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February 11, 2013San Juan, PR, United StatesContraband

USVI man sentenced to pay $1.1 million for illegal trade of black coral

SAN JUAN, Puerto Rico – A U.S. Virgin Islands man was ordered in federal court in St. Thomas Thursday to pay $1.1 million in fines and to perform community service for his role in the illegal trade of protected black coral. The investigation that led to the court order was conducted by the U.S. Fish and Wildlife Service in partnership with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), U.S. Customs and Border Protection (CBP) and the National Oceanic and Atmospheric Administration.

At Thursday’s hearing, the court imposed upon Ashu Bhandari, the former president and CEO of GEM Manufacturing LLC, a U.S. Virgin Islands-based company, a criminal fine of $918,950 and sentenced him to one month in prison. Bhandari will also serve one month of home confinement and one year of supervised release, during which he will be required to complete 300 hours of community service. The judge also banned him from any business venture involving coral or coral products. In addition to the fine, Bhandari will be required to pay $229,687 to the University of the Virgin Islands to be used for community service projects designed to research and protect black coral. The court recognized that Bhandari’s sentence was based, in part, on his cooperation with federal investigators in related illicit coral trafficking cases.

On Nov. 7, 2012, Bhandari pleaded guilty to one felony count of false classification of goods for his efforts to conceal his illegal importation of internationally protected black coral in 2009. 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. 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. 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 United States. Bhandari admitted that by 2009 he knew that the shipments he arranged on behalf of GEM were coming into St. Thomas falsely labeled.

"This sentence sends a clear message to black coral traffickers that we and our federal law enforcement partners are in the business of preventing illegal wildlife trade," said Angel Melendez, acting special agent in charge of HSI San Juan. "HSI will continue to identify and apprehend those who exploit protected species for commercial gain."

Black coral is a precious coral that can be polished to a high sheen, worked into artistic sculptures and used in inlaid jewelry. Black coral is typically found in deep waters and many species have long life spans and are slow-growing. Using deep sea submersibles, scientists have observed that fish and invertebrates tend to gather around the black coral colonies. Thus, black coral communities serve important habitat functions in the mesophotic and deep-water zones. In the last few decades, pressures from overharvesting, due in part to the wider availability of scuba gear and the introduction of invasive species have threatened this group of coral. Recent seizures of illegal black coral around the world have led many to believe that black coral poaching is on the rise.

On Oct. 26, 2011, GEM was sentenced to criminal financial penalties and forfeitures exceeding $4.47 million and three and a half years of probation that included a 10-point compliance plan that incorporated an auditing, tracking and inventory control program. 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. Bhandari was the individual known as "co-conspirator X" in the related case of Ivan and Gloria Chu. In January 2010, federal agents arrested the Chus as part of a sting operation in Las Vegas. 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. Gloria Chu was sentenced to serve 20 months in prison and pay a $12,500 fine.