A client of mine regularly gets requests from customers outside
of the U.S.A. to mark purchases as "gifts" and to use a very
low price cost for the goods.
The item shipment includes the eBay auction information,
and it would be easy to determine the real sale price if
some customs opened it.
The client just got out of a Federal "jail" (he said it
had ping pong and pool tables), and is freshly on probation
for white collar crimes in a previous business and he has
a probation officer popping in unannounced.
When I saw the traffic asking for "Gift" and a false price,
I recommended to the client that he not mark a false price
because of his precarious position.
He wrote back:
# Why would anyone in this country give a care about how much tax
# a foreign country would charge their citizen to discourage them
# from purchasing American foreign goods? Even a U.S. postmaster
# would encourage very low declarations. Every shipper knows to
# do so, unless they're an upstart shipper.
This post is my due diligence check.
This post is the thinnest due diligence check I've ever heard of.
Don't expect the State Bar Ethics Committee to agree that this
constitutes due diligence.
Is it illegal in the U.S. to do this practice?
Yes. Defrauding a foreign government is a crime.
Are the customs declarations a U.S. legal form even
if the shipping is UPS?
Every form is a legal form. Even if it says at the top: "This is not
a legal form."
What are the chances it will cause him a problem?
Irrelevant. You will be committing a breach of ethics and probably a
crime if you advise the client on how to get away with a crime.
Telling the client what you think or what you found out about the
chances of getting caught would qualify as advising.
His PO is requiring money in/out reports per month, which are
unaffected by this, and the PO is very unsavvy about computers.
Irrelevant. You will be committing a breach of ethics and probably a
crime if you advise the client on how to get away with a crime.
Telling the client what you think about the likelihood of the PO
catching on would qualify as advising. Even accepting the client's
assessment of that risk, without objection, might qualify.
It does seem to be a common shipping practice to declare a
false value. Even Bloomingdale's wrote a falsely inflated
price on a certificate for the value of some jewlry that I
bought, an entirely domestic transaction.
There may be some wiggle room in valuation, by using wholesale price
vs retail price vs manufacturer's cost, vs insurance replacement
value, etc. You can check that out in the customs laws and
regulations. But there will be no wiggle room about labeling
something as a gift when it isn't.
As for common practices, the Foreign Corrupt Practices Act and the
Foreign Tort Claims Act are not forgiving about using the term "common
practice" as a license to violate local laws.
You should withdraw from representation unless you receive
satisfactory assurances that no future crimes are planned or will be
committed. That's the only way to protect yourself. The client is
responsible for his own risks, and may well decide that common
practices are a competitive requirement. But you are responsible for
your own risks.
If you make it a firm rule that you will always take the high road,
even when it costs you a client, you will avoid learning how your name
looks on a federal indictment. I have known some people who relied on
the unlikelihood of getting caught, including lawyers. Those that
ended up in legal trouble or ethics committee trouble would agree that
there was in their past one critical decision point where they had the
opportunity to determine that their life would be on the straight and
narrow path. Messing up that opportunity the first time seems to be
what sends them down a road they are eventually sorry they ever
traveled. If this is your critical decision point opportunity, make
the most of it. You have my best wishes.
McGyver
