Customs fraud whistleblowers with knowledge of false entires, misclassification, or a failure to pay duties, can report the fraud and earn a reward.
Our whistleblower attorneys have successfully represented clients in whistleblower matters across the United States. Our firm has offices in Atlanta GA, Alexandria VA, and Washington DC, and we frequently travel to other federal courts to help whistleblowers recover rewards.
The United States imports more than $2 trillion worth of goods into the country every year. For many of these goods, importers are required to pay hefty tariffs or duties. When importers avoid paying these duties, entire industries can be harmed, and in turn, the country’s economy suffers.
To combat this, the United States incentivizes individuals who are aware of Customs fraud to blow the whistle by filing lawsuits under the False Claims Act. The False Claims Act allows whistleblowers to earn significant awards for helping to expose Customs fraud.
Customs fraud occurs when a company evades paying duties on goods that are imported into the United States. For every shipment into the United States, importers are required to submit forms to the U.S. Customs and Border Protection explaining what the shipment contains and whether antidumping duties or countervailing duties are owed on the shipment (the most common is a Form 7501). If a company lies on these forms in order to evade payment of the duties, it has committed customs fraud.
Antidumping duties are imposed on imports that the Department of Commerce believes are priced below fair market value. In other words, this duty is put into place when a foreign manufacturer floods America’s marketplace with a cheap good. An antidumping duty is meant to create a more equal playing field so that American manufacturers and businesses can compete.
Countervailing duties are imposed on imports when foreign countries subsidize their manufacturers. These subsidies allow foreign manufacturers to undercut American businesses by selling their goods at a lower price. The purpose of countervailing duties is to offset these subsidies which can harm American businesses.
Antidumping duties and countervailing duties are put into place by the U.S. Department of Commerce to protect American manufacturers and businesses. Without these duties, American manufacturers and businesses would not be able to compete with manufacturers in other countries that can produce and sell the same or similar goods for much less.
Customs fraud can occur in a variety of ways. The following list explains the four most common forms of Customs fraud that we have seen.
If a whistleblower wants to file a False Claims Act lawsuit against a company committing Customs fraud, there are several steps that the whistleblower should take. We find the following steps are helpful in evaluating and preparing customs fraud cases.
Our firm has obtained more than $25 million in settlements from companies that misclassified goods on Customs forms. One of the settlements that our firm achieved was the largest False Claims Act settlement in the Southern District of Georgia.
One case concerned the importation of wooden bedroom furniture from China by Bassett Mirror Company, a North Carolina furniture importer and manufacturer. The U.S. Department of Commerce found that China was dumping cheap wooden bedroom furniture into the U.S. marketplace, and as a result, imposed stiff antidumping duties. Instead of paying the duties, Bassett began assigning non-bedroom names to furniture that was clearly bedroom furniture. For instance, dressers became “hall chests” and nightstands became “end tables.” By doing so, Bassett was able to evade paying antidumping duties until our client – a small furniture retailer – recognized why Bassett had changed the names and blew the whistle.
Not only were we able to hold Bassett accountable, but we were also able to hold two of Bassett’s retailers, Z Gallerie and Macy’s, accountable for knowing about Bassett’s deception and encouraging it. As a result of our firm’s efforts, our client received more than $4 million as a reward for blowing the whistle.
If you think you may have personal knowledge of an importer, freight-forwarder or customs broker committing fraud to avoid paying anti-dumping duties or other tariffs, contact our office now and speak with an experienced whistleblower attorney. There is no cost or obligation, and the call is completely confidential.
We have successfully represented clients in whistleblower claims and litigation in districts across the United States. Our firm has offices in Atlanta GA, Brunswick GA, Alexandria VA, and Washington DC, and we frequently travel to other cities and states to help whistleblowers file claims and recover rewards. Contact our firm and we will let you know if we can help.
There have been relatively few False Claims Act cases involving Customs fraud when compared to False Claims Act cases involving healthcare fraud, but this trend is changing. Last year, for example, we saw one of the largest Customs fraud settlements to date. In September 2020, the Department of Justice announced that Linde GmbH and its U.S. subsidiary had agreed to pay $22.2 million for misrepresenting the classification and valuation of imported materials used in the construction of natural gas plants. The whistleblower was awarded $3.7 million.
The Linde settlement also came on the heels of an $8 million settlement against Centric Parts. Centric Parts, which sold aftermarket brake components for vehicles, falsely claimed on Customs forms that imported mounted brake pads (which carried a duty) were unmounted brake pads (which carry no duty). In that case, the Department of Justice paid out nearly $1.5 million to two whistleblowers.
We expect to see the number of Customs fraud cases grow in the coming years as companies become more savvy on how to evade duties (and as individuals become more aware of their right to file whistleblower lawsuits against these companies). This is especially true with regard to misrepresenting the country of origin. One area to keep an eye on is the recent exemption of Mexico and Canada from steel and aluminum duties. It will be interesting to see how many importers are tempted to ship Chinese steel and aluminum through Mexico and Canada and then falsely claim on Customs forms that the products originated in Mexico or Canada.
Page Pate and his partner Jess Johnson are top notch! Both are brilliant attorneys with incredible integrity. Page represented me in a successful 5 year long Whistleblower False Claims Act Case. Despite his busy schedule and prestigious reputation as one of the best Federal Trial Lawyers in the US, Page was unbelievably polite, respectful and took the time to listen, explain the process in its entirety and answer any questions. Page saw the potential of my case where the others didn’t. He and Jess worked very long hours preparing the claim, researching, making phone calls and attending meetings with me to assist the DOJ. I am still thanking God every day for Page Pate and Jess Johnson and their belief in me and their ability to make a $25M case out of what other expert Qui Tam attorneys saw as impossible.