Posted on 09/30/2011 7:36:58 AM PDT by Red Badger
Federal authorities are pressuring Nashville-based Gibson Guitar to hand over an additional 25 bundles of Indian wood that the company allegedly planned to use in its famous guitars.
The complaint was filed today in U.S. District Court for the Middle District of Tennessee and mirrors a 2010 action that sought official forfeiture of wood obtained in a 2009 raid of Gibson facilities. The latter of those cases has been stayed, pending the outcome of the most recent suit.
As has been the case in previous allegations, at issue is the classification of certain wood imported to the United States from India. Namely, a June shipment of 1,250 sawn logs was classified as "finished parts of musical instruments," which is allowed under Indian law. In reality, according to the sworn affidavit of Fish and Wildlife Service agent Kevin Seiler, the wood was unfinished – a violation of the Lacey Act.
The Lacey Act, originally passed by Congress in 1900, was amended in 2008 as part of that year’s Farm Bill to include protection for certain wood and endangered animal species. At its core, the Lacey Act makes it illegal to import plants or wildlife into the U.S. if those goods are harvested in a way that violates the laws of another country.
In other words, because Indian workers didn’t create the final product, it’s not legally eligible to be exported.
The affidavit also outlines allegations that Gibson CEO Henry Juszkiewicz understands the violations, as evidenced by the staunch defense of his company in a press conference and subsequent political fights around the Lacey Act.
“It is clear that Gibson understands the purpose of the Lacey Act, and understands that … fingerboard blanks are not finished fingerboards and thus Gibson is aware that its order for fingerboard blanks was an order for contraband ebony wood or ebony wood which is illegal to possess," Seiler wrote.
Martin is a competitor of Gibson. Fender is Gibson's main Competitor.
Gibson makes solid-body electrics, arch-top electrics, acoustics (with or without elctronics), and bluegrass (banjo, mandolin, and resonator guitars (dobro, although Gibson owns the name "Dobro"). Fender is considered the larger company (they're privately owned so exact figures aren't available), but Fender makes solid-body electrics, arch-top electrics (through its affiliate, Gretsch), acoustics (with or without electronics), and bluegrass (banjo, mandolin, and resonator guitars (dobro, although they're not remotely the quality of Gibson bluegrass).
Martin makes acoustic guitars (with or without electronics).
Martin competes with Gibson's factory in Bozeman, Montana, which has not been raided.
Fender's much larger than Martin.
But it is Martin who has been named throughout this story from the beginning...not Fender. It is Martin who has received these very same blanks in the very same way, but only Gibson has been rousted for it. The CEO of Martin is a heavy dem supporter.
A blogger named Martin as Gibson's competitor early on, which was easy, because Chris Martin IV is an unabashed Democrat. The blogger new enough about guitars to have heard of Martin. Try tracking down the owner and relatively new CEO of Fender.
That blog also said that Martin "used" the same wood, not that Martin got it in the same way. As of course, the 'use' of the wood was never at issue.
That blog mentioned Gibson CEO's Henry Juszkiewicz's few Republican contributions and those he made to an industry group; the blog didn't mention that Juszkiewicz also contributed to Democrats. In fact, the blogger mentioned that he used opensecrets.org, but he didn't mention that the most recent contribution shown on opensecrets.org for Juszkiewicz is one to Democrat Congressman Cooper of Tennessee.
The blogger also didn't mention how involved Juszkiewicz and Gibson are in liberal causes, nor the close relationship between Juszkiewicz/Gibson and Bill Clinton.
From that point, it was like the kindergarten game of 'telephone.' It just got repeated.
And yes, Chris Martin IV is a very heavy Democratic supporter. Other than that, he's pretty quiet. Juszkiewicz is sort of like Ted Turner. He's loud, he's brash, he's everywhere. He's involved in all kinds of liberal causes (Poetry slams for diversity and tolerance? United Nations day of diversity and tolerance? Rainforest alliance? John Lennon touring museum bus? MTV Rock the Vote? Clinton Global Initiative? - that's all Juszkiewicz, not Chris Martin).
