United States v. Puentes
2017 CIT 33
| Ct. Intl. Trade | 2017Background
- Paul Puentes was a licensed customs broker; Customs assessed a $30,000 civil penalty arising from misconduct between 2008–2010 and he ultimately lost his broker license for unrelated administrative reasons.
- For 79 entries for client Florexpo, Puentes provided Florexpo CF-7501 entry summaries showing true values and collected correct merchandise processing fees (MPFs), but filed different CF-7501s with Customs showing lower values and paid lower MPFs—allegedly pocketing about $6,437.05.
- Between Sept. 2008 and Feb. 2009, Puentes filed about 250 CF-7501s late for seven clients and failed to file any CF-7501s for 58 other entries (Sept. 2008–Jan. 2009).
- Between Apr. 2009 and Apr. 2010, Puentes filed 43 CF-7501s identifying WorldFresh as importer of record without WorldFresh’s authorization; Puentes was actually the importer of record for those entries.
- Customs issued pre-penalty and penalty notices and multiple demand letters; Puentes mostly did not respond (one attempted payment plan was not completed). The government sued; Puentes defaulted and did not oppose the motion for default judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Puentes is liable under 19 U.S.C. § 1641(d)(1)(F) for deceiving a client (intent to defraud) | Government: Puentes willfully and knowingly deceived Florexpo by sending clients true CF-7501s but filing false lower-valued CF-7501s with Customs and pocketing MPF overpayments | Puentes: no responsive pleadings (default) | Court: Facts taken as true on default establish liability under §1641(d)(1)(F) for intentional deception |
| Whether Puentes violated 19 U.S.C. § 1641(d)(1)(C) via violations of 19 C.F.R. §§ 111.29 and 111.32 (due diligence; false information) | Government: untimely filings (250), failures to file (58), false valuations (79), and false importer identifications (43) violated §§ 111.29 and 111.32 | Puentes: no responsive pleadings (default) | Court: Taking complaint allegations as true, Puentes violated §§ 111.29 and 111.32 and is liable under §1641(d)(1)(C) |
| Effect of defendant’s default on legal sufficiency and damages | Government: default admits well-pled facts; penalty amount ($30,000) is supported by Customs’ discretion and record | Puentes: no response to defend legal sufficiency or amount | Court: Default admits factual allegations but not legal conclusions; court reviewed legal sufficiency de novo and found facts support liability and award |
| Whether the $30,000 penalty is reasonable and permitted | Government: $30,000 is the statutory maximum, justified by multiple, intentional violations across many entries and clients; Puentes had opportunities to contest or seek mitigation but did not | Puentes: no opposition or mitigation presented | Court: $30,000 (statutory maximum) is reasonable and supported by the record; default judgment entered with post-judgment interest and costs |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (default admits factual allegations but not legal conclusions)
- Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105 (2d Cir. 1997) (court must ensure evidentiary basis for damages after default)
- Finkel v. Romanowicz, 577 F.3d 79 (2d Cir. 2009) (default and acceptance of well-pled facts principles)
- Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61 (2d Cir. 1981) (treating factual allegations as admitted after default)
- United States v. Ford Motor Co., 463 F.3d 1286 (Fed. Cir. 2006) (discussing prior disclosure/safe harbor principles)
- United States v. Ricci, 985 F. Supp. 125 (D. Mass. 1997) (upholding $30,000 penalty for repeated broker violations)