Theres case law backing up what i said. A malfunctioning rifle is NOT an nfa violation UNLESS AND UNTIL you continue using it after discovery of the problem. His rifle inadvertently going full auto due to poor assembly isnt a violation.
en.m.wikipedia.org
Today, you learned something. That gun wasn't an issue, unless he didn't stop using it. You were correct to advise him to stop using it, but, no, it wasn't a felony. Seems a minute difference, and it is.. but an r.o. should know the laws hes trying to impose. Id turn your snarky response inwards, if i were you.