Appeal from the United States Court of International Trade in No. 09-CV-0041, Senior Judge Nicholas Tsoucalas.
STEPHEN C. TOSINI, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for plaintiff-appellee. With him on the brief were STUART F. DELERY, Assistant Attorney General, JEANNE E. DAVIDSON, Director, and FRANKLIN E. WHITE, JR., Assistant Director.
JOHN J. GALVIN, Galvin & Mlawski, of New York, New York, argued for defendant-appellant.
Before PROST, Chief Judge, NEWMAN, LOURIE, DYK, MOORE, O'MALLEY, REYNA, WALLACH, TARANTO, and CHEN, Circuit Judges.[*] OPINION filed by Circuit Judge TARANTO.
Taranto, Circuit Judge.
Harish Shadadpuri transferred ownership of merchandise, while it was in transit to the United States, to a company he chose to be the importer of record for its entry into United States commerce. He also furnished to the hired customs broker, for use in completing and submitting the entry documents required for clearance through the Bureau of Customs and Border Protection (CBP), commercial invoices that materially understated the value of the merchandise, thereby reducing the calculated customs duties. We hold that, by those actions, Mr. Shadadpuri " introduced" the merchandise into United States commerce by means of the undervaluation within the meaning of 19 U.S.C. § 1592(a)(1)(A). Because it is undisputed that he was grossly negligent in his actions, Mr. Shadadpuri violated section 1592(a)(1)(A). We affirm the judgment of the Court of International Trade holding him liable.
Section 1592(a)(1) of Title 19, U.S. Code, provides:
(1) General rule
Without regard to whether the United States is or may be deprived of all or a portion of any lawful duty, tax, or fee thereby, no person, by fraud, gross negligence, or negligence--
(A) may enter, introduce, or attempt to enter or introduce any merchandise into the commerce of the United States by means of--
(i) any document or electronically transmitted data or information, written or oral statement, or act which is material and false, or
(ii) any omission which is material, or
(B) may aid or abet any other person to violate subparagraph (A).
19 U.S.C. § 1592(a)(1). That provision was the same in 2004, when the merchandise
at issue here was imported. Section 1592 goes on, among other things, to specify procedures for enforcement of the quoted prohibitions and to provide penalties for violations, the authorized penalties depending on whether a violation involves fraud, gross negligence, or negligence. Id. § 1592(b), (c).
This case began in 2009, when the government filed a complaint in the Court of International Trade, invoking that court's jurisdiction under 28 U.S.C. § 1582 and alleging a violation of section 1592(a)(1). The complaint names Trek Leather, Inc., and Mr. Shadadpuri as defendants, alleging that Mr. Shadadpuri was Trek's president, and directed its business, at the time at issue. It charges that, between February 2, 2004, and October 8, 2004, the two defendants " entered or introduced or attempted to enter or introduce men's suits into the commerce of the United States" by means of " false acts, statements and/or omissions" that " understated the dutiable value of the imported merchandise" for the 72 itemized entries, resulting in an underpayment of $133,605.08 in duties. Complaint, United States v. Trek Leather, Inc., Case No. 1:09-cv-00041-NT (Ct. Int'l Trade Jan. 28, 2009), at 1-2. According to the complaint, CBP had issued a penalty notice, and some of the properly calculated duties, and all of the penalties CBP sought to impose, remained unpaid. Id. at 2c3. The complaint includes separate counts alleging fraud, gross negligence, and negligence, and it seeks to recover penalties, unpaid duties, and interest. Id. at 3-5.
In late 2010, after discovery took place, the government filed a motion for summary judgment of liability. The defendants opposed the motion; they also moved to dismiss the fraud count and argued that Mr. Shadadpuri personally could not be liable without fraud. The filings and accompanying evidence establish the following facts beyond genuine dispute. We rely mainly on the government's statement of uncontested facts (" Gov't Facts" ) and the defendants' response, which admits most of the government's stated facts (" Def. Facts" ).
Trek " is the importer of record for men's suits reflected in the 72 entry lines at issue in this case," and Mr. Shadadpuri is the president and sole shareholder of Trek, whose activities he directed from January 2003 to December 2004. Gov't Facts at 1, 6. From February 2, 2004, to October 8, 2004, " Mr. Shadadpuri imported men's suits through one or more of his companies, including Trek." Id. at 1. " Mr. Shadadpuri, through Trek and/or one of his other companies, provided" fabric to ...