Jeffrey A. Newman
Customs and tariff fraud relating to U.S. tariff laws and products imported to the United States generally involves transshipment by routing a shipment through a third country to disguise its origin. Once there the country of origin is changed from China to the new country, Mexico, Vietnam, Thailand or others. It also can involve faklsifying the shipments dclared value, falsely describing the merchandise, splitting the shipments into multiple shipments reducing costs. These comon frauds add up. In 2022 the federal government assessed $111 billion in customs duties. In 2021, 79,000 unpaid customs duty bills totaling $5.4 billion were incurred from 1993 to 2020. Given the sheer volume of goods imported from China it is extremely difficult for the Government to check on the products. The government relies on whistleblowers and the False Claims act to deter these actions.
In March, the DOJ announced a settlement with Evolutions Flooring Inc. and its owners, paying $8.1 million to resolve allegations that they violated the FCA by evading customs duties on imports of multilayered wood flooring from China. The United States had alleged that Evolutions, at the direction of its owners, submitted false information to CBP regarding the identity of manufacturers and the country of origin. See DOJ press release announcing $8.1 million settlement with flooring importer.
In January 2023, International Vitamins Corporation agreed to pay $22.8 million to resolve allegations that it “misclassified more than 30 of its products” imported from China to improperly claim duty-free treatment. Even after internal consultants confirmed the misclassifications, IVC allegedly “persisted in using its incorrect classifications” and “made no effort to pay back the duties” owed. See DOJ press release announcing $22.8 million settlement with vitamin importer.
Japan-based printing ink manufacturer Toyo Ink SC Holdings paid $45 million to settle a qui tam case and government charges that it violated the False Claims Act by failing to pay anti-dumping and countervailing duties on a specific imported violet pigment. The whistleblower received nearly $8 million as a reward.
Industrial gas and engineering company Linde GmbH and it’s North American subsidiary agreed to a $22.28 million settlement of a whistleblower lawsuit, filed by Phillips & Cohen LLP, that alleged the multinational company evaded paying tariffs and the full amount for duties and AD/CV duties on materials it bought and imported to build chemical and natural gas plants.
University Furnishings LP and its general partner Freedom Furniture Group allegedly misclassified wooden bedroom furniture imported from China to avoid paying customs duties.
According to DOJ’s complaint, University Furnishings imported wooden furniture for sale in the student housing market for dormitory bedrooms but mislabeled the furniture as office furniture or other non-bedroom-related furniture.
University Furnishings paid $15 million to settle the lawsuit. A whistleblower who exposed the alleged customs fraud received a reward of $2.25 million.
Jeffrey Newman is a whistleblower lawyer representing doctors and nurses who have become whistleblowers reporting Medicare and Medicaid fraud. He also represents whistleblowers in tax evasion cases and tariff fraud cases. Jeff frequently writes on events affecting world social developments. He can be reached at Jeff@JeffNewmanLaw.com or at 978-880-4758
