Import Export Business Criminal Case.

While often referred to as “import-export crimes,” the types of conduct that can violate U.S. laws and regulations are broad, and many violations that could be considered “criminal” on their face will, in reality, carry only civil or administrative penalties. That said, federal law enforcement routinely pursues civil or administrative cases that, upon investigation, shift toward criminal prosecution. This makes it critical to engage counsel early to ensure that the case is classified correctly and that you are prepared to handle the consequences of the investigation.

Common Allegations of Import-Export Violations

Allegations of violations in the import/export industry frequently overlap. For example, allegations of smuggling may involve both false declarations and failure to pay customs duties. Likewise, allegations of smuggling restricted goods may involve false declarations, smuggling, and failure to pay customs duties. While these issues are related, they fall under different statutory provisions, each with its own potential penalties. Because of this, early classification of the investigation will be critical, as will your company’s duty to preserve any documents that are the subject of the inquiry.

Criminal Exposure in Import-Export Violations

Import-export business violations that carry the potential for criminal penalties depend on the particular offense at issue and the particular mental state required to establish that offense. This means that the same act can be civil, administrative, or criminal depending on the specific circumstances, and in many cases, a civil or administrative investigation that results in the imposition of penalties can then serve as the basis for initiating a criminal case.

Our attorneys can help you understand what type of exposure your company faces, assess the validity of the government’s allegations, and help you make informed decisions about the steps you need to take to protect your business.

Concurrent Criminal Violations, Offense Classification, and Federal Prosecution Consequences

Similar to other import-export violations, criminal violations involving the U.S. Customs and Border Protection (CBP) can also involve concurrent violations of other criminal statutes. For example, any act that constitutes smuggling under the Tariff Act can also trigger conspiracy and aiding-and-abetting charges, as well as various other crimes and charges depending on the specific circumstances involved.

When are Import/Export Violations Not Felonies?

Finally, not all import-export violations that are categorized as “criminal” are classified as felonies, and not all potential criminal violations are prison offenses. However, the nature and severity of the potential consequences of an import-export enforcement action will be one of the most important issues in determining the optimal defenses to assert.

How Do Customs Fraud, Export Controls, Sanctions, Anti-Boycott, and Drug Allegations Differ?

While customs fraud, export controls, sanctions, anti-boycotting, and drug allegations all fall under the umbrella of “import-export law enforcement matters,” they all involve unique legal issues and unique factual and legal considerations. For example, in a customs fraud case, a key issue will be whether your company’s representation to U.S. Customs and Border Protection was intentional, while in an export controls case, the key issues will likely be whether the merchandise you exported is subject to export licensing, whether a license was available, and whether you had the required knowledge for criminal prosecution. Similarly, while all export licensing cases will involve an inquiry into the nature of the goods being exported, they will each also involve a unique inquiry into the quantity of the goods, the destination of the goods, the reporting requirements for export transactions, etc. For example, OFAC administers United States’ sanctions, certain origin restrictions, and export licenses for transactions involving controlled countries. Criminal sanctions violations can carry up to 20 years of imprisonment and $1 million in fines, and violations of export licensing requirements can lead to up to 20 years of imprisonment. OFAC export licensing requirements can, however, be waived or revoked without the need to establish criminal intent. Export licensing (non-OFAC) will be a concern for transactions involving restricted items, quantities of items, or restricted destinations. Willful failures to report these export transactions to the government can carry fines and imprisonment of up to five years. Federal anti-boycott law prohibits U.S. companies from participating in “unapproved” foreign boycotts. Customs fraud cases involve intentional misrepresentations to the government intended to evade duties/tariffs, import contraband (drugs, stolen property, wildlife, etc.), or commit other forms of customs-related fraud. Allegations of illegal import/export of drugs, controlled substances, medical-grade narcotics, and other items are generally investigated or prosecuted by the DEA and DOJ in the U.S. District Courts.

Which Federal Agencies Investigate Import-Export Allegations?

As discussed, CBP handles customs entry, classification, valuation, payment of tariffs, duty enforcement, inspection/searches and seizures, and other import-related enforcement matters. These and other federal agencies’ duties include:

• Bureau of Industry and Security (BIS): BIS administers EAR export controls and EAR licensing requirements. While OFAC license requirements are often focused on countries, EAR license requirements are often focused on the item, quantity, or destination.
• Office of Foreign Assets Control (OFAC): OFAC administers United States sanctions, certain origin restrictions, and export license requirements for transactions involving controlled countries, territories, and organizations.

Which Other Agencies Are Involved in Import/Export Law Enforcement?

