Background

The Department of Justice has filed a civil fraud lawsuit against a U.S. company that sold jewelry to retailers, as well as its former president, for falsely underreporting the value of jewelry imported from Hong Kong and Thailand and thereby avoiding applicable customs duties. According to the DOJ, the former president admitted to the alleged conduct and has agreed to pay $415,000 to resolve the claims against him.

The DOJ’s complaint asserts that from 2010 through 2017 the company caused false representations to be made on entry documents concerning the value of the jewelry and submitted invoices that did not reflect the true value. In many instances, upon receipt of a shipment of jewelry from Hong Kong or Thailand (which incorporated diamonds obtained from India-based companies owned, operated, and/or controlled by the former president’s family members), a company employee would handwrite on the manufacturer’s receipt the actual value of the diamonds contained in the imported goods so the company could track this information. The company then provided its customs broker with the versions of these invoices without the handwriting – and without the actual value of the diamonds – and the broker submitted those invoices to U.S. Customs and Border Protection.

The former president admitted that as a result of this scheme the company routinely and knowingly underpaid customs duties for the jewelry based on false entry documents.

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