Gibson Guitar Corporation has agreed to pay $350,000 in penalties to settle federal charges that it illegally imported ebony Madagascar to use for fret boards, ending a criminal investigation that had drawn fire from conservatives as an example of over-reaching by the government, the Justice Department announced on Monday.

The guitar maker agreed to pay a $300,000 fine and to donate $50,000 to the National Fish and Wildlife Foundation to promote the protection of endangered hardwood trees, like ebony and rosewood. In return, the government deferred prosecution of the company for criminal violations of the Lacey Act, which since May 2008 has made it illegal to import wood that was harvested and exported illegally under another country’s laws.

“Gibson has acknowledged that it failed to act on information that the Madagascar ebony it was purchasing may have violated laws intended to limit over-harvesting and conserve valuable wood species from Madagascar, a country which has been severely impacted by deforestation,” said Ignacia S. Moreno, an assistant attorney general.

Henry E. Juszkiewicz, Gibson’s chief executive, said the company still maintains the ebony from Madagascar was exported legally under that country’s laws. But he agreed to the settlement, he said, because it frees the guitar maker to continue importing wood from India, which, unlike Madagascar, is the major supplier of rosewood used in many fretboards.

For the last year, he said, the criminal proceedings in court had effectively cut off Gibson from sources of hardwood in both Madagascar and India, and its luthiers were forced to make guitars with laminated fret-boards or fingerboards made of woods not traditionally used in guitars, which some customers did not like.



“The alternative was pretty onerous,” he said. “We would have had to have gone to trial and we would have been precluded from buying wood from our major source country. For the ability to carry on with the business and remove this onerous Sword of Damocles, if you will, we feel this is about as good a settlement as we can get.”

The federal investigation drew fire from conservatives after agents raided Gibson offices and factories in Nashville on Aug. 24 last year and seized pallets of fretboard blanks imported from India. That raid came two years after more than a dozen agents with automatic weapons burst into a Gibson factory in Nashville to seize ebony fingerboards from Madagascar. The raids became a cause for Tea Party activists and some Republican lawmakers, including House Speaker John A. Boehner, who questioned whether the government was overstepping its bounds.

Gibson said the shipments were legal and disputed the government’s interpretation of Indian and Madagascar laws, which the company maintains allow the exportation of “fingerboard blanks,” which are in essence a piece of hardwood cut to the dimensions of a guitar fret board. But federal officials defended the raids, saying the company had failed to comply with the Lacey Act and its officials had willfully turned a blind eye to evidence the exports were in fact illegal.

The settlement announced on Monday is a compromise that frees Gibson from the criminal charges as long as the company doesn’t violate the agreement over the next year and a half. As part of the deal, Gibson agreed to withdraw a suit seeking to recover about $261,000 worth of ebony and rosewood that was seized during the investigation.

Mr. Juszkiewicz said the government had also agreed to return the Indian fingerboard blanks it had seized last year and to allow future imports of the blanks from India. “We entered into the settlement voluntarily,” he said. “It allows us to continue on with life and manufacture guitars.”