Gibson Guitars CEO Calls Out The Government For 'Regulating Business Through Criminal Law' [Updated]
from the violating-obscure-statutes?-that's-a-paddlin' dept
Update: Of course, just about the time we posted this, the news came out that Gibson has decided to settle, though it still mainstains it did nothing wrong. It got off by having to pay $350,000 and by forfeiting the confiscated wood, which it notes is much less onerous than fighting this through. So this story is now done, but the original post below still highlights the ridiculous situations that Gibson was put in, and which many others could easily end up in.It's been close to a year since the Justice Department raided Gibson Guitars for using "illegal wood" on the fingerboards. You'd think something like "illegal wood" wouldn't require the use of the term "raid," or the services of 30 agents with guns and bulletproof vests, but hey, welcome to America. The raid was authorized under the Lacey Act, an act whose original use was to curb poaching of illegal species, but soon spread (as these things do) to cover the importing other wildlife and plants.
The fun thing about the law is that staying in compliance requires knowing not only the particular details of over 200 other countries' laws, but also a bit of mind-reading in order to suss out how the federal government will interpret each one of these laws. Put it all together and you've got Gibson's situation, which is detailed in a post for the Wall Street Journal (gated) but also helpfully detailed at Cato's new National Police Misconduct Reporting Project. The first indication that this raid was a complete abortion of justice is the fact that the wood Gibson used had made it into the country without being seized:
The fingerboards of our guitars are made with wood that is imported from India. The wood seized during the Aug. 24 raid, however, was from a Forest Stewardship Council-certified supplier, meaning the wood complies with FSC's rules requiring that it be harvested legally and in compliance with traditional and civil rights, among other protections. Indian authorities have provided sworn statements approving the shipment, and U.S. Custom allowed the shipment to pass through America's border and to our factories.Having made it through the safeguards that were set up to stop illegal imports, one would think that the material was cleared for use. But this sort of clear thinking fails to take into account that every law is somehow still open to multiple interpretations:
Nonetheless, the U.S. Fish and Wildlife Service decided to enforce its own interpretation of Indian law, arguing that because the fingerboards weren't finished in India, they were illegal exports. In effect, the agency is arguing that to be in compliance with the law, Gibson must outsource the jobs of finishing craftsmen in Tennessee.Seizure laws are incredibly popular with everyone from large government agencies to small town police departments and having 4,000 federal criminal offenses on the books makes it very simple for law enforcers to find inadvertent or unwitting criminals and inflict damage on them through seizures and imprisonment. Any avenue that looks as if it may provide agencies like this with more power and control is generally explored to its fullest.
This is an overreach of government authority and indicative of the kinds of burdens the federal government routinely imposes on growing businesses. It also highlights a dangerous trend: an attempt to punish even paperwork errors with criminal charges and to regulate business activities through criminal law. Policy wonks call this “overcriminalization.” I call it a job killer.
Many business owners have inadvertently broken obscure and highly technical foreign laws, landing them in prison for things like importing lobster tails in plastic rather than cardboard packaging (the violation of that Honduran law earned one man an eight-year prison sentence). Cases like this make it clear that the justice system has strayed from its constitutional purpose like stopping the real bad guys from bringing harm.That is exactly where the system is now. Criminal intent is no longer factored in to the equation. The old chestnut, "Ignorance of the law is no excuse," is actually a completely valid excuse. 4,000 federal criminal offenses on the books means that heavier sentences and fines are levied against criminals who in the past would have been subject to less harsh civil and/or local judgments. Add to that 40,000 new state laws introduced in 2012 alone, and you've got the perfect recipe for government overreach and thousands of chances to be hauled into court to attempt to prove a negative.
Cato's Tim Lynch pointed out the absurdity of the current situation during an address to the House Subcommittee on Crime, Terrorism and Homeland Security:
The sheer volume of modern law makes it impossible for an ordinary American household to stay informed. And yet, prosecutors vigorously defend the old legal maxim that "ignorance of the law is no excuse." That maxim may have been appropriate for a society that simply criminalized inherently evil conduct, such as murder, rape, and theft, but it is wholly inappropriate in a labyrinthine regulatory regime that criminalizes activities that are morally neutral. As Professor Henry M. Hart opined, "In no respect is contemporary law subject to greater reproach than for its obtuseness to this fact."Gibson Guitars had every reason to presume the wood it was using was perfectly legal. The company had taken great care to stay within the confines of the laws as it understood them. Instead of being given the benefit of a doubt when the issue of legality arose (and after the wood had already cleared Customs), the company was raided as though it were cranking out black market explosives rather than ordinary, harmless guitars. Gibson always has the option to sue but the odds of getting this case to be heard, much less winning it, are low. Even with higher odds, the time and expense would far outweigh the losses sustained by Gibson at the hand of the federal government.
