Gibson Guitar – Lacey Act Criminal Enforcement Agreement
On August 6, 2012, the USDOJ announced that Gibson Guitar had entered into a criminal enforcement agreement to resolve a criminal investigation into allegations that Gibson Guitar violated the Lacey Act by illegally purchasing and importing ebony wood from Madagascar and rosewood and ebony from India.
The criminal enforcement agreement deferred prosecution under the Lacey Act and required Gibson to pay a penalty of $300,000.00 and a community service payment of $50,000.00 to the National Fish and Wildlife Foundation. Gibson is also implementing a compliance program to strengthen its compliance controls and procedures. The government had seized the wood and as a part of the agreement, Gibson withdrew its claims to the seized wood. The USDOJ then declined criminally charging Gibson under the Lacey Act.
The Lacey Act makes it illegal to import plants and plant products (including wood), into the United States, that have been harvested and exported in violation of the laws of another country.
The criminal enforcement agreement set out in detail the facts on which the criminal enforcement agreement was based. From the press release announcing the criminal enforcement agreement, the USDOJ stated:
Madagascar Ebony is a slow-growing tree species and supplies are considered threatened in its native environment due to over-exploitation. Both legal and illegal logging of Madagascar Ebony and other tree species have significantly reduced Madagascar’s forest cover. Madagascar’s forests are home to many rare endemic species of plants and animals. The harvest of ebony in and export of unfinished ebony from, Madagascar has been banned since 2006.
Gibson purchased “fingerboard blanks,” consisting of sawn boards of Madagascar ebony, for use in manufacturing guitars. The Madagascar ebony fingerboard blanks were ordered from a supplier who obtained them from an exporter in Madagascar. Gibson’s supplier continued to receive Madagascar ebony fingerboard blanks from its Madagascar exporter after the 2006 ban. The Madagascar exporter did not have authority to export ebony fingerboard blanks after the law issued in Madagascar in 2006. In 2008, an employee of Gibson participated in a trip to Madagascar, sponsored by a non-profit organization. Participants on the trip, including the Gibson employee, were told that a law passed in 2006 in Madagascar banned the harvest of ebony and the export of any ebony products that were not in finished form. They were further told by trip organizers that instrument parts, such as fingerboard blanks, would be considered unfinished and therefore illegal to export under the 2006 law. Participants also visited the facility of the exporter in Madagascar, from which Gibson’s supplier sourced its Madagascar ebony, and were informed that the wood at the facility was under seizure at that time and could not be moved.
After the Gibson employee returned from Madagascar with this information, he conveyed the information to superiors and others at Gibson. The information received by the Gibson employee during the June 2008 trip, and sent to company management by the employee and others following the June 2008 trip, was not further investigated or acted upon prior to Gibson continuing to place orders with its supplier. Gibson received four shipments of Madagascar ebony fingerboard blanks from its supplier between October 2008 and September 2009.
So, what happens to the seized wood?
More later.
As always, feel free to contact me at walter.james@jamespllc.com
WDJiii