On July 5, 2017, prosecutors for the Eastern District of New York announced a settlement with Hobby Lobby Stores, Inc. for its purchase and importation of Iraqi artifacts in violation of applicable customs laws. Hobby Lobby, a privately owned arts-and-crafts retailer based in Oklahoma, worked with several dealers from Israel and the United Arab Emirates to buy more than 5,500 artifacts that included clay tablets containing cuneiform (an ancient Mesopotamian script) and clay bullae. According to the civil forfeiture complaint, Hobby Lobby retained an expert on cultural property law, yet ignored the expert’s warning that acquiring artifacts from Iraq entails considerable risk because hundreds of thousands of them have been looted from Iraqi archaeological sites since the early 1990s. The federal forfeiture complaint filed in rem (where the defendants, rather than Hobby Lobby, are the cultural property items) outlined the various legal protections afforded to Iraqi cultural property, including a general ban on the importation of any Iraqi goods under the Iraqi Sanctions Regulations codified in 1990. As part of its settlement, Hobby Lobby agreed to waive its rights to $3 million and 144 cylinder seals, as well as to the property named in the forfeiture complaint. In effect, Hobby Lobby paid a $3 million fine to the U.S. government in a process that will result in a final judgment of forfeiture.
The Hobby Lobby case is important for several reasons. First, the case is an example of law enforcement focus—notwithstanding the federal complaint’s civil nature—on the “demand” side of the market for cultural property trafficked from countries like Iraq or Syria that have been embroiled in conflict for years. The dealers of the property involved in the Hobby Lobby case, a U.A.E. and several Israeli dealers, fall within the “sell” side of the market. Law enforcement and experts in cultural property trafficking recognize the difficulty in prosecuting the middle-man dealers or the looters themselves, as well as the practical impossibility of requiring Customs officials to open every single box or package to verify its contents. Even if they were able to do so, one expert recently argued that further training for law enforcement and the support of specialized police and customs officers is required to make any meaningful impact.
Moreover, by pursuing the property in a civil forfeiture case, rather than pursuing criminal charges against Hobby Lobby or Hobby Lobby’s president, is the demand side of the market impacted? Some commentators have pointed out that by focusing on demand with a lens of self-regulation (the idea that buyers faced with the risk of losing their investment or jail time will make more of an effort to avoid sketchy dealers or illicit artifacts), it is now obvious that self-regulation has simply not worked because high-end buyers are rarely caught and punished. The question then becomes, does a $3 million fine and the negative press generated from the Hobby Lobby smuggling headlines result in a market correction towards less of a demand for looted artifacts?
Second, Hobby Lobby was not required to simply pay a fine, hand over the artifacts, and walk away. Hobby Lobby’s settlement includes some specific compliance and reporting requirements, including adopting an Antiquities Policy, providing mandatory annual training to Hobby Lobby employees involved with its cultural property activities, and engaging customs counsel for specific activities. Hobby Lobby also must deliver quarterly reports containing information about its acquisition or importation of cultural property. Ensuring that companies like Hobby Lobby embed meaningful compliance functions within their organization, especially for activities outside the day-to-day operations of the company, poses a unique challenge for U.S. law enforcement. The U.S. Department of Justice has focused on compliance in recent years, culminating in hiring an outside compliance counsel and publishing an Evaluation of Corporate Compliance Programs by its Fraud Section. It is not clear whether the Hobby Lobby settlement and its compliance measure requirements, however, will sufficiently deter others like Hobby Lobby from participating in the illicit cultural property market.
Finally, Hobby Lobby’s case is also interesting because it provides an example of a company conducting activities that are of personal interest to a leader within the company, rather than one core to the company’s business. In this case, the president of Hobby Lobby (Steven Green) maintains a personal, public interest in biblical antiquities. Steven Green’s collection, grown by Green and his father, is the world’s largest private collection of biblical texts and artifacts; that collection is supposed to be displayed in the upcoming Museum of the Bible in Washington, D.C.
U.S. policy for enforcing a legal regime intended to combat cultural property trafficking should continue to incorporate meaningful compliance measures and creative ways of attacking the “demand” side of the market. Further correction and regulation will likely be required if the Hobby Lobby case outcome simply incentivizes purchasers to find ways around customs laws through creative shipping tactics and willful ignorance of expert advice.