Attorney General Janet Reno said yesterday the Justice Department will "review" every aspect of last weekend's murderous shooting rampage in the Midwest, including any possible role of the extremist World Church of the Creator, but she stopped well short of saying that there would be a federal investigation of the white supremacist and antisemitic organization.

Reno and other Justice Department officials also defended themselves against criticism by the National Rifle Association that the shootings were an example of the federal government's failure to enforce existing gun control laws.

Reno said that if the government prosecuted every person who made a false statement in connection with an attempted gun purchase, as the NRA has suggested, "we might as well close the courthouse for business," because the caseload would then overwhelm the judicial system.

At her weekly news conference, Reno said she was "appalled" by the Independence Day weekend shooting spree in Illinois and Indiana that left two men dead and nine others wounded. The suspect in the shootings, Benjamin Nathaniel Smith, killed himself Sunday night in rural Salem, Ill., as local law enforcement authorities closed in on him.

All of the shooting victims, and others Smith is believed to have shot at but did not injure, were members of racial or religious minorities. The 21-year-old former University of Illinois and Indiana University student was a follower of Matthew Hale of East Peoria, Ill., the head of the World Church of the Creator and a self-avowed racist and anti-Semite. Experts on hate groups have described the World Church of the Creator as one of the most rapidly growing such organizations in the country.

But Reno suggested yesterday that under internal Justice Department guidelines, it will be difficult to launch an investigation of the World Church unless it can be directly linked to criminal activity such as the shooting spree.

"The standard is that we have got to have a reasonable indication of criminal conduct on the part of the group," she said, adding that "to avoid an abuse of authority, the FBI doesn't go out and investigate somebody because they say something that is protected by free speech. They go out and investi gate a group when there is a reasonable indication of criminal conduct."

Also yesterday, Donald R. Fiessinger of Pekin, Ill., who has been charged with illegally selling dozens of guns in the underground market, including the two that Smith is believed to have used during the weekend rampage, appeared in U.S. District Court in Peoria, Ill., and was released on a $10,000 personal recognizance bond. A preliminary hearing was scheduled for July 27.

Fiessinger, an unlicensed gun seller who worked out of his home, sold Smith the .22-caliber and .380-caliber semiautomatic handguns a day after Smith learned he had failed a mandatory background check at a licensed firearms dealer in nearby Peoria Heights, Ill. Under federal law, a person who is "engaged in the business" of selling firearms for a living, which authorities charge Fiessinger was, is required to have a license.

There is no evidence, however, that Fiessinger had any other dealings with extremist groups, according to officials. Assistant U.S. Attorney Tate Chambers said prosecutors had examined records of firearms sales that were seized at Fiessinger's apartment and did not find the names of any of Smith's associates in the white supremacy movement.

"As far as we know, what [Fiessinger] has been saying -- that he got a call in response to his newspaper ad and didn't know anything about Smith's beliefs -- is true," Chambers said.

NRA officials argue that Smith should have been arrested immediately after he failed the background check and charged with making false statements on the application form. But yesterday Reno and other Justice Department officials scoffed at that suggestion.

They said that since the instant background check system was instituted Nov. 30, there have been 4.8 million queries and more than 100,000 denials of gun purchases because of background problems. "If you were to dump, probably by the end of this year, almost 200,000 false statement cases on the courts, it would be impossible to try the gun traffickers, the kidnappers, the drug traffickers, the rapists," one official said.

The official said that since the 1994 enactment of the Brady handgun law, which was bitterly opposed by the NRA, there has been at least a 27 percent drop in the number of crimes involving firearms. "The NRA criticizes us, but they do not acknowledge that crime has dropped since these gun laws were put in place," he said. "They walk on the same streets made safer by these federal agents and prosecutors, but they still throw stones."

James Baker, the NRA's chief lobbyist in Washington, replied that he did not understand "why anybody thinks it would be inappropriate to arrest people for committing federal felonies. If it is a question of resources, they ought to be talking to Congress about getting adequate resources to do the job."

Staff writer William Claiborne contributed to this report.

CAPTION: Suspect Benjamin Nathaniel Smith fatally shot himself Sunday.