V.I. Man to Pay $1.1 Million for False Classification of Black Coral Imports
The former president and CEO of GEM Manufacturing was ordered Feb. 7 to pay $1.1 million in fines and perform community service for his role in the illegal trade of protected black coral, said Immigration and Customs Enforcement. Ashu Bhandari of the U.S. Virgin Islands pleaded guilty Nov. 7 to one count of false classification of goods. The black pearl imported from Taiwan was classified as “plastic” after GEM Manufacturing was unable to obtain legitimate CITES certificates, it said.
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The court imposed a criminal fine of $918,950 and sentenced Bhandari to one month in prison, one month of house arrest, and one month of supervised release, ICE said. During the supervised release, Bhandari will have to complete 300 hours of community service. He will also have to pay $229,687 to the University of the Virgin Islands for use in research and protection of black coral, ICE said. Bhandari was banned from any business venture involving coral or coral products. The sentence reflected Bhandari’s cooperation with federal investigators in related illicit coral trafficking cases, ICE said.
Bhandari pleaded guilty to the crime on Nov. 7. According to ICE, GEM was in the business of manufacturing high-end jewelry and sculpture products that utilized black coral. During his term as CEO, Bhandari was responsible for ensuring the continued supply of raw black coral for the company, ICE said. Black corals are considered important habitat for the deep sea marine environment and are protected by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Each of the species of black coral is listed in Appendix II of CITES and is subject to strict trade regulations.
Bhandari admitted that by 2008, he learned that GEM’s Taiwanese suppliers of black coral could not obtain legitimate CITES certificates, ICE said. In spite of this knowledge, he made a business decision to go forward with the Taiwanese suppliers who would label the coral shipments as "plastic" in order to fool customs authorities in Hong Kong and the U.S.. Bhandari admitted that by 2009 he knew that the shipments he arranged on behalf of GEM were coming into St. Thomas falsely labeled, ICE said.
GEM has already been sentenced to criminal financial penalties and forfeitures of over $4.47 million, and three and a half years of probation that included a compliance plan and auditing, ICE said. GEM was also banned from doing business with its former coral supplier, Peng Chia Enterprise Co. and its management team of Ivan and Gloria Chu. In January 2010, federal agents arrested the Chus as part of a sting operation in Las Vegas, ICE said. They were subsequently indicted in 2010 for illegally providing black coral to GEM. On June 23, 2010, Ivan Chu was sentenced to serve 30 months in prison and pay a $12,500 fine, it said. Gloria Chu was sentenced to serve 20 months in prison and pay a $12,500 fine.