchant account.’ They gave it to me two weeks later,” he recalled.

“I’m talking to another one of their business banking specialists who informed me, ‘Whoa! — Guns on our merchant account? That’s not OK.'”

“I said, ‘You approved me already.’ So it goes on for a while. I still have my PNC business account and I went back to talk to my banker last week and questioned him again and merchant services actually shut down my merchant account.”

Karrasch eventually found a banking service else where that was willing to do business with him.

Those behind Operation Choke Point are likely to face further questions on Capitol Hill in the near future, as those banks that maintain a relationship with industries the Obama administration considers taboo could face further scrutiny in the form of threatened audits.

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