First, no new wood is involved. This is the wood that was seized in the August 24, 2011, raid.
The new lawsuit is United States vs. 25 Bundles of Indian Ebony Wood, Case No. 3-11-CV-00913 (U.S. District Court for the Middle District of Tennessee). Earlier this week, a U.S District Judge denied all of Gibson's motions in the ongoing civil case (United States v. Ebony Wood in Assorted Forms, 3-10-cv-00747) and stayed that civil suit after reviewing evidence that continuing to allow civil discovery, at this time, would likely adversely affect the investigation and the prosecution of a related criminal investigation. The evidence came from the Environmental Crimes Section, Environment and Natural Resources Division of the United States Department of Justice, not the Civil Forfeiture Division that was prosecuting the civil forfeiture action.
The court had originally heard the evidence in June and was asked to stay the action then but, after a status conference hearing on July 29, Gibson indicated that it would fully cooperate with the government in answering interrogatories that had been served on Gibson in November 10. The government (not the court) had given Gibson multiple extensions to answer, but Gibson had not fully answered them. Gibson failed to answer the interrogatories, the government renewed its motion for a stay on September 21, and the District Court denied all of Gibson’s motions and stayed the case on September 28.
There are 68 filings in the stayed action - some 178 pages long, with exhibits of internal Gibson emails about dealing with Roger Thunam, a convicted smuggler whose wood was under current seizure by the Malagasy government (a Gibson employee, named Gene Nix spent 2-1/2 weeks in Madagascar and reported back that there was no legal source for the wood)- but they suggest that the target(s) of the criminal investigation may be Theodor Nagel GmbH, a Germany company whose exclusive source for Madagascar ebony and rosewood was Thunam. The owners of Nagel also own a company in California called Luthiers Mercantile International.
Nagel and LMI come into play in the August 2011 raids.
What I know about the facts keep changing because the filings in the civil forfeiture action contains more information than the original affidavit for the search warrant.
On June 10, 2011, Atheena Exports of India, documented the export of “finished parts of musical instruments” to the final consignee, Theodor Nagel GmbH (the German company) in the U.S. The customs paper described the product as a finished part for musical instrument under the international Harmonized Schedule for customs and tariffs (9209 – I’ll leave off the sub categories).
On June 27, 2011, a shipment of Indian ebony is stopped by Customs and Border Patrol (CBP) agents at the Dallas, Texas Port of Entry (the DFW airport). There’s no Lacey Act declaration. The shipment is marked as 4408 (WOOD VENEER <6MM THICKNESS). It’s not marked 9209, which would have required payment of a tariff. The paperwork says to notify Luthiers Mercantile International of California upon arrival and to ship interstate to the address of a Red Arrow Delivery Service Warehouse in Nashville. Nothing on the paperwork says there’s a final consignee in Nashville other than Nagel. Gibson’s name doesn’t appear anywhere on any paperwork.
Veneer (4408) makes sense. A guitar maker uses it on the headstock of guitars and bends it to make the back and sides of acoustic guitars. India’s HS specifically says that 4408 products may be exported without tariff.
Customs agents inspect the container. It doesn’t contain veneer. It contains rough pieces of cut wood about 10mm thick – they’re fretboard blanks. Since 1993, customs rules have said that guitar fretboard blanks are a 4407 item (cut, split, or chipped wood over 6mm thick). Guitar makers (luthiers) had sought that HS classification because it kept them from paying a tariff on a 9209 finished item.
Unfortunately, Indian law prohibits the export of 4407 items (India’s HS is online; I’ll post it for those who doubt it).
Natalie Swango, the General Manager for LMI shows up and produces a Lacey Act declaration that was signed back on June 17, before the shipment arrived. It was never filed. The Lacey Act declaration shows Gibson Guitars as the final consignee with a note, “Attention: Herb Jenkins.” Herb Jenkins orders wood for Gibson.
According to the Wildlife Inspector (and confirmed by Swango, because she later says she was mistaken in telling the WI), she says that Gibson is the final consignee and the import paperwork is wrong.
