The 'Wolff' at Importers' Doors: Criminal Statute Is New Tool in Trade Enforcement Cases

Originally published October 25, 2010

Keywords: Wolff, trade law, civil penalties, import, enforcement, obstruction statute

US importers have long been subject to civil penalties for violating US trade law. However, with the recent indictment of 11 individuals and 6 corporations for allegedly conspiring to illegally import goods into the United States, the US government may be signaling a sea-change in its enforcement strategy by subjecting trade law violators to severe criminal penalties as well.

In September 2010, the US government employed a fairly recent, but rarely used, criminal obstruction provision to indict corporate executives of foreign and domestic corporations for their participation in an alleged scheme to evade nearly $80 million in antidumping duties on honey imported from China. In United States v. Alexander Wolff, et al., the US Department of Justice (DOJ) charged 11 corporate executives and six corporations in a wide-ranging, 44-count indictment, which included a charge that the defendants obstructed justice in violation of 18 U.S.C. §1519 as a result of their destruction of various records before they knew they were the subject or target of any investigation into their alleged conduct. This obstruction statute is part of a provision of the Sarbanes-Oxley Act of 2002. To date, the section has resulted in few prosecutions. DOJ's use of this statute in an antidumping duty circumvention case marks a new tactic in the enforcement of US trade law that importers should monitor carefully.

Obstruction Under Section 1519

Titled "Destruction, Alteration, or Falsification of Records in Federal Investigations and Bankruptcy," Section 1519 provides in part:

Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, ... any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States...or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both.

This language departs from traditional obstruction statutes that require the existence of a pending federal investigation or judicial proceeding. The tactical advantage in charging this statute is that the government may not have to prove that a defendant undertook his obstructive act with the intent to affect a particular government proceeding. Thus, under...

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