Donald R. Fiessinger, 64, is being held in jail and will appear in federal court Thursday to answer the charge that he sold the guns to Smith without a license, according to Sharon Paul, a spokeswoman for the U.S. attorney's office in Springfield.
Mark Wertz, appointed as Fiessinger's lawyer, refused comment.
Prosecutors asked for an additional day to comb over the records seized from his apartment. Assistant U.S Attorney Tate Chambers said he wants to know whether Fiessinger sold weapons to anyone else associated with Smith or with extremist groups.
Authorities say Fiessinger had been under investigation for illegal gun sales prior to the shooting spree.
Smith bought a Bryco .38-caliber semiautomatic handgun on June 26 and .22-caliber pistol on June 29 from an illegal dealer, said Jerry Singer, an agent with the federal Bureau of Alcohol, Tobacco and Firearms.
The guns allegedly sold to Smith last month were among "dozens of guns" that Fiessinger is charged with selling illegally, Singer said.
CBS News Correspondent Randall Pinkston reports that when Smith tried to buy two handguns and a shotgun from a Peoria, Ill., gun shop last month, the owner turned him down after he failed a background check.
Smith's application was denied at the gun shop, and the NRA says he should also have been arrested.
Â"The system failed,Â" said James Baker, the chief lobbyist for the NRA. Â"Why did it fail? Because there is too little enforcement of existing federal gun laws, and that's the real tragedy here.Â"
Federal authorities say it's not that simple.
Â"The system worked in this case by not allowing firearms to be sold to Mr. Smith,Â" Singer said. He said that while a denial can trigger an investigation, authorities simply do not have enough information to make an immediate arrest.
Police say Smith killed two people Â— including a Korean student in Indiana Â— and injured nine others before taking his own life in a weekend shooting rampage in two states. All of the victims were black, Asian or Jewish.
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Former Northwestern basketball coach Ricky Byrdsong, who coached the universityÂ's team for four seasons, was shot and killed while walking with his children Friday near their home in Skokie Â— a suburb of Chicago.
A funeral was held for Byrdsong Wednesday night.
The shooting spree was the end of a stunning metamorphosis, from an unassuming teen-ager to unrepentant hate monger to determined killer.
In an interview last year, Smith defended what he called his right to speech: Â"People call our literature hate-literature, but all it really is truth that reflects on the minorities negatively. ItÂ's the facts and you canÂ't argue with the facts.Â"
SmithÂ's violent streak first came to the attention of authorities on the campus of the University of Illinois. After dating Elizabeth Sahr, he allegedly attacked her.
It was that attack that led Sahr to get an order of protection against Smith. It kept him from buying an arsenal at the Peoria gun shop, but did not prevent him committing three days of mayhem and murder.
Smith was a member of the World Church of the Creator, a white supremacist organization. The group advocates hatred of all Jews and non-whites.
The group's leader, Matt Hale, said that he did not condone what Smith did. But he acknowledged that his church does encourage hatred. "If you love something you must be willing to hate that which threatens it," he said.
Hale refused to express condolences to the families of the victims. "We don't care about the non-white races," he said.
Authorities are trying to determine Smith's motive and if he had any outside assistance. FBI agent Doug Garrison said Hale would not be implicated in the spree simply for his beliefs.
©1999 CBS Worldwide Corp. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report