The U.S. Supreme Court recently declined to hear the appeal in United States v. Trek Leather Inc. and Harish Shadadpuri, which involved a corporate officer of a U.S. importer who was found personally liable for gross negligence under the applicable statute by the U.S. Court of Appeals for the Federal Circuit (“CAFC”).
In its widely-discussed decision, the CAFC ruled that Mr. Shadadpuri, the owner of Trek Leather, personally violated the Section 592 penalty provisions by “introducing” goods into the United States when he gave his customs broker commercial invoices which omitted the value of mandatory additions to the declared price of the imported merchandise. The CAFC considered his act of omission to be egregious enough to constitute gross negligence under Section 592 and further held that Section 592 permits CBP to seek penalties for such violations against individuals and not just the business entity designated as the importer of record.
Because the Supreme Court has declined to hear Mr. Shadadpuri’s appeal, the Trek Leather decision is now the law of the land. Corporate officers and compliance professionals involved in importing goods into the United States should understand that CBP is now explicitly empowered to seek penalties against individual actors. Although it remains to be seen how broadly CBP will apply this authority, the Trek Leather decision should provide additional motivation for all management levels of a company to make compliance a top priority.