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Falsifying Country of Origin of Goods Sold to Federal Agencies Nets $2.3 Million Penalty

Thursday, August 21, 2014
Sandler, Travis & Rosenberg Trade Report

A New Jersey-based distributor and marketer of electronics has agreed to pay $2.3 million to resolve allegations that it violated the Trade Agreements Act of 1979 by causing the submission of false claims for products sold to federal agencies, the Department of Justice announced Aug. 19.

According to a DOJ press release, the company has authorized resellers who hold federal contracts requiring vendors to certify that all products they offer for sale comply with the TAA, which generally requires the U.S. to purchase products made in the U.S. or another designated country with which the U.S. has a trade agreement. However, the company was charged with knowingly representing to its resellers (which in turn represented to federal agencies) that specified products were made in TAA designated countries, generally Korea or Mexico, when in fact they were manufactured in China, which is not a TAA designated country.

DOJ notes that the allegations resolved by the settlement were originally brought in a lawsuit filed by a former employee of the company under the False Claims Act’s whistleblower provisions, which permit private parties to sue for false claims on behalf of the U.S. and to share in any recovery. 

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