Designer indictment shows compliance risks for fashion firms

Law360 (August 24, 2022 at 4:55 PM EDT) —

Daniel Garno
Daniel Garno
Wifred Ferrer
Wifred Ferrer
Isaac Fuhrman
Isaac Fuhrman

Luxury accessory designer Nancy Gonzalez, best known for her colorful exotic skin handbags, was arrested in Colombia on July 8 in collaboration with Colombian authorities and the U.S. Fish and Wildlife Service.

She is currently facing extradition to the United States for conspiracy and smuggling certain exotic skins in violation of US trade regulations.

An indictment has been filed against Gonzalez and her company, Gzuniga Ltd., and two other defendants in the United States District Court for the Southern District of Florida.

While this is an unusual set of circumstances, especially in the fashion industry, designers, distributors, resellers and retailers are reminded that compliance with federal and state laws must be a top priority when conducting business. It’s something that makes you

The indictment alleges that, between 2016 and 2019, Gonzalez and her co-defendants seized captive caimans and pythons without the very expensive permits and documents required under the Endangered Species Act. It claims to have smuggled hides into the United States.[1] It implements the provisions of the Convention on International Trade in Endangered Species of Wild Fauna and Flora.

According to the indictment, the defendants paid a network of people to fly from Colombia to the United States and put exotic handbags in their luggage. I was told that it was a gift from

that’s all Three years Authorities claim: Nearly 300 Exotics Leather handbags were smuggled into the United States according to this scheme.

If convicted, the designer could face up to 25 years in prison and her company could be fined up to $1 million.

State Regulations on Endangered Species Trade and Commerce

In addition to federal regulations, 46 states have their own laws to protect various wildlife. Naturally, these laws vary from state to state.

For example, New York and California have laws that mimic federal guidelines under the ESA, while Florida has regulations that protect only species and wildlife that are naturally occurring in Florida.[2]

As such, endangered species lists can vary dramatically from state to state, as they may include state-specific protected species.

Additionally, as of January, California banned the importation of cadavers or body parts that are on lists of endangered or species of particular concern.[3] These include iguanas, lizards, caimans and hippos. Violating the law can result in fines of up to $5,000 and imprisonment of up to 6 months. However, this law is currently being contested in court.[4]

As federal and state regulations regarding the importation and trade of exotic animals continue to evolve, businesses selling such goods, including second-hand luxury goods retailers, are encouraged to stay abreast of regulatory changes and their implications, if any. You have to be very careful. trade.

Additionally, under federal law, different species receive different levels of protection depending on their population size. This means that import and export requirements may vary by species.

It is imperative that retailers who source or sell exotic species understand the specific regulatory requirements that apply to the specific species being imported or exported.

Other legal and regulatory requirements in the fashion industry

The lawsuit against Mr. Gonzalez recalls the potential liability of entities operating in the U.S. market, including designers, suppliers, resellers and retailers, for violations of criminal law and federal and state laws and regulations. It’s something that makes you

In December 2021, President Joe Biden signed into law the Uyghur Forced Labor Prevention Act. restrict Import by U.S. Customs and Border Protection of goods produced or manufactured in the Xinjiang Uyghur Autonomous Region (XUAR) of China.[5]

CBP also enforces country of origin labeling rules for importers, requiring each item entering the United States to be labeled with the country of origin.

Similarly, fashion designers, resellers, and retailers must comply with Federal Trade Commission regulations regarding advertising disclosures (including “Made in USA” misrepresentations and green marketing claims) and safety requirements for children’s products. Must comply with US Consumer Product Safety Commission regulations. Criteria for flammability of clothing.[6]

As compliance requirements continue to evolve in complexity, companies must not only consistently assess and assess compliance risks, but also review and specifically adjust compliance policies and procedures to address those risks.

For example, companies importing apparel, cotton and textiles should enhance their supply chain due diligence to ensure that no goods or raw materials come from XUAR.

Some key elements of an effective compliance program that fashion brands and retailers should implement include: (1) Code of Conduct. (2) Employee and agency communication and training on compliance, compliance monitoring, internal and external audits across supply his chain; (3) reporting mechanisms and (4) record keeping.

An effective compliance program not only protects a company from violating the law, but also enables it to maintain its reputation and goodwill among its customers, suppliers, employees and the communities in which it operates.

The indictment of Nancy Gonzalez emphasizes that the fashion business, especially sourcing goods and materials internationally and complying with U.S. state and federal laws, is of paramount importance or risks being visited by the real fashion police. It should be a warning bell.

Danielle N. Garno is a partner at Holland & Knight LLP.

Wifredo A. Ferrer is Partner and Chair of the company’s Global Compliance and Investigations team. He previously served as the U.S. Attorney for the Southern District of Florida.

Isaac Fuhrman is the company’s Summer Associate.

The opinions expressed are those of the authors and do not necessarily reflect the views of the company, its clients, Portfolio Media Inc. or its affiliates. This article is for general information purposes and is not intended to be construed as legal advice.

[1] 16 §§ 1531 et seq.

[2] See generally 6 NYCRR Part 182. CA Fish & G D. 3, Ch. 1.5; Flastat. § 379.2291-2311.

[3] California Penal Code § 653o (2020).

[4] See Los Altos Boots v. Bonta 562 F.Supp.3d 1036 (ED Cal. 2021).

[5] Uyghur Forced Labor Prevention Act, US Customs and Border Protection. Enforcing the Uyghur Forced Labor Prevention Act, U.S. Department of State (June 21, 2022).

[6] See Made in USA Labeling Rules, 16 CFR § 323. Guide to Using Environmental Marketing Claims, 16 CFR §§ 260.1-260.17; 16 CFR § 1120.3(b); Combustible Textiles Act, 15 USC § 1191.

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