The feds track the shipment to the Red Arrow Delivery Service Warehouse.
There, they find another shipment of fretboard blanks from India. This shipment came in through Canada on paperwork listing LMI as the final consignee. The WI speaks with a manager at the warehouse (her name’s in the documents) who says that the wood belongs to Gibson and is delivered to Gibson as Gibson asks for it. The manager also gives the WI an email from LMI stating that LMI is not the final consignee, despite what’s shown on the import and customs papers. Gibson Guitars is the final consignee.
The feds raid Gibson and the Red Arrow warehouse and seize wood, computers and a thumb drive.
Contrary to everything that was written in the press and reported on blogs for a month, the feds seized Indian ebony, not rosewood. That doesn’t make much of a difference, but it does show that you can’t believe all the details you read.
LMI has now submitted revised paperwork stating that the correct import code should have been 9209.
So . . . U.S. law says that fretboard blanks are a 4407 item and aren’t subject to tariff. U.S. law has said that since at least 1993. Indian law prohibits the export of 4407 items.
U.S. law says that finished products for musical instruments are 9209. Indian law permits their export.
In this case, LMI and Theodor Nagel tried three different HS codes, avoided paying tariffs, changed the HS code and description to a product that Indian law permitted to be exported without tariff, engaged in some kind of strange clusterdance regarding who happened to be the true final consignee depending on the time of day.
LMI and Nagel are probably the targets of an ongoing criminal investigation, based on what’s happened in the other civil forfeiture action.
So . . . as I said. It’s not nearly as simple as it seems.
I’ve read all of the documents in the Madagascar case that was just stayed. I’ve been following it since it was filed. I’ve read the Gibson emails and other statements – as well as some of Gibson’s admissions in discovery.
In the case of the August 2011 raid, I think the government is technically correct on the law but has taken a position that isn’t practical. However, Gibson imported fretboard blanks from India eleven other times in the last thirteen months and the government didn’t confiscate any of those shipments, nor raid Gibson any of those times. The involvement of LMI and Nagel, the repeated changing of the HS code, the use of ‘ghost’ final consignees, and misleading descriptions (that, of itself, a Lacey Act violation), could be the problem here. That could make the wood contraband when LMI/Nagel imported it and before Gibson touched it.
I think Gibson should get its wood back from the 2011 raid – unless there are damning documents in Gibson’s computers, like the motherlode of damning emails in Gibson’s computers regarding Gibson’s knowing purchase of Madagascar wood, our from under government seizure, from a convicted wood trafficker just released from custody, after noting that there was no “legal” or “legitimate” source for the wood. As for the Madagascar ebony? If you read those documents, when you almost certainly agree that Gibson knew it was taking a risk (or knew it was doing something illegal) and it got caught.
The 2011 raids? What’s the government going to do? Ask the Indian producers to run a router along one side of the fretboard blank?
Dedicated dicks.
Economics won’t be a factor in the defense. They will argue that it is finished the way it is imported. I hope they win.
It is morally indefensible that they were raided by SWAT teams. In what way is an established iconic guitar manufacturer a threat to the police serving a warrant? A couple of men in suits and some people with side arms with would have sufficed. The “show of force” is a real problem for me and I hope it becomes an issue in the campaign.
When Democrats are in power, they seem to love using these heavily armed divisions to raid American people - Ruby Ridge, Waco, Elian Gonzales, Gibson Guitar... the list goes on. Now it could be a case of selective memory, but I truly don’t recall similar types of raids under GHWB.
“The CEO needs to send a check to the DNC or Obama re-election campaign and the heat will, unexpectedly, turn off. If they were raiding other guitar entities, it wouldn’t look so obvious, but, this administration doesn’t care how obvious they look; they know they will get away with it.”
Bingo.
All these Federales get their paychecks no matter what and no Fed is ever ever ever fired for stupidity or incompetence. They are making it so that Gibson workers will not get their paychecks. Feds are heartless cruel bassturds and anti-business. Do they ever suffer for their evil actions against American companies that provide good jobs to American workers?
