This is a particularly fascinating category. On one hand, there are the fairly obvious applications of United States law to activity that attempts to prevent the United States from collecting taxes on the importation of goods. That's quite self-explanatory. But one act can be punished under multiple statutes, which makes the case law in this category fairly dense. See United States v. Zhang, 833 F. Supp. 1010 (S.D.N.Y. 1993), below. What makes this field so interesting is that the United States has begun using provisions like the wire fraud statute to penalize people who do not pay excise taxes in other countries for defrauding foreign governments.
These pages first address crimes that revolve around the importation of goods, and then it addresses crimes that revolve around the exportation of goods.
The discussion here begins with United States customs statutes and then explores recent developments in enforcement of foreign countries' tax laws, noting that the Supreme Court denies that it is doing so.
Title 18, Chapter 27 of the United States Code covers customs and duty obligations. The statutes, found at 18 U.S.C. §§ 541-553, criminalize such behavior as falsely classifying goods, making false statements, paying less duty on goods than is owed, and even falsely claiming a refund of duties.
18 U.S.C. § 541 (2007).
The CrimeUnder this section it is a crime to "knowingly":
effect any entry of goods, wares, or merchandise, at less than the true weight or measure thereof.
effect the entry of goods upon a false classification of their quality or value.
effect the entry of goods by the paying less than the amount of duty legally due. 18 U.S.C. § 541.
The PunishmentThe punishment for a violation of section 541 is
a fine, imprisonmnet for not more than two years, or both. 18 U.S.C. § 541.
Case Law Interpreting Section 541United States v. Godinez,
922 F.2d 752 (11th Cir., 1991)In Godinez, the defendants imported a shipment of Latin American plywood that had been classified as softwood, but which customs officials determined was actually hardwood. Godinez at 753. By attempting to classify the plywood as softwood, no duties would need to be paid, whereas hardwood plywood required a duty be paid. Id. The defendants were ultimately convicted for falsely classifying imported goods in violation of 18 U.S.C. § 541 and for making false statements in connection with imported goods in violation of 18 U.S.C. § 1001. (Section 1001 is discussed below.)
The issue concerning section 541 in this case was whether there was sufficient evidence to prove that the goods actually entered the country. The defendants claimed that since entry, as interpreted by 19 C.F.R. §§ 141.0a(a) and 142.3, requires several documents to be filed, none of which were introduced at trial, then the goods never entered the country. Godinez at 756. The court ultimately determined that such documents did not need to be introduced at trial, and there was substantial proof that the goods actually made it into the country and had been sold. Id.
United States v. Zhang,
833 F. Supp. 1010 (S.D.N.Y., 1993)In Zhang, the defendants were charged with conspiring to defraud the United States Customs Service in connection with various imports of clothing from China in the late 1980s and early 1990s. Zhang at 1012. The defendants challenged the indictment as "impermissibly multiplicitous, arguing that it improperly charges a single course of conduct in multiple counts. [They claimed] this multiplicity is achieved ¼ by charging single acts as violations of multiple statutory provisions." Id. The indictment charged the defendants with violating sections 541, 542, and 545, which the defendants objected to because they claimed "each count does not require proof of facts in addition to facts required to be proved under the other counts." Id. 1016-17. The court noted that "[w]hether a defendant can [be] charged under multiple statutory provisions for a single act depends upon whether the legislature intended multiple punishments for a single act." Id. at 1017 (citing Missouri v. Hunter, 459 U.S. 359, 368-69 (1983)).
Determining legislative intent requires a three-step inquiry.
If the offenses charged are found in different statutes, or distinct sections of a statute, and each section authorizes punishment for a violation of its terms, the court can infer that Congress intended to authorize multiple punishments for each provision.
Using the "Blockburger Test," Blockburger v. United States, 284 U.S. 299 at 304 (1932), the court determines whether the offenses are sufficiently distinguishable from one another to show that the inference that Congress intended multiple punishments is a reasonable one. The Blockburger test is as follows:
The applicable rule is that where the same act or transaction constitutes a violation of two distinct statutory provisions, the test to be applied to determine whether there are two offenses or only one, is whether each provision requires proof of a fact which the other does not.
If the Blockburger test is satisfied, the final step is to examine the legislative history to discover whether a contrary Congressional intent exists; if the history reveals an intent to authorize multiplicity or is silent, there is a presumption that Congress intended to authorize multiple punishments. Zhang at 1017 (citing United States v. Nakashian, 820 F.2d 549, 551 (2nd Cir. 1987)).
The court in Zhang found that each statute the defendants were indicted under punished distinct offenses. Following the three-step inquiry, the court found: first, that each separate statutory provision carried an express penalty for its violation, which satisfied the first step; second, that each statute constituted a separately punishable crime; and third, that the defendant provided no evidence to that Congress did not intend to provide multiple punishments. Id. at 1017-19. Therefore, it is clear to see that one act can be punished multiple times.
