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Gold Tone Banjo Hit Hard By Fish & Wildlife Service

...this was just business as usual. When an official from the Fish and Wildlife Service called to ask for the number of his permit to import and export shell material, he promptly sent over a copy of the license, and went back to the task of running Gold Tone, the maker of banjos and fretted instruments he and his wife started 21 years ago. Days later, to his complete surprise, Fish and Wildlife informed him that he was in violation of the rules: although he had a license to import the bits of shell that are used for fingerboard inlay, he had failed to file the $93 dollar “eDec” inspection fee, and making matters worse, he had not brought the banjos in through one of the country’s  18  “designated” ports where the Fish and Wildlife Service maintains a trained staff to monitor possible violations.

That Rogers, who has been importing and exporting fretted instruments for over a decade, missed these two requirements is understandable: they are buried in small type, towards the back of the Fish & Wildlife Service’s   65-page import export license form. But once informed of the problem, he promptly submitted a comprehensive compliance plan to the Service. Going forward, he pledged to export all his products through a Fish & Wildlife certified UPS depot in Lexington, Kentucky; he began revising product specs, substituting synthetic inlay materials for shell; he informed export customers that they would be billed $93 for the “eDec” inspection fee; he  educated everyone in his supply chain, including offshore factories, brokers, and shipping forwarders of the Fish & Wildlife requirements; and he added an additional person to his 19-member team to comply with the resulting paperwork.

The measures were costly and adversely affected Gold Tone revenues, but he took some comfort in thinking the matter was behind him. “Banjos are very traditional instruments, and customers expect them to look a certain way,” he explains. “Even though the synthetic inlay is more expensive than real shell, some customers don’t like it and they think we’re ‘cheaping out.” For container shipments, the $93 eDec  form isn’t much of an issue. However, it has made export shipments of one or two instruments to smaller export markets impractical. “When you have to charge a $93 documentation fee on a $150 banjo, it is a problem,” he says.

Then in March, the bombshell dropped. A certified letter arrived from Fish & Wildlife Service attorney Gerald Thornton, levying a $210,000 fine for violating shell material import statutes and for bypassing designated ports. The letter also noted that another lawsuit was forthcoming, and if Gold Tone was found to be importing any materials banned by the CITES Treaty (Convention on International Trade in Endangered Species), Rogers could face fines of up to $6.0 million and jail time. “I sunk into complete depression after reading the letter,” he says. “We had busted our ass every day for the past 20 years to build this business, and now we were faced with losing it all.”

Days later, he began preparing a legal challenge, retaining Lenny Feldman, a lawyer specializing  in customs and import/export issues. The first step in the challenge involved complying with the Fish and Wildlife Service’s exhaustive information requests: five years of financial records, along with the records of every import and export transaction over the same period, including invoices, payment records, customs forms, and shipping documents. In addition to spending thousands to hire a specialist to properly catalog the data, Rogers, his wife Robyn, and several staff members devoted  several  months to sifting through old records. They quickly had the alleged CITES violations dismissed, demonstrating that the inlay they used, which came from the shells of the same oysters regularly served up in restaurants, was anything but “endangered.” Fish and Wildlife refused to budge on any of the other charges.

Faced with an impasse, Rogers and his lawyer opted for a face-to-face meeting with Fish and Wildlife officials at the Knoxville, Tennessee office. Over the day-long negotiation, the officials were polite and regularly suspended the meeting to privately consult by phone with their superiors about how to proceed. Their problem was the simple fact that there were no precedents for deciding the case: no company  had ever been charged for similar document failings. The only case remotely relevant was an incident seven years earlier when Canadian retailer Long & McQuade returned a Martin guitar for warranty work at the factory in Nazareth, Pennsylvania.

Rogers eventually managed to persuade officials that the filing lapses and illegal port entries  were all unintentional, and they agreed to drop the fine to $100,000, payable over two years. However, they never revealed the formula used for calculating the initial $210,000 fine or the subsequent reduction. “I argued that they should let us off for the $37,000 we had already paid in legal fees and other services, not to mention the disruption to our company,” says Rogers. “But they were unmoved.” He considered mounting legal challenges to the fine, but quickly concluded the fight would cost more than the fine.

Rogers hopes that his unfortunate run-in with Fish and Wildlife serves as a warning to the rest of the industry. “The music industry is one of  five industries that use shell material, the others being furniture, knives, jewelry, and buttons,” he explains. “Anyone who imports or exports without following these guidelines risks fines, confiscation of products, and incredible headaches.” He cautions, “The regulations don’t just apply to businesses in the process of importing and exporting; they apply to personal instruments as well.” That means that if a musician carrying a personal instrument with shell inlay (that would include about 90% of all stringed instruments) flies to Canada without proper documentation, his instrument could be confiscated, he could face hefty fines, and he could be required to produce a history of all his travels with the instrument.

Since the debacle, Rogers has seen his export business decline because documentation fees have made small shipments unviable; he’s had to experiment with alternative inlay materials in hopes that they meet customer expectations; and he’s run up a hefty legal tab. But what bothers him the most is the way the case was handled. “A simple phone call at any point in the past 15 years, and we would have instantly complied with the law,” he says. “Instead, they seemed more determined to extract a penalty than educate us on our misunderstanding of the law.”

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