All Posts By

Jim Chester

Aug 29

Elderly Man Arrested for Smuggling Counterfeit Erectile Dysfunction Pills

By Customs IP Enforcement, Intellectual Property

A man was sentenced recently to 30 months in federal prison for smuggling nearly 40,000 counterfeit erectile dysfunction pills that were discovered in a golf bag and other luggage when he entered the United States at Los Angeles International Airport last year.

Kil Jun Lee, 73, who resides in the Koreatown district of Los Angeles, was sentenced by U.S. District Judge Dean D. Pregerson, who said the sentence, in part, was due to the threat to public health posed by the counterfeit pills. The case is a result of a probe by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), with substantial assistance from U.S. Customs and Border Protection (CBP).

In May, a federal jury found Lee guilty of three counts of smuggling and three counts of trafficking in counterfeit goods for bringing the phony pills into the United States in February 2012. The retail value of the pills would have been more than $750,000 had the medications been genuine.

The counterfeit products – purporting to be Viagra, Cialis and Levitra – were discovered by CBP officers at LAX when Lee returned from a trip to China that included a stop in his native Korea. Most of the pills were hidden in a golf bag.

Analysis of the pills showed they were inconsistent with the genuine products. While many of the pills contained the active ingredient for the brand name medications, they typically contained the wrong amount (up to 150 percent of the claimed dose) or contained the active ingredient for a competitor’s product (so the purported Viagra would contain the active ingredient found in Cialis). Some of the counterfeit pills had no active ingredient at all.

When HSI special agents subsequently searched Lee’s residence, they found a small number of counterfeit pills, as well as numerous counterfeit labels that were hidden under a rug.

“The danger of this conduct is substantial,” prosecutors wrote in a sentencing memorandum filed with the court. “Indeed, while the government is not aware of any inherently harmful chemicals contained in the pills, the prospect of a user ingesting pills that contain more active ingredient than is listed on the pill, or a different active ingredient than is supposed to be in that pill, raises serious medical concerns.”

SOURCE: ICE

Aug 29

Venezuelan Colonel Sentenced for Arms Export Conspiracy

By Customs IP Enforcement

A Venezuelan air force colonel has been sentenced to 19 months in federal prison for exporting military aircraft engines to Venezuela, following a joint probe by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Defense Criminal Investigative Service and FBI.

Guiseppe Luciano Menegazzo-Carrasquel, 49, was sentenced Aug. 19 by U.S. District Judge G. Murray Snow for conspiracy to violate the Arms Export Control Act. In addition to the prison term, Menegazzo-Carrasquel will be subject to three years of supervision. Menegazzo-Carrasquel pleaded guilty to the charge June 3.

According to court documents, Menegazzo-Carrasquel was part of a Venezuelan air force team that negotiated with Mesa-based Marsh Aviation between November 2005 and February 2008 to refurbish 18 T-76 aircraft engines for use by the Venezuelan air force, under the guise that the engines were meant for civilian use.

T-76 engines are a designated item on the U.S. Munitions List, which, under the Arms Export Control Act, makes it illegal for these engines to be exported without a license or written authorization from the Department of State. The T-76 aircraft engine was designed for the OV-10 Bronco Aircraft, a light armed reconnaissance aircraft specifically suited for counter-insurgency missions.

“Our investigation showed that the defendants in this case falsely claimed these engines were parts for civilian aircraft in an attempt to circumvent the law,” said Matt Allen, special agent in charge of HSI Arizona. “The enforcement of arms export controls keeps America safe. One of HSI’s top enforcement priorities is preventing military equipment and sensitive technology from falling into the hands of those who might seek to harm America or its allies.”

Menegazzo-Carrasquel, who is a dual Venezuelan and Italian citizen, was indicted on arms export charges in October 2010. He was arrested by HSI special agents in September 2012 at George H. Bush Intercontinental Airport after he arrived in Houston on a flight from Caracas, using his Italian passport.

Floyd D. Stillwell, 87, former president of Marsh Aviation, who was also charged in the scheme, pleaded guilty Oct. 29, 2012, to conspiracy to violate the Arms Export Control Act and was sentenced May 13 to a $250,000 fine and five years’ probation.

