Wednesday, October 15, 2008

Illegally Importing Liquor, Lying About Exports is Customs Business

Miguel Delgao lost his brokers license when it was discovered that he had been part of a scheme to import liquor into a bonded warehouse where paperwork was prepared showing it was to be exported. But, instead of being exported, the liquor was diverted back to the U.S. without the payment of federal liquor taxes.

Apparently, Mr. Delgado does not argue that his conviction on 14 counts of violating 26 U.S.C. § 5601(a)(11) was proper. He might, but that is not the point for us. What he argued at the Court of International Trade was that his felony convictions did not relate to the importation of merchandise nor did they arise out of the conduct of customs business. 19 U.S.C. § 1641(d)(1)(B).

To cut to the chase, the Court disagreed. First, the fact that the plan was never to export the goods from the warehouse but to divert them to the U.S. commerce does not mean the plan did not involve exports. Rather, the statute only requires that exports be involved or closely related to the transaction and this was related enough. Further, the Court pointed out, the goods involved had been exported previously and were relanded before diversion into the U.S.

The Court also found that the completing the documents showing the putative exportation was an activity arising out of the conduct of Mr. Delgado’s customs business.

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