The Bureau of Alcohol, Tobacco and Firearms announced the indictment of two companies and five individuals yesterday as part of a year-long, nationwide investigation of illegal manufacture and distribution of machine guns, silencers and silencer kits.

BATF Director Stephen E. Higgins said weapons manufactured illegally by the two companies -- SWD Inc. of Atlanta and REJM Enterprises of Tehachapi, Calif. -- have been traced to criminal activities. The weapons are of the type popular with drug traffickers and extremists, he said.

"We are alleging that one company manufactured some parts, another the rest, and the parts were advertised and sold with the knowledge that they could, and were, in fact, being illegally assembled," Higgins said. "So far, 79 search warrants have been served and 25 defendants recommended for prosecution."

An indictment unsealed in Fresno, Calif., named three officers of SWD Inc., an official of REJM Enterprises and the officer of a Carrollton, Ga., gun company.

Higgins said the BATF seized 289 machine guns, 196 silencers and 246 machine-gun-silencer kits. He said he did not know how many of the weapons were distributed, but a BATF official said that more than 800 invoices were seized this week at SWD.

The machine guns -- most six to eight inches long -- were being sold at $195 for the internal parts and $6 for a flat metal piece that can be bent to form the weapon's outer housing. BATF officials said that such a weapon, capable of firing 1,000 to 1,200 rounds per minute, could then be sold on the street for $600 to $1,000.

To get around the law, the silencers have been sold in separate parts: the internal pieces, for $75, and two metal tubes, costing $20 each. The silencers can be sold on the street for $200 to $500.

Machine guns and silencers are legal in some states, but they must be registered with the BATF. In addition, there is a $500 federal tax for each machine gun manufactured and $200 for each transfer of ownership.

The maximum penalty on each count of conspiracy to violate federal firearms laws is five years in prison and a $10,000 fine