SOURCE: ICE

Aug 29

Customs Seizes $3.9 in Counterfeit Consumer Goods

By Customs IP Enforcement, Intellectual Property

U.S. Customs and Border Protection officers seized a shipment of 70,000 counterfeit consumer products July 22 at the port of Newark, N.J. Working closely with the Consumer Product Safety Commission, CBP officers intercepted an estimated $3.9 million worth of the illicit products, including razor blades, toys, sunglasses, markers and batteries, for violating intellectual property laws.

The shipment, which arrived from China, was targeted using CPSC-defined health and safety rules through the Commercial Targeting and Analysis Center in Washington, D.C. In conjunction with CPSC, CTAC identified the cargo for physical examination upon arrival in Newark.

Once identified at the port, CBP personnel examined the shipment, discovered intellectual property violations and seized the goods.

“The partnership between CBP, CPSC and other agencies at the CTAC enables greater sharing of information and targeting to ensure the safety of imported products,” said CBP Assistant Commissioner Allen Gina. “Interagency collaboration at the CTAC, combined with the vigilance of CBP officers at the ports truly exemplifies one U.S. Government working together at the border to protect American consumers.”

Counterfeit goods threaten American innovation, the competitiveness of its businesses, the livelihood of its workers and the health and safety of consumers who purchase inferior products that do not meet federal safety standards. CBP protects businesses and consumers from these risks every day through aggressive targeting and enforcement programs.

In fiscal year 2012, CBP and its investigative partner U.S. Immigration and Customs Enforcement seized 22,848 shipments for intellectual property rights violations, for a total retail value of $1.26 billion. ( IPR Seizure Statistics: FY 2012(pdf-1,629KB.) )

SOURCE: CBP

Aug 29

Customs Seizes $12M in Fake Designer Watches

By Customs IP Enforcement, Intellectual Property

U.S. Customs and Border Protection (CBP) officers and import specialists assigned to the Los Angeles International Airport (LAX) seized 215 watches bearing counterfeit Rolex, Louis Vuitton, Cartier and Omega registered trademarks.

The merchandise, which arrived from China via air cargo, was seized by CBP officials on August 8. If genuine, the seized watches estimated manufacturer’s suggested retail price, sold at retail to the consumer would be $1,250,500.

“This seizure of these trademarked watches is testament to our officers’ vigilance in protecting the intellectual property rights of manufacturers and retailers,” stated Todd C. Owen, director of the Los Angeles Field Operations office of U.S. Customs and Border Protection. “It is just another example of the caliber of the CBP officers in performing their day-to-day duties.”

CBP officers discovered the counterfeit merchandise after inspecting the shipment manifested as “watches” with a declared value of $173 and weighing 68 pounds.

Counterfeit and pirated goods pose a serious threat to our nation’s economic vitality, the health and safety of the American consumers, our critical infrastructure and national security.

Approximately $1.26 billion worth of counterfeit goods originating overseas were seized by CBP in 2012.

With an estimated manufacturer’s suggested retail price of $186 million, watches and jewelry ranked as a top-five commodity seized by CBP in fiscal year 2012. In the same period, watches and jewelry represented eight percent of the total number of seizures by CBP nationwide.

SOURCE: CBP

Aug 19

US Customs Collaborates with German Customs for Big Seizure

By Import

U.S. Customs and Border Protection announced recently that 20,000 Zolpidem pills, a schedule IV controlled substance, have been seized thanks to a collaborative enforcement effort with the German Customs Investigations Bureau Zollkriminalamt.

“Timely information from Zollkriminalamt and excellent targeting and coordination efforts by CBP’s Pharmaceuticals Center of Excellence and Expertise resulted in this significant interception, keeping these harmful pills off of our streets,” said Robert E. Perez, Director of Field Operations in New York. “We thank our partners in German Customs for their ongoing collaboration.”

“We are very happy that the joint collaboration between CBP and the Zollkriminalamt was successful,” said Dr. Ulrike Berg-Haas, German Customs liaison. “The Zollkriminalamt intends to pursue this excellent cooperation against growing global threats. We look forward to our continued work together and are confident, that this will not be the last joint operation.”

