BLUE LANTERN LEVEL TWO END USE CHECKS: APPLICATION

UNCLAS SAN JOSE 001586

SIPDIS

SIPDIS

DEPARTMENT FOR PM/DTCC - BLUE LANTERN COORDINATOR

E.O. 12958: N/A
TAGS: ETTC KOMC CS
SUBJECT: BLUE LANTERN LEVEL TWO END USE CHECKS: APPLICATION
05-991968 AND LICENSES 05-986109 AND 05-967303

REF: A. STATE 46425

B. COPLEY/STITZIEL FAX 17 MAY 2006

C. SAN JOSE 1569


1. Summary: PolOffs visited Importadora de Armas Martin
Armar on July 14. The business is located in the basement of
a private residence, is owned by Juan Carlos Martin, and has
one employee, Carmen Zamora. Post previously obtained
information from the Costa Rican government confirming that
Martin Armar is largely a straw purchaser for Armeria Rex
(Ref B). Few of the USML items imported by Importadora de
Armas Martin Armar appear to be sold in accordance with the
Nontransfer and Use Certificate signed by the company. End
Summary.


2. Owner Juan Carlos Martin was not available due to
hospitalization. Instead, we spoke with Carmen Zamora who
has managed the business for the past six months due to the
owner's health, and with Rodrigo Martin, father of Juan
Carlos and his chief financial backer. Martin Armar has a
long-standing and close business relationship with Armeria
Rex. Martin stated that approximately 70% of all shotguns
imported by Martin Armar are resold to Armeria Rex.
Approximately 20% of handguns are handled in the same
fashion. Both Martin and Zamora stated that few of the
rifles they import are resold to Armeria Rex. Zamora
presented computerized records showing that over the past 6
months only a handful of rifles had been sold to Armeria Rex.
However, per Ref B, records obtained from the Directorate
for Control of Arms and Explosives (DCAE) show that
practically all U.S. weapons, including rifles, imported by
Martin Armar in 2005 were resold to Armeria Rex.

Application 05-991968
--------------

3. According to Ref A, the application is to import
ammunition only (118,000 rounds of various caliber valued at
$28,540.00). Martin Armar's storage vault measures
approximately 8 x 8 x 20 feet and could easily store the
ammunition. The company's display area is very small,
however, consisting of a narrow room with six rifles mounted
on a wall. Martin said he plans to remodel the display area
to allow for better storage and display of ammunition.
Zamora was unfamiliar with the company's reasons for
importing high-powered rifle ammunition such as 30/30, 30/06
and .308 Winchester. She said Martin Armar's primary sales
in ammunition were .22 caliber rifle cartridges to ranchers
in northern Costa Rica. Zamora hopes to increase sales of
ammunition for handguns such as 9mm and .45 caliber by
keeping more of it on display. Zamora was unfamiliar with
.223 caliber ammunition and was completely unaware that the
license application includes 15,000 rounds. She had no idea
who that ammunition would be sold to and even believed it
would be illegal to import this kind of ammunition to Costa
Rica. Zamora assured us that Martin Armar had no current
contracts to provide ammunition to the Costa Rican government
which is the primary purchaser of this kind of ammunition in
Costa Rica. She telephoned business owner Juan Carlos Martin
to confirm this point.

License 05-986109
--------------

4. According to Zamora, one of Martin Armar's best-selling
products are .22 caliber rifles sold to ranchers. She
explained that Martin Armar sells on a consignment basis to a
Mr. Finlander Paniagua who travels throughout northern Costa
Rica reselling the rifles, ammunition, and his services in
assisting weapons buyers with registering their purchases.
This seems confirmed by the license request in which 50 of
the 72 rifles requested are .22 caliber. Martin was
unconcerned about the possibility that weapons he is
responsible for could be diverted if Paniagua were robbed
during his travels. Martin said his son has not considered
insuring the weapons he provides to Paniagua adding that the
relationship has worked well for approximately six years.
Note: Subsequent investigation revealed that Paniagua was
convicted on document fraud charges and served a year in
prison in 1998. It is unclear if Martin is aware of this
part of Paniagua's background. Also, initial efforts to
trace U.S. weapons imported by Martin Armar but sold by
Armeria Rex show that Paniagua purchased at least six .22
caliber rifles from Armeria Rex which makes little economic
sense given that he could have obtained them directly from
Martin Armar at a lower price. We will continue to
investigate. End Note.

License 05-967303
--------------

5. The quantities and models requested under this license
are nearly identical to the above request. As noted Ref B,
the majority of these weapons were sold to Armeria Rex in

2005 as follows: 38 of the 50 .22 caliber rifles, 8 of 12
30/30 rifles, as well as all of the .44 MAG and .357 MAG
rifles. The sales to Armeria Rex were made in February, July
and October of 2005--likely corresponding to the dates these
weapons were shipped. The receipt numbers used by Martin
Armar to report the sales to DCAE are generally in
consecutive order, indicating that the shipments were sold in
lots to Armeria Rex. We note that the model 1894 rifles (.44
and .357) are somewhat unusual and are also identical to
rifles that another arms dealer, Koruma Lenex (see Ref C),
told us Armeria Rex had specifically requested. Armeria Rex
was successful in obtaining several of these rifles from
Koruma Lenex and several more from Martin Armar, but
apparently is still trying to acquire them. During our visit
we counted 15 Marlin rifles, still in their boxes, being
stored in the weapons vault.


6. Martin Armar is a duly licensed arms dealer with valid
permits for importing firearms. Its largest customer by far
is Armeria Rex. Martin stated that Armeria Rex is a good
customer that always pays cash on delivery. Although this
Blue Lantern does not deal with shotguns, in the course of
our visit we discovered that Martin Armar imported and sold
over 100 12 gauge shotguns to Armeria Rex in 2005 and,
according to an FCS Extrancheck conducted in June 2005, it
imported a similar amount in 2004. Aside from Armeria Rex
and Mr. Paniagua, the remainder of Martin Armar's customers
appear to be individual Costa Ricans living in the San Jose
area. Martin Armar appears to keep proper records except in
the case of the weapons sold on consignment by Paniagua.
Zamora told us that Paniagua brings back the names of the
individuals he sells to so that records can be updated.
However, in the records we saw, the papertrail ends with
Paniagua. On-site security consists of CCTV at the entrance,
two alarm systems monitored by ADT company and a reinforced
wooden door on the weapons storage area. These security
systems are similar those used by other Costa Rican gun
dealers we have visited with one glaring exception. Rodrigo
Martin, the father, owns a restaurant in an adjacent
building. Martin Armar's display area and storage vault are
separated by an office used by Rodrigo Martin and a storage
area used by the restaurant. The door to the weapons storage
vault is not alarmed and the restaurant routinely accepts
deliveries to its storage area. The weapons storage area is
vulnerable whenever deliveries are being made to the
restaurant's storage area.
FRISBIE