18 U.S.C. § 542 (2007).
enter or introduce, or attempt to enter or introduce, into the commerce of the United States any imported merchandise
by means of any fraudulent or false invoice, declaration, affidavit, letter, paper, or
by means of any false statement, written or verbal, or
by means of any false or fraudulent practice or appliance, or
make any false statement in any declaration without reasonable cause to believe the truth of such statement, or
procure the making of any such false statement as to any matter material thereto without reasonable cause to believe the truth of such statement,
whether or not the United States shall or may be deprived of any lawful duties; or
commit any willful act or omission whereby the United States becomes deprived of any lawful duties accruing upon merchandise
embraced or referred to in such invoice, declaration, affidavit, letter, paper, or statement, or
affected by such act or omission. 18 U.S.C. § 542.
The punishment for a violation of section 542 is:
a fine for each offense under this title; imprisonment for not more than two years; or both. 18 U.S.C. § 542.
Furthermore, the imported merchandise may be subject to forfeiture under other provisions of law. 18 U.S.C. § 542.
Definition"Commerce of the United States", as used in this section, shall not include commerce with the Virgin Islands, American Samoa, Wake Island, Midway Islands, Kingman Reef, Johnston Island, or Guam. 18 U.S.C. § 542.
Case Law Interpreting Section 542United States v. An Antique Platter of Gold, 184 F.3d 131 (2d Cir. 1999).An Antique Platter of Gold involved an importer who had negotiated the sale of a gold platter of Sicilian origin. The price paid by the buyer was $1.2 million. An Antique Platter of Gold at 133. The transfer of the platter from seller to the buyer's agent "was confirmed by a commercial invoice issued by [the seller], describing the object as 'ONE GOLD BOWL-CLASSICAL ¼ DATE-C. 450 B.C. ¼ VALUE U.S. $250,000.'" Id. Furthermore, the buyer's agent's Entry/Immediate Delivery form listed the platter's country of origin as Switzerland. Id. After three years of possession, the Italian government requested the United States' assistance in investigating the circumstances of the platter's exportation, and requested that the United States confiscate it so that it could be returned to Italy. Id. at 134. The United States claimed that forfeiture was appropriate and the buyer entered the proceeding as a claimant. Id.
The government claimed, on appeal, that the importation of the platter was illegal because it violated 18 U.S.C. § 542, "which prohibits the making of false statements in the course of importing merchandise into the United States." Id. at 134-35. The buyer, however, claimed that an element of a section 542 violation is that the false statement must be material and that the government failed to show materiality in the instant case, at least for purposes of summary judgment. Id. at 135. The appeals court noted that "[t]here can be no dispute that the designation of Switzerland as the [platter's] country of origin and the listing of its value of $25,000 were false." Id. Furthermore, the court stated that section 542 does indeed include a materiality requirement, as shown by a previous case, United States v. Avelino, 967 F.2d 815, 817 (2d Cir. 1992) ("False statements under [s]ection 542 are necessarily material because the importation must be 'by means of [the] false statement.'") An Antique Platter of Gold at 135.
What this particular appeal hinged on was "the proper test for materiality." Id. The buyer wanted a "but for" test, "i.e., a false statement is material only if a truthful answer on a customs form would have actually prevented the item from entering the United States." Id. The district court, however, used a "natural tendency" test, "asking whether the false statement would have a natural tendency to influence customs officials." Id. The appeals court states that there is a circuit split about which test to use: the Fifth and Ninth Circuits have adopted a "but for" test, while the First Circuit has employed the "natural tendency test." Id. The court decided to adopt the natural tendency test. Id. It does so, first, because "the ordinary meaning for the statutory language requires only that the false statements be an integral part of the importation process." Id. at 136. Second, the court used the Supreme Court's formulation of materiality: "that a concealment or misrepresentation is material if it 'has a natural tendency to influence or was capable of influencing the decision of' the decisionmaking body to which it was addressed." Id. (quoting Kungys v. United States, 485 U.S. 759, 770 (1988)). Finally, the court decided to use the natural tendency test for practical reasons. "Under a but for test, lying would be more productive because the government would beat the difficult burden of proving what would have happened if a truthful statement had been made." Id.
United States v. Yip,
930 F.2d 142 (2d Cir. 1991).Yip is an excellent case for interpreting what it is that section 542 actually proscribes since it is such a dense statute. In Yip, the defendant was convicted of 14 counts of mail fraud and 59 counts of depriving the United States of lawful duty payments in violation of 18 U.S.C. § 542. Yip at 143. He argued, pertaining to section 542, "that the importation of goods using non-fraudulent invoices, followed by the failure to pay customs duties owed on those goods, is not a criminal act within the meaning of § 542." Id. at 143. The court goes to great lengths to untangle section 542 and determine to what it applies.
The court first notes that the statute punishes two distinct offenses. Id. at 147. "The first offense proscribes the introduction of imported merchandise through means of any 'false or fraudulent practice' regardless of whether the United States is deprived of duties." Id. In other words, "[a]nyone seeking to import goods[,] who, in the course of that importation, makes a false statement (written or oral), is guilty of a criminal act." Id. at 148. The second offense, under which the defendant was charged, "is directed at the loss of duties and makes 'any willful act or omission' a crime, without explicitly requiring that the act or omission be done with intent to defraud the United States." Id. at 147. The court has more difficulty with the second paragraph. "The first prong refers back to the false statement provision of the first [paragraph]. ¼ The use of the word 'such' clearly refers back to the 'invoice,' etc. listed in the first paragraph." Id. at 148.
