An FFL can't do a "private sale" out of business inventory, which is what this gun was in. If he moved the gun into his personal collection and then did a private deal, it would still be suspicious, but he'd at least have to have recordkeeping that that's what he did. When the feds show up asking about this gun, this idiot just said I don't know what happened to that gun.
An awful lot of FFL holders are using their storefronts to sell their own weapons, then. Which, I suppose, is perfectly legal.