Obama always talks about jobs...the stunning hypocrisy here. At the most the Feds should give Gibson a stern warning and tell them not to do this again
Thank you for this informative post. More information is better, and it’s clear that these crack investigators that have managed to track down all this illegal wood importation are going way above and beyond their call of duty. Brilliant detective work, trying to snoop out imports that evade taxes and tariffs.
I thank God himself these violent wood importers are being caught. I think they need to be publicly caned and executed for their vile, evil, despicable, horrid transgressions against the good of society. After all, once you accept wood that is illegally shipped here, it’s a short slide down the slippery slope to having the entire government undermined and under funded and having to borrow money.
It is now clear to me that the Federal Government, in it’s infinite wisdom, needs to outlaw trees altogether to stop this violent blood lust. It’s time to burn all trees down.
I understand your sarcasm regarding the 2011 raid. However, I don't anything was done solely to avoid paying the 5.7% tariff.
And I think the government's differentiation between HS 9902 and 4407 is overly legalistic.
But the entire import scenario was outlandishly strange - strange doesn't mean illegal or meant to cover up something illegal - but strange.
If I import "Product A", then I'd expect Importer 1 to import it as Product A, with me listed as Consignee. Unless, of course, Product A is illegal to export.
I wouldn't expect illegal Product A to be exported with papers listing it as legal Product B, which are then changed to papers listing and describing it as legal Product C, showing Fake Consignee X as the buyer.
When the product arrived, I wouldn't expect the importer to say that fake Consignee X wasn't the consignee, it was fake Consignee Y, and to declare that the product wasn't actually ordered by me, but by fake Consignee Y, while sending an email to a warehouse saying "ignore the papers that mention Consignee Y, because the consignee's always been this other guy."
And then, when the feds shown up, to have the importer say "forget all that stuff about Product A and Product C, we meant to list it as Product B from the beginning, and forget all of the different pieces of paperwork we've filled out identifying Consignees X and Y and Consignee; they were never consignees; Product B has belonged to us all along as was meant to be our Product B."
At some point you say: "what were you people really trying to do?
And what you've said would certainly apply to tobacco. It's just a leaf. Why in the world arrest somebody who is involved in the smuggling of cigarettes which haven't had the tax stamp applied to the carton/package, using a couple of misleading descriptions, misleading paperwork, and some names of bogus buyers and owners. It was just a leaf, and it's just a tariff or tax that's involved.
Spending energy attacking companies that don't donate $$ to them.
They couldn't find feces in an outhouse.
But they do such a good job detecting such lethal imported goods, imagine if they set these bloodhounds after actual important stuff, like Obama’s qualifications to be president, or fast and furious documentation, or who the hell is Valarie Jarett, and why is she running the white house.
No, let us all focus our attention way WAY over there, at those evil profit-making luthiers importing with hostile intent, wood.
Wood.
Seriously? Is this a $787,000,000,000 shovel ready investigation? This is what the administration needs to be doing? This is what is newsworthy to all the media? Really?
Amen. The issues you listed are vital to the very nature of our society and the nature of our government. They're being ignored by the Department of Justice and the media. Fox News isn't even doing a good job with Gunwalker/Fast & Furious or Valerie Jarrett.
But this Fish and Wildlife Agents are doing what the law tells them they are supposed to do. The Lacey Act was amended by bipartisan support (Republican Senator Lamar Alexander of Tennessee, who received money from Gibson's CEO, was one of the co-sponsors), was passed by a wide bipartisan margin, and was endorsed by the Rainforest Alliance while Gibson's CEO was a board member. The idea shouldn't be "stop them because Gibson was caught," it should be "amend or abolish the law because its wrong."
And the story isn't newsworthy to all the media. It's being ignored except in the conservative media and the guitar media. In the conservative media, the story is "jackbooted Obama thugs are after poor Gibson." The conservative media said "Gibson imported wood with the Indian government's permission and was raided anyway." There's no mention of changing the import code twice, avoiding tariffs, using fake final consignees, emails to tell people to ignore customs paperwork, false descriptions on shipping containers - all things that may be minor one at a time, but if listed in bulk may make people view the story in a different light if somebody had been willing to publish them.
