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$80 Million Judgment for False Claims Under Agricultural Export Aid Program

Tuesday, July 29, 2014
Sandler, Travis & Rosenberg Trade Report

The Department of Justice announced July 24 an $80 million False Claims Act judgment against a global financial institution headquartered in Paris for submitting false claims for payment guarantees issued by the U.S. Department of Agriculture. The same institution was hit with nearly $9 billion in penalties earlier in the month for a multi-year scheme to violate U.S. economic sanctions.

According to a DOJ press release, the U.S. filed a lawsuit against the institution in connection with its receipt of payment guarantees provided under USDA’s Supplier Credit Guarantee Program to U.S.-based exporters for their sales of grain and other agricultural commodities to importers in foreign countries. DOJ alleged that from 1998 to 2005 the institution accepted SCG export credit guarantees for transactions between U.S. exporters and Mexican importers that it knew were affiliated and thus ineligible for program financing. In some cases, the underlying transactions were shams and did not involve any real shipment. Beginning in April 2005, when the Mexican importers began defaulting on their payment obligations, the institution submitted claims to the USDA for the resulting losses.

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