Disclaimer: I wrote this post because I’m hoping that any time someone types “paddlefish caviar” into a search engine, this blog will get a hit. Also, I’ve managed to fit in a reference to the B-52’s, so it’s a win-win.
The federal government has stepped up its enforcement of the Lacey Act, a federal statute that prohibits possessing, buying or selling any “fish or wildlife or plant” in violation of domestic or foreign law. The Act requires that importers of covered products exercise “due care” to determine the source of their goods.
The case against Gibson Guitar last year raised the profile of the little-known Lacey Act. In that case, Gibson used wood from Madagascar for parts of its guitars.
So, how did Gibson fail to exercise “due care,” and what was its punishment?
In 2008, a Gibson employee visited Madagascar with a non-profit organization. During the trip, the employee learned that a 2006 law in Madagascar banned harvesting ebony or exporting any products made from ebony in their unfinished form. Unfinished products apparently included the part of a guitar called a “fingerboard blank.” The employee and the other participants even toured a factory in Madagascar where Gibson sourced these fingerboards and were told that the wood at the factory could not be moved because it was in the process of being seized. The employee reported what he learned during the trip to company management, but it did no good. Gibson received at least four additional orders of fingerboards from the factory.
The good news for Gibson is that it was the test case for a Lacey Act case against a big company. The government agreed to a deferred prosecution agreement in return for payment of a $300,000 fine and a corporate compliance program. Before buying any wood, Gibson must work with suppliers to implement Gibson’s policies, verify chain of custody of the wood, conduct due diligence into the source of wood (which could include site visits) and maintain records, among other things.
The Gibson case is not the only recent big Lacey Act case. Just last week, the Department of Justice announced the largest-ever Lacey Act restitution order of nearly $29.5 million in a case against three executives at a South African company that controlled two U.S. companies. The defendants–Arnold Bengis, David Bengis and Jeffrey Noll–illegally harvested rock lobster from South Africa and shipped it into the United States. They also allegedly bribed South African inspectors along the way. The defendants ultimately pleaded guilty and were sentenced to terms of 46 months, 30 months and 12 months. The key legal issue in the case, though, was the amount of restitution. The district court in the Southern District of New York had initially ruled that restitution was not allowed for criminal charges under the Lacey Act. The Second Circuit disagreed, so it’s off to the races for the government. We’ll no doubt see some large restitution orders down the road.
The Gibson Guitar and rock lobster cases are far from your standard Lacey Act case, though. A few recent Lacey Act cases will give you a flavor for the more run-of-the-mill prosecutions under the statute:
The Paddlefish Caviar Case: Eight individuals were indicted in March 2013 in the Western District of Missouri for illegal trafficking of paddlefish caviar. Paddlefish are found in the Mississippi River and the eggs are often sold as caviar. These eight individuals supposedly conspired to harvest and ship the caviar from Missouri to New Jersey, a state known for its test for caviar from Missouri.
The Elephant Trunk Case: Charles Kokesh was indicted in May 2013 for illegally selling the tusks of a sport-hunted African elephant trophy. What is interesting is that he imported the trophy legally but then sold the tusks illegally. He sold the tusks for $8100 to be paid in “currency and guns.”
The Salt Bait Case: Dennis Rodebaugh (72 years old!) runs a big game hunting outfitter in Colorado. However, he used salt as bait for his clients who desired to kill elk and deer, and this was not allowed under Colorado law. The case went to trial in February 2013, and he was convicted of aiding and abetting six violations of the Lacey Act. His assistant guide cooperated with the government and received a one day jail term.
The Striped Bass Case: William Lowery IV pleaded guilty to illegal trafficking of striped bass in the Eastern District of Virginia in February 2013. The plea agreement recounts that Lowery took a charter fishing trip into a protected area, looking for striped bass, all the while knowing that it was a protected area. When the police approached, he attempted to flee. However, when the police caught up with him, they found a barrel with 13 striped bass “floating in the water near the Anna Lynn.” (The Anna Lynn, of course, was his boat.)