- Associated Press - Monday, August 6, 2012

NASHVILLE, Tenn. — Federal prosecutors Monday announced a deal to drop a criminal case against Gibson Guitar Corp. after the instrument maker acknowledged its importations of exotic wood violated environmental laws.

Nashville-based Gibson agreed to pay a $300,000 penalty, forfeit claims to about $262,000 worth of wood seized by federal agents and contribute $50,000 to the National Fish and Wildlife Foundation to promote the conservation of protected tree species.

“The agreement is fair and just in that it assesses serious penalties for Gibson’s behavior while allowing Gibson to continue to focus on the business of making guitars,” U.S. Attorney Jerry E. Martin said in a statement.

Gibson didn’t immediately respond to messages left Monday seeking comment. The privately held company is considered one of the top makers of acoustic and electric guitars, including the iconic Les Paul, introduced in 1952.

Gibson’s decision to cooperate with the federal Lacey Act banning the importation of endangered wood products stood in contrast to a publicity campaign mounted in protest after agents raided Gibson facilities in Memphis and Nashville.

Republicans and tea-party members rallied behind CEO Henry Juszkiewicz at the time as he denounced the raids as overzealous federal regulation that threatened American jobs.

“We feel totally abused,” Mr. Juszkiewicz said immediately after the August 2011 raid. He vowed at the time that the company would “fight aggressively to prove our innocence.” Soon afterward, he was invited by House Speaker John A. Boehner to attend a joint session of Congress in which President Obama delivered a speech on jobs.

A few weeks later, a company spokesman claimed that a federal agent had “lied” in affidavits claiming the CEO knew the wood seized by authorities was imported illegally.

Those affidavits supporting the search warrant that authorized the raids said shipments of imported Indian ebony and rosewood were given false labels to circumvent import restrictions.

The exotic woods used in such guitars are considered integral to the sound. Artists who have played Gibson instruments range widely from Chet Atkins and Maybelle Carter in country to Pete Townshend of the Who and Eric Clapton in rock to Larry Carlton and Paul in jazz.

George Gruhn, who owns a vintage guitar shop in Nashville, said he wasn’t surprised that Gibson officials accepted the settlement.

“Regardless of the merits of the case on either side, it would have cost more than that by far to pursue it,” he said. “Even if they thought they conceivably they could win, it would have probably cost more than $1 million to do it.”

Mr. Gruhn said the resolution of the Gibson case doesn’t ease his concerns about the Lacey Act, which initially halted the trade in endangered wildlife goods, such as ivory, but in 2008 added rare woods to the import ban.

“The problem is that virtually every instrument prior to 1970 contains Brazilian rosewood,” he said. “Even on a Gibson LGO, which was their cheapest student guitar.”