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Gibson Guitar CEO on overcriminalizing businesses

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Jarrett Dieterle
Legal Intern, Manhattan Institute's Center for Legal Policy

Last August, federal agents descended upon the Gibson Guitar Co. factory in Tennessee. The agents reportedly seized 100 guitars and sent workers home for the day - costing the company an estimated $2-$3 million in products and lost productivity.

The justification for the invasion? The feds were acting under a law that many Americans likely have never heard of called the Lacey Act. Originally passed in 1900, the Lacey Act was intended to clamp down on illegal poaching of wildlife. The law has undergone several amendments and now is being used by the feds to target companies that import products made from trees harvested abroad (Gibson's guitar fingerboards are made from wood imported from India). The amendments also broadened the ranges of offenses under the act, making it a criminal offense to use any tree "taken, possessed, transported or sold in violation of any foreign law that protects or regulates plants."

In the Wall Street Journal, Gibson's CEO Henry Juszkiewicz uses his company's experience under the Lacey Act to argue against overcriminalization:

This is an overreach of government authority and indicative of the kinds of burdens the federal government routinely imposes on growing businesses. It also highlights a dangerous trend: an attempt to punish even paperwork errors with criminal charges and to regulate business activities through criminal law. Policy wonks call this "overcriminalization." I call it a job killer.

In America alone, there are over 4,000 federal criminal offenses. Under the Lacey Act, for instance, citizens and business owners also need to know--and predict how the U.S. federal government will interpret--the laws of nearly 200 other countries on the globe as well.

Many business owners have inadvertently broken obscure and highly technical foreign laws, landing them in prison for things like importing lobster tails in plastic rather than cardboard packaging (the violation of that Honduran law earned one man an eight-year prison sentence). Cases like this make it clear that the justice system has strayed from its constitutional purpose: stopping the real bad guys from bringing harm.

Juszkiewicz concludes by noting the destabilizing effect that overcriminalization can have on businesses, particularly in a tough economic environment:

Policy makers must stop criminalizing capitalism. This begins by stopping the practice of creating new criminal offenses, or wielding obscure foreign laws, as a method of regulating businesses.


Especially in a bearish economy, entrepreneurs need to be able to operate without the fear that inadvertently breaking an obscure regulation or unknowingly violating a foreign statute could shut down their company and land them or their employees in jail.

For more on the Lacey Act and overcriminalization, see these earlier Point of Law pieces.


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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.