Rogue Gun Dealer v. Rogue Gun Dealer Investigators

Last week one of the "rogue gun dealers" targeted by New York City Mayor Michael Bloomberg in a recent federal lawsuit sued back, arguing that the mayor's investigators violated state and federal law when they simulated a straw purchase at Adventure Outdoors in Smyrna, Georgia. The sting operation, which was supposed to be aimed at dealers whose guns frequently ended up in the hands of New York City criminals, involved an undercover investigator who handled the preliminary part of a handgun purchase and then called in another investigator to fill out the federal firearm purchase form. Adventure Outdoors owner Jay Wallace, represented by former Georgia congressman Bob Barr, says Bloomberg's investigators broke the law by falsifying the form and then slandered him by calling him a criminal. As I understand it, making a straw purchase is illegal for the buyer and the ultimate owner, but allowing one to happen is illegal for the seller only if he knows the ostensible buyer is not the real buyer. So I guess it's possible for Bloomberg's investigators to be on the wrong side of the law even if Wallace is on the right side. But if the fake/real buyer distinction was just pretend, and neither customer was a felon, did anybody break the law?