Gem Manufacturing, a St. Thomas-based jewelry firm, agreed on Thursday to pay roughly $4 million in fines, fees, and forfeitures, for false record keeping in connection with the importation of black coral in violation of federal wildlife protection laws.
In a document identified as “Information – Felony,” the firm was charged with violating the Endangered Species Act, which makes it “unlawful to engage in trade contrary to Convention on the International Trade in Endangered Species (CITES), an international treaty that has become part of U.S. law.
More specifically, the firm is charged with receiving several massive shipments of black coral that were sent from Hong Kong to the territory labeled “plastic of craft work” rather than being shipped in the manner specified by CITES. Black coral is regarded as an endangered species.
In the period 2007 to 2009 the mislabeled black coral shipped to Gem weighed more than four tons – 8,499 pounds, according to the plea agreement, which can be seen, in full, on the U.S. courts electronic reporting system, PACER. It is case 3:11-cr-00019-CVG -RM.
The plea agreement was worked out between the company’s lawyers and the U.S. Attorney’s Office and will be subject, as all plea agreements are, to review by the judge, in this case, U.S. District Court Judge Curtis Gomez
Neither the bill of information nor the plea agreement include any names of individuals linked with Gem Manufacturing, but the bill does mention that “GEM is the entity identified as ‘Company X’ in the criminal case U.S. v. Gloria Chu and Ivan Chu . . . ”
The Chus were the ones shipping the black coral, and both pled guilty to criminal violations of the environmental laws in St. Thomas last year; both are now serving 20-month jail terms.
In the plea agreement, the government agreed that there would be no other indictments in connection with these shipments, and Gem agreed to accept four different kinds of financial penalties.
First, there were will be $2 million in criminal fines, half of that to be paid within 14 days of the formal sentencing, a quarter within a year of that date, and the final quarter within two years. The fines will go into two different federal enforcement funds.
Second, there will be three “community service payments,” totaling another half a million, each will fund wildlife protection activities. One payment will be $140,000 to the section of the Smithsonian Institution dealing with Invertebrate Zoology (coral fits into that category) and $180,000 to National Fish and Wildlife Foundation for a study of the trade in black coral.
There is another $180,000 going to the University of the Virgin Islands Center for Marine and Environmental Studies for further research on black coral.
The third outflow of funds is “a mandatory special assessment of $1,425,” which is not further described.
The fourth is a collection of forfeitures. Not valued in the plea agreement, but presumably worth several hundred thousand dollars, is 13,655 pounds (close to seven tons) of raw coral. Also forfeited will be “90 jewelry items and 10 artistic sculptures.” These items, presumably made of coral, are valued at $1.4 million, according to the plea agreement.
It is not clear, at this moment, what the government will do with the forfeitures.
The 25-page plea agreement was signed by five lawyers and by Greg Ebenholtz, once the manager of AH Riise Watches in the British Virgin Islands and now the president and CEO of Gem Manufacturing.
An internet search reveals that Gem Manufacturing’s subsidiaries include “retail galleries … in the U.S. Virgin Islands, Hawaii, Alaska, Las Vegas and other locations …."
