He asked undercover agent if he was a cop, then sold him 7 ‘ghost’ assault weapons, feds say

AR-15 short barreled rifles allegedly manufactured by Michael Paul Smith
AR-15 short barreled rifles allegedly manufactured by Michael Paul Smith U.S. District Court

On Thursday afternoon, as the nation was reeling from the Florida school shooting where an AR-15 assault weapon was used to kill 17 people, federal agents were booking Michael Paul Smith of Grass Valley into the Sacramento County Main Jail.

The charge?

Manufacturing and selling AR-15 rifles – known as “ghost guns” that are virtually untraceable – to an undercover federal agent.

The arrest stems from a five-month Homeland Security investigation that used the dark web, Bitcoin payments, secret meetings at the Bass Pro Shops parking lot in Rocklin, and discussions of buying grenades, anti-personnel mines and explosives, federal court documents say.

The alleged plot, during which an undercover agent purchased eight AR-15 rifles – the civilian equivalent of the military’s M-16 – is spelled out in a 31-page criminal complaint unsealed Friday morning.

Smith, 44, made an initial appearance Friday afternoon in federal court on charges of unlawful dealing and manufacturing in firearms and unlawful possession of an unregistered firearm and was ordered to remain in custody pending a hearing Wednesday.

The case is the latest in a series that have cropped up in the Sacramento region in recent years, where federal officials say “ghost guns” have become a booming business on the black market.

U.S. Attorney McGregor Scott highlighted the issue in a press conference Thursday afternoon as he announced the indictment of three Stockton men charged with making and selling weapons illegally.

The Florida school shooter purchased his rifle legally, but officials say the market for illegally produced weapons also has flourished in recent years. Authorities blamed the November rampage in Tehama County that killed four on two semi-automatic rifles made by the gunman himself.

Such weapons typically are made using AR-15 blanks – metal castings that can be purchased over the internet and that are not considered to be firearms.

Individuals using a drill press or machine tool can mill the blank into the proper shape to hold other AR-15 parts and create a fully functioning rifle.

“Unlike a firearm manufactured by a licensed manufacturer, these firearms are completely untraceable,” an affidavit filed in court with the complaint against Smith states. “They have no serial number.

“They have no manufacturer identification. Further, these firearms are sold by unlicensed individuals with no regard to the prohibited status of the purchaser, or the legality of the firearm itself.”

The weapons are legal for an individual to make for themselves, but they cannot be sold.

The Smith investigation began Oct. 5, with an undercover agent posing as a firearms dealer on the dark web.

Using the online name “BrotherBig,” Smith contacted the agent and “discussed the purchase of grenades, anti-personnel mines, and explosives,” and ultimately sold eight short-barreled AR-15s to the agent, court documents say.

Seven of the rifles had been built by Smith using a drill press, the eighth had its serial number scratched off, court documents say.

The online discussions, which used an encrypted email service based in Switzerland, eventually led to the agent ordering four rifles in exchange for $4,400 in Bitcoin, the affidavit says.

The emails also evidenced some concern on Smith’s part, who at one point wrote, “do you represent any department or branch of law enforcement in any way shape or form? Forgive my paranoia,” the affidavit says.

On Nov. 14, Smith sent the agent a photo of the four rifles in a crate, but the agent complained that the rifle sights in the photo had been installed backward, according to the affidavit.

“I had my woman hanging out with me in the shop ‘helping out’ I can’t believe I didn’t catch that before I mailed pic to you,” Smith emailed, according to the affidavit.

The two agreed to meet on Dec. 1 at 4 p.m. at the Bass Pro Shops parking lot.

By then, federal agents had the Smith home under surveillance and watched as Smith made his way to a Roseville doctor’s appointment, then onto the parking lot, the affidavit says.

The agent and Smith consummated the deal inside the Starbucks in the shopping center, then Smith had the agent retrieve the rifles from a U-Haul van in the lot, according to the affidavit.

Smith and the undercover agent later began negotiating the purchase of four more rifles, but Smith was delayed by Nevada County Sheriff’s Office deputies investigating the Dec. 5 burglary of a dead woman’s home, court documents say.

Deputies suspected Smith and arrested him after the found him hiding in the attic. A search of his home turned up a gunsmith room, a drill press, 23 weapons, ammunition and reloading materials, the affidavit says.

Both Smith and his wife were on probation and not permitted to possess firearms, the affidavit says. He was booked into the Nevada County Jail on a misdemeanor burglary charge and probation violations.

He apparently wasn’t held long, as he emailed the undercover agent Dec. 14 to report the four rifles were ready for pickup, the affidavit says.

The exchange took place Jan. 4 at Bass Pro Shops parking lot, and by Jan. 26 the agent was emailing about buying four more weapons, sending $2,600 in Bitcoin as a down payment, the affidavit says.

The delivery date was set for Thursday, but by then a criminal complaint against Smith and a search warrant had been issued under seal. He was arrested when he met the undercover agent with five weapons to sell, Assistant U.S. Attorney Justin Lee said in court. The search of his home turned up more firearms, LSD and methamphetamine.

Sam Stanton: 916-321-1091, @StantonSam. Hector Amezcua contributed to this report.