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Small business gets hammered by big banks and lobbyists … oh wait

Small business gets hammered by big banks and lobbyists … oh wait

Gibson Guitar is paying hundreds of thousands of dollars in fines and foreiting possession of wood product used in guitars, based on the trumped up claim that it violated Indian law (and thereby a provision in U.S. law) in purchasing the “endangered” wood, as reported by The Christian Science Monitor (via Reason, h/t Mark Hemingway):

Federal prosecutors on Monday announced a deal to drop a criminal case against Gibson Guitar Corporation after the instrument maker acknowledged its importations of exotic wood violated environmental laws.

Nashville-based Gibson agreed to pay a $300,000 penalty, forfeit claims to about $262,000 worth of wood seized by federal agents and contribute $50,000 to the National Fish and Wildlife Foundation to promote the conservation of protected tree species.

“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,” U.S. Attorney Jerry Martin said in a statement.

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

“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,” CEO Henry Juszkiewicz said in a statement late Monday night.

“This allows us to get back to the business of making guitars,” he said, noting that the settlement would allow them to continue sourcing rosewood and ebony from India as it has for decades.

As Reason reported at the time:

The feds raided Gibson for using an inappropriate tariff code on wood from India, which is a violation of the anti-trafficking statute known as The Lacey Act. At issue is not whether the wood in question was endangered, but whether the wood was the correct level of thickness and finish before being exported from India. “India is wanting to ensure that raw wood is not exported without some labor content from India,” says [Gibson CEO Henry] Juskiewicz.

Andrea Johnson of the Environmental Investigation Agency (EIA) counters that “it’s not up to Gibson to decide which laws…they want to respect.” She points out that Gibson had previously been raided under The Lacey Act for imports from Madagascar.

(video via Instapundit)

Absolute insanity. Over half a million down the drain for Gibson, not to mention whatever it has spent on attorney’s fees and business it has lost.


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legacyrepublican | August 7, 2012 at 11:23 am

They are being strummed out of business one fine at a time. Sad, really sad.

The illogic of this whole deal is astounding.

The Madagascar ebony remains DEAD. Harvested. Beyond redemption.

What will the Feds do with it? I expect burning it is likely.

And what was the real issue? NOT the cutting of the trees. No.

It was the FORM in which Gibson accepted the processed blanks.


    JimMtnViewCaUSA in reply to JimMtnViewCaUSA. | August 7, 2012 at 11:29 am

    Umm, link not quite right, choose “Gibson Guitar” at the lower right of that page 🙂

      legacyrepublican in reply to JimMtnViewCaUSA. | August 7, 2012 at 11:38 am

      Thanks for the link advice.

      Justin Hayward is one of my favorite artists. Interesting that he gets capitalism and the saving of the Brazilian trees because they have value. It was as though he was channeling John Stossel.

      Anyway, I got to wondering if the feds might not go after my beatles songs next — “isn’t it good, norwegian wood?”

    legacyrepublican in reply to JimMtnViewCaUSA. | August 7, 2012 at 1:42 pm

    Thanks to the link, I feel inspired to rewrite a popular song …

    Nights in banned satin, never reaching the end,
    Fetters I’m bound in, never bending to rend.
    Beauty I’d always missed with these dotted i’s before.
    Just who built it is, I can’t say anymore.

    dhmosquito in reply to JimMtnViewCaUSA. | August 7, 2012 at 4:51 pm

    Worked well with OS 10.5.8 on Firefox 14.0.1. Thanks! It was a killer video. Moody Blues, Doors, etc; they don’t do music anywhere near as well these days… chuck

Henry Hawkins | August 7, 2012 at 11:29 am

That’ll teach Gibson to support conservatism.

casualobserver | August 7, 2012 at 11:36 am

The beauty of a complex and extensive collection of CFRs/regulations is that you can be selective in your prosecution and easily defend against it. Politics may enter into the selection, but because the laws are so vast and the prosecutions small by comparison, you’d have to be highly blatant and biased for such a bias to be proven.

