When Jesus Argandona, arriving in San Antonio from Mexico City, stepped off his plane, he probably thought his next destination would be his hotel. Instead it was jail. A criminal complaint had been filed against him under the Anti-Smuggling statute, 18 U.S.C. § 555*, in connection with his export of blank CDs from Laredo, Texas to Mexico City. If you think there’s something confusing about the U.S. charging a Mexican for smuggling goods into his own country, then you only know the half of it.

The criminal complaint filed against Argandona is hardly a model of narrative clarity, but the basic outlines of what happened seem to be this. Argandona purchased five containers of blank CDs for $600,000 from a Panamanian company which the Panamanian company had purchased from China. The containers, which were in the Laredo Free Trade Zone at the time of the sale, were being shipped “in bond,” i.e., they had entered the United States without assessment of duties because they were in transit to another country, in this case presumably Panama. Argandona allegedly instructed a warehouse employee outside the FTZ to use the services of a custom broker that Argandona believed could bribe a CPB official to cancel the in-bond documents.

The warehouse employee was then to take the containers to his warehouse outside the FTZ and subsequently to export them to Mexico. Instead, Customs officials later discovered that the document used to release the containers from the FTZ had been forged by the Customs broker, so they seized the containers at the warehouse to which they had been moved. The warehouse employee admitted to the Customs agents that he had assisted in other shipments for Argandona of blank CDs to Mexico, and that he was paid $40,000 per trailer, most of which was used to pay bribes to Mexican law enforcement officials.

The criminal complaint against Argandona alleges that this conduct violated 18 U.S.C. § 555. That section provides as follows:

Whoever fraudulently or knowingly exports or sends from the United States, or attempts to export or send from the United States, any merchandise, article, or object contrary to any law or regulation of the United States, or receives, conceals, buys, sells, or in any manner facilitates the transportation, concealment, or sale of such merchandise, article or object, prior to exportation, knowing the same to be intended for exportation contrary to any law or regulation of the United States, shall be fined under this title, imprisoned not more than 10 years, or both.

An essential element of this statute is that the export is contrary to a law or regulation of the United States. Neither the criminal complaint nor the U.S. attorney’s press release on this case specify what law this export violated, instead citing only 18 U.S.C. § 555. And it’s not clear what laws the export violated. There may have been U.S. laws violated before the export as a result of the fraudulent in-bond release documents but the export itself did not violate any U.S. laws. If the government’s claim is that any law violation that occurs in the course of the export transforms the export into a violation of 18 U.S.C. § 555, then that law would also be violated if the truck carrying the export to the border ran a stop sign or exceeded the speed limit.

Another conundrum posed by this case is why Argandona sought to cancel the in-bond documents even though he was planning to export the blank CDs to Mexiso and not to illegally divert them for sale or use in the United States. My speculation, and it’s only that, is that Argandona wanted to avoid the extra scrutiny involved in an in-bond export. Music piracy is a substantial problem in Mexico and there have been a number of seizures of blank CD media by Mexican authorities under Mexican law when they suspect that the blank CDs are destined for illegal piracy operations. It’s probably reasonable to suspect that these five containers of blank CDs were more likely destined to be used by large-scale piracy operations and not, say, for retail distribution.

However, even though it might have been illegal under Mexican law to import these CDs, the export must violate U.S. law for charges to be appropriate under 18 U.S.C. § 555.

[Hat tip to Guy Feral who first noticed this case.]

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*The criminal complaint mistakenly cites 18 U.S.C. § 554 and not 18 U.S.C. § 55f. The anti-smuggling provision was original enacted, the USA Patriot Improvement and Reauthorization Act of 2005, as 18 U.S.C. § 554, even though there was already a § 554. It was later officially recodified as § 555.

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