The Teraoka rationale has been widely rejected within the civil penalty context of § 1592. As the court observed in United States v. F.A.G. Bearings Corp. Ltd., 8 CIT 201, 615 F. Supp. 562 (1984), a reading of the statute permitting civil penalties only where the fraudulent statement concerned otherwise excludable goods "would emasculate [§ 1592], depriving the United States Government of one of its more effective and widely-used customs civil enforcement statutes." 8 CIT at 209; 615 F. Supp. at 569.
However, Teraoka has not been well received by this, or other courts construing § 1592. To the extent Teraoka implies that an entry is only accomplished "by means of" a false document where the entry would otherwise be restricted or prohibited, the courts have refused to engraft such a requirement on § 1592. United States v. Ven-Fuel, Inc., 758 F.2d 741 (1st Cir. 1985); United States v. F.A.G. Bearings Corp., 8 CIT 201, 615 F. Supp. 562 (1984); United States v. F.A.G. Bearings, Ltd., 8 CIT 294, 598 F. Supp. 401 (1984). Application of Teraoka would emasculate the essential civil enforcement statute of § 1592.
" USCIT Rule 9(b). It is necessary to determine whether plaintiff has satisfied "[t]he critical phrase of rule 9(b)" by setting forth "the circumstances constituting fraud." United States v. F.A.G. Bearings, Corp., 8 CIT 201, 206, 615 F. Supp. 562, 567 (1984). The complaint clearly shows plaintiff set forth "the circumstances constituting fraud."
Rule 9(b) and Rule 8(a) operate in conjunction with another in that Rule 9(b) tightens the pleading requirements for cases of fraud. U.S. v. F.A.G. Bearings, 615 F.Supp. 562 (1984).
In this Court, plaintiffs were held to have alleged fraud with sufficient particularity under USCIT R. 9(b) when they set forth in their complaints the kinds of informational elements mentioned above. In United States v. F.A.G. Bearings Corp., 8 CIT 201, 206-07, 615 F. Supp. 562, 566 (1984), the Court held that USCIT R. 9(b) was satisfied by a complaint that specified the "time, place, and contents" of the alleged false representations, details which "fairly apprise defendant of the charges against it so that an answer may be prepared."
Malice, intent, knowledge, and other conditions of mind of a person may be averred generally.See United States v. F.A.G. Bearings, Corp., 8 CIT 201, 615 F. Supp. 562 (1984). Rather than state the circumstances constituting the fraud with particularity, Customs makes conclusory statements in its complaint.
Defendant's interpretation would "emasculate that provision, depriving the United States Government of one of its more effective and widely-used customs civil enforcement statutes." United States v. F.A.G. Bearings, Corp., 8 CIT ___, Slip Op. 84-109 (Oct. 4, 1984), at 15. The Court holds that section 1592 applies to the merchandise entered by the defendant.