“Andrea Johnson of the Environmental Investigation Agency (EIA) counters that ‘it’s not up to Gibson to decide which laws…they want to respect.’”

It’s a shame the same guidelines don’t apply to the EPA with respect to funding, siting, licensing, and operating wind farms, solar panel arrays, and other “green” favorites; the DOJ; the President; INS; and ATFE. Our government is a wreck.

    NC Mountain Girl in reply to Owego. | August 7, 2012 at 1:24 pm

    Ms Johnson, may I introduce you to the simple, non-endangered pine rail. That is of course, after you have been liberally introduced to the concept of tar and feathers.

    gs in reply to Owego. | August 7, 2012 at 4:51 pm

    “Andrea Johnson of the Environmental Investigation Agency (EIA) counters that ‘it’s not up to Gibson to decide which laws…they want to respect.’”

    Meanwhile, the god-king in the Oval Office enforces (or does not) whatever laws he pleases. If no law is to hand for his purpose, he issues an executive order.

2nd Ammendment Mother | August 7, 2012 at 11:39 am

Begging the pardon of the professor, the Gibson settlement has little to do with guilt or innocence. Whether it’s a federal prosecutor, an environmental grudge or a frivolous lawsuit, the outcome of these legal maneuvers depends on the fiscal math of how much you can afford to defend. Quite simply, $300K is a drop in the bucket compared to multiple years of financially draining litigation that Gibson was facing.

“… contribute $50,000 to the National Fish and Wildlife Foundation to promote …”

Just WTF does the National Fish and Wildlife Foundation have to do with this “illegality” ? .. why do they get anything ?

    Spiny Norman in reply to Neo. | August 7, 2012 at 4:54 pm

    This is the Obama Administration. It’s graft, Neo. It doesn’t need to make any sense.

Insufficiently Sensitive | August 7, 2012 at 11:43 am

None of the mainstream ‘news’ articles on this ham-handed act of ‘enforcement’ give sufficient details to determine what the facts are, but it appears there are two facets to consider. The first, the overzealous drafters of the modifications to the Lacey Act, who wrote due process out of it, allowing the Feds on merely an accusation to treat Gibson as guilty unless they could prove themselve innocent. The second, the zealots attempt to ensure that for full employment overseas, Gibson must only import finished pieces and not rough-cut raw materials. In making musical instruments, that’s fatal – the finishing must be done where the instruments are assembled.

This parody of justice looks as much like a Federal shakedown of Gibson, relying on its overwhelming legal resources to force a settlement complete with ‘confession’ as the only viable economic alternative to keep Gibson in business. Jesse Jackson would approve.

“it violated Indian law (and thereby a provision in U.S. law) in purchasing the “endangered” wood….”

You jus’ wait ’til Cherokee Lizzy starts in on this, by damn!

Insufficiently Sensitive | August 7, 2012 at 11:49 am

Just WTF does the National Fish and Wildlife Foundation have to do with this “illegality” ? .. why do they get anything ?

The Lacey Act brings USFWS in as an enforcer in such cases – in fact it was USFWS guys with the guns and flak vests who twice raided Gibson. Remember, this is ‘environmental’ justice, in a close resemblance to lynch law.

Justice is no way a part of it, when the accuser not only gets to force the accused to prove itself innocent, but actually walks away from the coerced ‘settlement’ with $50,000 in baksheesh. This is corruption on stilts.


I’m 99% sure Japan is the number one importer of exotic wood.

How many fancy drinking establishments and nightclubs did I sit in many a night over years and marvel at the acres and acres of beautiful, exotic wood used to make the bar and exposed beams?

The amount of exotic wood Gibson uses in a year is probably on par with the amount used to furnish a couple of large restaurant bars in Japan.

And now they’re going after Sheldon Adelson again.

    Ragspierre in reply to LukeHandCool. | August 7, 2012 at 11:56 am

    Ah, but you missed the OTHER part of this story…

    If you bring a guitar…or a grand piano…into the U.S. from another part of the world, you run the risk of having your instrument confiscated.

