A Oregon-based gun maker said Thursday that it has been blocked from processing credit card transactions by its long-standing credit card company, and believes it is the latest victim of the Obama administration's "Operation Choke Point."
The Obama administration has said Choke Point lets the Departments of Justice and Treasury crack down on illegal businesses by blocking their access to banks and other parts of the U.S. financial system.
Gun makers say they are threatened by the Obama administration's Operation Choke Point; one producer in Oregon was told he could no longer process credit card transactions, and blames Choke Point.
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But critics of the program have said the administration is using it to crack down on businesses it doesn't approve of, under the guise of trying to stop illegal activities, even when they have done nothing illegal.
Calico Light Weapons Systems believes it is the latest victim of the administration's overreach. In a statement released Thursday, Chris Holmgren, the company's owner, says he was unexpectedly warned in mid-July that his credit card processor would have to close his account due to "illegal activities."
Firearms producers are prohibited by law from selling guns over the Internet. But Holmgren says his company does not sell guns online, and only sells certain parts.
"The [credit card] company thought that I sold firearms over the Internet, which I do not," he said. "My company only sells parts online, like screws, washers, and other soft goods."
After several phone calls to his credit card processor, Intuit Merchant Service, Holmgren was told a "policy change" related to "illegal activities" is what was forcing Intuit to close Calico's account.
"By this point, I wondered if my company had been a target of Operation Choke Point," he said. "I had heard of the program, but never believed that my company's accounts could be at risk since we do nothing illegal."
Holmgren said that his company later indicated it would re-open his account, but said this has not happened yet.
"I am certain that this is the work of Operation Choke Point, and that my company was targeted because it is considered a 'high risk' by the Department of Justice and FDIC, even though we do nothing illegal," he said.
[sharequote align="center"]"I am certain that this is the work of Operation Choke Point…"[/sharequote]
In the meantime, Calico has managed to recover from the setback by partnering with what Holmgren says is a "pro-Second Amendment" credit card servicer — McMillan Merchant Solutions, which is based in Arizona. Holmgren told TheBlaze he is already using McMillan to process transactions again — he says the difference between Intuit and McMillan is simply that McMillan has decided that it won't be cowed by the government's strong-arm tactics.
While Holmgren has not been told Operation Choke Point is the reason why he got the boot from Intuit, his experience is similar to that of other companies that have been targeted by the program.
According to people familiar with the program, Obama administration officials have targeted several industries, including those dealing with guns, gambling, credit repair services, payday lending and others.
Under the program, officials have told banks and other financial institutions that they are responsible not just for their clients, but for their clients' customers. Officials warn these institutions that they should not provide financial services to companies in these high-risk industries.
Close observers of the program have said these warnings often have the effect of forcing banks to quickly jettison any client that could pose a possible risk, which leads to sudden notices to companies like the one received by Calico.
"Operation Choke Point isn't just targeting online merchants, it's targeting entire industries, regardless of their clean records and law-abiding practices," Brian Wise, senior advisor for the U.S. Consumer Coalition, told TheBlaze.
"Calico Light Weapon Systems reached out to the U.S. Consumer Coalition as the first gun manufacturer who came forward as a victim of Operation Choke point," he said. "Now it is clear that the administration is not just going after gun dealers, but manufacturers as well. This program represents the single biggest threat to gun ownership that U.S. consumers have ever seen."
The scheme has gotten the attention of Congress, but so far, members have not been able to pass legislation to try to scale back the operation.
[sharequote align="right"]"This sounds more like strong-arming than law enforcement."[/sharequote]
In July, the House Judiciary Committee held a hearing on Operation Choke Point, at which Chairman Bob Goodlatte (R-Va.) said the program has stopped some illegal activities, along with an "unacceptable level of collateral damage."
Goodlatte also said there is evidence that the program is being abused, as officials seem to be going after entire industries that they don't support, instead of just those involved in illegal activities.
"For example, the committee obtained a jarring account of a meeting between a senior FDIC regulator and a banker contemplating serving a payday lending client," Goodlatte said. "The official told the banker, 'I don't like this product and I don't believe it has any place in our financial system… Your decision to move forward will result in an immediate, unplanned, audit of your entire bank.' "
"This sounds more like strong-arming than law enforcement," Goodlatte concluded.
Also in July, Rep. Roger Williams (R-Texas) spoke on the House floor to warn about the abuse of the program.
"Operation Choke Point began quietly last year as a way for President Obama and the Justice Department to intimidate and strangle businesses they no longer support," he said. "By forcing banks to cut ties with law-abiding businesses like sporting goods stores [and] licensed gun dealers, these business owners have no recourse."
Read Calico's statement here: