Wednesday, July 19, 2017

The Roman Libyan site of Leptis Magna.
The Cultural Property Advisory Committee (CPAC) meets today to consider a request to erect American import protections on endangered cultural property from Libya.

The meeting will take place today at 1 p.m.  EDT. Viewers can watch live by clicking here.

The May 30 request asks the United States to impose import restrictions on archaeological and ethnological objects objects dating from prehistoric, Greek, Roman, Islamic, and Ottoman times.

Article 9 of the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property permits such a request, and CPAC makes a recommendation to the president or his designee pursuant to its authority under the Convention on Cultural Property Implementation Act.

Photo credit: Faruk Seta/

Text and original photos copyrighted 2010-2017 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, museum risk management, and archaeology. Blog url: Any unauthorized reproduction or retransmission without the express written consent of CHL is strictly prohibited.

Monday, July 10, 2017

The case of United States v. Approximately Four Hundred Fifty (450) Ancient Cuneiform Tablets and Approximately Three Thousand (3,000) Ancient Clay Bullae--the Hobby Lobby cultural artifacts case--involves two parts:

(1) the court forfeiture of 3,450 cuneiform tablets and clay bullae illegally imported into the United States, and specifically named in the caption of the civil case, and

(2) the administrative forfeiture of $3 million in proceeds along with 144 unlawfully imported cylinder seals, which is outlined in the companion settlement agreement filed with the federal district court in Brooklyn, New York.

So how did prosecutors arrive at this $3 million figure? As stated in CHL's July 6 blog post, the amount is not a fine or penalty levied against Hobby Lobby, contrary to what has been widely reported in the media. A fine is a form of punishment. Instead, the  $3 million forfeitable proceeds (to use the technical term) represents a kind of restitution, covering the financial worth of acquired artifacts that no longer were available to hand over to U.S. authorities.

Cultural property forfeitures typically involve the seizure and forfeiture of hot cultural objects, not cold cash in lieu of the objects themselves. That is because cultural property seizures usually are civil in rem actions, meaning that the lawsuits involve the U.S. v. The Actual Stuff to be Forfeited rather than criminal in personam actions that involve the U.S. v. John Doe, where the fruits and contraband of John Doe's crime might be forfeited to the government after conviction, including any illegal money derived from the proceeds.

Cuneiform tablet seized by U.S. Customs.
While it is easy to understand how 3,594 specific tablets, bullae, and cylinder seals may be civilly forfeitable in the Hobby Lobby case because they are illegally tainted cultural property, it is not easy figure out the mechanism and the source of the forfeitable $3 million proceeds based on the currently available pleadings.

We do know a little bit. Termed "Forfeited Funds" by the Stipulation of Settlement filed with the court by the U.S. Attorney's Office for the Eastern District of New York and Hobby Lobby, the $3 million represents proceeds derived from illegal conduct and/or is a substitute for illegal cultural property that already has been dissipated. In particular, the agreement says that the money represents forfeitable proceeds under 18 U.S.C. § 981(a)(I)(C) that were generated by one or more violations of 18 U.S.C. § 542 (entry of goods by false statement), 18 U.S.C. § 545 (smuggling), or 19 U.S.C. § 1595a(c)(1)(A) (merchandise introduced into the country in violation of law).

Were some illegally imported artifacts transferred and converted to cash in the amount of $3 million? Were $3 million worth of artifacts purchased but undelivered to Hobby Lobby, as might be implied by the Stipulation? Was there a $3 million financial benefit derived by some party as a result of the illegally imported antiquities? Or was there something else? We simply do not know.

At this juncture, the only cash amounts related to the court case or to any donations made by Hobby Lobby to its supported museum--The Museum of the Bible--are found in the prosecutors' forfeiture complaint and in the the Form 990's filed by the museum. These documents include the following information:
  • Hobby Lobby agreed to purchase 5,500+ artifacts in December 2010 for $1.6 million (cuneiform tablets and bricks, clay bullae, cylinder seals), which a Hobby Lobby consultant thought might be appraised at $11,820,000.
  • The Museum of the Bible legally formed in 2010 and received 501(c)(3) tax-exempt recognition from the IRS in 2011. While the museum's 2010 Form 990EZ shows no receipt of antiquities, Form 990, which covers July 1, 2011 through June 30, 2012, reports the museum's possession of "works of art, historical treasured, or other similar assets," declaring that the institution acquired $23,038,000 (reported fair market value) in non-cash "DONATED ARTIFACTS," which was given in one contribution. The source of the contribution is unlisted.
  • The following tax reporting year discloses that the museum received $61,633,000 worth of historical artifacts from a single donation. Again, the source of the contribution is unlisted.
  • The museum's 2013 Form 990 explicitly reveals that Hobby Lobby Stores, Inc. donated 526 "biblical artifacts," specifically 496 "scroll items" and 30  "non-scroll items," having a fair market value of $50,294,500. (Putting that amount in perspective, the building and land acquired by The Museum of the Bible in July 2012 cost $50,360,855, according to publicly available tax documents.)
  • From July 1, 2013 through June 30, 2014, Hobby Lobby donated 408 artifacts that included 265 scroll and 143 non-scroll objects having a fair market value of $65,368,000.
  • The museum's latest Form 990 covering 2015/2016 reports no artifact donations but lists artifact assets held by the museum in an amount of $201,212,721.
Hopefully, government lawyers will offer an explanation about the source of the $3 million non-fine forfeiture.

[UPDATE>: Tracy Connor of NBC News reported on July 13: "An attorney for the [Hobby Lobby] confirmed to NBC News that the $3 million it will pay the federal government to settle a civil case isn't a fine but a payment to cover unspecified items that were improperly brought to the United States before the 2010 acquisition. Hobby Lobby didn't forfeit those purchases because it doesn't have them any longer."]

[Updated 11/27/18 to more clearly explain that a fine is a form of punishment.]

Photo credit: Dömötör Gergely / and U.S. Attorney for the Eastern District of NY.

Text and original photos copyrighted 2010-2017 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, museum risk management, and archaeology. Blog url: Any unauthorized reproduction or retransmission without the express written consent of CHL is strictly prohibited.

Thursday, July 6, 2017

Cuneiform tablet subject to forfeiture.
After a six and a half year probe by federal authority into ancient cultural property imports acquired by Hobby Lobby, the U.S. Attorney's Office in Brooklyn yesterday filed a forfeiture complaint as part of a settlement agreement with the arts and crafts company. The agreement, filed today in federal district court, confiscates Hobby Lobby's antiquities purchases, compels the Oklahoma-based corporation to forfeit cash proceeds related to the unlawful imports, and mandates the company's personnel to follow ethical collecting guidelines. Failure to comply with the settlement terms could cost Hobby Lobby $2,000 per day.

The forfeiture complaint—docketed in the Eastern District of New York as United States v. Approximately Four Hundred Fifty (450) Ancient Cuneiform Tablets and Approximately Three Thousand (3,000) Ancient Clay Bullae (17-CV-3980)—alleges that shipments of ancient Iraqi artifacts were smuggled through both the international mail facility at New York's JFK International Airport and the FedEx facility located in Memphis, Tennessee. The items were shipped from the United Arab Emirates and Israel and misleadingly described on customs forms as “Tiles (Sample),” “hand made clay tiles (sample),” and “hand made [sic] miniature clay tiles." The complaint goes on to say that the antiquities were significantly undervalued in order to skirt formal customs entry procedures. They also were falsely invoiced and labeled with either a false or no country of origin.

[UPDATE 7/11/17: Cultural property expert Dr. Neil Brodie breaks down the shipments in his blog post, Hobby Lobby Forfeits More Than its Reputation].

To gain title to the cultural property specified in the court complaint, which U.S. Customs and Border Protection already seized several years ago, federal prosecutors use 19 U.S.C. § 1595a(c)(1)(A). That's the often applied federal customs law that says:
Merchandise which is introduced or attempted to be introduced into the United States contrary to law shall be treated as follows: The merchandise shall be seized and forfeited if it is stolen, smuggled, or clandestinely imported or introduced.
Prosecutors additionally cite the companion criminal statutes of 18 U.S.C. § 542 and 545 to argue that the merchandise was imported by means of false statements or other criminal means.

While government lawyers allege criminal activity, they have chosen not to pursue a criminal conviction against any wrongdoer. It should be mentioned too that federal prosecutors have deliberately singled out the shipper, not the importer, as the party who reportedly violated Title 18, arguing in their complaint that "the shipper knowingly made false declarations as to [the property's] value, description and country of origin" and "the shipper knowingly made false declarations as to its value and description and, in failing to file formal entry declarations, omitted the required declaration as to country of origin."

The forfeiture complaint, nevertheless, recites broader facts than what is captioned in the court case's title or in the complaint's claim for relief, describing the sale of at least 1,500 cuneiform tablets, 500 cuneiform bricks, 3,000 clay bullae, 13 extra-large cuneiform tablets and 500 stone cylinder seals. The seller pitched these artifacts as “legally acquired" by the father of an Israeli dealer during the 1960's, according to the U.S. Attorney's pleading.

The complaint goes on to note that in October 2010, in-house counsel at Hobby Lobby received an expert's memorandum that explained the federal import restrictions on endangered cultural property from Iraq, the criminal penalties for their import, and an additional warning:
I would regard the acquisition of any artifact likely from Iraq ... as carrying considerable risk. An estimated 200-500,000 objects have been looted from archaeological sites in Iraq since the early 1990s; particularly popular on the market and likely to have been looted are cylinder seals, cuneiform tablets . . . . Any object brought into the US and with Iraq declared as country of origin has a high chance of being detained by US Customs. If such an object has been brought into the US in the past few years and was not stopped by US Customs, then you need to examine the import documents to see if the country of origin was properly declared; an improper declaration of country of origin can also lead to seizure and forfeiture of the object.
Prosecutors explain that the purchase of the Iraqi antiquities, nevertheless, went forward in the winter of 2010. Prior to that, in July 2010, Hobby Lobby’s president and a consultant traveled to the UAE in to view many of the artifacts. The consultant thought the total collection might be appraised at $11,820,000, according to the complaint. Hobby Lobby made a deal for $1.6 million and wired payment to seven bank accounts held in the names of people other than the seller, according to the court document.

Government lawyers charge that Hobby Lobby circumvented its company protocols to obtain the objects, writing:
Commencing on or about November 9, 2010, a Hobby Lobby employee tasked with receiving and cataloguing artifacts purchased for the Collection (the “Curator”) began working with Hobby Lobby’s International Department and the Executive Assistant [to the President] to coordinate the importation of the Artifacts. The International Department advised the Curator and Executive Assistant that the Artifacts should be imported using the Customs Broker. However, after the Customs Broker reported that the Artifacts could be detained by CBP, the Curator and Executive Assistant decided to bypass the International Department and Customs Broker and have Israeli Dealers #1 and #2 handle the shipping arrangements for the Order.
Hobby Lobby began to collect cultural property around 2009. Because its arts and crafts stores do not sell ancient cuneiform tablets or bullae, the company likely imported the antiquities so that they could donate them to the company-supported museum, The Museum of the Bible. The museum incorporated as a nonprofit under Oklahoma law on September 13, 2010 and is scheduled to open its doors in Washington, DC in a few months.

To conclude its case with the U.S. Attorney's office, Hobby Lobby agreed to terms contained in a stipulation of settlement filed with the court. The agreement's terms do not bind The Museum of the Bible. According to the settlement, Hobby Lobby agrees to
  • not challenge the government's forfeiture action;
  • assist with the delivery of the artifacts to the government;
  • surrender 144 cylinder seals as forfeited assets for the same legal reasons just explained;
  • not to assert any legal interest in any cultural property purchased, but not already acquired by Hobby Lobby in the $1.6 million deal, and to notify the U.S. Attorney if the company learns where the artifacts may be;
  • have the personnel listed in the company's new Antiquities Policy (unavailable in current court records) receive training within six months, and at least once a year thereafter, on customs regulations, provenance, and due diligence with regard to the purchase and import of cultural property;
  • retain customs counsel to offer or supervise this training and give advice regarding modifications of the Antiquities Policy and any cultural property acquisitions;
  • secure the services of a qualified customs broker; and
  • provide regular and detailed reports to the U.S. Attorney over eighteen months that describe in detail the company's cultural property imports, including the invoice price, vendor, Harmonized Tariff Schedule code, mode of transport, etc.
Failure to comply with these conditions could result in a fine costing the company $2,000 each day.

Assistant United States Attorneys Karin Orenstein and Ameet B. Kabrawala represent the government. Hobby Lobby is represented by litigator Barry Berke of the New York firm of Kramer Levin and cultural property lawyer Michael McCullough of Pearlstein, McCullough & Lederman in New York.

View a copy of the forfeiture complaint and the agreement below

Photo credit: U.S. Attorney's Office, Eastern District of New York

Text and original photos copyrighted 2010-2017 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, museum risk management, and archaeology. Blog url: Any unauthorized reproduction or retransmission without the express written consent of CHL is strictly prohibited.