Therefore, the first part of the second paragraph "makes criminal those acts and omissions that deprive the United States of duties on the merchandise specifically related to the false statements." Id. The second part of the second paragraph is more confounding. "'[S]uch act or omission' can refer to nothing other than the beginning of the second paragraph, for that is the only other place the phrase is to be found. The beginning phrase 'Whoever is guilty of any willful act or omission' is the first mention of 'act or omission' in the statute." Id. at 148-49. The court determines that that part of the second paragraph "would make criminal the omission to file any forms on goods brought into the United States and any acts undertaken in bringing such undeclared goods into the United States. ¼ [I]t makes sense that Congress would want to make criminal not just false statements made to secure importation of goods ¼ but also willful attempts to avoid making statements and paying duties altogether¼i.e., smuggling." Id. at 149.
The court further determined that section 542 began life as a civil statute, rather than a penal statute, and the language must be interpreted narrowly. Id. at 153. The court felt that "Congress must have planned that, in order to constitute criminal conduct, the willfulness of a person's acts must not only extend to their voluntariness and the person's competency, but also to the defendant's ability to foresee the act's effect on the government's loss of customs duties." Id. In other words, "the government must prove that the link between the act and the deprivation was so direct that a defendant knew or should have known his actions would deprive the government of lawful duties." Id.
18 U.S.C. § 543 (2007).
knowingly admit to entry, any goods, wares, or merchandise, upon payment of less than the amount of duty legally due. 18 U.S.C. § 543.
The punishment for a violation of section 543 is:
a fine, imprisonment not more than two years, or both; and
removal from office. 18 U.S.C. § 543.
Case Law Interpreting Section 543
There are no recent cases that deal with the current section 543. However, there are a couple of cases that discuss the predecessor to section 543.
United States v. Rosenthal,
126 F. 766 (C.C.S.D.N.Y. 1903)In Rosenthal, the "officer of the revenue" in question objected to being indicted for assisting the defendants in importing silks without paying full duty on them. Rosenthal at 773. He objected by claiming that he was an examiner rather than a weigher, and therefore, he could not legally make the collector act. Id. In other words, "[t]he argument is reduced to this: That he did not commit a crime, because the act which he did dishonestly he was not obligated to do, and could not legally do at all." Id. However, the court noted that if the examiner did act, "he was bound to act in accordance with his oath, and abstain from intentionally and corruptly giving false information to the collector, based upon corrupt acts or omissions in his examinations." Id. It is not necessary "that he should at the time of doing the forbidden act be shown to have been acting strictly as a de jure officer. ¼ Every officer 'by any means whatever' knowingly aiding the illegal admission of goods, i[s] punishable. If the means adopted by him was to accept a duty which did not belong to him, and to take advantage of his knowledge that his performance of that duty would be recognized by his superior officer, that would be quite as much of a 'means,' within the meaning of the statute, as if he had departed from a duty regularly laid upon him." Id. at 773-74.
18 U.S.C. § 544 (2007).
The CrimeIt is a violation of section 544 to:
enter or withdraw any merchandise for exportation
without payment of the duties thereon, or
with intent to obtain a drawback of the duties paid, or
of any other allowances given by law on the exportation thereof, and reland the merchandise at any place in the United States without entry having been made.
The merchandise will be considered as having been imported into the United States contrary to law. 18 U.S.C. § 544.
The punishment for violating section 544 is
a fine, imprisonment for not more than two years, or both; and
the merchandise will be forfeited. 18 U.S.C. § 544.
Case Law Interpreting Section 543Like section 543 there is little if any current case law on the modern statute. However, one case in particular that evaluates the predecessor statute is particularly enlightening.
Two Thousand Tin Cans, 24 F. Cas, 454 (E.D.N.Y. 1873) (No. 14,303).In this case, a shipment of tin cans had been entered for exportation on board a ship. Two Thousand Tin Cans at 455. Afterwards, and before that particular boat had sailed, the cans were found in a smaller boat next to the original boat. Id. The cans were then seized. Id. The first question was "whether the discharge of goods from the ship to [the other ship] amounts to a landing 'within any port or place within the limits of the United States.'" Id. The court found that it was.
The more interesting point of Two Thousand Tin Cans is that there need not be any intent to defraud the United States government. In this case, the transfer of the cans was done to correct a mistake. However, the court ruled that "[a]n intent to defraud the government of the duties is not required by the statutes to be an element in the case." Id.
18 U.S.C. § 545 (2007).
knowingly and willfully, with intent to defraud the United States,
clandestinely introduces or attempts to smuggle or clandestinely introduce into the United States any merchandise which should have been invoiced, or
makes out or passes, or attempts to pass, through the customhouse any false, forged, or fraudulent invoice, or other document or paper; or
fraudulently or knowingly
imports or brings into the United States, any merchandise contrary to law, or
receives, conceals, buys, sells, or in any manner facilitates the transportation, concealment, or sale of such merchandise after importation, knowing the same to have been imported or brought into the United States contrary to law. 18 U.S.C. § 545.
