Gibson Guitar to pay big fine related to wood...

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http://www.marketwatch.com/story/gibson-guitar-paying-300000-fine-doj-2012-08-06?link=MW_home_latest_news
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John Grossbohlin wrote:

http://www.marketwatch.com/story/gibson-guitar-paying-300000-fine-doj-2012-08-06?link=MW_home_latest_news Yep. They caved and I lost all respect for the company.
They had, as best I understand, a defensible position on the merits. I'd be hard-pressed to imagine a jury finding against them.
Secondly, had they just strung (no pun intended) things out for a few months, it's possible a new administration would have dropped the entire business.
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On 8/7/12 8:14 AM, HeyBub wrote:

It was three hundred grand... they probably considered it a bargain. How many millions were they paying to their lawyers? How much would would another 6 months cost them? When you're dealing with the DoJ, who can just keep reaching into *our* pockets to fight in the courts, most of the time it's better to settle and sacrifice principle for profits.
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"Playing is not something I do at night, it's my function in life"
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On 8/7/12 12:10 PM, Mike Marlow wrote:

Except that most in-house corporate attorneys aren't used to running up against the DoJ every day, so outside counsel is often sought from firms who do have experience with the Fed.
Of course, if I want to get it from someone who is really "in the know," I 'll just call one of my buddies down at Gibson or stop by for lunch.
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-MIKE-

"Playing is not something I do at night, it's my function in life"
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On 8/7/2012 12:43 PM, Mike Marlow wrote:

What they spent to date and faced continuing to fight in direct legal costs is just the tip of the iceberg...but to build enough of a case to actual stand in federal court against DOJ I wouldn't be at all surprised if it at least pushed the six figure amount for legal costs alone.
From a letter Gibson president wrote the NY Times not long ago...
"...they shut down production, sent workers home, seized boxes of raw materials and nearly 100 guitars, and ultimately cost our company $2 million to $3 million worth of products and lost productivity."
In the end, one has to do what one has to do to survive.
--
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On 8/7/12 2:33 PM, Mike Marlow wrote:

I never stated they spent millions. Maybe you should read the post again? :-p I was simply speculating as to a possible motivation behind settling and posed a hypothetical question. I think you're getting a bit too wound up.
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On 8/7/12 6:20 PM, Mike Marlow wrote:

I have my own chair in the corner. :-)
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-MIKE-

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-MIKE- wrote:

Well, it sure cost them my business. And the business of millions of right-thinking potential buyers the world around.
And the DOJ is not invincible. Back in the 60's, the DOJ sued IBM for monopolistic and unfair trade practices. IBM had more lawyers on the case that were in the ENTIRE anti-trust division of the DOJ. IBM strung out the case for ELEVEN years.
Just to show you how stupid the DOJ was, they allowed CDC, Control Data Corporation and a co-plaintiff, to do virtually all of the discovery.
IBM then reached a secret deal with CDC: IBM would pay CDC big bucks and give them the Service Bureau Corporation to go away. In return, CDC had to affirmatively destroy every scrap of discovery garnered over eleven years.
All this book-burning was done over a weekend. Tapes were degaussed, disks deleted, paper records shredded, tape recordings destroyed. On Monday, IBM announced ready for trial.
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wrote:

Agreed. With the cost of a top end Gibson being over $15 grand $300,000 was a slap on the wrist.
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Jack Novak
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A $300k fine for NOT checking paperwork before signing a contract seems a bit stiff to me. YMMV.
-- We are always the same age inside. -- Gertrude Stein
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On Thu, 09 Aug 2012 12:17:56 -0700, Larry Jaques

Gibson was first raided in 2009 and then again in 2011. After the first raid they should have gotten a clue something was amiss.
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Jack Novak
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snipped-for-privacy@verizon.net says...

