Franklin D. Lowe, 56, of Old Lycoming Township, and owner of All American Guns, pleaded guilty to conspiracy and income tax evasion during a plea hearing before federal Judge Christopher Conner Tuesday.
Lowe appeared with his attorneys before Conner in a wheelchair and agreed that he is guilty of hiring a known felon to work in his gun shop and handle and also purchase six guns for him at an estate sale in Baileysville in 2008.
He also admitted he filed two incorrect income tax returns for 2009.
A summary of the charges was read by Assistant U.S. Attorney Bill Simmers accusing Lowe of hiring the felon in 2006, after applying for a license to manufacture firearms in 2004. He was issued the license in February, 2005.
Lowe confirmed that between 2008 and 2009 he gave the felon an unregistered machine gun and a silencer and instructed him to sell them and give him $2,000 from the sale.
He also said he gave the felon a Leinad Cobray 9mm revolver in December, 2007, and a Ruger .22 caliber pistol between 2006 and 2009 in return for $300 cash, as well as a Smith and Wesson .38 special caliber revolver between 2005 and 2009.
In the tax evasion charge, the prosecution said that Lowe submitted two fraudulent tax returns, the first one based on "bogus 1099 forms" that the Internal Revenue Service suspected were fake because the name of the bank on the forms was misspelled. The first one claimed a tax refund of $534,419.
When that tax return was sent back to him by the IRS, Simmers said, Lowe filed out a second return which showed he did not report about $163,000 worth of income and actually owed a tax bill of $55,754, which he failed to pay.
Lowe could face up to five years in prison and a $250,000 fine for each offense, plus restitution to the IRS. He also must turn over two guns to the federal government, a Beretta .380 caliber pistol and a Remington .38 caliber rifle.
He must give up his license to manufacture and deal in firearms 120 days from the date of the plea, which will allow him time to dispose of the remainder of his inventory.
The name of the felon was not revealed during the hearing.