Trading in the departments old weapons for new is not a crime.
Nearly every department does it, or used to before it become too PC to scrap them. (Thus wasting many thousands of the taxpayers dollars).
His department is really small, so yes he is taking an advantage of the nuances of BATFE regulations.
But so long as he did not misappropriate or commingle department money there is no legitimate crime.
Seems his real “Crime” is making a profit using the rules as written rather than just submitting to the new order.
Without being on the Jury I do not know enough to be certain, but ATF is very fond of sticking it to small dealers to create their desired “Precedent” in an effort to tighten their grip and put more dealers out of business.
Yes. I would agree with that assessment. ATF is despicable.