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$760,000 in Penalties for Lacey Act and Endangered Species Act Violations

Wednesday, September 20, 2017
Sandler, Travis & Rosenberg Trade Report

The Department of Justice reports that a U.S. company has been sentenced to a $500,000 fine, $135,000 in restitution, and a $125,000 community service payment after pleading guilty to federal misdemeanor charges regarding its illegal trafficking of rosewood oil and spikenard oil in violation of the Lacey Act and the Endangered Species Act. The company was also sentenced to five years’ probation with special conditions that include the implementation of a corporate compliance plan, audits, and the publication of statements regarding its convictions. A U.S. attorney said these penalties reflect the “intentional and substantial” nature of the violations as well as the company’s decision to conduct an internal investigation, voluntarily disclose the initial violations, and cooperate throughout the investigation.

According to a DOJ press release, from June 2010 to October 2014 several company employees and contractors harvested, transported, and distilled rosewood in Peru and imported some of the resulting oil into the U.S. through Ecuador. Peruvian law prohibits the unauthorized harvest and transport of timber, including rosewood, and neither the company nor its suppliers, employees, or agents had any valid authorization from the Peruvian government. Peru also prohibits the export of species protected under the Convention on International Trade in Endangered Species of Wild Fauna and Flora without the required permits, and the company did not obtain any CITES export permits from Peru. According to a DOJ press release, the company lacked an internal compliance program or formal procedures, training, or means to review and resolve problems and identify and stop potential violations.

In addition, an internal investigation revealed that the company had exported spikenard oil harvested in Nepal to the United Kingdom without a CITES permit. This oil was imported from a company in the UK that had obtained a CITES export permit but was then shipped back to the UK after the company found it to be unsatisfactory. A company employee filed an application for a CITES permit for the latter shipment after the fact and without providing the required copy of the permit authorizing its export from the UK.

Further, the investigation found that between November 2014 and January 2016 the company purchased more than 1,100 kilograms of rosewood oil from a supplier/importer in the U.S. without conducting sufficient due diligence to verify the lawful sourcing of that oil.

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