Customs Fraud

WHISTLEBLOWERS CAN FIGHT CUSTOMS FRAUD BY FILING A QUI TAM CLAIM AGAINST THEIR EMPLOYER OR BUSINESS COMPETITOR UNDER THE FALSE CLAIMS ACT AND EARN FROM 15% TO 30% OF THE GOVERNMENT’S RECOVERY.

Your business competitor may be cheating customs and beating you out on important contracts and business deals, but what can you do about it?

Filing a claim under the False Claims Act could not only stop your cheating competitor from getting business unfairly, but also put a handsome bounty in your pocket for reporting him to the federal government.

There has been a recent surge in customs fraud cases filed under the False Claims Act. Customs fraud includes illegal conduct such as mislabeling products to conceal their true country of origin, removal of required labeling prior to delivery of products out of the country, undervaluing products to avoid paying import duties and other forms of tariff evasion.

Late last year, Toyo Ink SC Holdings Co. Ltd. (“Toyo”), a large Japanese manufacturer of printing inks with affiliates in New Jersey and Illinois, agreed to pay $45 million to settle claims of tariff evasion brought under the False Claims Act. The suit alleged that Toyo was deliberating evading paying required duties on imports by knowingly misrepresenting the country of origin for a particular colorant product. While Toyo represented the country of origin for the colorant to be Japan and Mexico, the colorant was actually imported from China and India and undergoing a superficial finishing process in Japan and Mexico.

The government’s complaint alleged that Toyo was engaged in this conduct in order to avoid paying “antidumping” and “countervailing” duties on the colorant. According to the Department of Justice: “The Department of Commerce assesses antidumping and countervailing duties to protect United States businesses by offsetting unfair foreign pricing and government subsidies. The duties are collected by U.S. Customs, which is an agency of the Department of Homeland Security. Import duties may vary depending on a product’s country of origin, which is identified by determining the last country in which the product underwent a substantial transformation.”.

The U.S. government became involved in the case against Toyo after a whistleblower filed the case under the qui tam provisions of the False Claims Act. In this case, the whistleblower was the President of the company that manufactured the colorant, not a Toyo insider.

Also in 2012, the government settled a $6.3 million case under the False Claims Act brought by a former sales account manager for a Chinese-owned logistics and warehousing company, CMAI. CMAI imports automotive parts which are distributed to Ford, General Motors and Chrysler. CMAI paid $6.3 million to resolve charges that the company evaded customs duties on the imported automotive parts.

In 2011, a Hong-Kong based jewelry manufacturer with New York affiliates, Noble Jewelry Ltd., paid the U.S. government $3.85 million to resolve charges that it was submitting false invoices on shipments and underreporting the value of the items shipped. The allegations were first brought to the government’s attention in a complaint filed by a whistleblower under the False Claims Act.

The False Claims Act seeks to recover government funds wrongfully paid out to individuals, companies or agencies that submitted false claims or who made false certifications in bills, contracts or other government documents. The False Claims Act can also be used, as it has in the customs fraud cases described above, to recover government funds that should have, but were not remitted to the federal government.

Successful whistleblowers, known as “relators” in False Claims Act cases, may earn anywhere from 15% to 30% of the government’s recovery. The share of the recovery received by a particular relator depends on a number of factors, including the amount and quality of the evidence he or she possesses, the overall value it adds to the case and whether the government elects to intervene in the case. The government may also impose fines for violations of the False Claims Act at a rate of $5,500-11,000 per false claim or violation.

The whistleblower lawyers at Levy Konigsberg LLP have the knowledge, experience, and passion to fight fraud against the government, while ensuring that your rights are protected. Our lawyers have a proven track record with recoveries that exceed $70 million.

Our law firm handles cases nationwide and has offices throughout the U.S., New York, New Jersey, California, Georgia, Washington, and Maryland. We handle all of our whistleblower cases on a contingency fee basis.

If you believe you have evidence of customs fraud or any type of fraud against the government, contact us for a free consultation at our 24/7 hotline at (800) 315-3806, or by submitting an email inquiry through our website.

IMPORTANT: If you believe you have evidence of fraud against the government, securities fraud, commodities fraud or IRS or New York State tax fraud, contact us for a free, confidential consultation by calling our 24/7 toll-free hotline at (800) 315-3806, or by submitting an email inquiry.

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