New York Apparel Importers to Pay $10 Million to Settle False Invoice Charges
A group of related apparel importers will pay $10 million to settle charges that they falsified entry documentation to avoid paying import duties, said the U.S. Attorney’s Office for the Southern District New York on April 9. Siouni and Zar Corp. and Dana Kay admitted to underreporting the dutiable value on invoices provided to CBP for imports of women’s apparel by using a second, unreported invoice for part of the purchase price. The complaint said the false invoices resulted in $3 million per year in unpaid duties.
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As part of their settlement, the companies admitted to underdeclaring the value of their imported apparel between 2003 and 2012. The entire purchase price of the apparel would not be declared on the commercial invoice provided to their customs broker for use in CBP entry documentation. Instead, a second bill called a “debit-note” would be created, and part of the purchase price would be billed on this second invoice. The second invoice was not provided to CBP, so only the first invoice was used to determine dutiable value. “Through this fraud, the defendants avoided paying millions of dollars in customs duties,” said the attorney’s office.
Michael Krigstien had filed the whistleblower suit in 2011 in the Southern New York U.S. District Court against Alan Hakimian and Afshin Hakimian, and their companies Siouni and Zar Corp., Danny & Nicole, and Dana Kay. Under the False Claims Act, whistleblowers are eligible for a share of the proceeds from a civil suit. The case remained sealed until December 2013, and the U.S. government announced it would prosecute the case in January (see 14011023). According to the complaint, the Hakimians and their companies import women’s apparel for sale at small specialty stores and department stores like Sears, J.C. Penney, Ann Taylor and Dress Barn. The settlement appears only to reference Dana Kay and Siouni and Zar.