Tag

penalty

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 PracticesBISEventsExportFreight ForwardingOFACUncategorized

Freight Forwarder Pays $125,000 Mitigated Penalty – Avoid This & Learn 11 Steps to Exporting

posted by Jennifer Diaz May 28, 2014 0 comments

Aramex Emirates, LLC, located in Dubai, United Arab Emirates (U.A.E.), agreed to pay a $125,000 civil penalty to the U.S. Department of Commerce’s (DOC) Bureau of Industry and Security (BIS) for the unlicensed export and reexport to Syria, via the U.A.E., of network devices and software without the required BIS licenses.

The Under Secretary of Commerce Eric L. Hirschhorn commented:

Today’s settlement shows the importance of compliance with U.S. law by foreign freight forwarders handling items subject to U.S. export controls.

The items in question could be used by the Syrian government to monitor Internet activity and block pro-democracy websites as part of its brutal crackdown against the Syrian people.

Continue Reading

Best PracticesBISCBPExportFreight ForwardingInvestigationOFACSpeaking

Export Penalties Already Total $184 MILLION in 2014 – Want to Learn Who, What, Why & How to Stay Compliant?

posted by Jennifer Diaz April 23, 2014 0 comments
 
Within just the first nine weeks of 2014, almost $182 million dollars in penalties have been assessed against companies for OFAC and ITAR export violations.  Within those same nine weeks alone, companies have been ordered to pay the Department of Treasury almost $25 million dollars more than was ordered in all of 2013. Simply put, compliance is critical, and non-compliance is costly!
 
Don’t miss this update on export enforcement actions stemming from a busy 2013 and start of 2014. 
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.

 

FoodFSMA

2012 International Boston Seafood Show

posted by Customs & International Trade Law Blog March 12, 2012 0 comments

The annual International Boston Seafood Show is today and tomorrow at the Boston Convention Center.  The Show attracts 19,000 visitors, and is the largest seafood show in North America.  See www.bostonseafood.com.  I am again lecturing on the Food Safety and Compliance Track with emphasis on the implementation of the Food Safety Modernization Act of 2011: What every food importer and customs broker needs to know – now.

My topic is "Food Safety Compliance under the New Food Safety Modernization Act of 2011."  My fellow panelists discussing the FSMA, and import safety generally, include Ted Poplawski from the FDA, Judith Webster from U.S. Customs and Border Protection (CBP), Howard Tennen from Quirch Foods, Dean Leaman of ABC Research Laboratories, and Dan Fone of NSF International.  Since 80% of the seafood consumed in the United States is imported, compliance with the food safety laws and regulations that have now been implemented by the FDA, in cooperation with CBP, is critical.

There were a record number of FDA Import Alerts for seafood in 2011, and a higher number of imported shipments of seafood are now the subject of Detention Without Physical Examination (DWPE). What is surprising to many people is that the seafood is not just being stopped and inspected from China, but also Vietnam, Chile, and Canada, to name a few.  Moreover, seafood fraud in many forms such as species substitution or false country of origin to avoid the payment of anti-dumping duties is now being discovered by the FDA, CBP, and NOAA.  Criminal prosecutions and civil penalties by CBP are now front page news.

Thank you to Diversified Business Communications, based in Portland, Maine, for again inviting me to be a speaker at the Show.  See www.divbusiness.com.

By the way, the abundance of free seafood is FABULOUS at the Show!

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

Import

Homeland Security Says U.S. Customs Bonds are Insufficient

posted by Customs & International Trade Law Blog August 13, 2011 0 comments

The Office of Inspector General (OIG) of the U.S. Department of Homeland Security (DHS) issued a report criticizing U.S. Customs and Border Protection (CBP).  In a June 2011 report entitled "Efficacy of Customs and Border Protection’s Bonding Process," DHS concluded that up to $12 billion in single transaction bonds for importers may fail to be collected.   Considering that approximately $2 trillion of goods are imported into the United States each year, and that CBP collects about $32 billion in duties, taxes, and fees, $12 billion is a heck of a lot of money to lose.