The seizure occurred at the San Francisco International Mail Facility. Acting on information provided by the Zollkriminalamt, CBP’s Pharmaceutical CEE targeted several shipments, and CBP officers at the International Mail Facility intercepted numerous parcels originating in India that had transited Germany. Upon closer examination of the suspect parcels, CBP personnel discovered that the 10 parcels contained a total of 20,000 Zolpidem pills, a Schedule IV controlled substance, and seized the pills.

This enforcement action follows another collaborative enforcement effort in March between CBP and French Customs Fake Medicine Observatory when CBP personnel seized 400 Carisoprodol pills, another schedule IV controlled substance. ( CBP and French Customs Officials Seize Controlled Substance )

As these seizures illustrate, CBP collaborates with its international partners to intercept merchandise that infringes on registered trademarks, is made of substandard materials, or contains prohibited substances that may represent a threat to public safety.

The Pharmaceutical, Health and Chemicals CEE is one of 10 virtual centers that provide one-stop processing to lower the trade’s cost of business, provide greater consistency and predictability and enhance CBP enforcement efforts. The Centers represent CBP’s expanded focus on “Trade in the 21st Century,” transforming customs procedures to align with modern business. The CEEs will also serve as resources to the broader trade community and to CBP’s U.S. government partners.

Source: CBP

Aug 19

Modernization of Export Process and Full Deployment of Automated Commercial Environment

By Export

U.S. Customs and Border Protection (CBP) presented updates and received valuable feedback from trade stakeholders on a variety of trade facilitation, antidumping enforcement and modernization issues during the Aug. 7 meeting of the Advisory Committee on Commercial Operations (COAC).

“We have a lot of work to do. We need your help in getting people ready for full implementation of ACE,” said CBP Acting Commissioner Thomas S. Winkowski to COAC members. “We are making progress with our partner government agencies toward making a single window, One U.S. Government at the Border (trade processing system).”

Key highlights of the meeting included announcement of a three-year deployment schedule for the completion of the Automated Commercial Environment (ACE) with firm dates for mandatory use of ACE. A COAC subcommittee also gave a detailed analysis and recommendations on how to improve and modernize the export process. Updates were also given regarding ongoing improvement of the Air Cargo Advanced Screening (ACAS) program and recommendations to develop program rules that accommodate various business models. Subcommittee topics also included development of e-bonds, encouraging enforcement and prosecution of anti-dumping/countervailing duty cases and ongoing work toward mutual recognition of trusted trader programs with foreign governments, including Canada, Mexico and Israel.

In his closing remarks, Acting Commissioner Winkowski encouraged CBP, its international partners Canada and Mexico and the trade community to consider collaborating on the development of a North American strategy. He noted that all three countries are working on very similar initiatives and that perhaps this work could be channeled into a larger strategy. The Acting Commissioner also observed that collaborative, inter-customs agency projects remain ongoing on our northern and southern borders and that ultimately these efforts help all three countries move closer toward harmonization of customs documentation.

Source: CBP

Aug 19

Destroyed: Illegally Imported and Unsafe Land Rover Defender

By Import
Destruction of illegally imported and unsafe Land Rover Defender.

Destruction of illegally imported and unsafe Land Rover Defender.

A Land Rover Defender, which U.S. Customs and Border Protection (CBP) officers seized at the Baltimore seaport April 16 as an illegal and unsafe import, was destroyed in spectacular fashion at an undisclosed Maryland salvage yard recently.

This Defender is one of dozens stopped in recent months at ports of entry in Philadelphia, Norfolk, Va., Charleston, S.C., Savannah, Ga., Jacksonville, Fla., Houston and Tacoma, Wa., that violated federal highway safety standards, including the standards requiring airbags.

A portion of these illegal shipments will require destruction, as their Vehicle Identification Number (VINs) was intentionally altered and/or manipulated.

All shipments were targeted for examination by CBP’s Commercial Targeting and Analysis Center (CTAC) in Washington, D.C. The CTAC combines resources and staff from several government agencies, including National Highway Traffic Safety Administration (NHTSA) and Environment Protection Agency (EPA), to protect the American public from harm caused by unsafe imported products.