The PunishmentThe punishment for violating section 545 is
a fine, imprisonment for not more than twenty years, or both; and
the forfeiture of the merchandise, or its value. 18 U.S.C. § 545.
Sufficiency of Evidence
There is a rebuttable presumption that if there is proof that the defendant possessed the goods, that proof will be deemed sufficient evidence to authorize a conviction under section 545. 18 U.S.C. § 545.
"United States", as used in this section, shall not include the Virgin Islands, American Samoa, Wake Island, Midway Islands, Kingman Reef, Johnston Island, or Guam.
Case Law Interpreting Section 545As can be expected, there is quite a bit of case law that interprets both section 545 and its predecessor statutes. As a preliminary matter, "smuggling" should be defined. Smuggling has long been defined as "[t]he fraudulent taking into country, or out of it, merchandise which was lawfully prohibited. Dunbar v United States, 156 U.S. 185, 193 (1895). However, section 545 is not solely concerned with smuggling; it also criminalizes illegal importation of goods, and the two acts should be understood as separate offenses. United States v Westover, 511 F.2d 1154, 1155 n.2 (9th Cir. 1975). Finally, in rounding out some of the preliminary considerations, merely importing goods which are subject to a duty without paying the duty is not, in general, an offense against smuggling laws; there must be secrecy or concealment, or intent to defraud the United States of revenue. United States v. Kushner, 135 F.2d 668, 671 (2d Cir. 1943). (Illegal importation, however, does not seem to require an intent to defraud the United States of revenue. Id. at 672.)
United States v. Hassanzadeh, 271 F.3d 574 (4th Cir. 2001).In Hassanzadeh, the defendant was convicted of illegally importing carpets of Iranian origin, which was prohibited by Executive Order 12,613, 31 C.F.R. § 560.201 (1987). During sentencing, the defendant objected to the inclusion of 42 carpets made before 1935 in the calculation of the loss amount for sentencing purposes. Hassanzadeh at 580. This was certainly a novel argument, because prior to 1935, Iran was known as "Persia." Id. at 580-81. Therefore, the defendant argued, the rugs were not of "Iranian" origin, but "Persian" instead. Id. at 581. But the ban applies to the territory known as Iran, and the court ultimately ruled against the defendant. Id. at 582.
United States v. Boggus,
411 F.2d 110 (9th Cir. 1969).In Boggus, the defendant was convicted of not properly declaring some gold shavings they had brought into the United States from Mexico. Boggus at 111. The defendant had gone to Mexico to inquire about purchasing some gold bars which he would then sell in America. To test the purity of the gold, he took some shavings back to the United States, and did not declare his possession of the shavings to customs when he returned. Id. A customs agent thereafter contacted the defendant and pretended to be an agent representing the American buyers; when he visited the defendant at the defendant's hotel room, the agent noticed the shavings and then arrested the defendant. Id. at 112. The total weight of the shavings amounted to 6.2 grams. Id. 6.2 grams is about one-fifth of an ounce, which in 1969 was worth roughly seven dollars. Id. at 113.
On appeal the defendant tried to tie 19 U.S.C. § 1484 to section 545 by arguing that there was a five day period for entry. Id. at 112. The court stated however, that 19 U.S.C. § 1484 only applies to a consignee, and furthermore, "[o]nce a person has smuggled something into the country it would be senseless to provide he had five days thereafter to enter and declare it and wash away his crime." Id.
Defintion of MerchandiseThe definition of merchandise actually is quite broad. For example, it can refer to obscene photographs of minors that are not intended for commercial purposes. United States v. Meyer, 802 F.2d 348, 351 (9th Cir. 1986). It also includes marijuana, United States v. Garcia-Paz, 282 F.3d 1212, 1214 (9th Cir. 2002); heroin, United States v. Meza-Arcadia, 458 F.2d 31, 31-32 (9th Cir. 1972); cattle, Babb v. United States, 252 F.2d 702 (5th Cir. 1958) (no objection to use of term "merchandise" in relation to cattle); fish and wild life, United States v. Lee, 937 F.2d 1388, 1397 (9th Cir. 1991); and even baggage. United States v. Chesbrough, 176 F. 778, 781 (D.C.D.N.J. 1910).
18 U.S.C. § 546 (2007).
own in whole or in part any vessel of the United States and
employ, participate in, or allow the employment of, such vessel for the purpose of
smuggling, or attempting to smuggle, or assisting in smuggling, any merchandise into the territory of any foreign government in violation of the laws there in force, if the foreign government has a reciprocating statute that punishes violations of the laws of the United States respecting the customs revenue, and
be a citizen of, or person domiciled in, or any corporation incorporated in, the United States, controlling or substantially participating in the control of any such vessel, directly or indirectly, whether through ownership of corporate shares or otherwise, and
allow the employment of the vessel for any such purpose, and
be found, or discovered to have been, on board of any such vessel so employed and participating or assisting in any such purpose
hire out or charter a vessel having knowledge or reasonable grounds for belief that the lessee or person chartering the vessel intends to employ the vessel for any of the purposes described in this section and if the vessel is, during the time it is leased or chartered, employed for that purpose. 18 U.S.C. § 546.
