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Investigation

Best PracticesInvestigationU.S. Fish and Wildlife Service

Essential Oils Company to Pay $760K for Lacey Act Violations

posted by Jennifer Diaz September 25, 2017 0 comments

MONEY

The Justice Department announced YOUNG LIVING ESSENTIAL OILS, L.C., (the Company), headquartered in Lehi, Utah, plead guilty in federal court to federal misdemeanor charges regarding its illegal trafficking of rosewood oil and spikenard oil in violation of the Lacey Act and the Endangered Species Act. Continue Reading

Best PracticesCBPCounterfeitsCPSCImportInvestigationIPR, Trademarks and LogosSeizuresU.S.Customs

Florida Companies Convicted and Sentenced

posted by Jennifer Diaz June 24, 2013 0 comments

Co Authored by Robert Becerra

In another example of the government’s continuing use of the criminal justice system to enforce international trade laws, three Florida companies and their management were recently convicted and sentenced for importing smuggled toys from China containing lead and containing counterfeit trademarks.

LM Import-Export, Inc., Lam’s Investment Corp., and LK Toys Corp., Hung Lam and Isabella Kit Yeung plead guilty to charges of conspiracy to traffic and smuggle toys containing hazardous substances such as lead, and one count of trafficking in counterfeit goods, in violation of 18 U.S.C. Secs. 371 and 2320, respectively. Co-defendant Yeung plead guilty to one misdemeanor count of submitting a false country of origin label, in violation of 19 U.S.C. Sec. 1304(a). The information, or charging document filed in court, against all defendants, as well as the plea agreements for each defendant can be found on the website of the District Court for the Southern District of Florida. (If you have trouble getting these documents, email me and I’d be happy to share them with you).

The facts underlying the charges, as stated in court documents, are that from April, 2000, until May 2011, a span of 11 years, the corporate defendants conspired to sell children’s products imported from China in violation of the Consumer Product Safety Act 15 U.S.C. Sec. 2068, and the Federal Hazardous Substances Act, 15 U.S.C. Sec. 1263. Some of the toys contained lead, while others presented various hazards such as choking, aspiration or ingestion. The products were imported using false statements on Customs declaration forms and with false country of origin labeling.

Hung Lam was sentenced to 22 months incarceration, 3 years of supervised release and a $10,000 fine. The corporations were sentenced to 5 years of probation. Yeung was sentenced to 1 year probation and a $1,000 fine. An order was entered mandating the forfeiture to the government of $862,500 and all products imported by the defendants that were seized by the government. The press release from the Consumer Products Safety Commission and Department of Justice discussing the case can be found here and here respectively.

This case is extremely important for importers to be familiar with and understand that:

  1. It is vital for importers to retain counsel to assist with pre-compliance before you import.
  2. When you receive any violation notice from the federal government, retain counsel immediately and be sure to address all violations with remedial action and enhanced compliance procedures in an attempt to keep administrative penalties or forfeiture cases from turning into potential criminal matters.
  3. Resolving a civil action through a consent decree with the government does not absolve you of criminal liability.
  4. Once contacted by government officials, retain counsel immediately. Any evidence you provide or any statements you make will be used against you in court.
  5. Repeated misconduct and federal regulatory law violations over a period of years will often result in criminal prosecution of both companies and their individual employees, resulting in federal prison sentences and substantial fines and forfeitures.

 

InvestigationTSA

TSA and Pepper Spray – A Story of What NOT to Do

posted by Customs & International Trade Law Blog August 14, 2011 1 Comment

Our beloved Transportation Security Administration (TSA) has the responsibility of screening passengers to "ensure that certain items and persons prohibited from flying don’t board commercial airliners."  This is accomplished through 43,000 Transportation Security Officers (TSOs) located at 450 airports around the United States.  While I am waiting in line to be screened, there seems always to be one energetic TSO screaming at my fellow passengers to take our shoes off, remove most liquids, take our belts off, take out our laptops, etc.. it is hard to remember that the official Mission of the TSA is to "protect the Nation’s transportation systems to ensure freedom of movement for people and commerce."  I do have one funny story to tell you about the TSA and a certain passenger.