Personally I think we need another Constitutional amendment to the effect that no failure to properly fill out forms shall carry a penalty greater than that for event the slightest violent crime or property crime.
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True, but is it amiss at the Gibson plant or with the regulators/laws?
-- We are always the same age inside. -- Gertrude Stein
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On 8/9/2012 3:17 PM, Larry Jaques wrote: Nova wrote: -MIKE- wrote:

A $300,000 fine for violating a foreign law that the foreign country didn't think they violated is a bit stupid to me.
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Jack
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On Tuesday, August 7, 2012 10:05:51 AM UTC-5, -MIKE- wrote:

I agree. Any time you get the DOJ or State Department involved the fines that are published might be the negotiated slap on the wrist that comes before they drop the hammer.
I managed International Traffic in Arms (ITAR) compliance for a company that didn't take it too seriously until they got in trouble. I got in when they realized that a few, stupid clerical errors made by us, and some more serious infractions by a customer, violated the ITAR. The initial fine was going to be in the $2M-$3M area but we negotiated it down by basically pleading, groveling and begging and agreeing to some special terms. We ended up with a $150K fine plus another $50K allocated for a mandatory training program and some systems changes. At the end of the day the training and systems changes cost more than that but we were happy to comply. If we had a second infraction within a 3-5 year window the fine could have been quite large.
RonB
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are published might be the negotiated slap on the wrist that comes before they drop the hammer.

didn't take it too seriously until they got in trouble. I got in when they realized that a few, stupid clerical errors made by us, and some more serious infractions by a customer, violated the ITAR. The initial fine was going to be in the $2M-$3M area but we negotiated it down by basically pleading, groveling and begging and agreeing to some special terms. We ended up with a $150K fine plus another $50K allocated for a mandatory training program and some systems changes. At the end of the day the training and systems changes cost more than that but we were happy to comply. If we had a second infraction within a 3-5 year window the fine could have been quite large. ITARs are a slightly different thing than some greenie detail that even the source country doesn't care about. ...unless the deal involves campaign cash (on one side or the other).
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HeyBub wrote:

This article (http://www.bbc.co.uk/news/science-environment-19153588 ) says"
Gibson admitted violating the Lacey Act, which requires firms to *know* that timber they use is legally obtained.
From this, it appears they violated the law as charged. What is the defensible position--that they *didn't know*?

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On 8/7/12 12:33 PM, Bill wrote:

I don't know the particulars, nor do I have a dog in the race, but they wouldn't be the first to admit to a lesser charge to avoid the possibility of being convicted of a higher one, even knowing there were guilty of neither.
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-MIKE-

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-MIKE- wrote:

That will look good in their annual report! I have heard that everyone who is incarcerated "Didn't do it!". I"m sorry, my tolerance for double-talk gets lower by the year.
If we give a darn about our system (s), perhaps we should encourage companies to pursue their innocence by making them pay more for their (admitted) guilt. Our media systems have the power! Just a thought...
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On 8/7/2012 12:55 PM, Bill wrote:

And mine for those who speak without bothering to inform themselves of the particulars.
Once again:
To illustrate the ridiculousness and overreaching of this action by the DOJ against Gibson, you have to read the affidavit filed in support of the search warrant:
http://graphics8.nytimes.com/packages/pdf/arts/GibsonWarrant.pdf
The seized wood is described in the affidavit as in the form of "sawn logs" 510-530 x 75/70 x 10mm.
IOW, each of the 1250 pieces seized is roughly 20" x 3" x 13/32".
Read paragraph 14, page six of the affidavit and you will see that India allows export of this particular wood up to 6mm thick (due to the high complexity of involved in cutting these thin sheets to a uniform commercial quality)
IOW, it must be cut to that thickness by Indian workers at Indian factories, insuring Indian jobs.
IOW, the raid on Gibson's facilities, disrupting the production and jobs of workers at one of the few American companies still "manufacturing" products is based on a difference of 5/32" of thickness, AND TO PROTECT INDIAN WOODWORKING JOBS.
How many of you, experienced woodworkers, could look at bundles of these pieces and tell that there is up to 4mm (5/32") difference in thickness in the pieces?
Do you really think that Gibson should be held accountable, and be subject to a police action, computers seized, production disrupted, jobs lost, by buying rough stock, sight unseen, that is approximately 1/8" thicker than it's supposed to be?
What it boils down to is that US is enforcing India's laws to protect the woodworking jobs at the expense of American jobs. And apparently, the Indian woodworker aren't doing their jobs very well, at least when it comes to "uniform commercial quality".
If Gibson would only move their operations to India, there would be no problem.
--
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