By  on October 26, 2011

WASHINGTON — The U.S. Justice Department said Wednesday that Gem Mfg. LLC, based in the U.S. Virgin Islands, was sentenced to pay a criminal fine of $1.8 million for illegally trading in black coral, which was being used in jewelry and sculptures and shipped into the U.S.

Gem, based in St. Thomas, is a high-end manufacturer of jewelry, art and sculpture that contain black coral. According to federal authorities, the vast majority of Gem’s sales are through galleries. Gem operated through several subsidiaries that did business in Florida, Nevada, California, Hawaii, the U.S. Virgin Islands, Alaska and the Cayman Islands.

Gem executives pleaded guilty in mid-July to seven counts of violations of both the Endangered Species Act and the Lacey Act, which makes it a felony to “falsely label wildlife that is intended for international commerce.” Gem was sentenced to pay the criminal fine and an additional $500,000 in community service payments for projects to study and protect black coral. The company was also ordered to forfeit dozens of pieces of jewelry, 10 artistic sculptures and over 13,655 pounds of raw black coral, with a combined total value exceeding $2.17 million.

In addition to the criminal fine being the largest ever for the illegal trade of coral, it also marked the largest nonseafood wildlife trafficking penalty.

“We face a growing challenge to preserve the world’s coral, which serves as essential habitat for marine biodiversity,” said Ignacia S. Moreno, assistant attorney general for the Environment & Natural Resources Division at Justice. “We will continue to work with our federal partners to aggressively investigate and prosecute those who violate U.S. law by illegally trading in protected species.”

Gem was also sentenced to three-and-a-half years of probation and a 10-point compliance plan that includes an auditing, tracking and inventory control program. The company was banned from doing business with its former coral supplier, Peng Chia Enterprise Co., a Taiwanese company whose managers, Ivan and Gloria Chu, were indicted last year for the illegal trade of black coral sourced in China and sold to Gem facilities, according to court documents. They are currently serving time in prison.

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