Brokers Breaking the Law

Now that the Customs Broker’s Exam is over, those who passed the exam will be notified and a background investigation will be performed. Will this investigation uncover anything that would prevent any of the aspiring applicants from receiving a license? Even after you receive your license, it comes with the responsibility to continue to obey Customs laws and regulations. For those who are considering taking the exam, you too must consider your actions because certain deeds could prevent you from obtaining your license.

Those of you who have studied for the exam are quite familiar with the grounds for denial or revocation of a broker’s license found in 19 CFR 111.16 and 19 CFR 111.53. The provisions of the regulations that are the focus of this article are related to criminal, dishonest or unethical conduct along with violation of any law enforced by Customs and knowingly aiding in the violation of Customs laws.

As you read this, many of you may be thinking that we're foolish to suggest that a Customs broker would commit a crime and risk losing his or her license. Are we foolish? No. Regrettably, the actions of just a few brokers created the opportunity for this discussion.

In June 2007, licensed customs brokers were among 29 people arrested for participating in a scheme to import counterfeit goods such as Nike shoes, Rolex watches and other goods. Those arrested included distributors, freight forwarders, customs brokers, owners and managers of customs-bonded warehouses, and managers of a customs exam site. These people were named in criminal complaints for conspiring to smuggle more than 950 shipments of high-quality knockoffs through New York City, Long Beach, Calif., Texas and other ports of entry. The counterfeit goods were estimated to have an approximate value of $700 million if authentic. Officials said it was one of the largest plots in recent history involving corrupt Customs brokers. The government licenses the brokers to inspect paperwork provided by importers and to clear merchandise for delivery to wholesalers. If found guilty, the defendants face prison sentences of five to 20 years. Additional information about this incident can be found on the ICE web site.

Customs and Border Protection (CBP) enforces laws relating to the protection of trademarks and copyrights. Articles that infringe on a properly registered trademark or copyright are subject to detention and/or seizure. Infringing articles may consist of articles that use a protected right without the authorization of the trademark or copyright owner or articles that copy or simulate a protected right.

Articles bearing marks that are counterfeit or that inappropriately use a federally registered trademark are subject to seizure and forfeiture. The importation of articles intended for sale or public distribution bearing counterfeit marks may subject an individual to a civil fine if the registered trademark has also been recorded with CBP. Articles bearing marks that are confusingly similar to a CBP recorded registered trademark are subject to detention and seizure. As you learned from the above incident, participants can also be arrested and charged with a crime that carries a prison sentence.

If a client or other party contacts you about importing counterfeit goods “Just Say No.” The next time a street vendor tries to tempt you to purchase a pair of Nike athletic shoes or a pair of Ray Ban sunglasses at a price that is too good to be true, think about the consequences and “Just Say No.” Obtaining that Customs Broker’s License is hard work, so don’t jeopardize your license, opportunity to make a living or reputation by participating in counterfeiting or any other illegal activity.