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IMPORT / EXPORT CRIMES (Continued)
Export Crimes
Export Crimes are not codified in title 18 of the United States Code. Instead, most of them are found in 50 U.S.C. Appx. § 2410, which is also known as the Export Administration Act. The discussion here, however, begins with a recent case from the Supreme Court of the United States which involves the wire fraud statute.18 U.S.C. § 1343 (2007).
For more information on the specifics of the wire fraud statute, please visit our wire fraud page, here.
Case Law Interpreting 18 U.S.C. § 1343 Regarding Import Duties
Pasquantino v. United States, 125 S. Ct. 1766 (2005) (No. 03-725).
Pasquantino is a fascinating case. The Court claims that it is not enforcing another country's tax laws. This is because enforcement of the tax laws of a foreign sovereign is typically frowned upon. "At common law, the revenue rule generally barred courts from enforcing the tax laws of foreign sovereigns." Pasquantino, 125 S.Ct. at 1770. Therefore, the question was restructured to be "whether a plot to defraud a foreign government of tax revenue violates the federal wire fraud statute. … Because the plain terms of §1343 criminalize such a scheme, and because this construction of the wire fraud statute does not derogate from the common-law revenue rule, we hold that it does." Id. (internal citations removed).
How the court at this holding is an interesting story. From 1996 to 2000, the defendants, while in New York, ordered liquor over the telephone from discount providers in Maryland. They then smuggled the alcohol into Canada by hiding it in their cars and failing to declare the goods to customs officials. Id. They were eventually arrested and convicted of federal wire fraud for carrying out a scheme to scheme to smuggle large quantities of liquor into Canada. Id. The defendants appealed their convictions by "urging that the indictment failed to state a wire fraud offense. They argued that their prosecution contravened the common-law revenue rule, because it required the court to take cognizance of the revenue laws of Canada." Id. They won that appeal, but the Court of Appeals granted a rehearing en banc, which ended up vacating that opinion and affirmed the defendant's convictions. Id. at 1771.
The Supreme Court granted certiorari "to resolve a conflict in the Courts of Appeals over whether a scheme to defraud a foreign government of tax revenue violates the wire fraud statute." Id. The Court pointed to two cases as evidence of the conflict: United States v. Boots, 80 F.3d 580, 587 (1st Cir. 1996) (a scheme to defraud a foreign nation of tax revenue does not violate the wire fraud statute); and United States v. Trapilo, 130 F.3d 547, 552-553 (2d Cir. 1997) (a scheme to defraud a foreign nation of tax revenue violates the wire fraud statute). Pasquantino, 125 S.Ct. at 1771.
Finding that a sovereign nation's right to uncollected excise taxes is "property" in its hand, the Court notes that a scheme to defraud a country of this property falls with the wire fraud statute's provisions. The defendants "would be equally liable if they had used interstate wires to defraud Canada not of taxes due, but of money from the Canadian treasury." Id. at 1773.
18 U.S.C. § 546 does not apply in this case because Canada does not have a reciprocating statute that criminalizes smuggling into the United States and because section 546 requires that a vessel be used to transport the goods. Id. at 1766 & n.9. (Ginsburg, J., dissenting). The dissent also points out that international tax collection is controlled largely by treaties, and also that Canada has the primary interest at stake. Id. at 1782 (Ginsburg, J., dissenting). "United States citizens who have committed criminal violations of Canadian tax law can be extradited to stand trial in Canada. Canadian courts are best positioned to decide whether and to what extent" the Canadian government has been defrauded. Id. at 1782-83 (J. Ginsburg, dissenting) (citing United States v. Pasquantino, 336 F.3d 321, 343 (4th Cir. 2003) (Gregory, J., dissenting)). Furthermore, as the dissent notes, the defendants in Pasquantino were indicted by Canada for failing to report excise taxes and possession of unlawfully imported spirits, yet Canada has not requested the defendants' extradition. Id. 1783 n.3 (Ginsburg, J., dissenting).
Nonetheless, the Court determined that using the wire fraud statute in this manner was not inconsistent with its purpose and did not constitute the enforcement of a foreign nation's tax revenue laws.