The PunishmentThe punishment for a violation of section 546 is
a fine, imprisonment for not more than two years, or both.
Case Law Interpreting Section 546
The case law interpreting section 546 is generally straight-forward, even if the statute is terribly convoluted. However, with Pasquantino having been recently decided, the ability of the government to punish people for smuggling goods into other countries is expanding. We discuss this aspect a little later in this section.
United States v. Miller, 26 F. Supp. 2d 415 (N.D.N.Y. 1998).In Miller, the defendants were indicted for smuggling tobacco and liquor products from the United States to Canada across the St. Regis Mohawk Indiana Reservation which straddles the international border between the State of New York and the Canadaian provinces of Ontario and Quebec. Miller at 418. Apparently, the defendants would purchase imported Canadian-brand tobacco products from Canadian distributors, ship them from Canada to locations in Western New York, then to warehouses on the reservation, and from there by sled or boat back into Canada without going through Canadian customs. Id.
The defendants sought dismissal in part on the fact that Canada does not have a reciprocating statute that criminalizes smuggling into the United States from Canada as required by section 546. This argument was ultimately successful, id. at 426, and were it not for Pasquantino, discussed later, this would be most likely the end of the story for attempted prosecutions of smuggling goods from the United States into Canada.
18 U.S.C. § 547 (2007).
receive or deposit any merchandise in any building upon the boundary line between the United States and any foreign country, or
carry any merchandise through the same, in violation of law. 18 U.S.C. § 547.
The punishment for violating section 547 is
a fine, imprisonment for not more than two years, or both. 18 U.S.C. § 547.
Case Law Interpreting Section 547There seem to be no reported cases that deal with section 547 or its predecessors.
18 U.S.C. § 548 (2007).
The CrimeIt is a violation of section 548 for a person to
fraudulently conceal, remove, or repack merchandise in any bonded warehouse or
fraudulently alter, deface or obliterate any marks or numbers placed upon packages deposited in such a warehouse. 18 U.S.C. § 548.
The PunishmentThe punishment for violating section 548 is
a fine, imprisonment not more than two years, or both; and
the forfeiture of the merchandise in question. 18 U.S.C. § 548.
Case Law Interpreting Section 548There are apparently no modern cases dealing with section 548, but cases dealing with the predecessor statute are of some interest.
Becher v. United States, 5 F.2d 45 (2nd Cir. 1924).In Becher, the defendants were convicted of withdrawing cases of whisky by means of forged permits. Becher at 47. At trial, the forged permits could not be produced, to which the defendants objected. On appeal, however, the court found that "the indictment was not for forgery, and it is only in cases such as forgery, counterfeiting, or the misuse of the mails that it is necessary to set forth the document in full." Id. at 49. It is a small point, to be sure, but interesting nonetheless.
United States v. Ehrgott, 182 F. 267 (C.C.S.D.N.Y. 1910).In Ehrgott, the defendant was charged with fraudulently removing beans that had been deposited in a Brooklyn warehouse under bond under a false pretense that the beans were to be exported. Ehrgott at 270. The beans were removed from the warehouse, concealed elsewhere, and never exported. Id. The only question that the court considered was what "fraudulently" meant. The court states that the "word means that the acts must be done with an intent to evade the law." Id. The offense was completed once the goods were removed and the concealment thereafter was mere proof of the fraudulent intent. Id. at 270-71.
18 U.S.C. § 549 (2007).
The CrimeThere are four separate provisions in section 549. It is a violation for any person to
without authority, affixes or attaches
a customs seal, fastening, or mark, or
any seal, fastening, or mark purporting to be a customs seal, fastening, or mark
to any vessel, vehicle, warehouse, or package; or
without authority, willfully removes, breaks, injures, or defaces any customs seal or other fastening or mark placed upon any vessel, vehicle, warehouse, or package containing merchandise or baggage in bond or in customs custody; or
maliciously enters any bonded warehouse or any vessel or vehicle laden with or containing bonded merchandise
with intent unlawfully to remove therefrom any merchandise or baggage therein, or
unlawfully removes any merchandise or baggage in such vessel, vehicle, or bonded warehouse or otherwise in customs custody or control; or
receives or transports any merchandise or baggage unlawfully removed from any such vessel, vehicle, or warehouse, knowing the same to have been unlawfully removed. 18 U.S.C. § 549.
The PunishmentThe punishment for violating section 549 is
a fine, imprisonment not more than ten years, or both. 18 U.S.C. § 549.
Case Law Interpreting Section 549Unlike some of the other statutes in chapter 29, section 549 actually has quite a bit of modern case law.
United States v. Harold, 588 F.2d 1136 (5th Cir. 1979).First, we look at Harold. The defendant in Harold was convicted by a jury on charges of willfully removing from United States Customs custody or control some imported merchandise which had not been released by the Customs Service. Harold at 1138. The defendant was caught red-handed with five boxes of china which had never made it into a secure area for customs processing. Id. at 1139. On appeal, the defendant argued that section 549 could not apply because "there was no removal because the merchandise was never taken from the general area over which customs had authority to control." Id. at 1140. The court humors this contention for a moment, but determines that "Congress intended a broader definition than the direct, physical containment theory advanced by the [defendant]. ¼ [I]mported goods are in the constructive custody of customs from the moment of their arrival in a United States port until their formal release by the Customs Service, regardless of whether customs has actual, physical possession." Id. at 1142.
