After Two Raids, DOJ Decides No Criminal Charges Against Gibson Guitar Company

August 7, 2012 - 5:54 AM
Gibson Guitar Raid

In this Aug. 25, 2011 photo, Gibson Guitar CEO Henry Juszkiewicz speaks about a raid by federal authorities, at the plant in Nashville, Tenn. (AP Photo/The Tennessean, Samuel M. Simpkins)

(CNSNews.com) - Three years after federal agents carrying automatic weapons raided the Gibson guitar factory in Nashville -- the first of two federal raids -- the company has agreed to settle Justice Department allegations that it violated the federal Lacey Act, which bans the importation of endangered wood products.

The Justice Department will not bring criminal charges against Gibson related to the company's purchase and importation of ebony and other exotic woods from Madagascar and India.

In return, Gibson admitted that it had failed to ensure that the exotic wood it was purchasing from its supplier had been legally harvested and exported.

Gibson has agreed to pay a $300,000 penalty to the U.S. government, and it also has agreed to make a "community service payment" of $50,000 to the National Fish and Wildlife Foundation -- to be used on research projects or tree conservation activities. The Fish and Wildlife Service conducted the investigation.

"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 said the settlement follows many weeks of negotiations, and it leaves a bitter taste:

"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."

Further, Gibson noted that the years-long investigation has cost taxpayers millions of dollars -- and put a "job-creating U.S. manufacture at risk and at a competitive disadvantage."

"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," Juszkiewicz said.

"I am committed to working hard to correct the inequity that the law allows and ensure there is fairness, due process, and the law is used for its intended purpose of stopping bad guys and stopping the very real deforestation of our planet".

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.

(The fretboard or "fingerboard" of a guitar is the piece attached to the neck of the guitar, under the strings.)

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 says true legislative reform is necessary to avoid what it calls the "criminalization of capitalism."

The privately held company is considered one of the top makers of acoustic and electric guitars, including the iconic Les Paul introduced in 1952.