Articles Posted in Customs Fraud & Import Duty Evasion

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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.Pharmaceutical firm Danco Labs allegedly imported products lacking country-of-origin labels from China yet failed to pay the 10% marking duties it owed.

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.

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Importer of welded outlets knowingly evaded applicable anti-dumping duties

A federal court in California has awarded $24 million damages—and an additional $2.7 million in attorney’s fees—to a corporate qui tam whistleblower that successfully sued a rival company under the False Claims Act claiming that it unlawfully evaded anti-dumping duties on “welded outlet” imports from China.  The whistleblower—Tennessee-based Island Industries, Inc.—accused importer Sigma Corp. of being able to undersell law-abiding competitors like Island by cheating U.S. Customs and Border Protection (CBP) out of the anti-dumping tariffs.

Jury rules in favor of whistleblower
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Extruded aluminum imports fraudulently misclassified as warehouse pallets to evade anti-dumping and countervailing (AC/CVD) duties

A group of California companies affiliated with CiStock-1131702041-1-300x169hinese Billionaire Liu Zhongtian—known as “Uncle Liu” or “Big Boss”—have been ordered to pay the U.S. government $1.83 billion in restitution after having been convicted of a scheme to evade customs duties on imports of Chinese aluminum.  The judgment is believed to be one of the largest in U.S. history involving customs fraud.

On April 11, 2022, United States District Judge R. Gary Klausner sentenced the affiliated warehousing and aluminum companies to five years probation and ordered them to pay the $1.83 billion.  The sentence followed a trial in August 2022 where the defendants were convicted of conducting a scheme with Zhongtian and others to evade U.S. anti-dumping and countervailing duties (AC/CVD) on extruded aluminum products from China.  The jury found the defendants guilty of conspiracy, wire fraud, and passing false and fraudulent papers through a customshouse.

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Linde AG used incorrect Harmonized Tariff Schedule (HTS) codes and failed to declare “assists” on steel products imported from China

The German firm Linde AG has agreed to pay $22.2 million to resolve allegations it knowingly dodged U.S. customs duties on iLogistics and transportation of Container Cargo ship and Cargo plane with working crane bridge in shipyard at sunrise, logistic import export and transport industry backgroundmports of steel components from China. The qui tam whistleblower who exposed the fraud—the company’s former logistics coordinator—will receive a whistleblower award (or “relator’s share”) of $3.7 million under the False Claims Act.

Evasion of antidumping and countervailing duties (AD/CVD)
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Centric Parts of California evaded 2.5% tariff by misclassifying “mounted” brake pads as “unmounted.”

In yet another False Claims Act settlement involving customs fraud and tariff enforcement, California aftermarket auto partshutterstock_493303243-300x200s supplier CWD Holdings, LLC – which does business as Centric Parts – has agreed to pay $8 million to revolve claims it knowingly evaded import duties owed on imported brake pads.  Two former employees of Centric who blew the whistle on the customs fraud scheme by filing qui tam lawsuits under the False Claims Act will share a $1.48 million reward.

If you have information about customs fraud and would like to discuss your rights, reach out to whistleblower attorney Mark A. Strauss, who has represented whistleblowers in successful cases based on customs fraud in the past.