United States v, McNair,
341 F. Supp. 919 (E.D. Pa. 1972).In McNair, the defendant was charged in part of receiving goods unlawfully removed from customs custody knowing that the goods had been unlawfully removed. McNair at 920. In a post-trial motion, the defendant challenged the admissibility of some of the evidence, which had established that a good was removed from customs custody, that the removal was unlawful, that the defendant received the good, and that the defendant knew that the good was taken unlawfully. Id. at 921. What is salient for our purposes is the last point. The defendant need only know that the good was unlawfully taken; he doesn't need to "have exact technical knowledge that it was in customs custody." Id. (citing United States v. O'Brien, 255 F. Supp. 755 (E.D. Mich. 1965)).
United States v. Three Railroad Cars,
28 F. Cas. 144 (D.C.N.D.N.Y. 1868 (No. 16,513).Finally, we look at Three Railroad Cars. In Three Railroad Cars, which examines the predecessor to section 549, an employee of the claimants had removed consular seals on trains carrying flour in transit from Canada to the United States. Three Railroad Cars at 145. The unauthorized person removed the seals "in ignorance of the character and purpose of such seals, and without knowing by whom, or why, or for what purpose they had been placed upon said cars; that they were so removed for the purpose of making the fastening of said cars more secure, without any improper or illegal motive or intention, or any desire or purpose to defraud the government, or enable any person to do so." Id. The court wrestles with congressional intent, for the employee clearly "willfully" broke the seals, but apparently with no bad intent. "[I]t can hardly be supposed that the legislature intended to declare an act committed without any illegal or improper motive, and under the honest belief that it was entirely right and proper, to be a felony punishable ¼ by a large pecuniary fine and five years' imprisonment." Id. at 146. Therefore, the employee could not be punished under section 549 because his act was not done "willfully" as Congress must have intended. Id. at 147-48.
18 U.S.C. § 550 (2007).
file any false or fraudulent entry or claim for the payment of drawback, allowance, or refund of duties upon the exportation of merchandise, or
make or file any false affidavit, abstract, record, certificate, or other document, with a view to securing the payment to himself or others of any drawback, allowance, or refund of duties, on the exportation of merchandise, greater than that legally due thereon. 18 U.S.C. § 550.
The PunishmentThe punishment for a violation of section 550 is:
a fine, imprisonment for not more than two years, or both, and
the forfeiture of the merchandise or the value of the merchandise. 18 U.S.C. § 550.
Case Law Interpreting Section 550
Like many of the customs-related statutes, e.g. 18 U.S.C. §§ 543, 544, there are very few cases that interpret the modern codification of this policy. One case interpreting the predecessor statute, however, seems to be somewhat useful.
Barlow v. United States, 32 U.S. 404 (1833).In Barlow, the claimant had attempted to classify "bastard," or residue, sugar as refined sugar in order to receive a drawback on exportation. Barlow at 406. The Supreme Court first noted that the term "refined" should apply as it is commercially understood, i.e., either lump or loaf, not merely sugar that had gone through a refining process. Id. at 409-10. The Court then dispensed with the fact that the claimant surely understood that was the case and should forfeit the goods on that point alone, id. at 411, wanting to decide the case on a larger point. "[This case] presents the broader question, whether a mistake of law will excuse a forfeiture in cases of this description. We think it will not." Id. In other words, if the claimant had legitimately believed that bastard sugar qualified as refined sugar, he would still be required to forfeit the goods.
18 U.S.C. § 551 (2007).
The CrimeIt is a violation of section 551 for a person to
willfully conceal or destroy any invoice, book, or paper relating to any merchandise imported into the United States, after an inspection thereof has been demanded by the collector of any collection district; or
conceal or destroy at any time any such invoice, book, or paper for the purpose of suppressing any evidence of fraud therein contained. 18 U.S.C. § 551.
The PunishmentThe punishment for violating section 551 is
a fine, imprisonment for not more than two years, or both. 18 U.S.C. § 551.
Case Law Interpreting Section 551There are no modern cases dealing with the concealment or destruction of documents relating to import duties. However, a case dealing with the predecessor statute is particularly useful because it relates to a conspiracy to conceal or destroy such documents.
United States v. De Grieff, 25 F. Cas. 799 (C.C.S.D.N.Y. 1879) (No. 14,936).In De Grieff, the defendants were charged with conspiring to violate the predecessor to section 551. De Grieff at 799. The defendants objected to the indictment, "because it omits to state facts showing the commission of a fraud upon the United States in connection with the importation of the merchandise described, and because the contents of the papers are not so stated as to enable the court to see that they contained evidence of that fraud." Id. at 800. In other words, the court notes, "[u]nless there was a fraud upon the United States in connection with the importation of the merchandise described, the papers described could not have contained evidence of such a fraud, and there could be no conspiracy to destroy what did not exist." Id. The court, however, does not accept this argument. The "indictment is for a conspiracy to commit an offence against the United States, not for a fraud upon the United States." Id. Furthermore, if the statute were construed to "require proof of a fraud as to which the papers destroyed contained evidence," the statute would have very little applicability because the destroyed papers would contain the only evidence. Id. at 801. "It could hardly have been intended that the successful result of the prohibited act should render its punishment impossible." Id. Therefore, if the government cannot succeed on the provisions of section 551, they can likely succeed on a conspiracy charge.