Let’s discuss some fundamental customs laws and policies first.  A bond is a contract between a principal (i.e. importer) and a surety (i.e. insurance company), with CBP serving as the beneficiary when an importer fails to pay any duties, taxes, and fees assessed by CBP on the imported merchandise.  The single transaction bond amount for the importer established by CBP is typically 1 to 3 times the total value of the imported merchandise for that particular shipment, plus duties, taxes, and fees.  If the importer does not pay the assessed amounts promptly, a liquidated damages claim is issued by the Fines, Penalties, and Forfeitures (FP&F) Office of CBP against the importer and the surety company.  

Although in theory, this type of insurance policy should pay CBP in full every time, it does not really work that way.  Blame it, in part, on anti-dumping and countervailing duty cases.  The U.S. Government Accountability Office (GAO) estimates that it takes over 3 years in anti-dumping or countervailing duty cases between the initial entry of merchandise subject to an anti-dumping or countervailing duty order, and when the final duty bill is issued to the importer.   Importers that are unwilling or unable to pay, or have already gone out of business, result in a loss of revenue to CBP. 

According to the OIG Report, CBP has written off tens of millions of dollars "because of inaccurate, incomplete, or missing bonds" such as a lack of signatures or inaccurate transaction numbers.   Moreover, it turns out that CBP is not doing a good job of keeping copies of the bonds, but often relies upon the customs brokers to do so.  The OIG Report concluded that "there is a potential for collusion between the broker and the importer."  Well, at least, for once, DHS and CBP don’t blame this problem on those pesky customs lawyers.

So, you ask, what will happen now.  No surprise this time – CBP will certainly re-evaluate its current monetary guidelines, last significantly updated in November 2010, to establishing higher bond limits, especially for food and drug products regulated by the FDA which pose a potential threat to the public health and safety.  Importers should expect to see such letters from CBP’s Revenue Division at the National Finance Center located in Indianapolis, Indiana, and more liquidated damages claims from the FP&F offices around the country.

TSA

TSA 100% Air Cargo Screening Update – 6 Months Later?

posted by Customs & International Trade Law Blog March 3, 2011 1 Comment

On Thursday, March 10, 2011, from 12 noon to 1:30 p.m. EST, Marc Rossi, Chief, Cargo Screening, TSA Headquarters will speak at a webinar hosted by the National Customs Brokers and Forwarders Association of America.  Shippers, indirect air carriers (IACs) or freight forwarders, and international airlines will benefit from learning about the newest policies and requirements by the Transportation Security Administration (TSA).  Sign up here to take advantage of this webinar opportunity.

A quick chronology is important.  On Aug. 3, 2007, President Bush signed into law the Implementing Recommendations of the 9/11 Commission Act of 2007 (9/11 Act). The 9/11 Act required TSA to establish a system for the air cargo industry to screen 100% of cargo transported on passenger aircraft in the United States at the piece level.  That goal was achieved in August 2010.

This webinar is a natural follow-up to my April 7, 2010 blog post entitled “TSA 100% CARGO SCREENING RULE EFFECTIVE AUGUST 1, 2010.”  It is just over 6 months since the TSA had implemented its 100% cargo screening requirement, so it’s time for a check-up. While Marc Rossi will focus on the operational requirements of 100% air cargo screening as part of the Certified Cargo Screening Program (CCSP), I will focus on the legal requirements of the TSA for IACs, as well as explain how to respond to a TSA Letter of Investigation and a TSA Notice of Proposed Penalty for any alleged failure to comply with some TSA requirement.

The 100% Air Cargo Screening by TSA – How’s it Going 6 Months Later? webinar is sponsored by the National Customs Brokers and Forwarders Association of America (NCBFAA), and you may participate in the webinar by registering on-line, or calling (202) 466-0222 .