    FOREVER. It might have been in your family for generations. If you want it back, you have to prove its provenience.

      LukeHandCool in reply to Ragspierre. | August 7, 2012 at 12:00 pm

      And meanwhile the Japanese love for rare and exotic timber in interior design is gobbling up large patches of the Amazon.

      Henry Hawkins in reply to Ragspierre. | August 7, 2012 at 3:30 pm

      I’ve been playing the same ‘exotic wood’ six string acoustic for thirty-five years. They can have it when they pry it from my COLD DEAD HAND.

      Hey, they call Clapton ‘Slow Hand’. Maybe folks’ll call me Cold Dead Hand.

        Henry Hawkins in reply to Henry Hawkins. | August 7, 2012 at 5:38 pm

        On second thought, I think I’ll stick with the name I called for yesterday in the thread about, Thunderball, the Occupier who bravely confronted a gray-haired homeless street preacher: Henry Moonraker Hawkins.

Good. At least they are getting the materials back that were grabbed by armed agents.

I can only hope that whatever press this gets will help Gibson with some sympathy purchases.

Having spent a lifetime in government, it may be a simple case of “We have to do something”

Lawyers (even government ones) aren’t cheap, nor are their offices, vehicles and pensions. Like ever multiplying SWAT teams, these highly trained, credentialed and virtuous (maybe even ambitious) specialists must produce, or why are they there?

Lawyers sue. Government lawyers justify their existence and need for higher budgets by suing.

    Ragspierre in reply to Icepilot. | August 7, 2012 at 12:41 pm

    Excellent point.

    The bottom line here is that you CANNOT leave stupid laws on the books. They will be used perversely by people with power.

    I advocate sun-setting the entire Federal Registry…as a good start.

Wouldnt it be interesting to see by year the total fines and other penalties the US Government collects from businesses?

This is how tyranny looks.

Someone above mentioned sunsetting the entire Federal Register. Then I’ll go one better: fire everyone and zero out the budgets in the “social services” part of Federal government, and some others, too, and start from scratch. Earnest semi-incompetence (which occasionally will get it right) is better than systematic corruption (which only gets it right when it suits the Washington elites, which is becoming increasingly rare, explained by the first sentence of this post.)

Hope you don’t mind Professor but I posted this entire article in a Precious Metals site that is trying to make people aware of the coming collapse of the “Keynesian Ponzi System”

Extortion , pure and simple. Fascism. The Chicago way.

I remember reading at some point that Gibson had worked out an arrangement with the Indian government to permit this precise exportation. The feds didn’t care.

The larger reality is the intent to establish such prolix regulations that any business at any time can be subject to a felony. This is a constant Sword of Damacles. And, of course, that the CEO of Gibson is a conservative.

Oh yeah, I love that disclaimer. “We’re not going after the individual guitar owner” – right now. A stupid law is on the books. The odds are certain that a stupid bureaucrat will one day enforce that law in a stupid manner. Such is the nature of bureaucracy and bureaucrats. They can’t help themselves.
The law has nothing to do with “conservation”. It’s a make-work-for-locals law. We have as much business enforcing another nation’s labor-generation laws as we do regulating against incandescent light bulbs. Q. E. D.

Forced contributions?

Hey… it’s the Chicago way.

2nd Ammendment Mother | August 7, 2012 at 1:51 pm

Until it’s Ted Nugent returning from a show in Canada and the Feds decides his guitar might contain exotic woods that he will probably be unable to document back to their origins. I own several antique instruments that have been inherited, all of them would be impossible to properly document under the Lacey Act.

Hug a guitar.

Sadly, the confiscated wood will never resonate with music because the craftsmen will never form the blank into an instrument and receive wages for their work. A musician will never be able to bring out the sonority inherent in that type of wood and he won’t receive payment for performing because of the Ministry of Exotic Tree Protection. The value added to the wood would have been very great and the (now lost)revenue would have provided tax revenues enough to chop down other trees in order to print more food stamps.