It is absurd and unjust for the government to impose a legal duty on every citizen to "know" all of the mind-boggling rules and regulations that have been promulgated over the years. Policymakers can and should discard the "ignorance-is-no-excuse" maxim by enacting a law that would require prosecutors to prove that regulatory violations are "willful" or, in the alternative, that would permit a good-faith belief in the legality of one's conduct to be pleaded and proved as a defense. The former rule is already in place for our complicated tax laws — but it should also shield unwary Americans from all of the laws and regulations as well.
This leaves companies like Gibson in the unenviable position of putting even more time and money into compliance, rather than innovation, expansion or outside investments. In today's economy, the private sector really can't afford another "job killer," especially one they have to pay for out of their own pockets.
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Filed Under: arbitrary, doj, forfeiture, guitars, seizure, wood
Companies: gibson
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YOU'RE ARE GUILTY UNTIL PROVEN INNOCENT.
It's not a coincidence, either, the copyright/patent laws makes criminals first, innocent businesses second.
It's clear the governments discovered the greatest playbook ever devised.
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While the cars used in the examination were props set up for the exercise, part of the instruction was that a knowledgeable police officer should be able to find at least three violations with any car on the public roads. There are thousands of them, most never published outside of the actual lawbooks, so many that it is essentially impossible to be fully in compliance.
He listed a few of the most common such violations, and I've forgotten all but one: in this state, you are legally required to have a designated trash receptacle in the front half of your vehicle. Almost nobody knows this.
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I'm safe on this one. The front half of my vehicle is my designated trash receptacle.
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I'm really torn by this. On one hand, I want cops to be able to pull over and apprehend a child rapist because his tail light is out, but on the other hand it seems wrong to give a $175 ticket to a soccer mom because she didn't have time to put her registration sticker on her license plate because she was late for her kids' dentist appointment. There's got to be a better balancing test, like 2 regulatory freebies a year, absent any substantive violations.
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This is perverse ... not sure which foreign laws I have to follow and which ones I can ignore. For example, am I allowed to shave?
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Not until you're in prison. Once there, it depends on which part you're talking about.
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http://www.youtube.com/watch?v=5zJj9qANNM8
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I can think of no more evil company than a guitar maker
Next up, pianos!
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Re: I can think of no more evil company than a guitar maker
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Re: Re: I can think of no more evil company than a guitar maker
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Gibson 'sinned' by 'assuming' the wood was legal
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There are excellent reasons for closely limiting imports of endangered hardwoods from the other side of the world. Gibson has sources for better woods (from the standpoint of musical instruments) that are local and safe, but they continued to use the foreign sources because they're cheaper.
Remember this too: the only reason Gibson is making these guitars here in the States is because the customers for guitars costing over $2000 demand it. Gibson is doing it's best to be able to say they're "American made" while actually making as little as possible of the guitars here.
Gibson was warned repeatedly that they were in violation of these complex laws and trade restrictions. They figured they could ignore the warnings and ignore the law and then make big political hay about it.
They were wrong. They have now admitted wrongdoing and paid the fines. They'll probably be good until they figure they can get away with it again.
There are much better guitars, by the way. This is not the Gibson of the 1960s.
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> standpoint of musical instruments) that are
> local and safe
There was something unsafe about the wood Gibson imported? Were people getting splinters or something when they played the guitars?
> but they continued to use the foreign sources
> because they're cheaper.
So what? Now it's some kind of moral or actual crime to minimize your overhead?
> Gibson is doing it's best to be able to say
> they're "American made" while actually making
> as little as possible of the guitars here.
Other then not exporting the fingerboard jobs, you mean?
> Gibson was warned repeatedly that they were in
> violation of these complex laws and trade
> restrictions.
They were warned they were in violation of some bureaucrat's self-serving *interpretation* of the law. Based on a plain reading of the law itself, they violated nothing.
And of course none of the points you've raised-- even if they were true-- justifies raiding their factory like it was a Taliban stronghold in Afghanistan. A couple guys in suits could easily have just shown up and served the seizure order. There's no conceivable reason why a SWAT team was necessary in this case.
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Shock and awe.
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What about jury?
Why don't they acquit the accused?
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You're effectively claiming that as long as there is violation of a law there is no need for reform. That is dangerous, to say the least.
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They probably accepted a plea bargain in order to avoid a long and costly criminal trial and in doing so IIRC one must plead guilty to the lesser charge regardless of what really happened or whether the law being applied makes any sense.
