Newtown Shooting: Bushmaster Under Fire

PHOTO: Three variations of the AR-15 assault rifle are displayed at the California Department of Justice in Sacramento, Calif., Aug. 15, 2012.PlayRich Pedroncelli/AP Photo
WATCH Big Gun Business Changed After Sandy Hook Shooting

When the private investment firm Cerberus Capital Management announced Tuesday it would unload its interest in Bushmaster – the company that built the weapon used in last week's mass murder of 20 Connecticut first graders -- it marked the beginning of what experts say is likely to be a challenging period for the North Carolina-based weapons manufacturer.

"They are looking at a taint on their brand and looking at a marketplace that could change dramatically with respect to their weapon," said Chris Lehane, a crisis public relations expert who worked in the Clinton White House. "To me the fact that Cerberus is pulling out is a pretty significant defining moment."

For years, Bushmaster has been marketing itself to testosterone-fueled male customers, issuing "man cards" to customers who want to be "card carrying men." Now, Lehane and others said the company is facing the prospect of being branded the weapon of choice for mass killers. The Newtown, Connecticut shooting marked the fourth time a Bushmaster has been implicated in a mass shooting since 1999, including the Beltway sniper case that left 10 dead and three more wounded.

Cerberus announced Tuesday it wanted distance from Bushmaster, calling the murder of 20 first grade children at Sandy Hook Elementary School a "watershed event." The investment firm, which is chaired by former Vice President Dan Quayle, noted in its statement that Bushmaster may not be an investment consistent with the interests of its clients. Its investors include the pension plans of firemen, teachers, and policemen.

Lehane said the announcement could signal a shift in the way investors view companies that make military style weapons for a civilian market.

"It reminds me of the time when tobacco began to be associated with a negative light, or the divestiture movement surrounding companies in South Africa," he said. "Where financial markets believe they are going to pay a price."

In addition, a spokesman for Cerberus Group confirmed that the father of Stephen Feinberg, the founder of Cerberus Group, lives in Newtown.

Gun control groups have also lined up to criticize the weapons manufacturer, arguing that the company was selling civilian customers a weapon clearly designed for war.

"This thing is just a killing machine," said Josh Horwitz, executive director of the Coalition to Stop Gun Violence. "[I]t's a weapon that can easily shoot hundreds of … In fact it's very similar to the weapon that James Holmes used to shoot up the movie theater in Aurora."

The company has not responded to phone calls seeking comment, but gun enthusiasts say the weapon's menacing appearance can appeal to civilians looking for a means to secure their homes, and its ease of use can appeal to those looking for a weapon for target shooting.

"The [assault rifle] platform is the most popular in the country," said Frank Cornwall, a firearms instructor in Connecticut. "Civilians have always bought similar type arms to the military. And this is a very versatile platform. Quite a popular hunting and target shooting gun."

Phillip Stutts, a crisis management consultant who worked for President George W. Bush, said he has been surprised by the silence of the gun manufacturer.

"Bushmaster doesn't have to take responsibility for this tragedy, but they have a responsibility to respond to this tragedy," he said. "And they haven't. They have to get out in front of this. It needs to be corrected ASAP."

Stutts said the company's brand is at risk, and to counter that, "they should be talking loudly about how mentally ill people shouldn't be using or purchasing their firearms. And they should be reminding people that Adam Lanza did not purchase their firearms."

If history is any guide, the public relations challenge that Bushmaster now faces may be matched by potential legal challenges.

After police determined that the Washington, D.C. Beltway snipers killed their randomly chosen targets with a Bushmaster rifle, the company faced a lawsuit from victims of the attacks and from the Brady Campaign to End Gun Violence. The lawsuit, which also named the Tacoma, Washington gun shop where under-aged sniper Lee Malvo managed to walk out the door with a weapon, yielded one of the largest settlements in a gun case to date -- $2.5 million, with Bushmaster's insurance company paying $500,000 to settle the company's share of the suit. Bushmaster did not admit fault and said they settled to combat rising legal fees.

Since that time, Congress passed legislation to help to shield firearms manufacturers and dealers from liability lawsuits. President George W. Bush signed it into law in 2005. But attorneys involved in the first case against Bushmaster told ABC News that manufacturers are still vulnerable if they go too far in building a weapon that appears to be designed for mass killing.

"We certainly will look to see where the gun industry is facilitating these crimes," said Jonathan E. Lowy, director of the Brady Campaign's Legal Action Project. "We look at that and try to hold them accountable when they are profiting off the criminal market."

In the case of the Connecticut shooting, Lowy said it was too soon to say whether Bushmaster will face legal action. "We'll wait and see where the facts will lead us," he said.

Bushmaster's parent company, Freedom Group, says on its website that it will "only act within the law" and "will not compromise our moral or ethical principles." In its filings with the Securities and Exchange Commission, the company notes that both lawsuits and increased regulation are a risk in the gun business. "In the event that such lawsuits were filed, or if certain legal theories advanced by plaintiffs were to be generally accepted by the courts, our financial condition and results of operations could be adversely affected," the filings note.

Follow ABCNewsBlotter on Facebook

Follow BrianRoss on Twitter

Click Here for the Blotter Homepage.