Feds drop charge against Bellevue gun dealer

The government has dropped a felony firearms charge against a Bellevue gun dealer once arrested as a material witness in the unsolved 2001 slaying of Assistant U.S. Attorney Thomas Wales.

Federal prosecutors, facing an adverse ruling out of the 9th U.S. Circuit Court of Appeals and a refusal by that panel to rehear the case, moved late last month that the 2006 indictment against Albert Kwok-Leung Kwan be dismissed "in the interest of justice." U.S. District Judge Thomas Zilly signed the order June 26.

A jury convicted Kwan in June 2007 of possession of an unregistered short-barreled rifle after a four-day trial before U.S. District Judge Thomas Zilly. He was acquitted during the same trial of possessing an unregistered machine gun.

Zilly granted Kwan a new trial after his defense argued that the jury had not been properly instructed. Federal prosecutors appealed to the 9th Circuit Court, which upheld Zilly's decision.

"I think they realized they just could not win at trial," said Joseph Conte, Kwan's Washington, D.C., lawyer. "We are glad to have it done with."

Kwan has been scrutinized by the FBI and federal prosecutors because of evidence that he purchased two replacement gun barrels for a handgun like the one used to kill Wales, who was shot in his Queen Anne home on Oct. 11, 2001.

Agents have spent years trying to track purchasers of those barrels.

Kwan has insisted he only bought one barrel, which he turned over to federal agents. However, Conte has said — and federal agents have confirmed — that he failed an FBI polygraph about the second barrel.

His Bellevue home was just a few miles from the former home of an airline pilot who is the prime suspect in the shooting. Kwan has denied knowing the pilot, who was prosecuted by Wales for fraud in the late 1990s.

The charges eventually were dropped and the pilot was bitter over the ordeal, according to court documents.

Kwan was jailed as a material witness in the case for 23 days in January 2005. During that time, agents from the federal Bureau of Alcohol, Tobacco, and Firearms and Explosives and the FBI seized hundreds of firearms in his collection, including the machine gun and short-barreled rifle prosecutors claimed he was not licensed to own.

Kwan now has another appeal pending over thousands of pages of documents seized by agents in the Wales case.

Conte has said he believes the government has been using the prosecution to pressure his client into revealing information about the Wales case he does not have.

A call for comment from the U.S. Attorney's Office late Monday was not immediately returned. In the past, prosecutors have denied those claims.

Mike Carter: 206-464-3706 or mcarter@seattletimes.com