GuildMaster sues federal government for return of seized lamps

Jenny Heinzen York - Home Accents Today -- Furniture Today, December 20, 2012

SPRINGFIELD, Mo. — Home accents and furniture source GuildMaster has filed suit in U.S. Bankruptcy Court for the Western District of Missouri for the return of 5,150 lamps the federal government seized early in 2012 because of fraudulent Underwriters Laboratories stickers.

The move follows a federal indictment last week for importing lamps with the counterfeit or unauthorized stickers.

The lamps were manufactured and shipped a year ago, according to a statement from GuildMaster. The federal indictment against the company calls for forfeiture and destruction of the lamps, which GuildMaster has valued at $900,000 and the government has valued at $1.9 million.

The statement from the company goes on to say that the suit is part of the petition for Chapter 11 reorganization filed on Dec. 13. On Dec. 12, the company was served a federal indictment on nine counts related to the December 2011 shipments of lamps bearing a removable, unlicensed sticker indicating a UL trademark. The lamps were manufactured by Dongguan Yangming Hardware Crafts Limited, a lamp factory purchased by GuildMaster in late 2011.

"The employees of the Chinese plant decided indiscriminately and incorrectly - without U.S. personnel or U.S. management knowledge - that the lamps needed to have the UL-certified stickers on them," said Steve Crowder, GuildMaster CEO. "We first learned of the offending stickers on January 27, 2012, the day after the seizure and immediately agreed that the removable stickers should not be on the lamps and had the stickers removed and destroyed in China."

GuildMaster lamps are constructed of UL-certified components, but the stickers are considered counterfeit because GuildMaster does not hold a license for UL-certified Portable Luminaire assembly.

"The basis for this motion to return the lamps is that the seized lamps are property of the ‘estate' under bankruptcy code and that because removing the sticker eliminates the issue, the lamps should be returned to GuildMaster to sell in order to pay our debtors under bankruptcy protection," Crowder said. "Since the seizure we have manufactured and shipped thousands of lamps - sans the counterfeit stickers - with no further audits or government inspections. It makes no sense to destroy the lamps when removing the stickers solves the problem."

The suit filed by GuildMaster includes motions to:

• The right for GuildMaster to inspect all of the lamps to clarify whether all of the lamps actually bear the counterfeit stickers and therefore were seized improperly. The bankruptcy judge has already ruled in favor of GuildMaster on this motion, according to a company statement.

• Return of the 5,150 lamps after the stickers are removed to GuildMaster for sale to its customers.
"We have operated with total integrity and transparency throughout this ordeal. After much thought, we filed suit against the government for return of the lamps because doing what is right is more important than the bottom line. We are fighting for jobs and for people to live in a world of common sense," Crowder said.

"GuildMaster has created 400 jobs worldwide and made a profit during an economy that has been challenging. The company supports a children's orphanage in Indonesia and was the first to develop a sustainable reforestation program in a country ravaged by corruption and illegal logging. We have taught capitalism to workforces in China and Indonesia, setting up bonus programs and paying above average wages. We are doing this because it is the right thing to do."

In the meantime, GuildMaster is conducting business as usual and is shipping all products as it moves forward under Chapter 11 bankruptcy protection, according to a company statement.

The company is following its normal schedule of product introductions for the winter markets in Atlanta, Dallas and Las Vegas, as well as for the High Point Market in April. It continues to manufacture products without disruption at its plants in Indonesia and China.

"While this has been a distraction for management, we are manufacturing and shipping orders on time as usual," Crowder said. "Since we own our plants in Indonesia and China, we control our supply chain and have not faced difficulties there. It is business as usual."