Textile Importer to Pay $2.3 Million to Settle Whistleblower Suit on Misclassification
A textile importer will pay more than $2.3 million to settle allegations that it misclassified its entries to save on duties, in violation of the False Claims Act, the U.S. Attorney’s Office for the Northern District of Georgia said in a recent press release. American Dawn and its owners, Adnan Rawjee, Habib Rawjee and Mahmud Rawjee, allegedly entered terry bath towels as “polishing clothes,” costing the U.S. government over $1 million in unpaid duties, according to the underlying complaint, filed by a former employee.
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The intentional misclassification scheme lasted nearly a decade, from 2008 until 2016, said settlement documents filed at the beginning of January and subsequently unsealed. Instead of entering the terry bath towels under subheading 6302.60.00 of the tariff schedule, dutiable at 9.1%, American Dawn profited by entering the goods under subheading 6307.10.1090, paying a 4.1% duty, the documents said.
The U.S. elected to intervene in the whistleblower suit against American Dawn, an importer of aprons, towels, bed linens, blankets, surgical gowns and patient gowns it produces overseas, mostly in Pakistan. The whistleblower, Andrew Feldman, a former regional sales manager for American Dawn, will receive about $400,000 of the settlement for his efforts.
Email ITTNews@warren-news.com for a copy of the complaint and the notice of dismissal.