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Insurance anyone?
Since the same govt that rips you off would provide the insurance I guess it would technically be a protection racket. Our beloved govt has taken over most of organised crime anyway (gambling, numbers, porn, extortion etc) so why not run a nationwide protection scheme as well?
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Re: Insurance anyone?
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Re: Insurance anyone?
> country needs is low cost LEGAL insurance
> that would protect you from defending pointless
> lawsuits, irrational fines and maybe compensate
> you for time spent in prison for stuff you didn't
> do or acts that should never have been illegal
> in the first place.
I have a policy that does exactly that (with the exception of the prison compensation part). For $300/year, I have $5 mil in liability coverage, plus attorney expenses to protect me from people who see our court system like a potential lotto win.
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Re: Insurance anyone?
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Give us the whole story!
[1]All the facts from the complaint and later court proceedings indicate that Gibson were almost certainly guilty in this matter. They had previously been warned in another action, regarding illegally importing ebony from Madagascar but they kept on behaving in the same manner. They were labeling Indian rosewood as having been finished in India, as required by export by Indian law, in order to get it past US customs. It was not finished, but raw planks. In this way, they gained an advantage over their competition,who were complying with the law.
[2] When they got caught, their CEO though he could bully his way out of the charges by running crying to Fox News with a story that the Obama administration had targeted him for operating in a non union state. You picked up some of the propaganda the usual suspects issued in support of this claim, and presented it here as fact.
[3] There are numerous other US guitar makers using rosewood and ebony who seem to have no problem at all complying with the law in this area. Support for the Gibson view in the industry has been non-existent.
[4] After it became clear that the political intimidation was not going to work, and the Justice Department was going to prosecute, they copped a plea (yesterday)
I'd change your header from "legal issues" to "'pro-business'think tank mouthpiece"
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[2] is completely wrong. It's a justified case of rallying support against government overreach when your own science damn government is confiscating your wood because you didn't outsource the finishing work to India, which is literally what happened even following in your description in [1].
[4] After it became clear that defense would cost more time and money than the wood was worth they took a settlement to save themselves money, because they're a business.
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If you owned one you would know why.
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Outside of laws criminalizing murder, assault, stealing from someone else (whether doing that using physical force or economic hi-jinks in the banks), and forcible rape (yes, only forcible rape)?
There shouldn't be any other criminal laws on the books.
Yes, that means legalize prostitution (at least adult prostitution), drug dealing, etc.
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Behind every story about government overreach is a business lobbyist whose client was caught cheating or lying about rules that they and everybody else in their industry knew about.
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No. I completely disagree.
Here is a statement that is much more accurate in the majority of cases: Behind every government overreach is a business lobbyist whose client is seeking to restrain their competition
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then we will stop the guitar manufactures from making the instruments !!
now clearly using 30 swat team police is "overkill" for the investigation, and I completely agree in the excessive use of force
however why the hell is gibson using endangered tree stock from halfway around the world
this isnt green
this isnt carbon neutral
this is killing trees and exploiting them from 2nd world markets
my father is a 4th generation wood worker and craftsman, he certainly taught me the value of sourcing local wood for projects.
Shame Gibson, Shame
I'll stick to Rickenbacker and Fender axes.
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"Gibson has acknowledged that it failed to act on information that the Madagascar ebony it was purchasing may have violated laws intended to limit over-harvesting and conserve valuable wood species," Assistant Attorney General Ignacia Moreno said in a statement, released on Monday.
The company also imported rosewood and ebony from India in a potential violation of the US Lacey Act, which protects endangered foreign wood species, the statement from the Justice Department alleged.
Gibson must pay a penalty of $300,000 and an additional $50,000 "community service payment" to the National Fish and Wildlife Foundation, to be used to promote the conservation of protected tree species, it said.
The company will also withdraw claims to wood, including Madagascar ebony, seized by the government in August 2011. The wood came in a shipment "with a total invoice value of $261,844," the Justice Department said.
Gibson did not admit wrongdoing on its website, saying it had agreed to the settlement to avoid the legal costs associated with going to trial.
"We felt compelled to settle as the costs of proving our case at trial would have cost millions of dollars and taken a very long time to resolve," CEO Henry Juszkiewicz said in a statement.
"We are getting back the materials seized in a second armed raid on our factories and we have formal acknowledgement that we can continue to source rosewood and ebony fingerboards from India, as we have done for many decades."
Makers of the legendary Les Paul guitar, Gibson became a cause celebre for US Tea Party activists after wildlife conservation agents raided two of its plants in Tennessee and took away several pallets of Indian ebony.
