LEGEND IN THE MAKING:

IT HAS BECOME THE QUICKEST WAY TO FAME IN AMERICA'S GUN culture. And one morning in May 1992 it happened to Louis Katona III, a Bucyrus, Ohio, real estate salesman and part-time police officer. He got to tell all about it when the National Rifle Association flew him to its annual meeting in Phoenix last spring--how agents of the Bureau of Alcohol, Tobacco and Firearms, the "jackbooted fascists" of N.R.A. lore, had raided his home and seized his machine-gun collection. At the time, he estimated the guns' value at about $300,000 and kept them locked inside a walk-in vault in his basement, expecting them one day to pay for the college educations of his son and his second child, whose birth he expected in seven months. One version of what happened next appeared in a recent full-page N.R.A. advertisement: "When shouting and cursing ATF agents rushed into his home to seize his firearms collection, they grabbed his pregnant wife Kim and shoved her into a wall. Within days she suffered a miscarriage." The Katona episode is one of the most vivid horror stories the N.R.A. has been telling lately in its campaign to pillory the ATF. In a lawsuit now pending in Cleveland federal court, the Katonas are charging the ATF with the death of their unborn child and other offenses. But there's much more, or ultimately less, to this story than the N.R.A. would have people understand.

What prompted the "raid" was Katona's arsenal of machine guns. Under the National Firearms Act of 1934, anyone hoping to buy a machine gun must first fill out a federal authorization and have it signed by the chief law-enforcement officer of the community. Until September 1988 Katona was an auxiliary Bucyrus police officer and took his forms to his boss, Chief Joseph Beran--an immense, bearded man with a shaved head and a passion for Harley-Davidson motorcycles. At one point, Katona claims, the chief presigned a large stack of forms. Beran denies it.

During the summer of 1988, their relationship decayed. The department demanded that Katona turn in an old Bucyrus police chief's badge that his father had bought for him at a gun show. The department claimed it had been stolen long ago from another collector. When Katona refused, he was forced to resign. Meanwhile, Crawford County sheriff Ronny Shawber had persuaded almost all the county's police chiefs to agree to a moratorium on authorizing machine-gun purchases. Beran agreed. In August 1989 he wrote to Katona: "Dear Louis, I'm sorry, but I am not signing these forms any longer." Over the next two years, however, Katona kept buying machine guns and submitting the required forms to ATF, all apparently bearing the chief's signature.

In choosing the targets of its investigations, the ATF relies heavily on tips from local police. In March 1991 the Cleveland office of ATF got a call from Sheriff Shawber, who had come to suspect, erroneously, that out-of-towners were buying machine guns from Louis Katona's father, Louis Katona Jr., a licensed dealer, and then listing false local addresses on their registration forms.

The ATF waited almost a year before dispatching compliance inspector Thomas Scoufis to check the elder Katona's records. In the process he stumbled across records of the son's purchases and quickly became suspicious, according to an ATF affidavit. He showed Beran a form with the chief's own signature, but Beran said he could not have signed it; he had honored the moratorium.

Scoufis alerted ATF's Cleveland office. Soon afterward, special agent Lance Kimmell met with Beran and showed him more forms bearing his signature but dated after his letter to Katona. The chief denied signing them. In a deposition, Kimmell said, "I had all the probable cause in the world to believe that the firearms had been transferred illegally, and there had been a mass forgery of documents that took place."

A federal magistrate agreed and on May 7, 1992, authorized a search warrant. In contrast with a recent N.R.A. ad that showed a photograph of ATF agents in battle gear rushing toward the reader, the raiding party that stormed Bucyrus the next morning consisted of three ATF agents, one in a suit, the rest casually dressed. No one brandished any weapons. As a matter of protocol, they invited Bucyrus police officer Jerry Agee to come along.

While Agee and special agent Stephen Wells waited outside Katona's house, agent Kimmell and group supervisor Stephen St. Pierre went to Katona's office and waited for him to return from an errand. They told him they had a warrant to search his house. As the search began, according to Officer Agee, Katona offered the raiders "coffee and pop."

Katona charges that Kimmell handled the guns roughly. "He started holding the guns one at a time up to his belt level and turning [to] me and giving me a little sneer and dropping them one at a time on the concrete," Katona stated in a deposition. Officer Agee told ATF Internal Affairs investigators the height was more like three to six inches. Agent Wells said he and his colleagues took good care of the guns.

But the most infamous moment came midway through the search when Katona's pregnant wife Kimberly arrived, furious at the intrusion and embarrassed that the agents would see her laundry room. Seconds later, the Katonas say, ATF supervisor St. Pierre grabbed Kimberly and "slammed" her against a wall, shouting, "Get this woman the hell out of here." But agent Agee and lawyer James Pry both said the agents did not handle Mrs. Katona roughly.

She began bleeding that night, the Katonas charge, the beginning of a miscarriage. Ten days later she underwent a pelvic ultrasound examination, but medical records obtained by Time show this exam yielded an unexpected discovery: an "intrauterine gestational sac without embryonic echoes, suggesting a blighted ovum." Three specialists, asked by Time to review Kimberly Katona's records, agree in their conclusion: she had lost her baby well before the raid even began. The sac was empty, but her body had continued to develop as if the pregnancy were viable. Says Ilan Timor, head of Columbia University's obstetrics-gynecology ultrasound unit: "That bleeding would have come sooner or later anyway, whether there had been a raid or not."

ATF won an indictment against Katona, but handwriting experts for both sides agreed they had found no conclusive evidence linking the alleged forgeries to Katona or anyone else. As a result, the judge dismissed the case.

Kimberly Katona, in a tear-filled deposition, said the agents didn't have to raid the house but could simply have asked Katona to explain how he got the signatures on the forms. ATF director John Magaw agrees, saying the agents should have asked themselves some questions first: "What is this we're trying to enforce? What is the danger to the public here?" He adds, "We're going to work a case like this differently in the future."

But Sheriff Shawber wonders why the case got tagged as an example of federal abuse in the first place. "It just baffles me," he says. "Because it would appear to me that there was something going on there. There were forged documents."