While the TSA regulations specifically prohibit the carrying on board an aircraft, or even into the airport, any weapon or explosive device, a particular passenger had a pepper spray pen with him. The pepper spray pen was not detected by the TSO when the passenger’s body and luggage went through those radiation-emitting devices.

That is bad enough, but what the passenger did next was a mistake. After passing through TSA, he then approached the crew of the aircraft at his gate of departure, and handed over the pepper spray pen to the gate agents with some sort of statement that the TSOs did not detect the pen during the screening process.  Predictably, the passenger was then approached by law enforcement, interrogated, and not allowed to fly on that aircraft. The passenger subsequently received a Letter of Investigation from the TSA with the threat of a $11,000 penalty for attempting to compromise a security system utilized by TSA.

Seems to me that the gate agents and TSA should simply have said "thank you" to the passenger for turning over the pepper spray pen, rather than going on a witch hunt.  Perhaps the lesson the TSA wants to get across to people is not to tell the truth. If the passenger had kept his mouth shut, he would have kept his pepper spray pen, not missed his flight, and not have to pay a potential penalty of $11,000.  Plus, I guess now the TSOs will start yelling at passengers that the list of prohibited items includes pepper spray pens.

One more thing.  While it is prohibited to carry on board an aircraft any pepper spray, you may still transport it in your checked luggage, according to the TSA website

ImportInvestigation

Is Your Company Under Investigation by the Federal Government?

posted by Customs & International Trade Law Blog January 19, 2011 1 Comment

Every year, the numerous agencies of the United States Government send out letters to companies putting them on notice that the company is suspected of committing some serious violation.  Usually, the letter or notice demands a written response within 30 days or the company will be subject to a penalty or fine.  Knowing how to handle such letters, notices, or subpoenas is critical in terminating the investigation successfully, not paying a huge penalty, and even avoiding criminal prosecution.

The Executive Branch departments, bureaus, and agencies of the Federal Government  all have the legal authority to investigate and assess penalties against companies that violate that particular Government agency’s regulations. This is especially true of companies which are importers, exporters, or otherwise involved in international trade such as customs brokers, international freight forwarders, airlines, and indirect air carriers.  The U.S. Food and Drug Administration (FDA) would issue an "Administrative Subpoena" or a"Notice of FDA Action", the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) would issue an "Administrative Subpoena" while the U.S. Department of Transportation’s Federal Aviation Administration (FAA) would call it a "Notice of Proposed Civil Penalty", the U.S. Department of Homeland Security’s Customs and Border Protection (CBP) describes it as a "Notice of Action" and "Pre-Penalty Notice", the Environmental Protection Agency (EPA) calls it a "Request for Information", the U.S. Commerce Department’s Bureau of Industry and Security (BIS) calls it a "Proposed Charging Letter", and the Transportation Security Administration (TSA) would call it a "Letter of investigation". 

Whatever pseudonym or term is used, the Government documents are all similar in that they:

(1) are a legal demand from the Government,

(2) require a written response by the addressee,

(3) describe briefly the factual basis for the demand,

(4) threaten action against the company for not providing a timely response, and

(5) threaten action against an individual if false information is provided to the Government.

The first response by the President of the company (or its General Counsel) who receives the letter is – you guessed it – identify and call a lawyer very knowledgeable and experienced in handling these investigations.  All communications between the company and its outside lawyer are considered to be under the attorney-client privilege. That means that anything the President or other employees of the company say to the attorney are entirely confidential.  The inquiry by the outside legal expert is also confidential, so anything the attorney discovers or discusses with the company’s employees do not have to be subsequently disclosed to the Government.

In my over 20 years of practice as a customs and international trade lawyer routinely involved in defending companies under investigation by the U.S. Government, the biggest error by company officers is that they respond directly to the U.S. Government without seeking proper legal advice.  Only after the company receives a large penalty do I finally get the call to straighten it all out. Fortunately, whether the letter of investigation is from Washington, D.C. to a company located in California, Florida, New York, or elsewhere in the United States, the administrative procedures are identical.