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Duty Evasion Scheme Nets $908,100 Penalty

Friday, February 16, 2018
Sandler, Travis & Rosenberg Trade Report

A luxury knitwear retailer and its chief executive officer will pay a total of $908,100 to resolve allegations that they violated the False Claims Act by structuring transactions to improperly avoid U.S. customs duties, the Department of Justice reports.  

Under U.S. law, a person can import up to a set value of goods free of duty and tax per day. That amount was $200 at the time of the alleged violations but was increased to $800 as of February 2016 by the Trade Facilitation and Trade Enforcement Act. According to a DOJ press release, the company and its CEO allegedly took advantage of this provision by breaking up single shipments worth more than the de minimis amount into multiple shipments of lesser value to avoid applicable duties. 

This False Claims Act case was originally filed by a UK citizen under the Act’s whistleblower provisions, which allow private individuals who have knowledge of fraud committed against the U.S. government to file lawsuits on the government’s behalf. The government may recover up to three times the amount of damages incurred as well as civil penalties for each violation. The government may also intervene and file its own lawsuit for damages and penalties, as it did in this case.

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