UPDATED: OtterBox Pays $4.3 Million to Settle Customs Broker's Whistleblower Suit
Cellphone case maker OtterBox paid $4.3 million to settle a whistleblower suit brought by a customs broker and former employee that alleged the company failed to account for the value of assists when it paid customs duties, said the U.S. Attorney’s Office for the District of Colorado on April 21. The broker, Bonnie Jimenez, alleged that her former employer knowingly disregarded the value of engineering work and molds on entry documentation it submitted between 2006 and 2011. The government agreed, and decided to intervene on her behalf. Jimenez will receive $830,000 out of the settlement for her trouble. OtterBox did not admit guilt as part of the settlement, and a company spokesman later denied the charges in the complaint.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
According to the complaint filed by Jimenez, OtterBox paid for engineering work and molds separately from what it paid for the finished cellphone and tablet cases it imported from China. The engineering work and molds qualified as assists that needed to be added to dutiable value, with the cost of the tooling alone valued at $2,500 to $12,000 per mold, she said. But in her complaint, she says that from 2006 through 2011 OtterBox deliberately ignored the requirement to include assists in transaction value, undervaluing its merchandise on customs documentation so as to pay less in duties, the complaint said (see 13100701).
Jimenez was hired by OtterBox in August 2009, and began to warn higher-ups that the company needed to adjust transaction values to account for the engineering work and molds, she said. According to her complaint, the company controller, CEO, and president all knew about the situation but declined to do anything about it. Jimenez was fired from the company in August 2010, said the complaint. She filed a False Claims Act whistleblower suit in November 2011. Under the False Claims Act, whistleblowers are entitled to a share of any final settlement. OtterBox said Jimenez was precluded from filing suit because the company had already submitted a prior disclosure. The government disagreed (see 13111302), and intervened on Jimenez’s behalf.
OtterBox denies the allegations in the complaint, and did not admit to the violations under the settlement. "OtterBox denies the contentions of the qui tam complaint filed in 2011 by former employee Bonnie Jimenez and asserts that at no time has the company knowingly underpaid customs duties," said Jordan Vater of OtterBox. "As the government acknowledges, this matter was based solely on allegations and the case was settled with no admission of liability."
OtterBox CEO Brian Thomas says the company has since beefed up its import compliance program to prevent any violations from occurring in the future. “OtterBox experienced rapid global growth during the period alleged in the complaint. We work diligently to conduct our business responsibly and previously self-reported two customs payment discrepancies," said Thomas. "We corrected those isolated incidents, enhanced our internal controls and proactively paid all duties that were owed. With resolution of this matter, we are pleased to continue to focus on manufacturing and innovating technology protection products that our customers know and trust, and remain dedicated to being a responsible corporate citizen.”
Lawyers for Jimenez did not respond to a request for comment.
Correction: This report has been corrected to reflect the fact that OtterBox did not admit to any violations as part of the settlement.
Email ITTNews@warren-news.com for a copy of the agreement to dismiss the case.