These Land Rover Defenders were represented on import entry documents as being 25 years of age or older, but may actually be newer vehicles whose Vehicle Identification Numbers (VIN) have been fraudulently altered.

These fraudulent actions are intended to take advantage of the exemptions within the statutes and regulations administered by NHTSA and EPA that allow older, nonconforming vehicles to be imported without restriction (NHTSA – 25 years old and EPA – 21 years old).

The overseas value for this model of vehicle is approximately $25,000. However, the resale value in the U.S. can run as much as $150,000 per vehicle depending on its model year and condition. Because these vehicles cannot be lawfully imported into the U.S. unless they are at least 25 years old, their rarity also inflates the stateside purchase price.

“Ensuring the safety of imported products is a top priority for CBP,” said Allen Gina, CBP’s assistant commissioner for international trade. “The concerted targeting efforts of CTAC and the vigilance of CBP officers and import specialists at our ports of entry will help ensure that unsafe vehicles from overseas markets do not reach our roadways.”

Prospective buyers of imported vehicles can confirm the validity of the vehicle by checking the VIN in a vehicle history report.

Buyers who suspect that a vehicle is being illegally imported are encouraged to report suspected trade violations. All information submitted to CBP is voluntary and confidential. To report a possible trade violation, please visit eAllegations. ( eAllegations)

For additional information on the CTAC and import safety, please visit CBP.gov/Trade, and click on the “Priority Trade Issues” tab. ( Trade )

Source: CBP

Aug 19

Changes to the Foreign Trade Regulations Export Requirements

By Export, International Business

On March 14, 2013, the U.S. Census Bureau (Census) published new export reporting requirements under the Foreign Trade Regulations (FTR) in the Federal Register that become effective January 8, 2014.  Specifically, Census is requiring mandatory filing of export information through the Automated Export System (AES) or through AES Direct for all shipments of used self-propelled vehicles and temporary exports.  In addition to adopting new export reporting requirements and modifying the post-departure filing program, Census is making remedial changes to the FTR to improve clarity and to correct errors.

Changes to the FTR include:

