NASHVILLE, TN – After three years and two raids with federal agents branding automatic weapons, Gibson Guitar has settled its issues with the Federal government, at least for now. The music company’s problems began when the Justice Department alleged that it had violated a ban on the importation of endangered wood products under the Lacey Act.
Gibson had purchased and imported ebony and other exotic woods from Madagascar and India incurring the threat of criminal charges from the DOJ. In a deal to end its problems with Justice, Gibson had to admit that it had failed to ensure that the exotic wood it was purchasing from its supplier had been legally harvested and exported.
Gibson also agreed to pay a $300,000 penalty to the U.S. government, and a “community service payment” of $50,000 to the National Fish and Wildlife Foundation. The Fish and Wildlife Service conducted the initial investigation and the $50,000 will be used on research projects or tree conservation activities.
“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,” Gibson CEO Henry Juszkiewicz said in an Aug. 6 news release announcing the settlement. “This allows us to get back to the business of making guitars. An important part of the settlement is that 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.”
“This criminal enforcement agreement goes a long way in demonstrating the government’s commitment to protecting the world’s natural resources,” said Jerry Martin, U.S. Attorney for the Middle District of Tennessee. “The agreement is fair and just in that it assesses serious penalties for Gibson’s behavior while allowing Gibson to continue to focus on the business of making guitars.”
Gibson may have settled with the DOJ but that doesn’t mean the company is pleased with the outcome. “We feel that Gibson was inappropriately targeted,” Juszkiewicz said, adding that the matter “could have been addressed with a simple contact (from) a caring human being representing the government. Instead, the Government used violent and hostile means,” including what Gibson described as “two hostile raids on its factories by agents carrying weapons and attired in SWAT gear where employees were forced out of the premises, production was shut down, goods were seized as contraband, and threats were made that would have forced the business to close.”
Juszkiewicz also observed that the investigation has cost taxpayers millions of dollars — and put a “job-creating U.S. manufacture at risk and at a competitive disadvantage.” He added, “This shows the increasing trend on the part of government to criminalize rules and regulations and treat U.S. businesses in the same way drug dealers are treated. This is wrong and it is unfair.”
As part of the settlement, the federal government acknowledged that Gibson cooperated with the investigation. Further, the settlement states that the Government and Gibson “acknowledge and agree that certain questions and inconsistencies now exist regarding the tariff classification of ebony and rosewood fingerboard blanks” under the Indian government’s Foreign Trade Policy.
Gibson therefore will be allowed to continue importing exotic woods from India. “Accordingly, the Government will not undertake enforcement actions related to Gibson’s future orders, purchases, or imports of ebony and rosewood fingerboard blanks from India, unless and until the Government of India provides specific clarification that ebony and rosewood fingerboard blanks are expressly prohibited by laws related to Indian Foreign Trade Policy,” the settlement says.
Gibson, in a statement, said the company is “gratified” that the government “ultimately saw the wisdom and fairness in declining to bring criminal charges in this case. “The company also said true legislative reform is necessary to avoid what it calls the “criminalization of capitalism.”