ATF

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Bureau of Alcohol, Tobacco, Firearms and Explosives

For Immediate Release
Contact: Jim Crandall

October 7, 2002

FY 03-01

ATF Settles Case Against Austin Powder Company

The Bureau
of Alcohol, Tobacco and Firearms (ATF) announced today that the Austin Powder
Company, a nationwide, Federally-licensed dealer of explosive materials, has pleaded
guilty in United States District for the District of Nevada to one count of violating
18 U.S.C. § 842(k) at the company's Amargosa Valley (Nevada) site and one
count of violating 18 U.S.C. § 842(j) at its Martin, Kentucky site. Section
842(k) makes it unlawful to fail to promptly report a known theft or loss of explosives.
Section 842(j) makes it unlawful to store explosives except in compliance with
Federal law and regulation. An $8,000 criminal fine will be imposed pursuant to
the plea. The plea hearing took place today, October 7, 2002, in the United States
District Court for the District of Nevada. United States Attorney Daniel G. Bogden,
U.S. Attorney for the District of Nevada, coordinated the investigation with Gregory
F. Van Tatenlove, U.S. Attorney for the Eastern District of Kentucky.

The
plea was the culmination of an ATF investigation into the operations of Austin
Powder which revealed widespread violations of State and Federal laws, including:
failure to report to ATF the theft or loss of explosive materials; storage of
explosives in a manner not conforming to Federal regulations; recordkeeping omissions,
in particular the failure to properly execute explosives transaction forms and
failure to properly complete a daily summary of explosives magazine transactions;
distribution of explosives in violation of State law; unlawful distribution of
explosives to persons who were ineligible for the transfer; and distribution of
explosive materials to a prohibited person. Austin Powder has stipulated to these
violations and admitted that they were committed willfully within the meaning
of that term as applied to violations of federal explosives laws.

Austin
Powder Company was cited for violations at the following licensed facilities:
Northampton, PA; Greencastle, PA; Martin, KY; Denton, NC; Las Vegas, NV (including
the former Amargosa Valley license); and Roseburg, OR.

To settle the case,
the Austin Powder Company first waived its right to an administrative hearing
and agreed to the following administrative sanctions:

(1) permanent revocation
of its Northampton, PA license;

(2) 10-day revocation of its Martin, KY
license;

(3) 10-day revocation of its Denton, NC license;

(4) 5-day
revocation of its Greencastle, PA license;

(5) 5-day revocation of its Roseburg,
OR license; and

(6) 5-day revocation of its Las Vegas, NV license.

During
the revocation periods, which took place in May, the company could not engage
in any activity for which a federal explosives license is required at or from
the affected sites.

In lieu of ATF initiating forfeiture proceedings regarding
proceeds derived from or traceable to the company's violations, Austin Powder
Company also agreed to administratively forfeit to ATF the sum of $232,000.

This
stipulated agreement was also dependent on Austin Powder pleading guilty and being
sentenced in United States District Court for the District of Nevada for the violations
considered in today's hearing.

Due to the violations disclosed during this
investigation, Austin Powder Company has expanded its formal employee training
program regarding compliance with federal laws and regulations, and agreed in
the settlement agreement to continue to expand the program. Austin Powder will
also establish a written corporate policy for each employee to read and sign stating
that he or she will comply with all applicable federal laws and regulations.

ATF
considers strict compliance with all federal explosives laws and regulations to
be imperative. The events of September 11th should serve as an additional impetus
for those who are engaged in the business of dealing with explosives to be vigilant.
More than ever, they should ensure that explosives in their control are fully
accounted for through accurate inventory and recordkeeping practices, and that
all explosives are safely stored and secured. ATF will continue to inspect and
closely monitor all industry members to insure public safety.

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