Articles Posted in Customs Fraud & Import Duty Evasion

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The whistleblower, a business competitor of the allegedly dishonest importer, received a $286,000 whistleblower reward.

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Industrial tools firm King Kong Tools has paid $1.9 million to settle a whistleblower lawsuit alleging it transshipped Chinese merchandise through Germany—fraudulently redesignating them as German origin—to circumvent applicable customs duties.

Whistleblower China Pacificarbide—which competes with King Kong in the industrial tools market—filed the lawsuit under the False Claims Act.  It will receive $286,000 or approximately 15% of the recovery as a whistleblower reward, in addition to attorney’s fees, according to the U.S. Department of Justice, which intervened in the case.

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The former logistics staffer who reported the import-duty evasion will receive a $152K whistleblower reward.

An importer of  Chinese-manufactured ready-to-assemble furniture sold through such retailers as Walmart and Wayfair has iStock-1585339706-300x169paid $798,334 to resolve whistleblower claims it fraudulently used undervalued commercial invoices to reduce its import-duty obligations.

A former employee of Homestar North America alerted the U.S. government to the importer’s alleged double-invoicing scheme by filing a lawsuit under the whistleblower provisions of the False Claims Act and will receive $151,000—approximately 19% of the recovery—as a whistleblower reward, according to the U.S. Justice Department, which intervened in the case.

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iStock-1187895923-300x190Former employees who blew the whistle on the duty evasion will share a $500k whistleblower reward.

ADCO Industries, a Texas-based importer of industrial products, has agreed to shell out $2.5 million to end a whistleblower lawsuit alleging it knowingly undervalued merchandise from China to fraudulently reduce its customs duties.

Two former ADCO employees initiated the customs-fraud whistleblower lawsuit under the False Claims Act and will share a whistleblower reward of $500,000, according to the U.S. Justice Department, which intervened in the case.

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iStock-599758466-300x206Former Yakima employee to receive $500k False Claims Act whistleblower reward.

Yakima Products, a maker of automobile accessories such as hitches and roof racks, will pay $3 million to resolve a whistleblower lawsuit alleging it knowingly underdeclared its customs duties and misdeclared the country-of-origin of its imports.

The qui tam whistleblower, a former director of operations at Yakima, filed the False Claims Act lawsuit on behalf of the U.S. government, which intervened in the case.  He will receive 17% of the recovery—or more than $500,000—as a reward, and $75,000 in attorney’s fees to be paid by Yakima, according to the U.S. Department of Justice.

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Container cargo freight ship with working crane bridge discharge at container terminal, Aerial top view container ship at deep sea port. Customs-Fraud Whistleblower receives $115K Award.

Drug distributor Danco Laboratories has agreed to pay $765,000 to resolve a federal whistleblower lawsuit alleging it violated the False Claims Act by failing to pay marking duties on products it imported from China without country-of-origin labels.

Imports are required to be labeled with their “country of origin,” meaning the country where the product was manufactured or produced or where work was performed resulting in its “substantial transformation” into the finished article.

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Samsung C&T America allegedly declared incorrect HTS tariff classifications on its customs entry documents.

A U.S. unit of the SouiStock-1097810654-300x119th Korean conglomerate Samsung (KSE: KRX:028260.KS) has agreed to pay $1 million to settle allegations it violated the False Claims Act by knowingly misclassifying imports to evade customs duties.

According to the U.S. Department of Justice, Samsung C&T America knowingly filed customs entry documents misdescribing and listing inaccurate U.S. Harmonized Tariff Schedule classification codes for footwear it imported from China and Vietnam.

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iStock-1339057752-300x200International Vitamin Corp. allegedly violated the False Claims Act by misclassifying imports from China as “duty free.”

International Vitamin Corp., a producer of store-brand vitamins and supplements, has agreed to pay $22.8 million to resolve allegations it violated the False Claims Act by knowingly evading customs duties on imports from China.

According to the U.S. Department of Justice, IVC misclassified imports of raw ingredients and bulk vitamins as duty free when, in fact, those goods were subject to substantial customs duties.

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iStock-1224725343-300x168High Life LLC allegedly reported phony “first sale” prices on import declarations filed with CBP.

New York apparel wholesaler High Life LLC has paid the U.S. government $1.3 million to resolve allegations it violated the False Claims Act by underdeclaring the value of its imports.

According to the U.S. Department of Justice, High Life knowingly reported fictitious “first sale” prices on customs entry documents filed with U.S. Customs and Border Protection, thereby fraudulently reducing the company’s import duties.

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iStock-117144640-1-300x200A federal jury returned a $24 million judgment against an importer of Chinese steel pipe fittings, finding that it knowingly violated the False Claims Act by evading applicable anti-dumping duties. The importer says its non-payment of duties was “objectively reasonable.”

False Claims Act lawyers are monitoring the appeal in U.S. v. Sigma Corp., which is scheduled for oral argument before a U.S. Court of Appeals for the Ninth Circuit panel on Jan. 10, 2023. A qui tam whistleblower lawsuit involving an importer’s alleged knowing failure to pay anti-dumping duties on pipe fittings imported from China, the case raises hugely controversial questions relating to the False Claims Act’s knowledge requirement.

Applicability of Safeco Under the False Claims Act
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iStock-1219693277-300x169OneBigOutlet allegedly evaded millions of dollars in duties on imports from China by filing commercial invoices with CBP understating its purchase prices.

California importer RGE Motor Direct Inc., which does business under the name OneBigOutlet, has paid $3.25 million to resolve allegations it fraudulently underreported the prices it paid for furniture it imported from China.  The settlement ends a lawsuit brought by a qui tam whistleblower which alleged that OneBigOutlet, in coordination with its Hong Kong affiliate, Royal Sourcing Limited, violated the False Claims Act by knowingly filing false commercial invoices with U.S. Customs and Border Protection, thereby skirting millions of dollars in Section 301 tariffs.

The whistleblower, a resident of Hong Kong who previously worked as a sourcing manager at Royal Sourcing, received a whistleblower award of 27.5% of the settlement proceeds, according to legal filings.