Xing Wei received $170,000 for her role as a whistleblower in a customs duty evasion case settled between the Justice Department and a garment wholesaler in 2017 (see 1710030048), Wei's lawyer Timothy McInnis said in a news release. Notations, the wholesaler, admitted to failing to prevent the obvious customs fraud committed by importer, Yingshun Garments (see 1609280038), as part of the settlement. McInnis said the settlement is significant for two reasons. “First, the government pursued duties fraud claims against a US-based 'downstream' commercial purchaser and re-seller, not just the foreign manufacturer and importers,” he said. “And, second, the whistleblower received an award for opening the door to the investigation and later helping uncover Notations' role even though her qui tam complaint did not name Notations specifically.” Asked why it took so long after the 2017 settlement for Wei to receive her portion, McInnis said by email that “there is no specific reason for the delay” and that some things “just take time.”
An Italian textile manufacturer and its U.S. subsidiary will pay $650,000 to settle allegations in a False Claims Act whistleblower lawsuit that it artificially used “sham intermediary ‘sales’” to underpay duties, the U.S. Attorney’s Office for the Southern District of New York said in a Sept. 12 press release. Miroglio Textile declared on customs documentation that it sold fabric to Miroglio USA at arbitrarily discounted prices, when it was actually selling it directly to consumers at higher prices than it declared.
A California federal court on June 10 declined to hand victory to a whistleblower suing his former employer for allegedly undervaluing imports of herbal supplements to evade payment of customs duties. Travis Kiro, a former account manager for Jiaherb, did not prove that Jiaherb knowingly mislabeled its shipments to pay lower duties to CBP, the Central California U.S. District Court said in the decision.
Joseph Bailey, CEO of children's clothing companies Stargate Apparel and Rivstar Apparel, is facing criminal charges over allegedly falsifying documents that were given to CBP upon import, the U.S. Attorney’s Office of the Southern District of New York said in a June 6 news release. Bailey is said to have submitted "invoices to CBP that falsely understated the true value of the goods his company imported," the Justice Department said. In addition to the criminal charges, Bailey and the companies face a civil lawsuit, DOJ said.
A chemical importer will not face penalties under the False Claims Act for an alleged antidumping duty evasion scheme, after a jury found in its favor in a trial at the Central California U.S. District Court. Unichem Enterprises and its owner, Tony Hang, were not proven to have violated the False Claims Act in a case brought by a whistleblower, David Ji, who based it on manifest data, the jury said. According to court documents, Ji had said Unichem imported glycine that its Chinese supplier helped it mislabel as glucosamine, which is not subject to AD/CV duties. Unichem and Hang had contended that Ji lacked enough evidence to prove his claims, and was pursuing the case “to put a competitor and former employee out of business.”
The Department of Justice and Selective Marketplace agreed to a settlement over allegations of illegal use of de minims exemptions, the DOJ said in a May 13 news release. The DOJ agreed to join the lawsuit in U.S. District Court for the District of Maine in March (see 1904190006) as part of a qui tam whistleblower suit. The company, which is based in England, will pay a total of $610,000 to resolve the suit, the DOJ said.
A pipe importer will pay $600,000 to settle a False Claims Act suit over its failure to pay marking duties, according to lawyers in the case. Victaulic had been accused by Customs Fraud Investigations LLC of failing to mark pipe fittings it imported from China and Poland and then failing to pay the 10 percent marking duty to CBP (see 14091119).
The Department of Justice on May 7 released a guidance document for its lawyers on the mitigation of penalties in False Claims Act cases. Under the new policy, “cooperation credit” in False Claims Act cases can be earned “by voluntarily disclosing misconduct unknown to the government, cooperating in an ongoing investigation, or undertaking remedial measures in response to a violation,” DOJ said in a press release. That applies even where the government has already launched an investigation if the misconduct being disclosed is not part of the government investigation’s scope, it said. DOJ will also take into account corrective action by companies, such as “undertaking a thorough analysis of the root cause of the misconduct, appropriately disciplining or replacing those responsible for the misconduct, accepting responsibility for the violation and implementing or improving compliance programs to prevent a recurrence,” it said. Cooperation credit will usually take the form of a reduction in the damages multiplier and civil penalties, DOJ said. There has been a general uptick in False Claims Act whistleblower cases related to customs violations in recent years (see 1806140044).
The Department of Justice recently agreed to intervene in a qui tam whistleblower lawsuit against Selective Marketplace Ltd. and the company's alleged use of de minimis exemptions for the expressed reason of avoiding customs duties, the DOJ said in a March 27 filing. The filing was in U.S. District Court for the District of Maine because "a substantial part of the events or omissions giving rise to the claims occurred in this District," the DOJ said. Selective, which is based in England, mostly sells premium womenswear under the Wrap London and Poetry brands, the DOJ said.
Byer California, a women's apparel wholesaler, reached a settlement agreement with the Justice Department over the company's alleged involvement in an undervaluation scheme, the U.S. Attorney’s Office for the Southern District of New York (USAO) said in a March 27 news release. Byer is said to have allowed one of its importers, Queen Apparel NY, to continue to use falsified customs forms despite being aware of the discrepancies, the Department of Justice said. The USAO said it also filed a civil fraud suit last month against Queen. Both cases stem from a whistleblower complaint that previously resulted in a major settlement (see 1607140056).