A federal court in Illinois has determined that the government did not allege facts sufficient to pierce the corporate veil of related U.S. and foreign corporations and thus could not bring the foreign corporations before the court on charges of avoiding $80 million in customs duties on honey imported into the United States between 2002 and 2009. United States v. Alfred L. Wolff GMBH, No. 08 CR 417 (U.S. Dist. Ct., N.D. Ill., E. Div., decided September 26, 2011).
A federal grand jury indicted the foreign defendants and a U.S. corporate entity on 44 counts in August 2010. The U.S. entity’s attorneys voluntarily accepted service on its behalf and on behalf of its parent and then appointed, via a shareholder resolution, a limited-authority corporate representative to appear before the court and enter a not-guilty plea for the U.S. defendants. This representative did so, and, immediately after the arraignment, the government served the representative with summonses for each of the foreign defendants. They moved to quash the summonses, and the court obliged, finding that the government could not effect service of the foreign defendants this way. According to the court, “Nothing in the indictment, in Special Agent Gauder’s affidavit, or in the materials filed under seal by the government, suggests that any of the Foreign ALW Defendants formed ALW USA ‘to perpetrate a fraud on the United States,’ as the government now contends.”