In the guitar media, the story is "wait, let's make certain Lacey doesn't apply to sale of personal guitars and let's make certain it's easy to take personal guitars with you when you cross international boundaries. And, oh yeah, Gibson was caught doing something shady again; what a surprise."
All that said, if we could ask all federal enforcement agents to stop what they were doing for about six months and ask them simply to investigate the illegal dealings of Obama and the infestation in the White House, I would enjoy watching the fireworks with you on a large flatscreen. I'll bring the guacamole. I'd hope we could bury the hatchet.
I don’t mean to imply that I oppose what you’re saying here, no need to bury the hatchet. I most certainly appreciate your elucidation of details of this whole story that I’ve not seen anywhere else. It does implicate Gibson if what you’ve related here is true.
But...
This story in the greater scheme of things goes into my “pass enough laws and everyone will find ways around it and become criminals, therefore the plan to criminalize everyone is working to perfection” folder of WTF stories.
The laws need to be repealed. God provides a bounty of riches on this planet, and gave us the smarts to utilize said riches to our best advantage. Smartass Earth worshippers convince Poll-worshiping lawmakers to make illegal the conduction of business, the free enterprise of making things, and we’re supposed to support the law and order side of the ledger? I say Gibson is doing what normal people do when confronted with excess governmental rules and regulations.
Wood. It is astonishing that after arguing for years that outlawing marijuana is like outlawing trees, it’s almost come to pass. When is the revolution?
Hi monkeyshine,
Thanks for your reply. I screwed up the heart of my argument: that fingerboard blanks should be considered finished products because you can’t do anything much with a fingerboard blank except make fingerboards. We needn’t worry about seeing the wood diverted to say, building up-scale birdhouses.
It just occurs to me: picture frame moldings are sold to frame shops in continuous lengths. Are any of these imported? It’s analogous.
No argument about cops new ninja-look. There was this scene in the movie “Brazil” ....
Hi monkeyshine,
Thanks for your reply. I screwed up the heart of my argument: that fingerboard blanks should be considered finished products because you can’t do anything much with a fingerboard blank except make fingerboards. We needn’t worry about seeing the wood diverted to say, building up-scale birdhouses.
It just occurs to me: picture frame moldings are sold to frame shops in continuous lengths. Are any of these imported? It’s analogous.
No argument about cops new ninja-look. There was this scene in the movie “Brazil” ....
Hi monkeyshine,
Thanks for your reply. I screwed up the heart of my argument: that fingerboard blanks should be considered finished products because you can’t do anything much with a fingerboard blank except make fingerboards. We needn’t worry about seeing the wood diverted to say, building up-scale birdhouses.
It just occurs to me: picture frame moldings are sold to frame shops in continuous lengths. Are any of these imported? It’s analogous.
No argument about cops new ninja-look. There was this scene in the movie “Brazil” ....
I need to re-read a few more times to ingest it, but it seems that Gibson is being used to get at the real targets, LMI and Nagel. Is that correct (assuming no evidence showing direct involvement-- instructions from Gibson to evade the laws) surfaces?
What's disturbing to me is that the government is penalizing a business for depending on other businesses whose focus and expertise are remote from their clients'. Is Gibson legally obliged to know the intricacies of Indian export law?
You relate that:
...Gene Nix spent 2-1/2 weeks in Madagascar and reported back that there was no legal source for the wood ...
This seems pretty damning, but supplies of this sort ebb and flow on the market. Maccasar Ebony has been marketed to guitar builders as a substitute for African varieties for some time now. I assumed that it was relatively plentiful, if subject to seasonal supply fluctuation.
Again, your explanation is golden, and I don't mean to waste your time on this. It's just some of the legal terminology makes it a little unclear.
I should mention ahead of time: replying to these questions will likely prompt more. Forewarned is fair-warned :-)
Thanks again.
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