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Clothing Importer to Pay $13 Million Fine for Evading Customs Duties

Tuesday, July 19, 2016
Sandler, Travis & Rosenberg Trade Report

U.S. Immigration and Customs and Enforcement reports that a China-based apparel importing and manufacturing company has agreed to pay a fine of nearly $13.4 million after admitting to violating the False Claims Act and defrauding the U.S. government of millions of dollars in customs duties. An ICE press release states that for approximately four years the company conspired with clothing wholesalers to use a double invoicing scheme in which false representations about the value of imported goods were included in entry documents filed with U.S. Customs and Border Protection. Specifically, the company admitted to:

- repeatedly preparing and presenting to the government commercial invoices for imported apparel that reported less than the total value of the goods imported;

- repeatedly representing to the government that its documentation contained, to the best of its knowledge, correct and true information such as prices, values and quantities;

- repeatedly receiving from apparel wholesalers an amount in excess of that recorded on the commercial invoices; and

- repeatedly failing to disclose to the government the separate invoices reflecting the true value of the apparel and instead reporting only the lesser amounts listed in the commercial invoices, which the government then used to assess customs duties.

The press release notes that the allegations of fraud were first brought to the attention of federal law enforcement by a whistleblower who filed a lawsuit under the FCA.

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