Gibson Guitar Admits It Broke the Law; Settles with DOJ to Avoid Criminal Prosecution

500px-Gibson_logo.svgGibson Guitar Corp., a manufacturer of musical instruments and significant shareholder in Onkyo Corp. and majority owner of Onkyo USA, has entered into a “Criminal Enforcement Agreement” with the U.S. Department of Justice settling matters and circumstances surrounding government allegations of their illegal purchase and importation of woods and materials protected by environmental regulations and laws. As part of their settlement, Gibson admits the government’s allegations are true, agrees to pay a penalty of $300,000, agrees to an additional “community service” payment of $50,000 to the National Fish and Wildlife Foundation, implements a strict compliance program (approved by DOJ enforcers) to prevent future violations, and relinquishes claim to more than $260,000 worth of government-seized illegally imported materials.

But there is a significant win in this agreement for Gibson as well. By settling with the government, Gibson avoids the possibility of criminal prosecution and finally puts this matter behind it. From the DOJ press release on the matter:

In light of Gibson’s acknowledgement of its conduct, its duties under the Lacey Act and its promised cooperation and remedial actions, the government will decline charging Gibson criminally in connection with Gibson’s order, purchase or importation of ebony from Madagascar and ebony and rosewood from India, provided that Gibson fully carries out its obligations under the agreement, and commits no future violations of law, including Lacey Act violations.

We first reported on this issue in an article earlier this year about the investment by Gibson into Onkyo. As we reported at the time, Gibson had defiantly denied any wrongdoing and made many public statements positioning the issue as a political matter of an over-reaching government enforcing regulations that are choking off a job-creating small businesses.

Gibson CEO Henry Juszkiewicz was vocal in his anti-government rhetoric and the company was supported by various conservative and Tea Party groups that staged protests in support of Gibson’s position. Even some conservative members of Congress got involved, questioning whether the Government was over-stepping its bounds.

Gibson’s press release on the matter circulated this past Monday continued to be surprisingly forceful on the matter and showing very little contrition for its actions, saying:

Despite the fact that, ‘…the government acknowledges that Gibson has cooperated with the Government and the investigation conducted by the Fish and Wildlife Service,’ Gibson was subject to two hostile raids on its factories by agents carrying weapons and attired in SWAT gear where employees were forced out of the premises, the production was shut down, goods were seized as contraband, and threats were make that would have forced the business to close.

Gibson’s defiance continued throughout their press release, quoting Juszkiewicz as saying:

We feel that Gibson was inappropriately targeted, and a matter that could have been addressed with a simple contact a [sic] caring human being representing the government. Instead, the Government used a violent and hostile means with the full force of the US Government and several armed law enforcement agencies costing the tax payer millions of dollars and putting a job creating US manufacture [sic] at risk and at a competitive disadvantage. This shows the increasing trend on the part of government to criminalize rules and regulations and treat US businesses in the same way drug dealers are treated. This is wrong and it is unfair. I am committed to working hard to correct the inequity that the law allows and insure there is fairness, due process, and the law is used for its intended purpose of stopping bad guys and stopping the very real deforestation of our planet.

While Gibson did not directly address the media, their press release provided set questions and answers that continued their aggressive posture, even in the wake of reaching this agreement with the DOJ. Gibson also took the unusual step of publishing various government letters and documents on their website to let visitors “draw their own conclusions.”

The reaction from visitors to Gibson’s website appears to be mixed…largely centered around political ideology – and some heated exchanges developed. Many comments were supportive of Gibson’s position and critical of the Government. However, several commenters took Gibson to task for politicizing the matter.

Says Gibson’s Juszkiewicz: “We felt compelled to settle as the costs of proving our case at trial would have cost millions of dollars and taken a very log time to resolve. This allows us to get back to the business of making guitars.”

See Gibson’s press release along with published documents here…

See the DOJ announcement on the matter here…

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