Monthly Archives

November 2010


Unhappy Holidays for Some International Flight Attendants Courtesy of U.S. Customs

posted by Jennifer Diaz November 27, 2010 1 Comment

Every few weeks, I get a call from an international flight attendant who wants my help to deal with a huge fine issued by U.S. Customs and Border Protection. The typical scenario is that while the nice international flight attendant is traveling overseas, she purchases some counterfeit, luxury brand handbags, wallets, watches or jewelry for friends, family, or co-workers back in the States.  Flight crews are rarely stopped and searched by U.S. Customs upon return to the United States, so the risk is low. Unfortunately, some do get stopped, and the Customs officer seizes the counterfeit items.  That is just the beginning of the nightmare.

Some weeks after Customs seizes the counterfeit items, the flight attendant will receive a formal written Seizure Notice stating what was seized, why it was seized, and providing an opportunity for him or her to file a Petition. Since the flight attendant typically only spent a few hundred dollars, and the stuff is clearly counterfeit, most people don’t bother to file a Petition, and the merchandise is automatically forfeited to U.S. Customs.

What the flight attendants need to know is that after the merchandise is forfeited, Customs will send a second letter assessing a fine pursuant to 19 U.S.C. 1526(f). The fine is equal to the Manufacturer’s Suggested Retail Price (MSPR) as if those counterfeit items were real. So, instead of a fine of a few hundred dollars for a few, counterfeit Rolex or Chanel watches, the fine might total $100,000, as regular readers know from my August 10, 2010 blog post "U.S. Customs Inflates Seizure Statistics".

Now, the flight attendant (or your regular international passenger with the same problem) realizes that he or she needs to get a customs attorney ASAP to file a proper Petition to get the fine reduced or canceled.  If only the flight attendant had read my January 24, 2010 blog post, "Yes, You May Legally Import Counterfeit Merchandise into the United States," there would have been no seizure, and hence, no fine. 

Anyway, I am always available to help a flight attendant in distress with U.S. Customs. Who knows, maybe the flight attendant will return the favor someday with some extra peanuts or, better yet, a complimentary upgrade to first class.  :))

U.S. Office of Foreign Assets Control (OFAC)

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

posted by Jennifer Diaz 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".


EPA Compliance Webinar November 30, 2010, by NCBFAA

posted by Jennifer Diaz November 18, 2010 0 comments

The National Customs Brokers and Forwarders Association of America (NCBFAA) is hosting a webinar on the topic of "EPA Import Compliance – What To Do When Things Go Wrong".

The webinar will focus on the practical import compliance policies and procedures of both the U.S. Environmental Protection Agency (EPA) and U.S. Customs and Border Protection (CBP) for the importation of mobile source equipment such as non-road and marine spark ignition engines in motorcyles, generators, and lawn mowers. 

An introduction to the EPA’s enforcement of the Clean Air Act through its regulations will be discussed.  Learn about ‘EPA Certificates of Conformity,’ ‘ EPA Administrative Settlement Agreements,’ and the proper use of EPA Form 3520.

Real-life examples of detentions and seizures by CBP will be used, along with a step by step "how to" resolve seizures and penalties by CBP and settle civil penalty cases with the EPA.

Registration may easily  be done on-line by clicking on this "Register Now"  link, or by calling Brian Barber, Director, NCBFAA Educational Institute, at (202) 466-0222.

U.S. Customs and Border Protection (CBP)

Why is U.S. Customs Issuing So Many Requests for Information (CBP Form 28)?

posted by Jennifer Diaz November 7, 2010 2 Comments

WARNING!  U.S. Customs and Border Protection (CBP) has issued a record number of CBP Form 28s (Request for Information) and CBP Form 29s (Notice of Action) so far this year.  Import Specialists of CBP at ports of entry all over the United States are sending out these forms to importers demanding responses.  If the responses are not satisfactory, the CBP officer will demand payment of customs duties. What an importer states in its response to CBP may result in CBP taking no further action, assessing customs duties, issuing a monetary penalty notice, or even referring the case for criminal prosecution. 

A CBP Form 28 is entitled "Request for Information", and it demands that a response be submitted by the importer of record, in writing to CBP, within 30 days of the date of the Request.  The response is typically signed and dated by a company official, usually a corporate officer or manager.  Moreover, the company employee who signs the form certifies that the statements made by the company are true and correct.  The person who signs the CBP form is reminded that false statements on the form to CBP may result in criminal prosecution against that person.

CBP may demand records and assess penalties, demand payment of duties, or take other legal action up to 5 years after an entry of a shipment is made in the United States, according to 19 U.S.C. 1509, 19 U.S.C. 1621, and 19 CFR Part 151.  A Request for Information form may be the first step for CBP to discover violations committed by an importer.  Typically, the CBP officer demands proof that a certain product ((often a textile) qualified for the free trade agreement identified by the importer when it brought the shipment into the United States.  Another typical demand from CBP is an explanation from the importer why a shipment of a certain item from a certain country (often China) should not be subject to anti-dumping duties.  The most common problem remains that CBP believes that an importer failed to declare the proper tariff classification on the imported product, thereby attempting to avoid paying higher customs duties.

Why CBP is now issuing a record number of CBP Form 28s has not been disclosed to the public. Maybe it is the Federal Government’s misguided effort to collect additional revenue, or maybe CBP discovered that importers are not properly declaring shipments as accurately as they did in prior years.  Whatever the reason, importers and customs brokers must be careful when drafting and filing a written response to CBP. 

I am regularly hired by importers or customs brokers only after CBP has taken action against the importer or broker which resulted from not carefully responding to a CBP Form 28.  Rather than getting hired after ‘the horse is out of the barn,’ it sure would be easier for a customs attorney like me to get hired to draft the response to the CBP Request for Information.