Ok, I’ve been thinking about this for a little while, because it’s a very common allegation that something is fishy with these auctions. I think I understand how this might work.
In our scenario the seller is the main bad actor. He may not be the criminal, himself, but he’s working for the criminal. Or maybe he’s a completely innocent 3rd party who is roped in to sell this gun on consignment. That would be better, I’d think. The gun is a completely legit, real firearm that actually exists. But it may or may not actually change hands.
Seller and buyer may both be in on the scheme -or the same person under separate accounts. Or the buyer could be innocent.
Our bad actor has 10,000 in profits from his cocaine business that he can’t spend on the street (one can only eat at so many nice restaurants and buy so much jewelry) and he wants to bank it and invest. He’s happy to pay taxes on it he just wants it to be legit money.
So he gets a nice gun from somewhere, a firearm that has some plausible collectibility but one he can procure for a small fraction of his sale price, or maybe he already owns it, whatever. He gives it to his girlfriend who takes it in to the local dealer for consignment. That way the gun isn’t on the dealers books under his own name.
Dealer obligingly consigns the gun on Gunbroker with a glowing description. At some point in the auction our buyer places a crazy high bid. Another friend or shill account gets in a “bidding war” with buyer and bids it up so the gun ends up selling for 10k. If legit bidders get in on the action so much the better, it makes it look more legit and he knows his shill bidder will win anyway. And he actually owns the gun so if a real, albeit crazy, legit buyer does somehow think it’s worth 10k and wins the auction, he can bank that 10k of legitimate profit and worry about laundering his ill-gotten gains next week.
So, the gun is sold, our seller has a public record on the auction site now where his gun sold for 10k. If it’s an innocent fool who won, the fool sends a real check to the gun store who writes one to the criminal or his agent for the amount agreed. If it’s the criminal or his friend who won, he sends the friend into the store in person and he puts down cash. Gun store then writes a clean and totally legitimate check to the criminal for the amount agreed.
The criminal can then deposit the totally legit check from the dealer and has printouts from Gunbroker and his dealer’s invoice should he ever have to prove to the IRS where that roughly 10k came from.
Alternatively, the gun need never change hands and a dealer not need be involved. The criminal could list a gun with one fake account (admittedly would not be a dealer but numerous guns are listed on Gunbroker from private sellers), bid up and win the auction from his basement with a couple of other fake accounts and some tech wizardry to hide his real IP address so Gunbroker doesn’t detect it. Then he sends himself a couple of fake emails “hey bro I live in your area of Florida is it ok if I meet you in person and we do this face to face? I could pay with a check?” “Man I’m happy to meet you at Wal Mart parking lot to save myself and you the FFL fees but if we do this in person I need cash and to see a valid drivers license from the state of FL.” “Ok bro sounds good I’ll be there I’m so excited about this awesome gun!”
He can claim they paid him in cash, take it (really his drug money) to the bank, and deposit it, showing the bank the auction invoice and even the emails if they ask. He’s of course very exact in reporting this to his accountant and paying capital gains tax on it.
Obviously the more layers (real gun, real FFL, straw consignor, etc) the more scrutiny this would stand up to if the authorities ever investigated, but conversely the more trouble and the more losses in fees.
