NSW authorities admit the case might have exposed a major loophole in their firearms registry, with diligent policing rather than an automated system detecting the large number of licences linked to one property.
Police believe they have since dismantled the ploy, seizing more than 150 firearms including Glock pistols, scoped rifles and shotguns during raids in September.
They allege businesses in Liverpool, in Sydney's southwest, and Bobs Creek, south of Port Macquarie, supplied the fraudulent documents to more than 1000 people for between $60 and $80.
The force is concerned some of those licences might have helped organised-crime figures source guns.
Central to the alleged scheme was a property in far-west NSW, where the 86-year-old owner gave one licence applicant permission to shoot on the grounds in 2012.
In NSW, a firearms licence applicant can list shooting on a particular rural property as a genuine reason for obtaining the weapon.
But the same property was allegedly fraudulently used for about 1000 other approved applicants.
Detective Chief Superintendent Grant Taylor said the 86-year-old was "shocked" to learn he was caught up in the plot.
"All 1000 permissions to shoot were listed as being at that particular property, hence the suspicion around it," he said on Wednesday.
It was not unusual to have a large number of gun licences attached to permission to shoot at one property, but hitting four-figures was a "red flag", Det Supt Taylor said.
"There may be properties that have hundreds, because they have it as part of their business for that property ... so it doesn't necessarily alert immediately," he said.
"But it's something that we're working on, processes to identify where there may be loopholes or areas that may be exploited by organised crime."
Three people, including a firearms dealer, have been charged, but more are expected to follow as police sift through the scheme and determine who was running it.
Fraudulent licences can allow criminals to get their hands on guns, like this one that was seized (HANDOUT/NSW POLICE)
A 50-year-old man faced Liverpool Local Court on Wednesday charged with 17 counts of failing to keep labels and records as required of a lincensed firearms dealer and supplying ammunition to a person not authorised.
A 58-year-old woman appeared before Port Macquarie Local Court charged with 14 counts of making a false document to obtain a financial advantage.
Both remain on bail to return to court in December.
A 39-year-old man is due to face court in November charged with two counts of possessing an unauthorised firearm and possessing ammunition without holding a licence.
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