Delgado v. U.S.

• Decision Date: 29 September 2008
• Docket Number: Slip Op. 08-103. Court No. 06-00030.
• Citation: 581 F.Supp.2d 1326
• Parties: Miguel A. DELGADO, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

581 F.Supp.2d 1326

Miguel A. DELGADO, Plaintiff, v. UNITED STATES, Defendant.

Slip Op. 08-103. Court No. 06-00030.

United States Court of International Trade.

September 29, 2008.

The Mooney Law Firm (Neil B. Mooney), Tallahasse, FL, for Plaintiff.

Gregory G. Katsas, Assistant Attorney General; Barbara S. Williams, Attorney In Charge, International Trade Field Office, Commercial Litigation Branch, Civil Division, United States Department of Justice (Marcella Powell); Ilena Pattie, Office of the Associate Chief Counsel, United States Customs and Border Protection, of counsel, for Defendant.

OPINION AND ORDER

R. KENTON MUSGRAVE, Senior Judge.

This matter returns to the Court following a remand to the Secretary of the U.S. Department of Homeland Security ("the Secretary" or "DHS") pursuant to the Court's order in Slip Op. 07-177, Delgado v. United States, 31 CIT ___, 536 F.Supp.2d 1328 (2007). On May 15, 2008, the Secretary reissued its decision to revoke plaintiff Miguel A. Delgado's Customs broker's license on the ground that Mr. Delgado was convicted of felonies that involved importation and exportation and that arose out of the conduct of customs business. Reissued Decision at 2. Mr. Delgado filed objections arguing that the Secretary's decision is erroneous because the crimes for which he was convicted neither "involve[d] import or export" nor "arose out of the conduct of customs business." Plaintiff's Objections at 1-3. This Court has jurisdiction over this matter pursuant to Section 641(e) of the Tariff Act of 1930, 19 U.S.C. § 1641(e)(1) and 28 U.S.C. § 1581(g)(2000). For the reasons set forth below, the court will sustain the Secretary's decision to revoke Mr. Delgado's license.

I. Background

The facts of this case were extensively summarized in the court's previous opinions on this matter and need not be fully repeated here. See Delgado v. United States, 31 CIT ___, 491 F.Supp.2d 1252 (2007) and 536 F.Supp.2d 1328. In April 2001 Mr. Delgado was convicted on twenty-eight felony counts stemming from his involvement in a scheme to illegally divert liquor into the commerce of the United States without the payment of federal liquor taxes. See Judgment, United States v. Miguel Delgado, Ct. No. 00682 (S.Dist. Fla., Sept. 6, 2001) ("Judgment") R. at 165. Evidence of record indicates that the general scheme can be understood as thus: A co-conspirator by the name of Kumar purchased approximately fifteen shipments of liquor from the McCormick distillery and designated them for export so that no taxes would be due¹. Each of the fifteen shipments was then shipped to Mr. Delgado's care as manager at a company known as "Inversions Sula, S.A. de CV" in Honduras. Upon arrival in Honduras, the liquor was consigned to Lancer Honduras, a brokerage company 50% owned by Mr. Delgado. Mr. Delgado then "sold" the liquor back to Kumar and shipped it back to Miami, where it was stored in Mr. Delgado's bonded warehouse or Mr. Delgado's container freight station. Hearing Transcript ("Tr.") at 118-123. At. that point, Customs forms were then prepared that designated the liquor for export to Venezuela; however, except for one shipment, none of the liquor was exported to Venezuela, but was instead diverted back into the United States. See Tr. at 117-27; United States v. Delgado, 321 F.3d 1338 (11th Cir.2003).

For his involvement in the scheme, Mr. Delgado was convicted on fourteen violations of 26 U.S.C. § 5601(a)(11) ("knowingly receiv[ing] distilled spirits knowing and having reasonable grounds to believe that any tax due on such spirits had not been paid"); thirteen violations of 26 U.S.C. § 5601(a)(12) ("knowingly removing, other than authorized by law, distilled spirits on which the tax had not been paid, from the place of storage and from an instrument of transportation"); and one count of 18 U.S.C. § 371 ("conspiracy to commit offenses against the United States."). Id. The specific offenses contained in the section 371 conspiracy charge included (1) conspiring to violate 26 U.S.C. 5601(a)(11) supra; (2) conspiring to violate 26 U.S.C. 5601(a)(12) supra; and (3) conspiring to violate 26 U.S.C. § 5608(b) ("Unlawful relanding" of "distilled spirits which had been shipped for exportation and on which federal excise taxes had not been paid"). The Jury found Mr. Delgado guilty of conspiracy on all three counts. See Verdict Form, United States v. Miguel Delgado, Ct. No. 00682 (S.Dist.Fla., Sept. 6, 2001); 26 U.S.C. §§ 5601(a)(11), (12) (2000); 18 U.S.C. § 371 (2000); 26 U.S.C. § 5608(b) (2000). That verdict was affirmed on appeal. Delgado, 321 F.3d 1338.