18 U.S.C. § 1001 (2007).
Section 1001 involves the making of false statements
Case Law Interpreting 18 U.S.C. § 1001 Regarding Import / Export Crimes United States v. Godinez, 922 F.2d 752 (11th Cir. 1991).As discussed earlier in conjunction with 18 U.S.C. § 541, the Godinez defendants were convicted of importing falsely classified lumber under section 541, and for making false statements during that importation.
In its discussion of section 1001, the court stated: "A conviction under 18 U.S.C. § 1001 requires proof of five elements: (1) a statement, (2) falsity, (3) materiality, (4) specific intent, and (5) agency jurisdiction." Godinez at 755 (internal quotations omitted). The defendant-appellants claimed that the Government failed to sufficiently prove that a false statement had been made along with the defendant's intent to do so. Id. The defendant claimed that the country from which the plywood came classified the wood that comprised the plywood as softwood, even though the United States classifies the same type of wood as hardwood. There is an interesting discussion about the definition of wood, but the court focuses on witness testimony that the plywood trade considers the wood types at issue as hardwood. Thus the statement was false. Id. Intent to make the false statements was satisfied by evidence that the defendant knew the plywood was dutiable. The defendant had been a co-owner of a Puerto Rican lumber company that had previously imported the same type of wood and had paid appropriate duties on those shipments. Id. Furthermore, the defendant had instructed one of his employees to check on the correct classification of the plywood, who confirmed that it should be classified as dutiable hardwood. Id. Finally, there was a 1984 telex from the defendant to his suppliers where the defendant stated that "softwood terminology was necessary 'so that we do not have to pay duty on merchandise.'" Id. For the court, that was more than enough evidence to show intent.
18 U.S.C. § 1343 (2007).
Case Law Interpreting 18 U.S.C. § 1343 Regarding Import DutiesPasquantino v. United States,
125 S. Ct. 1766 (2005) (No. 03-725).Pasquantino is a fascinating case. The Court claims that it is not enforcing another country's tax laws. This is because enforcement of the tax laws of a foreign sovereign is typically frowned upon. "At common law, the revenue rule generally barred courts from enforcing the tax laws of foreign sovereigns." Pasquantino, 125 S.Ct. at 1770. Therefore, the question was restructured to be "whether a plot to defraud a foreign government of tax revenue violates the federal wire fraud statute. ¼ Because the plain terms of §1343 criminalize such a scheme, and because this construction of the wire fraud statute does not derogate from the common-law revenue rule, we hold that it does." Id. (internal citations removed).
How the court at this holding is an interesting story. From 1996 to 2000, the defendants, while in New York, ordered liquor over the telephone from discount providers in Maryland. They then smuggled the alcohol into Canada by hiding it in their cars and failing to declare the goods to customs officials. Id. They were eventually arrested and convicted of federal wire fraud for carrying out a scheme to scheme to smuggle large quantities of liquor into Canada. Id. The defendants appealed their convictions by "urging that the indictment failed to state a wire fraud offense. They argued that their prosecution contravened the common-law revenue rule, because it required the court to take cognizance of the revenue laws of Canada." Id. They won that appeal, but the Court of Appeals granted a rehearing en banc, which ended up vacating that opinion and affirmed the defendant's convictions. Id. at 1771.
The Supreme Court granted certiorari "to resolve a conflict in the Courts of Appeals over whether a scheme to defraud a foreign government of tax revenue violates the wire fraud statute." Id. The Court pointed to two cases as evidence of the conflict: United States v. Boots, 80 F.3d 580, 587 (1st Cir. 1996) (a scheme to defraud a foreign nation of tax revenue does not violate the wire fraud statute); and United States v. Trapilo, 130 F.3d 547, 552-553 (2d Cir. 1997) (a scheme to defraud a foreign nation of tax revenue violates the wire fraud statute). Pasquantino, 125 S.Ct. at 1771.
Finding that a sovereign nation's right to uncollected excise taxes is "property" in its hand, the Court notes that a scheme to defraud a country of this property falls with the wire fraud statute's provisions. The defendants "would be equally liable if they had used interstate wires to defraud Canada not of taxes due, but of money from the Canadian treasury." Id. at 1773.
18 U.S.C. § 546 does not apply in this case because Canada does not have a reciprocating statute that criminalizes smuggling into the United States and because section 546 requires that a vessel be used to transport the goods. Id. at 1766 & n.9. (Ginsburg, J., dissenting). The dissent also points out that international tax collection is controlled largely by treaties, and also that Canada has the primary interest at stake. Id. at 1782 (Ginsburg, J., dissenting). "United States citizens who have committed criminal violations of Canadian tax law can be extradited to stand trial in Canada. Canadian courts are best positioned to decide whether and to what extent" the Canadian government has been defrauded. Id. at 1782-83 (J. Ginsburg, dissenting) (citing United States v. Pasquantino, 336 F.3d 321, 343 (4th Cir. 2003) (Gregory, J., dissenting)). Furthermore, as the dissent notes, the defendants in Pasquantino were indicted by Canada for failing to report excise taxes and possession of unlawfully imported spirits, yet Canada has not requested the defendants' extradition. Id. 1783 n.3 (Ginsburg, J., dissenting).
