Gibson Guitar Settles With Federal Investigators, Acknowledges Exotic Wood Violation

A 1960 Gibson Les Paul Special, formerly owned by reggae musician Peter Tosh, from the guitar collection of actor Richard Ger
A 1960 Gibson Les Paul Special, formerly owned by reggae musician Peter Tosh, from the guitar collection of actor Richard Gere is displayed at Christie's, Thursday, Oct. 6, 2011 in New York. The collection includes over 100 vintage American guitars and amplifiers and will be auctioned on Tuesday, Oct. 11, 2011. (AP Photo/Jason DeCrow)

On Monday, federal prosecutors announced a deal has been reached between the government and Gibson Guitar Corp., resolving a criminal case against the famed instrument maker for the alleged illegal importation of exotic wood.

Gibson will pay a $300,000 penalty, forfeit claims to about $262,000 worth of wood seized earlier in federal raids and contribute $50,000 to the National Fish and Wildlife Foundation for efforts involving the conservation of endangered and rare wood species, CBS News reports.

According to Reuters, U.S. Assistant Attorney General Ignacia Moreno of the Justice Department's Environment and Natural Resources Division, said:

As a result of this investigation and criminal enforcement agreement, Gibson has acknowledged that it failed to act on information that the Madagascar ebony it was purchasing may have violated laws intended to limit over-harvesting and conserve valuable wood species from Madagascar, a country which has been severely impacted by deforestation.

The Nashville-based instrument maker has so far not reponded to requests for comment, but in a statement on the company website, Gibson CEO Henry Juszkiewicz said the settlement was necessary to avoid further damaging legal costs.

"We felt compelled to settle as the costs of proving our case at trial would have cost millions of dollars and taken a very long time to resolve," Juszkiewicz said in the statement.

The conflict gained national attention in August of 2011, when conservation agents from the Fish & Wildlife Service raided Gibson for a second time. The agents seized raw materials and guitars, alleging in an avidavit that the company was illegally importing exotic wood from Madagascar and India in violation of an environmental law known as the Lacey Act.

The act, originally intended to ban wildlife products such as bird feathers and ivory, was amended in 2008 to include rare wood variations.

Andrea Johnson, director of forest programs for the Environmental Investigation Agency in Washington, was quoted in an NPR piece as saying her investigators had linked Gibson to illegally acquired Madagascar ebony.

Gibson "understood the risks," Johnson said. "And made a decision in the end that they were going to source despite knowing that there was a ban on exports of ebony and rosewood."

Juszkiewicz, however, vigorously disputed the government's claims, arguing officials were misreading the Lacey Act statute.

“It’s baloney,” he told The New York Times in 2011. “It seems to me they are gunning for us. They are just looking for us to make a mistake or do something wrong.”

In an op-ed for The Huffington Post, Juszkiewicz doubled down, calling himself a "lifelong conservationist" who was "distressed that our government is using a law as important as the Lacey Act not to fight illegal logging but to enforce protectionist Indian labor statutes."

"This use of scarce governmental resources does nothing to further the critical environmental effort to halt global deforestation or to protect American jobs," he continued.

The CEO's insistence on his company's innocence, coupled with the storied history of the Gibson brand in American folk music, made the issue a rallying cry for Tea Party activists and conservatives who complained that the government was once again overstepping its authority, and unfairly penalizing private businesses, according to the Hill.

Several pieces of legislation, so far unsuccessful, were introduced in response to the government's investigation.

One such bill, introduced by Sen. Rand Paul (R-Ky.) and Rep. Paul Broun (R-Ga.), would repeal the requirement that U.S. companies comply with foreign environmental laws; while another, dubbed the RELIEF Act, would eliminate penalties for people who unknowingly possess illegal woods, as well as lower penalties for first time offenders and for wood imported before 2008.

The settlement means Gibson will not face any criminal charges, and Marcus Asner, a former assistant U.S. Attorney who now consults on Lacey Act compliance, told the Wall Street Journal that both sides should be pleased by the outcome.

"The government was taking a lot of heat about this, and yet at the end of the day this ended up being a big victory," Asner said.

Environmental groups, too, heralded the announcement as a blow against illegal logging. The agreement should be "a wake-up call" for companies, said Jameson French, CEO of Northland Forest Products Inc., in same article.