BISExport

Save Money by Admitting Your Export Violations to the U.S. Commerce Department

posted by Customs & International Trade Law Blog December 12, 2010 0 comments

Sometimes it is beneficial for an exporter to voluntarily self-disclose its export violations to the U.S. Government.  Maybe an exportation of an item occurred without first obtaining the necessary license, or maybe the item was shipped to a company overseas other than allowed in a license. Both situations are violations of the Export Administration Regulations, and both violations could result in $250,000 penalties against the exporter. By voluntarily self-disclosing the violation, the exporter would reduce, and might even eliminate, such a penalty.

For a suspected violation of 15 CFR 764.2 of the Export Administration Regulations (EAR) enforced by the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce, an exporter may submit a voluntary self-disclosure (popularly known as a "VSD") to the Office of Export Enforcement of BIS at its Washington, D.C. headquarters office.  The contents of what must be included in a VSD are established in 15 CFR 764.5.

Procedurally, once a properly filed VSD is received by the BIS, it is investigated by a Special Agent from the Office of Export Enforcement. If a penalty or other sanction is contemplated, the case is referred to an attorney with the Office of Chief Counsel of BIS.  The BIS attorney will contact the exporter’s attorney, eventually resulting in a written Settlement Agreement between the exporter and the BIS.  Negotiating the terms of the Settlement Agreement is critical.

The Obama Administration is actively pursuing export control reforms. Importantly, Kevin Wolf, Assistant Secretary of Commerce for Export Administration, on November 9, 2010, at the Global Trade Controls Conference in London, England, stated:

Enforcement will become an even higher priority…We have long promoted the submission of voluntary self-disclosures (VSDs).  We view VSDs, along with internal compliance programs, as important mitigating factors. 

There will always be occasional errors by exporters.  Exporters should consult with knowledgeable and experienced international trade attorneys before submitting a VSD.  With more enforcement, there are sure to be more investigations and more penalties assessed by the Government against exporters, and likely more VSDs submitted to the Government by exporters.

OFAC

Miami Aircraft Company Pays $225,000 Fine for Lying to OFAC

posted by Customs & International Trade Law Blog November 26, 2010 1 Comment

Pinnacle Aircraft Parts, Inc., based in Miami, Florida, just paid $225,000 to the U.S. Office of Foreign Assets Control ("OFAC") regarding OFAC’s investigation of a jet engine that may have been shipped to Iran.  This case is unique in that OFAC did not assess the fine because the jet engine was actually shipped to Iran, but because Pinnacle Aircraft Parts failed to properly comply with it subpoena to provide all records about that shipment.

OFAC certainly has the authority to issue an administrative subpoena, and to demand documents for any alleged sale of a jet engine to Iran. See 31 CFR Section 501.602, which states:  

Every person is required to furnish under oath, in the form of reports or otherwise, from time to time and at any time as may be required by the Director, Office of Foreign Assets Control, complete information relative to any transaction,…

Pinnacle received such a subpoena demanding "all correspondence and other documents" related to the payment and transportation of the jet engine.  Through its outside legal counsel, Pinnacle provided 260 pages of responsive documents, however, according to the OFAC’s Enforcement Information notice for November 16, 2010

[Pinnacle] failed to submit a copy of a post-sale e-mail – which Pinnacle had provided to its [legal] counsel – indicating that the aircraft engine was likely destined for Iran…

OFAC determined that the failure to produce the responsive document was "egregious", resulting in almost the maximum penalty of $250,000. OFAC concluded that Pinnacle "knowingly withheld" the relevant documentation. Pinnacle’s unfortunate reliance on the incorrect advice of its outside legal counsel, usually a huge mitigating factor, only resulted in a 10% discount.

I have only one question for the lawyer or law firm that advised its client not to disclosure the e-mail to OFAC:  Did you attend the International Law Section of the Florida Bar’s September 24, 2010 seminar on OFAC at which I discussed this very topic?  See prior Blog post dated August 30, 2010 entitled "Forbidden Places for Tourism and Trade".