Nonetheless, the Court determined that using the wire fraud statute in this manner was not inconsistent with its purpose and did not constitute the enforcement of a foreign nation's tax revenue laws.
50 U.S.C. Appx. § 2401 et seq. (2007).
Section 2410(a)Generally, the punishment for knowingly violating, conspiring to violate, or attempting to violate, any provision of section 2410 will be
a fine of the greater of
not more than five times the value of the exports or
imprisonment for not more than 5 years, or
both. 50 U.S.C. Appx. § 2410(a) (2007)
However, subsection (b) provides for harsher penalties for certain willful violations.
Section 2410(b)(1)It is a crime under section 2410(b)(1) for a person to
willfully violate, or conspire to violate, or attempt to violate any provision of this Act or any regulation, order, or license issued thereunder,
with knowledge that the exports involved will be used for the benefit, or that the destination or intended destination of the goods or technology involved is, any controlled country or any country to which exports are controlled for national security or foreign policy purposes. 50 U.S.C. Appx. § 2410(b)(1).
If a violation of subsection (b)(1) is committed by an individual, the punishment will be
a fine of not more than $250,000,
imprisonment for not more than 10 years, or
both. Id. § 2410(b)(1)(B)
If the violation is not committed by an individual, the punishment will be a fine of not more than five times the value of the exports, or $1,000,000, whichever is greater. Id. § 2410(b)(1)(A).
Section 2410(b)(2)It is a crime under section 2410(b)(2) for any person
who is issued a validated license under the Export Administration Act for the export of any good or technology to a controlled country, and
who has knowledge that the good or technology is being used by that country for military or intelligence gathering purposes contrary to the conditions under which the license was issued,
to fail to report such use to the Secretary of Defense. Id. § 2410(b)(2).
If a violation of subsection (b)(2) is committed by an individual, the punishment will be
a fine of not more than $250,000,
imprisonment for not more than 10 years, or
both. Id. § 2410(b)(2)(B)
If the violation is not committed by an individual, the punishment will be a fine of not more than five times the value of the exports, or $1,000,000, whichever is greater. Id. § 2410(b)(2)(A).
Section 2410(b)(3)Section 2410(b)(3) applies to a person who possesses such goods or technology who violates either 50 U.S.C. Appx. §§ 2404 or 2405:
with the intent to export such goods or technology in violation of an export control imposed under 50 U.S.C. Appx §§ 2404, 2405 or any regulation, order, or license issued with respect to such control, 50 U.S.C. Appx § 2410(b)(3)(A), or
knowing or having reason to believe that the goods or technology would be so exported, id. § 2410(b)(3)(B).
In the case of a violation of an export control imposed under 50 U.S.C. Appx § 2404 (or any regulation, order, or license issued with respect to such control), the punishment will be that set forth in paragraph 50 U.S.C. Appx. § 2410(b)(1).
In the case of a violation of an export control imposed under 50 U.S.C. Appx § 2405 (or any regulation, order, or license issued with respect to such control), the punishment will be that set forth in subsection 50 U.S.C. Appx. §2410(a).
Section 2410(b)(4)It is a violation of section 2410(b)(4) for any person to take any action with the intent to evade the provisions of this Act or any regulation, order, or license issued under this Act.
The punishment for doing so will be that set forth in 50 U.S.C. Appx. § 2410(a).
In the case of an evasion of an export control imposed under 50 U.S.C. Appx §§ 2404, or 2405 (or any regulation, order, or license issued with respect to such control), the punishment will be that set forth in 50 U.S.C. Appx. §2410(b)(1).
Case Law Interpreting Section 2410An indictment for a violation of the Export Administration Act does not need to define "export," nor does it apparently need to specify how and from what point exports were made. United States v. Moller-Butcher, 560 F. Supp. 550, 555 (D. Mass. 1983). Furthermore, a defendant can be indicted for exporting without a proper license even when the indictment does not allege that the government is in compliance with 50 U.S.C. Appx. § 2402(2)(A) because section 2402(2)(A) are policy considerations and not elements of the offense. United States v. Mandel, 696 F. Supp. 505, 510 (E.D. Cal. 1988) rev'd on other grounds, 914 F.2d 1215 (9th Cir. 1990).
One of the essential elements in proving a violation of the Export Administration Act is the defendant's knowledge that the export was unlawful. United States v. Jamil, 707 F.2d 638, 642 (2d Cir. 1983). In order to establish that the defendant violated section 2410(a), the government is required to prove beyond a reasonable doubt that the defendant "knowingly exported or attempted to export a controlled commodity, without obtaining the appropriate export license." United States v. Shatterly, 971 F.2d 67, 73 (7th Cir. 1992).