The U.S. District Court for the Southern District of New York on Jan. 26 declined to dismiss a False Claims Act suit from a whistleblower that alleges her employer misclassified footwear to avoid tariffs. Magistrate Judge Robert Lehrburger said the fact none of the defendants served as the importer of record for the allegedly undervalued footwear imports is irrelevant for purposes of establishing liability under the FCA (United States ex rel. Devin Taylor v. GMI USA Corp., S.D.N.Y. # 16-7216).
Furniture company Homestar North America will pay $798,334 to settle charges that it violated the False Claims Act by underreporting the value of its Chinese imports to avoid customs duties, the U.S. Attorney's Office for the Eastern District of Texas announced. Of the total penalty, $151,683 will go to the whistleblower in the action: Larry Edwards, a logistics and warehouse manager who worked for Homestar for a short stint in 2020.
Dallas-based importer ADCO Industries, also known as Dallco Marketing, settled charges that it violated the False Claims Act by avoiding customs duties on Chinese industrial product imports, the U.S. Attorney's Office for the Northern District of Texas announced. The company agreed to pay $2.5 million to settle the whistleblower action, with $500,000 going to whistleblowers Donald Reznicek and Collen McFarland.
National Customs Brokers and Forwarders Association of America President J.D. Gonzalez said the trade group thinks the Customs Modernization Act is heavily focused on enforcement, and the group is "a little disappointed" that some of the items that NCBFAA talked about with Sen. Bill Cassidy, R-La., didn't find their way into this bill.
German company KingKong-Tools GmbH & Co KG, along with its American subsidiary King Kong Tools, will pay $1.9 million to resolve allegations of customs fraud, the U.S. Attorney's Office for the Northern District of Georgia announced. The office alleged that King Kong falsely said its tool imports were made in Germany when they were made in China, misrepresenting their country of origin in violation of the False Claims Act.
International Trade Today is providing readers with the top stories from last week in case they were missed. All articles can be found by searching on the titles or by clicking on the hyperlinked reference number.
New Hampshire-based furniture seller Yogibo will pay $217,832 to settle charges it violated the False Claims Act by "failing to pay customs duties on imports from China," the U.S. Attorney's Office for the District of Massachusetts announced July 26. The case was brought by David Kohlenberger, a whistleblower and former senior logistics and warehouse manager for Yogibo from 2017 to 2021, who will receive 20% of the settlement.
Defendants in False Claims Act cases still have a valid defense in light of the U.S. Supreme Court's recent ruling in U.S. ex rel. Schutte v. SuperValu "if there is objective ambiguity" in the law and there exists a "genuine subjective belief in the validity of the claim," Akin Gump lawyer Robert Salcido said in a blog post. FCA defendants also have a valid defense if they "acted with mere negligence or inadvertence," Salcido added, explaining the plaintiff must show that the defendant acted with a "substantial and unjustifiable risk."
John Summers, former assistant U.S. attorney for the Northern District of Texas, has rejoined Caldwell Cassady as a principal, the firm announced. Summers draws from his experience as an assistant U.S. attorney prosecuting False Claims Act and qui tam complaints related to customs, procurement and healthcare fraud, the firm said.
South Korean company Anyclo International pleaded guilty to evading customs duties on clothing it imported, agreeing to a civil settlement with the U.S. under which it will pay $2.05 million to the U.S. in restitution, the U.S. Attorney's Office for the District of New Jersey announced. A $250,000 criminal fine also was levied. Anyclo will pay the settlement, plus interest, over 15 months to resolve potential charges under the False Claims Act.