## Facts

- Trek Leather, Inc. was the importer of record for 72 entries of men’s suits in 2004.
- Harish Shadadpuri was Trek’s president and sole shareholder and had an ownership interest in an affiliated consignee.
- Shadadpuri and entities he controlled supplied “fabric assists” (materials provided free or at reduced cost to the foreign manufacturer) used in the imported suits.
- While shipments were in transit, ownership was transferred to Trek, which Shadadpuri selected as the importer of record.
- Shadadpuri provided commercial invoices to a customs broker for use in preparing and submitting entry documents to Customs and Border Protection.
- The invoices materially understated the value of the merchandise by omitting the value of the fabric assists, reducing assessed duties.
- In a civil penalty action under 19 U.S.C. § 1592(a)(1), the Court of International Trade found Shadadpuri personally liable for gross negligence and imposed penalties under § 1592(c)(2).
- A Federal Circuit panel reversed as to the individual penalty, but the Federal Circuit reheard the case en banc.

## Issues

1. Whether 19 U.S.C. § 1592(a)(1) permits personal civil-penalty liability for an individual who is not the importer of record when the individual’s conduct causes merchandise to be introduced into U.S. commerce by means of materially false value declarations.
2. Whether Shadadpuri’s conduct fell within the statutory term “introduce” in § 1592(a)(1)(A), permitting liability without piercing Trek’s corporate veil.

## Decision

- The Federal Circuit, sitting en banc, affirmed the Court of International Trade’s judgment imposing personal penalties on Shadadpuri.
- The court held that § 1592(a)(1) applies to “no person” and is not limited to the importer of record.
- Shadadpuri “introduced” the merchandise into U.S. commerce by causing Trek to become the importer of record and by providing undervalued invoices for use in entry filings.
- Because gross negligence was undisputed, Shadadpuri violated § 1592(a)(1)(A) and could be penalized directly for his own conduct.
- Imposing liability did not require piercing the corporate veil because the statute imposes direct liability on any person who commits the prohibited acts.

## Legal Principles

- Under 19 U.S.C. § 1592(a)(1), “no person” may enter or introduce merchandise into U.S. commerce by means of a material false statement or material omission; liability is not confined to the importer of record.
- “Enter” may be associated with importer-of-record responsibilities, but “introduce” is broader and reaches conduct that causes goods to proceed through the entry process using materially false documentation.
- Corporate officers and other individuals may be personally liable under § 1592 when they themselves commit acts that constitute a grossly negligent (or fraudulent or negligent) introduction, even if they act through a corporate importer.
- Personal liability under § 1592 for an individual’s own statutory violation is direct statutory liability, not derivative alter-ego liability requiring veil piercing.

## Conclusion

The en banc Federal Circuit held that an individual can be personally penalized under 19 U.S.C. § 1592(a)(1)(A) for grossly negligent “introduction” of merchandise into U.S. commerce by means of undervalued entry documentation, even when the corporate entity is the importer of record and without piercing the corporate veil.


United States v. Trek Leather, Inc., 767 F.3d 1288 (Fed. Cir. 2014) (en banc)