  1. Post-departure filing (Option 4 program) (15 CFR 30.5)
    1. Post-departure (Option 4 Program) filing timeframe to complete the Electronic Export Information (EEI) in AES will be reduced from 10 calendar days to 5 calendar days.
    2. A moratorium on accepting new applications for post-departure filing is still in place.
  2. Household Goods
    1. The definition of household goods has changed to:  Usual and reasonable kinds and quantities of personal property necessary and appropriate for use by the U.S. Principal Party in Interest (USPPI) in the USPPI’s dwelling in a foreign country that are shipped under a bill of lading or an air waybill and are not intended for sale.
    2. The household goods export code can only be used for shipments where the USPPI is the ultimate consignee.
  3. Used Self-Propelled Vehicles
    1. All used self-propelled vehicles must be filed in the AES regardless of value or country of destination (15 CFR 30.2(a)(1)(iv)(H)).
    2. All used self-propelled vehicles must be filed in AES 72 hours prior to export (15 CFR 30.4(b)(5)).
  4. Port of Export (15 CFR 30.6(a)(9))
    1. Clarification of port of export specifies that the port of export for shipments by overland transportation is where the goods cross the U.S. border into Canada or Mexico, including transshipments through Canada or Mexico to other countries.
    2. The language for port of export was revised in 15 CFR 30.6(a)(9) to include FTR 15 CFR 30.6(a)(9)(i) and (ii).
  5. Split Shipments (15 CFR 30.28)
    1. The requirements regarding split shipments will apply to all modes of transportation, not just specific to the air environment as it exists today.
    2. The definition of split shipments has changed to the following:  A shipment booked for export that is divided by the carrier into more than one conveyance and sent on two or more conveyances of the same carrier from the same port within 24 hour for cargo transported by vessel and 7 days for all other modes of transportation.
  6. Exclusions
    1. AES filing is NOT required for licensed goods where the country of ultimate destination is the United States or for goods destined to international waters where the person(s) or entity assuming control of the item(s) is a U.S. citizen or permanent resident alien of the United States (15 CFR 30.2(d)(5)).
    2. The Exclusion legend is required to be reported on the bill of lading, air waybill, export shipping instructions, or other commercial loading documents.
  7. Exemptions (15 CFR 30.37)
    1. The following exemptions were ADDED to the FTR changes:
      1. Exports of technical data and defense service exemptions as defined in 22 CFR 123.22 (b)(3)(iii) are exempt from the EEI filing requirements in AES (15 CFR 30.37(u)).
      2. Reporting vessels, aircraft, cargo vans, and other carriers and containers when shipping as tools of international trade (15 CFR 30.37(v)).
      3. Shipments to Army Post Office, Diplomatic Post Office, Fleet Post Office (15 CFR 30.37(w)).
      4. Shipments exported under License Exception BAG (15 CFR 30.37(x)).
      5. Specific types of shipments destined for a country listed in Country Group E:1 (15 CFR 30.37(y)).  Country Group E:1 are Cuba, Iran, North Korea, Sudan, and Syria. These countries support acts of international terrorism.
    2. The following exemptions were REMOVED:
      1. Temporary shipments: temporary shipments of goods valued over $2,500 per Schedule B or that fall under 15 CFR 30.2(a)(1)(iv) must be filed in the AES.  When reporting temporary exports report the appropriate export information code for temporary goods, such as “TE” export intended for return and “TP” domestic merchandise (§30.37(q) and I).
      2. In-bond (in-transit) shipments (§30.37I). This is covered under the current exclusion (30.2(d)(1)).
  8. International waters
    1. International Waters Change in Definition– waters located outside the U.S. territorial sea, which extends 12 nautical miles measured from the baselines of the United States, and outside the territory of any foreign country, including the territorial water thereof. Note that vessels, platforms, buoys, undersea systems, and other similar structures that are located in international waters, but are attached permanently or temporarily to a country’s continental shelf, are considered to be within the territory of that country.
    2. For licensed shipments to international waters, it will be required that the person designated on the export license must be reported as the ultimate consignee (§30.6).
    3. For Bureau of Industry and Security license exceptions and non-licensed shipments to international waters the filer will be required to report the nationality of the person(s) or entity assuming control of the item(s) subject to the Export Administration Regulations (§30.6(a)(5)(i)).
  9. Data elements (15 CFR 30.6)
    Two data elements were ADDED:

    1. License value – Report the value indicated on the license.
    2. Ultimate consignee –There are four types: Direct Consumer, Government Entity, Reseller, and Other/Unknown. Other/Unknown is an entity that does not fall under one of the other three ultimate consignee types or whose type is not known at the time of export.

Source: U. S. Census Bureau

Jul 04

CHESTER pllc Declares Independence

By Innovation, Internet / eCommerce, News

In keeping with the spirit of July 4th, Dallas-based business & innovation law firm CHESTER pllc is “declaring independence … from paper.”

The Dallas-based global business & innovation law firm of CHESTER pllc is pleased to announce that it will begin to exclusively (to the extent possible) use e-signatures starting July 4, 2013.   These e-signatures will be used on all firm documents.

For the past several months, the firm has been beta testing various services, and chose July 4th to formally adopt an e-signature based system.

The firm has been low-paper since its inception, and has evaluated new paperless technologies once they have become available and been proven reliable.  Hosted servers, scan and shred policies, paperless invoicing, and other similar paper-free options have been adopted over the years.  Using e-signatures will further transform the way the company handles documents that need to be signed and move it one step closer to become a truly “paperless” law firm.

Jim Chester, CHESTER pllc’s CEO and founding principal, says, “The practice of law is constantly changing, and we are proud to be pioneers in that regard. We seek to offer an alternative to large, expensive firms by providing quality legal services for the core legal issues faced by technology and innovation-based clients at a reasonable cost. Adopting state-of-the-art technology maximizes the quality of service that we can provide to our clients and helps us cut costs, which translate into savings that are passed onto our clients.”

“Going paperless helps us reduce costs, space, and our environmental footprint, while creating a document control system that is reliable, searchable, and scalable” said the attorney.

