Downstream wholesaler allegedly turned a blind eye to suppliers’ import fraud while receiving goods at below-market prices. Whistleblowers reap rewards.
The increased use of the False Claims Act to combat duty evasion has alarmed importers — as it well should!
Liability under the False Claims Act can be significant — three times damages plus penalties for each false entry document. This is far more severe than the penalties generally awarded in U.S. Customs & Border Protection administrative proceedings. The False Claims Act’s qui tam provisions also incentivize whistleblowers to come forward and expose import fraud by offering awards of up to 30% of the amount recovered. Current and former employees of importers — as well as their competitors — have reaped millions of dollars in awards for filing whistleblower claims.