PILMAN
...if you're giving him money, that's a business transaction. The BATFE has no sense of humor. If he's building a gun for you, even on a pre-made receiver, and you're paying him, he's in business.
There's no such thing as a "hobby", legally. If he's doing it for money, he's a business, and if he's doing so without a license, get your possessions back and politely inform him to get a dang FFL.
Worse yet, he's probably not paying taxes to the IRS.
If caught, he's in trouble at LEAST with the State and two Federal agencies.
Doing it without being paid.... gray area at best. Taking in receivers and building them into functional arms for no fee seems rather sketchy, but hey, maybe he likes to.
This:
..makes me
EXTREMELY wary of the entire situation. Being a gunsmith, it's
common knowledge that you need an FFL to take in guns and work on them. It's hard to imagine he's anything but a hack if he's saying he's a gunsmith and doesn't know any of this.