In addition to its adoption of cutting-edge paper-reduction technologies, CHESTER pllc also utilizes cloud-based servers, hosted phone service, AppleTV based presentation screens that can beam wirelessly from Macbook Airs. Breaking from traditional law practices, CHESTER pllc keeps all client records in a digital format, which makes files easy to sort and search, and ultimately maximizes efficiency.

This step towards becoming a ‘paperless’ law firm reinforces the CHESTER pllc mantra of being ‘innovative legal counsel for innovative companies,” Chester adds.

CHESTER pllc is a Dallas, Texas law firm providing comprehensive legal services to innovation-based companies doing business in the US, around the world, and on the web.  Its mission (and passion) is helping entrepreneurs and emerging companies solve problems and protect their interests. CHESTER pllc delivers value by providing business-savvy, cost-effective solutions to legal challenges.  The firm offers a wide array of business legal solutions, such as business entity formation (LLCs, corporations, etc.), trademarks and other intellectual property, technology transactions, contracts, ecommerce and dispute resolution.  Additional information about the firm and its attorneys may be found at www.chester-law.com.

Jun 03

US Cyber-Sting Catches Chinese National Attempting to Export Sensitive Technology

By Export

A Chinese citizen pleaded guilty last Thursday at the federal courthouse in Brooklyn to violating the International Emergency Economic Powers Act by attempting to export weapons-grade carbon fiber from the United States to China. The guilty plea follows an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Defense Criminal Investigative Service and the U.S. Department of Commerce Office of Export Enforcement.

Lisong Ma, 34, was arrested after attempting to close a deal to acquire and export the specialized materials, which have applications in the defense and aerospace industries and are therefore controlled for export by the United States.

“The defendant tried to circumvent laws that protect our national security by preventing specialized technologies from falling into the wrong hands. The defendant was bent on exporting to China up to five tons of weapons-grade carbon fiber — enough carbon fiber to stretch from Brooklyn to the Pacific Ocean,” stated United States Attorney Loretta E. Lynch. “Today’s conviction should leave no doubt that the United States will use every available technique, including covert cyber operations, to maintain the superiority of our nation’s armed forces.”

During the investigation, federal agents tasked with protecting sensitive technology maintained a covert cyber-presence on web sites related to the brokering, purchase and sale of controlled commodities. In February 2013, the defendant, using the name “Ma Li,” e-mailed an undercover agent and indicated that he was interested in acquiring several different types of high-grade carbon fiber. Then, through various online communications, the defendant attempted to negotiate the purchase of five tons of carbon fiber. Based on a review of Internet Protocol log-in information, investigators discovered that the defendant was communicating from the People’s Republic of China.

On March 12, 2013, the defendant and undercover agents engaged in an online video teleconference session, which was recorded. During the teleconference, the defendant and the undercover agents discussed the license requirement to export certain types of carbon fiber from the United States. One of the agents told the defendant: “We can’t send this to China without an export license, otherwise we risk going to jail.” The defendant then told agents that he would soon be traveling to the United States, and arranged a meeting to further discuss the terms of a deal. On March 27, 2013, the defendant met with undercover agents in the United States. During the meeting, which was covertly recorded, the defendant requested a sample of carbon fiber, because it was “easier” and “safer” to ship, and later commented: “There is a greater chance that the authorities will arrest you if you get a third party involved. That is why it’s better to go directly from the U.S. to China.”

The defendant ultimately decided to ship a sample of weapons-grade, Toray-type T-800 carbon fiber from the United States to China. He paid the undercover agents and placed the material into a plain brown box. Ma falsely indicated on the waybill and invoice that the package contained “clothing.” After the defendant finished packing the box and completing the shipping forms, the package was transported to a courier service, to be shipped to China. The package was thereafter intercepted by agents before it could be exported. Agents also intercepted and arrested the defendant shortly thereafter, as he transited Los Angeles International Airport on his way to Shanghai. He was then removed in custody to Brooklyn.

When sentenced, Ma faces up to 20 years in prison, as well as forfeiture and a fine of up to $1 million.

SOURCE: ICE