The firm was never formally charged, but Juszkiewicz alleged Gibson had been unfairly targeted, while globe-traveling guitarists feared their instruments might be seized at customs due to the exotic wood used to make them.
In one interview with CNN, Juszkiewicz went so far as to suggest that First Lady Michelle Obama may have broken the law when she took a Gibson guitar out of the United States to present to her French counterpart Carla Bruni."
France24.
That reads more like Gibson backed down, knowing they were pretty much fucked for doing what they had already been told was bad... not because they didn't know.
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Reads more like nothing has changed since they will continue to source the same wood from the same countries. Does that sound like the logical result of someone getting caught red handed importing endangered wood illegally or someone electing not to pay millions in court fees and even more in time arguing over $261,844 worth of wood when they can just as easily import new wood of the same variety from the same places. The Justice Department twisted a law that was intended to stop the import of endangered species and used it to target a business because they could.
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a potential violation of the US Lacey Act
Gibson did not admit wrongdoing... it had agreed to the settlement to avoid the legal costs
"we have formal acknowledgement that we can continue to source rosewood and ebony fingerboards from India"
The firm was never formally charged
Reads pretty much the same to me.
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Will Gibson guitars be made in China someday? Most likely if this crap keeps up!
Also, Gibson purchased this wood legally (or so they thought). I suspect they buy the wood from India because it has characteristics that make their instruments sound better.
This is an example of unbelievable over regulation and harassment of a company that still makes many of their products in America. Yet the Liberal Obama government treats them like criminals with their swat team tactics.
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No wonder the Liberals haven't been able to fix our economy. This over regulation is killing us.
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The wood used to fabricate the neck of the guitar, acoustic -or- electric, which includes the fretboard, has a very definite effect on the resonance of the guitar.
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And the neck on the Les Paul is generally rosewood or maple if I remember correctly, both of which are grown in the US.
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overheard in a Justice Dept bathroom just before the raid
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Updated
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Fretless Fingers & Fingerboards Fight For Freedom
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There was a raid in 2009 that got several pallets of ebony that the government claimed was sourced from India but exported illegally because of labeling that was misleading to Indian authorities, resulting in violation of Indian export laws. No US laws were violated except perhaps the Lacey Act, and Indian authorities certified the export. No charges or civil cases were filed as a result of this raid
In 2011, the government filed a civil case regarding ebony that Gibson purchased from a German company that obtained the wood from Madagascar, making it illegally exported. Gibson at that time claimed that it was under the impression that the wood was legal, but later admitted that they had failed to act when they received information regarding the potential illegality of the wood. There was never a proven link between the ebony seized in the raid (which was seized under the premise that it was deceitfully exported from India) and the German supplier. The link to the German supplier was brought up by going through Gibson's import records.
2 months later, the feds performed a second raid on the factory - this one with mutiple armed agents and breach tactics - that was after Indian rosewood. All this wood was later returned, no charges were filed, and Gibson was assured they could continue importing Indian rosewood and ebony.
Gibson settled the Madagascar ebony case without admission of wrongdoing, claiming the $350k fine plus the loss of the wood was much less expensive than the potential cost of fighting the case. It is possible that the ebony seized in 2009 was the Madagascar ebony, but it is equally likely that the seized ebony was the allegedly mislabled wood from India, which was never brought into the case. A request to return the ebony was denied by the courts, and Gibson forfeited its right to the wood as a part of the settlement.
There was a pretty big outcry about the whole case, as Gibson regularly donates to conservative political candidates, several competitors (notably Martin guitars) donated heavily to the current administration. Indian ebony and rosewood from the same parts of India (which were the motivations behind the raids) are used by both companies. Gibson appears to have been singled out both for legal attention and police action. Even if the alleged political motivations are discarded, the whole affair appears to have been a fishing expedition enacted with very heavy hands. Gibson is noted for being eco-friendly, and the Rainforest Alliance certifies Gibson wood, including all the wood that was seized.
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Durr?
If we're going to make this case representative of America, why don't we add "big companies trying to use their big money to be above the law" to the list?
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Re: Durr?
Anonymous lives at Techdirt.
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Went to Buy a Guitar Today
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Were they afraid the liberal, Obama worshipping musicians would bail on them?
Or was the CEO lashing out all just a publicity stunt to get the money he had to pay to the Feds down to the measly 350k?
I feel like we, the American people, are like Rick Moranis in Spaceballs... "We're surrounded by assholes" and "Evil will always triumph because good is dumb"
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Madagascar Touring
http://www.madagascar-adventures.com
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