Wood Flooring Importer to Pay Over $8.1M to Settle False Claims Act Duty Evasion Charges
California-based importer Evolutions Flooring and its owners, Mengya Lin and Jin Qian, agreed to settle claims they violated the False Claims Act by "knowingly and improperly evading customs duties" on multilayered wood flooring from China, DOJ announced. DOJ said the company and its owners will pay $8.1 million to settle the case, noting that whistleblower Urban Global will receive around $1.2 million of the proceeds.
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Evolutions said in a statement that it's "pleased to have this issue put behind them, and looks forward to continuing to focus its attention and resources on delivering high-quality products to its customers, and working cooperatively with CBP to ensure its compliance with applicable trade laws."
DOJ alleged that Evolutions, at the direction of Lin and Qian, knowingly evaded antidumping, countervailing and Section 301 duties on their Chinese-made wood flooring products from September 2019 to July 2022. The importer "caused false information to be submitted to CBP regarding the identity of the manufacturers and country of origin" of the imports, DOJ said.
In the complaint, DOJ alleged that Evolutions conspired with Chinese manufacturers and exporters to make "false representations on the Entry Summary and its accompanying documentation about the country of origin and the manufacturer of the imported merchandise." The company marked its products as being made in Malaysia.
The complaint said Evolutions was incorporated in 2013 and, up until 2018, only minimally imported wood flooring. Then, in 2018, the company shot up to become the sixth-largest wood flooring importer in the U.S. In 2019, Evolutions became the largest importer of multilayered wood flooring in the U.S.
DOJ said it investigated one of Evolutions' declared manufacturers in Malaysia, Metal Jaya Industries. The government said it searched for Metal Jaya's listed business address online but found that "no office under Metal Jaya's name seems to exist, let alone a wood flooring factory and/or a warehouse with the capacity to properly store such voluminous products."
CBP director Cheryl Davies said CBP conducted site visits to factories in Thailand, analyzed import data and was involved in interviews with witnesses to help investigate the matter.
The case was originally brought on the word of wood flooring importer and wholesaler Urban Global, a competitor of Evolutions, who received a cut of the settlement under the False Claims Act's qui tam provision.