We predicted the ramping up of customs enforcement given the current administration’s interest in goods imported from other countries, and foreign trade in general, as recent news has shown.
Interestingly, this scrutiny also extends to old allegations of customs fraud.
Case in point: The Department of Justice said last month that it would get involved in a whistleblower case filed nine years ago that had sat around under seal.
On April 18, the DOJ announced that it had filed a complaint against Barco Uniforms Inc. and other companies controlled by Kenny Chan and David Chan, alleging that they “knowingly and improperly” underpaid customs duties on the apparel they imported. This violates the False Claims Act, a longstanding law that prohibits fraud against the government.
Barco supplies uniforms made overseas, including in China, to restaurants, health care providers, and others.
Originally, a whistleblower — Toni Lee, former director of product commercialization at Barco Uniforms — filed the lawsuit under the qui tam provision of the False Claims Act. This provision allows an individual to bring suit on behalf of the government. Successful actions can result in whistleblower awards of up to 30 percent of recoveries. The law allows for the government to intervene and take over the case. Or for the whistleblower and the whistleblower’s lawyers to go forward even if the government does not intervene.
In this case, the DOJ moved to take over the case.
According to the allegations outlined in the complaint, the defendants undervalued their imported clothing in order to pay lower — or no — customs duties, even after an auditor warned them about the risks of underpaying duties. Sometimes, the DOJ alleged, they created two invoices, with a false one representing the understated values that they showed at customs. Other companies listed (and controlled by the same people) include Able Allied Ltd., Nathan Global Direct Inc., J&K Garment Inc., Mega Goodwill Ltd., JS Garment Co., and Superway Import & Export Inc.
Recent news reports show these kinds of violations continue to happen and are actually on the rise. Whistleblowers are going to play a critical role in curbing this fraud.
Keller Grover has a long history of helping whistleblowers expose wrongdoing. Our experienced customs fraud whistleblower attorneys can help answer questions, work with whistleblowers to develop prudent next steps, and help to submit stronger claims under the False Claims Act. Thorough submissions will have a better chance of success in encouraging government officials to investigate fraud and obtaining the largest possible whistleblower reward.
If you would like more information, or have a potential case, contact us for a free confidential consultation with a customs fraud whistleblower attorney.