Customs fraud whistleblowers

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.

Two importers each will pay seven-figure sums to settle False Claims Act lawsuits related to the undervaluation of their customs entries and underpayment of duties, DOJ said Aug. 11. Apparel importer Luchiano Visconti and its manager, Sasha Hourizadeh, will together pay $3.64 million to settle allegations they sent fraudulent invoices to their customs broker that understated the actual price paid. In a separate settlement, Eos Energy Storage will pay $1.02 million to resolve allegations that it failed to declare assists and other additions to transaction value.

The U.S. Court of Appeals for the 7th Circuit held in a June 16 opinion that window covering manufacturer Springs Window Fashions did not illegally fire customs broker Jennifer Lam-Quang-Vinh over her position that the company had to pay Section 301 China tariffs. Judges Diane Sykes, Michael Brennan and Michael Scudder said that the record evidence does not support Lam's position that she was fired in retaliation (Jennifer Lam-Quang-Vinh v. Springs Window Fashions, 7th Cir. #21-2665).

A recent Court of International Trade decision says domestic industry can’t use the interested party petition process to challenge individual entries, and are instead limited to challenges of how CBP treats the category of merchandise as a whole, customs lawyer Larry Richardson of Barnes Richardson said in a blog post April 4.

Two chainsaw chain and blade importers, TriLink Saw Chain and TriLink Global, agreed to pay $525,000 to settle allegations that the companies misclassified their imports, the U.S. Attorney's Office for the Northern District of Iowa said. The U.S. alleged that the importers purposely classified their chain saw chains and blades from September 2018 through June 2019 under the wrong Harmonized Tariff Schedule subheading to avoid paying Section 301 China tariffs -- a violation of the False Claims Act.

With too many small packages to inspect, and Instagram and other social media influencers promoting knockoffs, fashion brands are dealing with a challenging environment. But panelists on a Crowell & Moring webinar Oct. 26 called "The Year of the Knockoff" found some reason for hope.

Queen Apparel NY, and its sole owner, Hank Hyunho Choi, agreed to pay $50,000 and cease all future importing activities due to fraudulent underreporting of imports to evade customs duties, the U.S. Attorney's Office for the Southern District of New York said. Queen and Choi admitted to falsifying customs documents to skirt the import duties, leading to the settlement. The company made and imported garments for other companies that would then sell those garments through department stores and retail chains in the U.S., the U.S. Attorney's Office said. Choi managed the business. From 2009 to 2013, Choi and his company made the garments overseas, brought them to the U.S. and then repeatedly undervalued the shipments on customs forms to evade paying the proper amount of duties. This conduct was discovered via a whistleblower who filed a lawsuit under the False Claims Act, the U.S. Attorney's Office said. The case was settled, with the eventual agreement containing admissions from Queen and Choi about the nature of their business and conduct during the relevant time period.

George Iloulian, CEO of apparel company Delta Uniforms of New York, skimped on import duties by understating the true value of his company's imports, the U.S. Attorney's Office for the Southern District of New York said. Arrested on Sept. 23, Iloulian was then presented in Manhattan federal court where the civil fraud lawsuit was unsealed. Iloulian is accused of violating the False Claims Act by lying on entry documents submitted to CBP.

Stargate Apparel, Rivstar Apparel and their former owner and CEO, Joseph Bailey, settled a False Claims Act case with the U.S. Attorney's Office for the Southern District of New York over the companies' use of inaccurate invoices to underreport their clothing imports, the Department of Justice said July 28. Under the settlement, Bailey and the New York-headquartered companies admitted to engaging in the fraudulent schemes. Bailey will pay $3.2 million while the employee stock ownership plan that owns the two companies will pay a combined $2.8 million, DOJ said. Bailey and the companies led two “double invoicing” schemes 2004-2015, according to the complaint.

Steel parts importer Smith-Cooper International settled a False Claims Act allegation raised by Island Industries that the importer evaded antidumping duties, according to a March 29 filing in the U.S. District Court for the Central District of California. In 2017, Island accused SCI of failing to pay antidumping duties on its welded outlet imports from China while also alleging that SCI submitted false information to the U.S. relating to the applicability and amount of duties owed. The initial lawsuit also accused four companies and 11 individuals of violating the FCA due to duty evasion. In the joint motion to dismiss the case, the case was described as having been vigorously litigated. Now a confidential settlement between SCI and Island has been submitted and accepted by the court. Allied Rubber and Gasket Co. was dismissed from the case in August 2020 while litigation continued with the remaining parties.