In March 2004, the U.S. Department of Customs and Border Protection ("Customs" or "CBP") commenced proceedings against Mr. Delgado for the possible revocation of his Customs broker's license. Customs charged Mr. Delgado with several violations of CBP regulations, including (1) 19 C.F.R. §§ 111.53(c) and 111.32 (violating Customs law or regulation by filing false documentation); (2) 19 C.F.R. § 111.53(b) (having been convicted of a felony either involving importation or exportation of merchandise or arising out of customs business); and (3) 19 C.F.R. § 111.53(d) (aiding and abetting violation of Customs law). Notice and Statement of Charges, R. at 153-54.

Mr. Delgado was afforded a formal hearing on the matter before an Administrative Law Judge ("ALJ") on May 18, 2004. See generally, Tr., Vols. I & II. On December 17, 2004, the ALJ issued a decision recommending license revocation. Recommended Decision, R. at 34. That recommendation was reviewed by the Secretary, who issued a decision revoking Mr. Delgado's license on December 3, 2005. Upon review, this court remanded the Secretary's revocation decision back to DHS on two separate occasions; the third version of that decision was reissued by the Secretary on May 15, 2008 and is now before the court.

In the May 15, 2008 decision on review, the Secretary adopted several portions of the ALJ's Recommended Decision and concluded that, pursuant to 19 U.S.C. § 1641(d)(1)(B)(i),(ii) and 19 C.F.R. § 111.53(b), license revocation was warranted because the felonies for which Mr. Delgado was convicted "involved importation and exportation" and "arose out of the conduct of customs business." May 15, 2008 Reissued Decision at 2-3.

Mr. Delgado asserts that the Secretary's findings are erroneous because pursuant to the definition of "exportation" set forth in Swan & Finch v. U.S., 190 U.S. 143, 23 S.Ct. 702, 47 L.Ed. 984 (1903), the liquor involved in this matter "cannot be considered imported or exported...." Plaintiffs Objections at 1-2. Similarly, Mr. Delgado contends that Customs failed to connect his crimes to "Customs business" because, inter alia, "Customs own mitigation guidelines relating to the doing of `Customs Business' without a license" indicate that the in-bond movement of merchandise and the filing of a Customs Form 7512 are not considered to be Customs business. Plaintiffs Objections at 3.

II. Standard of Review

In accordance with 5 U.S.C. § 706(2)(A), the court reviews the Secretary's revocation decision to determine whether it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." See also Barnhart v. U.S. Treasury Dep't, 9 CIT 287, 290 613 F.Supp. 370, 373 (1985) (finding that the court need only "assure itself the decision was rational and based on consideration of relevant factors").

The factual findings of the Secretary must be based on substantial evidence. 19 U.S.C. § 1641(e)(3) (2000). See also 5 U.S.C. § 706(2)(E) (2000) and Anderson v. United States, 16 CIT 324, 324 799 F.Supp. 1198, 1199-1200 (1992). Substantial evidence includes "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Fusco v. United States Treasury Dep't, 12 CIT 835, 838-39, 695 F.Supp. 1189, 1193 (1988) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). Less than the weight of the evidence, the possibility of drawing two inconsistent conclusions from the evidence does not prevent the agency's findings from being supported by substantial evidence. Barnhart, 9 CIT at 290, 613 F.Supp. at 373.

III. Discussion

Title 19, section 1641 of the United States Code provides, in pertinent part, that the Secretary may "revoke or suspend a license or permit of any customs broker, if it is shown that the broker—

(B) has been convicted at any time after the filing of an application for license under subsection (b) of this section of any felony or misdemeanor which the Secretary finds—

(i) involved the importation or exportation of merchandise;

(ii) arose out of the conduct of its customs business...."

19 U.S.C. § 1641(d)(1)(B) (2000); see also 19 C.F.R. § 111.53(b) (2008).

A. Mr. Delgado's Crimes Involved the Importation or Exportation of Merchandise

Pursuant to caselaw and Customs regulations, "exportation" is defined as "a severance of goods from the mass of things belonging to this country with the intention of uniting them to the mass of things belonging to some foreign country." Swan, 190 U.S. at 145, 23 S.Ct. 702; 19 C.F.R. § 101.1. Mr. Delgado argues that the Secretary's finding that his crimes "involved importation or exportation" is unsupported by substantial evidence because no "exportation" occurred as a matter of law, according to the definition thereof announced in Swan and found in the Customs regulations. More precisely, Delgado contends that the crime for which he was convicted did not "involve" exportation because "[p]remeditatedly shipping merchandise rapidly into and back out of bonded warehouses in Honduras certainly does not indicate an `intention to unite the merchandise into the mass of things belonging to that country.'" Plaintiff's Objections at 2. Mr. Delgado essentially argues that, although the liquor had been designated for exportation and then shipped out of the country, no actual exportation...