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November 8, 1994

225345 SR

Mr. Elon A. Pollack
Politis, Pollack & Doram
3255 Wilshire Blvd., Suite 1688
Los Angeles, CA 90010

RE: Employment by a Customs broker of a person who has been convicted of uttering an altered bill of lading; 49 U.S.C. App. 121; 19 U.S.C. ?1641(d)(1)(E); 18 U.S.C. ?1; 18 U.S.C. ?3559.

Dear Mr. Pollack:

This is in response to your letter dated April 21, 1992, concerning the employment, by a Customs broker, of a person who has been convicted of uttering an altered bill of lading.


Company X is a licensed corporate Customs Broker in the San Francisco District. An employee entered a guilty plea for violation of Title 49 U.S.C. App. 121, uttering an altered bill of lading, in the United States District Court. Apparently in filling out a document he used the date of delivery of containerized cargo to a terminal rather than the actual date of loading on board a vessel. The offense was committed in September 1988. The employee was sentenced on April 8, 1992, to a fine of five thousand dollars, two years on probation, and 120 hours of community service. The court also recommended that this individual retain his brokers license. Although the statute provides that a violation of 49 U.S.C. App. 121 is a misdemeanor, the attorneys for the brokerage company are concerned that the sentence received by the employee may cause the offense to be considered a felony under Federal law.

According to 19 U.S.C. ?1641(d)(1)(E), a broker may not employ anyone who has been convicted of a felony without written permission of the Secretary of the Treasury. This authority has been delegated to Customs. See 19 CFR 111.53(e). The brokerage company wishes to determine if written permission is necessary to continue the employment of the individual.

Pursuant to section 625, Tariff Act of 1930 (19 U.S.C. ?1625) as amended by section 623 of the title VI - Customs Modernization - of the North American Free trade Agreement Implementation Act (Pub. L. 103-182, Stat. 2057), a notice was published in the Customs Bulletin, Volume 28, Number 39/40, proposing to revoke HQ 223908, issued August 27, 1992, pertaining to whether a broker may employ a person who has been convicted and sentenced under the New Federal Sentencing Guidelines of uttering an altered bill of lading.


Whether the employee in question has been convicted of a misdemeanor or a felony for purposes of 19 U.S.C. ?1641(d)(1)(E).


According to 19 U.S.C. ?1641(d)(1)(E) the Secretary may impose a monetary penalty or revoke or suspend a license or permit of any customs broker if the broker has knowingly employed, or continues to employ, any person who has been convicted of a felony, without the written approval of such employment from the Secretary.

The employee was convicted of uttering an altered bill of lading under 49 U.S.C. App. 121 which provides as follows:

Any person who, knowingly or with intent to defraud, falsely makes, alters, forges, counterfeits, prints or photographs any bill of lading purporting to represent goods received for shipment among the several States or with foreign nations, or with like intent utters or publishes as true and genuine any such falsely altered, forged, counterfeited, falsely printed or photographed bill of lading, knowing it to be falsely altered, forged, counterfeited, falsely printed or photographed . . . or transfers for value a bill which contains a false statement as to the receipt of the goods, or as to any other matter, or who, with intent to defraud, violates, or fails to comply with, or aids in any violation of, or failure to comply with any provision of this chapter, shall be guilty of a misdemeanor, and, upon conviction, shall be punished for each offense by imprisonment not exceeding five years or by a fine not exceeding $5000, or both.

The brokerage company is concerned that although the statute specifically provides that a person who violates the statute shall be guilty of a misdemeanor, the severity of the
sentence may elevate the employee's conviction to a felony. 18 U.S.C. section 1 states that, notwithstanding any Act of Congress to the contrary, any offense punishable by imprisonment for a term exceeding one year is a felony. This provision was repealed (Pub.L. 98-473, Title II, section 218(a), Oct. 12, 1984, 98 Stat. 2027). It applies retroactively only to offenses that were committed before November 1, 1987. It appears from the documents submitted that the employee's offense was committed in September of 1988.

The provision, 18 U.S.C. ?l, was replaced by new Federal Sentencing Guidelines, 18 U.S.C. ?3559, which are the same except that the provision states that the guidelines apply only to an offense that is not specifically classified by a letter grade. Although 49 U.S.C. App. 121 specifically states that conviction under this statute is to be considered a misdemeanor, it does not list a letter grade and therefore the new Federal Sentencing Guidelines apply.

We are aware from the transcripts that the judge was very concerned that the employee should keep his job. However, we have been instructed by the Customs Office of Chief Counsel, based on the advice of the Department of Justice, that in spite of the wishes of the judge and the fact that the statute specifically states that it is a misdemeanor, under section 3559, an offense that is not specifically classified by a letter grade in the section in which it is defined is classified as a Class D felony if the maximum term of imprisonment authorized is less than ten years but is 5 or more years. Accordingly, we understand that the employee is guilty of a felony under 49 U.S.C. App. 121 and 18 U.S.C. ?3559. We have been advised that there have been no relevant court cases since the new Guidelines went into effect. The court cases decided under 18 U.S.C. 1, (See United States v. Schutte, 610 F. 2d 698 (10th Cir. 1979) and Loos v. Hardwick, 224 F.2d 442 (5th Cir. 1955)), are still considered to be valid precedent.


The offense for which the employee was convicted is a felony under the new Federal Sentencing Guidelines, 49 U.S.C. App. 121. Therefore, unless the brokerage company receives special permission from the Commissioner it may not employ the individual in question.

In accordance with section 625, this ruling will become effective 60 days from its publication in the CUSTOMS BULLETIN. Publication of rulings or decisions pursuant to section 625 does not constitute a change of practice or position in accordance with section 177.10(c)(1), Customs Regulations (19 CFR


John Durant, Director
Commercial Rulings Division

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