Background

A U.S. clothing importer will pay a total of $118 million after agreeing to plead guilty to undervaluing imported garments and failing to report cash transactions, a Department of Justice press release reports. This amount includes $18.4 million in payments to U.S. Customs and Border Protection, which includes the unpaid tariffs and accrued interest.

According to the DOJ, the company imported clothing from Asian countries and submitted fraudulent invoices to CBP that undervalued the shipments and allowed the company to avoid paying the full amount of duties owed. At the owner’s direction, the Asian manufacturers prepared two invoices for the clothing, one that usually reflected 60 to 70 percent of the actual price and was paid by letter of credit (and was used by CBP to calculate the duties due), and one that reflected the balance of the actual price and was paid by wire transfer. DOJ states that over the course of about four years the company undervalued imports by about $82.6 million and failed to pay more than $17.1 million in tariffs.

The company also admitted that it failed to file required reports documenting cash transactions of more than $10,000. Company employees received approximately 364 such payments over a two-year period but the company documented them in a second set of books that was not reported to its outside accountants. As a result, the company now owes the Internal Revenue Service more than $16.8 million in unpaid taxes, penalties, and interest.

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