Insufficiently Sensitive | August 7, 2012 at 2:02 pm

It appears that the loose cannon Greenpeace, acting as government stooge and bearing no accountability nor liability for its acts, had a hand in this enviro crusade.

And at the end of the agreement, Gibson was rapped over the knuckles for assuming that its third-party wood importers were dealing in good faith, and for failing to act as a police representative to enforce the laws of Madagascar.

Subotai Bahadur | August 7, 2012 at 2:05 pm

Some corrections, if I may.

1. Insufficiently Sensitive | August 7, 2012 at 11:49 am

The USFWS that is the enforcement arm for the Lacey Act is a department of the US government. Yes, their agents conducted the raid

The National Fish and Wildlife Foundation that the Federal government directed the $50K fine to is a totally private, Leftist tax-exempt organization with no government authority. Being private, they have the ability to covertly transfer the funds to the Obama campaign in cash or in kind. This is a simple protection money racket shakedown for the Democratic Party using Federal goons.

2. jimzinsocal | August 7, 2012 at 11:58 am

Good. At least they are getting the materials back that were grabbed by armed agents.

I may well have missed it, but I didn’t see where they got the wood back. Could you cite it in the decision? The closest thing I could see was a clause about future purchases:

The Government and Gibson acknowledge and agree that certain questions and inconsistencies now exist regarding the tariff classification of ebony and rosewood fingerboard blanks pursuant to the Indian government’s Foreign Trade Policy. 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.

In other words, the government is admitting the law is shaky, and promises [as if they can be believed] that if the Indian government gives the same guarantees that they just raided the company for accepting, they will not prosecute the company in the future for doing the exact same thing they just raided them for. I don’t see anything saying saying that they would give back what was seized. Nor do I see any reason to trust the government.

3. As far as I can see, the government is still in possession of a whole bunch of now much more expensive wood that is in the exact form used to make guitars. I don’t think that they will burn it. I will bet that the wood will be sold as government surplus. At a pennies on the dollar price. To Fender Guitar Co.

Fender Guitar Co. is a major contributor to Obama and the Democrats. And, of course, competitors to the Gibson Co. They buy the exact same wood, using the same brokers and methods that Gibson was prosecuted for, and the Federales give them a free pass, even when challenged on it.

After all, part of a shakedown racket is not only showing that it is dangerous not to pay, but also that there can be benefits to paying.

I make custom political t-shirts [for my own use only, not for sale] to make Leftists’ heads explode. One which I wear around town to great effect has an Obama symbol with a circle and slash. Above it is the phrase: “BOYCOTT DEMOCRAT OWNED BUSINESSES”. Below is: “Make them as poor as they are making us!”.

The concept seems to fit this situation. Patriots should not buy Fenders.

Subotai Bahadur

“…proving our case at trial would have cost millions of dollars and taken a very long time to resolve.”

NOT spending funds on projected outlays…
Obamanomics logic dictates that.. err Gibson Guitar just made millions !!!

Insufficiently Sensitive | August 7, 2012 at 2:41 pm


Good catch. It wasn’t until I read the Gibson/DOJ settlement – link provided above by jimzinsocal, and NOT by the Seattle Times – that I saw the difference between USFWS and the National Fish and Wildlife Foundation. You’re spot on, that $50K from Gibson will undoubtedly be converted at least partially to baksheesh to enhance the Obama campaign. That is corruption on stilts, as aforesaid.

Emails: Geithner, Treasury drove cutoff of non-union Delphi workers’ pensions

Enforcing a selective rule of law appears to be motivated not by an aversion to business, small or otherwise, but by marginalizing and eviscerating competing interests.

So, now we have a better understanding of what happens behind the scenes.

Currently … Department of Justice and various federal agencies have a tendency to investigate and raid conservative companies or firms owned by conservatives. Just ask Sheldon Adelson.

What I do not understand is, if no charges are brought because the evidence is insufficient, or wholly lacking, for whatever charge was sought, why is the target firm/individual not made whole, materials returned, records returned, etc.?

A similar apparent travesty is underway with New Mexico’s New Deal Shooting Sports.