While CBP handles most import-export business investigations, these matters involve multiple other federal agencies. The DOJ, FBI, and DEA have their own roles in enforcing federal law related to customs fraud, smuggling, export controls, sanctions, anti-boycotting, narcotics import/export, and other criminal and civil offenses. These agencies often work together and, in certain circumstances, an administrative investigation involving CBP can turn into a criminal investigation involving the DOJ, FBI, or another agency.

What Follows the Government’s First Document Demand in a Customs Investigation?

In cases involving imports to the United States, government investigations typically begin with a document demand or administrative summons. This summons or document demand will seek the import of the company’s supporting import documentation, including the shipping manifests, invoices,bills of lading, packing slips, delivery receipts, and any other documents that may be pertinent to the investigation. At this point, Customs and Border Protection (CBP) officers are able to determine whether the company is in compliance with the customs laws and regulations, and if not, then it is able to determine what additional investigative steps are needed. At this point, if the customs record does not satisfy Customs and Border Protection, the importer must respond in accordance with U.S. government demand rules, and if they do not, the government can, and often will, seek court enforcement of its document demand or administrative summons.

Are Importers Compelled to Produce Requested Customs Documents?

Yes. Under 19 U.S.C. § 1509, CBP may issue a customs summons requiring an importer or other person to produce records relevant to a customs investigation. Importers must then produce the requested documents or face civil and criminal penalties.

What Do Trade Documents, Reasonable Care, and Intent Determine in Import-Export Cases?

Import-export violations often are complex issues that require a substantial understanding of the federal statutes and regulations involved. Similar to other white collar cases, import-export cases also frequently involve complicated, highly-technical inquiries that can require considerable effort to uncover, analyze, and rely upon in litigation. To combat these challenges, our attorneys are prepared to assist in the following areas of the investigation or litigation:

• Trade Compliance and Customs Counsel: Trade compliance involves all aspects of the paperwork, licensing, classification, valuation, and calculation of tariffs and duties owed, in addition to screening for sanctions violations and destination review. Our attorneys assist with all aspects of importers and exporters’ trade compliance needs, including assisting with both voluntary and compulsory requests for documents and other records, as well as representing clients in customs-related investigations.
• Trade Compliance and Customs Investigations: Both businesses and individuals can face customs-related investigations, often involving demands to produce import documentation, as well as demands to comply with customs laws and regulations going forward. Our attorneys represent businesses and individuals in all customs-related investigations, including: - Smuggling, - Customs Fraud, - Export-Import Reporting Violations, - and, other violations related to CBP’s enforcement of import/export laws and regulations.
• Customs Audits: In customs audits, officials are able to demand the import of documentation identifying and describing the imported goods, the shipping manifest, commercial invoice, bill of lading, packing list, delivery receipt, and other documentation to determine if the imported goods are appropriately classified, assessed tariffs and taxes, and subject to any other licensing or other restrictions. When companies’ documentation is insufficient, customs officials can classify and assess taxes, which the company is responsible for paying unless they can demonstrate that they have the documentation to support a classification and value that differ from what customs officials determined. Importers can challenge CBP’s assessments in the Court of International Trade, whose jurisdiction is generally exclusive for customs-duty matters.

What Can Reliable Advice Establish About Customs Lawyer Fees, Difficulty, and Your Trade Case’s Potential Outcome?

Our research was unable to establish a standard customs lawyer hourly fee, flat fee, or any other type of fee. While some marketing communications from customs firms provide these numbers, there are no universally accepted customs-lawyer fees, and what one firm charges might be completely different from what another firm charges. This can depend on various factors, such as the size and scope of the case, the amount of work required to represent the client, and the level of experience of the firm’s attorneys.

Similarly, our research was unable to establish any other import-export crimes that are universally hardest to defend. While all import-export cases present challenges, some challenges are more difficult to overcome than others. For example, some cases involve challenging statutory and regulatory interpretations and challenging the sufficiency of the government’s evidence, while others involve mitigating civil and criminal liability in order to avoid prosecution. We will be able to assess the difficulties and obstacles that you face and help you make informed decisions based on the facts and circumstances of your case.

Penalty ranges depend on the offense at issue, the statutory maximum penalty for that offense, and the various sentencing factors established under the Federal Sentencing Guidelines. Marketing statements about experience, successful results, and previous cases provide insight into a lawyer’s or firm’s past capabilities, but they are not a reflection of any universally accepted legal rules. Furthermore, marketing statements about previous success cannot provide predictive value for a particular import-export business criminal case. However, this does not mean a similar result is guaranteed. We cannot guarantee a particular outcome in your case.

Speak With a Federal Defense Lawyer

If you are dealing with any part of what this article describes, the next step is a conversation with a lawyer who handles these cases. Spodek Law Group is a second generation criminal defense firm practicing since 1976, representing clients nationwide from offices in New York, Brooklyn, Queens and Los Angeles. Call 888 348 8028 to speak with our team.