Most products sold in this country – whether imported or made here – are subject to a matrix of federal laws and regulations intended to provide Americans with significant benefits, such as safe food, safe products and a cleaner environment. The compliance costs for producers here and abroad are substantial. Further, imports can be subject to additional costs and restrictions, such as import duties and quotas.
But it is much more difficult for federal regulators to enforce regulatory compliance on imports than American-made goods. Unlike domestic producers, foreign producers – and their principals and production assets – are effectively beyond the reach of U.S. regulators.
United States v. Chavez appears to be the first case in which DOJ – supported by U.S. Immigrations and Customs Enforcement (“ICE”) and U.S. Customs and Border Protection (“CBP”) – has based criminal customs fraud charges on the ground that an importer’s submission of falsified entry documents – and its efforts to cover up the fraud – constitute obstruction of justice under Section 1519. This suggests that DOJ will increasingly use Section 1519 and its 20-year incarceration penalty in an effort to deter future acts of customs fraud.
A new article in the Metropolitan Corporate Counsel , written by Kelley Drye international trade partner Michael J. Coursey, discusses customs fraud, false statement prosecutions and DOJ’s move to use Sarbanes-Oxley Section 1519 violations to trigger obstruction of justice charges.