Who's Profiting from Oakland's Gun Violence? 

As the city struggles with violent crime, major gun makers and their lobbyists are making a financial killing.

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Gaston Glock's fortune wasn't just built on the deadly reputation of his polymer casted guns. He also became a multi-millionaire by evading taxes in his most lucrative market, according to journalist Paul Barrett's book Glock: The Rise of the America's Gun. Paul Jannuzzo, the former general counsel and chief operating officer of GLOCK, Inc., was sentenced to seven years in prison last year on charges of embezzlement. But Jannuzzo claimed his employer framed him after he blew the whistle on Glock's tax evasion schemes, which he said have sheltered more than $100 million from the IRS since the late 1980s. Although Glock's opaque firearms empire is rivaled by few others, seven of the top ten gun makers with US factories, all of which are bigger than Glock, also are secretive private companies about which little is known.

The weapon used to kill Evan Meisner has an equally peculiar origin. Made by Taurus International Manufacturing Inc. in the company's Miami, Florida shop, the powerful 9mm pistol is one of more than 114,000 built there each year for sale in the United States. Like Glock USA, Taurus is a subsidiary of a foreign company. Forjas Taurus, S.A., a Brazilian conglomerate, began making guns in 1941 for sale in South America. Eager to stake a claim in the United States, Taurus opened its Miami pistol factory in 1984, just in time to supply America with thousands of guns during the hyper-violent decade that followed.

Today, Brazil's Taurus is the ninth-largest gun maker with a US factory. Unlike Glock, Forjas Taurus is a publicly traded corporation listed on the Brazilian stock exchange. When Americans buy Taurus pistols, the profits accrue to the employee pension fund of the Banco do Brasil and the Brazilian government.

But it's the handguns, rifles, and shotguns made by industry giants like the Freedom Group, Sturm, Ruger, & Co., Smith & Wesson, and O.F. Mossberg & Sons that turn up most frequently as weapons used in crimes in Oakland. Both Sturm Ruger and Smith & Wesson are publicly traded corporations, and together they manufacture one-third of all the guns made in the US each year, or about two million firearms. Profits distributed as dividends accrue mostly to investment managers, hedge funds, and private equity firms. In 2011, the most recent year in which information was available, Sturm Ruger's net sales totaled $329 million, up 28 percent from the previous year, while Smith & Wesson reported net sales of $392 million.

The Freedom Group, America's largest gun maker, with a 20 percent market share, is owned by the New York-based Cerberus Capital Management. Cerberus assembled Freedom Group by combining existing gun brands like Remington with smaller specialized companies like Bushmaster. Under pressure from CalSTRS, the California teachers' retirement system, which invests heavily in Cerberus, the firm recently pledged to sell off the Freedom Group following the Sandy Hook massacre, in which a Bushmaster assault rifle was used (see "Teachers Financing Guns," 1/23/2013).

According to Tom Diaz, author of the forthcoming book The Last Gun, ownership of the firearms industry is incredibly concentrated. "In 2000, for example, three companies produced 53 percent of the rifles made in the United States, three companies produced 86 percent of shotguns, two companies produced 76 percent of revolvers, and four companies produced 55 percent of the pistols," Diaz explained in a 2005 report. In an interview with the Express, he said not much has changed.

Statistics that we compiled from ATF reports show that just three companies — the Freedom Group, Sturm Ruger, and Smith & Wesson — manufactured more than half the firearms made in America in 2011. More than half of these guns were assembled in just three states: New Hampshire and Massachusetts tied for first, with 17 percent of the national market; New York came in third with 16 percent. A single factory owned by Smith & Wesson in Springfield, Massachusetts produced more than 800,000 guns that year. A Sturm Ruger factory in Prescott, Arizona assembled 610,000 guns, and a Freedom Group factory in Ilion, New York built 476,000 guns. The Freedom Group reported net sales of $775 million in 2011, and a gross profit of $220 million.

Firearms corporations, whether US-based, or owned by foreign interests, have invested in domestic factories because they provide easy access to what one industry executive called "the last great market for guns." To keep this last great market open, gun companies have assembled a high-caliber political influence machine that rewards friends and knocks off foes. The firearms industry's main target of opportunity has been the go-to federal agency for regulating guns: the ATF.

In 2012, Oakland had 131 homicides, 2,153 robberies involving a gun, and 4,600 documented instances of gunfire (including 681 non-fatal shootings of people and more than 700 incidents of vehicles and homes being hit by bullets). Between 1990 and 2010, 1,651 people were killed by guns in Oakland, and 76 percent of the victims were African-American. Young black men are especially prone to becoming victims of gun violence.

Despite the severity of gun violence in Oakland, the city's troubled police department is handicapped from effectively combating firearms trafficking, and from informing the public about the origins of the guns that make their way to the East Bay, by the political power of the gun industry.

Just a decade ago the ATF made readily available reports that identified the makes and models of weapons seized in cities, as well as information on federal firearms licensees who buy and sell weapons down to the retail level. This data allowed local communities to trace guns used in crimes to the original sellers, and ultimately the manufacturer. It also spawned criminal prosecutions and civil litigation against gun dealers and manufacturers, including lawsuits against the biggest firearms companies. The lawsuits then begat data used to make better public policy. Bans on assault weapons; cheap, compact guns like Saturday night specials; and other more lethal firearms were the product of these efforts.

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