The Justice Department announced on Sept. 4 that it settled two more False Claims Act whistleblower suits related to evasion of antidumping and countervailing duties on aluminum extrusions from China, with Robert Wingfield of Texas and Bill Ma of New Jersey agreeing to pay $385,000 and $50,000, respectively (here). According to DOJ, Wingfield, the U.S. sales representative for Chinese exporter Tai Shan Golden Gain Aluminum Products Ltd., “conspired with domestic importers to submit false information to the government to evade duties” by misrepresenting the Chinese extrusions as goods of Malaysia. Ma formed a company to act as importer of record “in an attempt to shield the real importers from liability,” said DOJ. The two settlements are the latest in a series that stem from the allegations of James Valenti, the CEO of sourcing consultant World Trade Group (see 13111924 and 1502170019).
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Importers cannot be sued for False Claims Act violations related to failure to pay marking duties, said the U.S. District Court for the Eastern District of Pennsylvania as it denied a bid to reignite a whistleblower lawsuit from a company founded specifically to conduct "research and analysis on customs fraud" (here). The False Claims Act only applies to a false claim made to avoid an already existing obligation, while the obligation to pay marking duties is nonexistent until it is created by the failure to mark, said the court.
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Three importers have agreed to pay a total of over $3 million to settle charges that they transshipped Chinese aluminum extrusions through Malaysia in order to avoid paying antidumping and countervailing duties, said the Justice Department on Feb. 12. California-based C.R. Laurence, Florida-based Southeastern Aluminum, and Texas-based Waterfall Group allegedly declared the country of origin of the aluminum extrusions to be Malaysia, even though the goods were actually manufactured in China and only transshipped through Malaysia, said DOJ. The settlement comes as the result of a False Claims Act whistleblower lawsuit in Middle Florida U.S. District Court brought by James Valenti, owner and CEO of sourcing consultant World Trade Group, and joined by the U.S. government. Valenti is set to receive $555,100 for his role in the case.
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The U.S. Court of Appeals for the D.C. Circuit recently affirmed the dismissal a False Claims Act lawsuit alleging customs fraud by several major office supply retailers. An anonymous “pencil industry insider” had claimed Staples, OfficeMax, Target and Industries for the Blind had misreported the country of origin on entries of pencils that should have been subject to antidumping duties. In its Dec. 2 decision, the Appeals Court affirmed the District of Columbia U.S. District Court in finding the lawsuit was invalid because it was based on publicly available information.
The Eastern Pennsylvania U.S. District Court recently dismissed a whistleblower lawsuit brought against an importer by a company that appears to have been founded solely to find cases of customs fraud. Customs Fraud Investigations (CFI) alleged that Victaulic Company imported iron and steel pipe fittings without properly marking them, and then left payment of marking duties off of its entry documentation. District Judge Mary McLaughlin ruled CFI’s allegations, which were based on research conducted on eBay listings, were too threadbare to prevail.
Samsung Electronics America will pay $2.3 million to settle with the Justice Department over allegations of providing inaccurate country of origin claims to resellers, the DOJ said in a press release. The company was accused of causing "the submission of false claims for products sold on General Service Administration (GSA) Multiple Award Schedule (MAS) contracts in violation of the Trade Agreements Act," said the release. "Samsung caused resellers of its products to sell items on their GSA MAS contracts in violation of the TAA by knowingly providing inaccurate information to the resellers regarding the country of origin of the goods," the DOJ said.
An employee of a New York apparel importer will receive over $2 million for his role in bringing a whistleblower lawsuit against his employer for customs fraud. Michael Krigstein, who according to court documents has been a garment cutter at Dana Kay since 2006, had filed a lawsuit that eventually resulted in a $10 million settlement agreed to by the U.S. government, Dana Kay and Siouni and Zarr to end a False Claims Act case in the U.S. District Court for the Southern District of New York related to undervaluation of apparel imports.