Whistleblower Lawyer Comments on Surge in Customs Fraud Cases

Share Article

Whistleblower lawyer from the national qui tam law firm Levy Phillips & Konigsberg LLP comments on a recent surge in the number of customs fraud cases brought under the Federal False Claims Act.

Whistleblower lawyer Theresa A. Vitello from the national qui tam law firm Levy Phillips & Konigsberg LLP (“LPK”) has commented on a recent surge in the number of customs fraud cases filed under the Federal False Claims Act and urged whistleblowers to report customs fraud, which, as she explained, includes illegal conduct such as mislabeling products to conceal their true country of origin, removal of required labeling prior to delivery of products out of the country, undervaluing products to avoid paying import duties and other forms of tariff evasion.

“Your business competitor may be cheating customs and beating you out on important contracts and business deals, but what can you do about it?” said Vitello. “Filing a claim under the False Claims Act could not only stop your cheating competitor from getting business unfairly, but also put a handsome bounty in your pocket for reporting him to the federal government.”

According to the U.S. Department of justice*, late last year, Toyo Ink SC Holdings Co. Ltd. (“Toyo”), a large Japanese manufacturer of printing inks with affiliates in New Jersey and Illinois, agreed to pay $45 million to settle claims of tariff evasion brought under the False Claims Act. The lawsuit alleged that Toyo was deliberating evading paying required duties on imports by knowingly misrepresenting the country of origin for a particular colorant product. As per the DOJ, while Toyo represented the country of origin for the colorant to be Japan and Mexico, the colorant was actually imported from China and India and undergoing a superficial finishing process in Japan and Mexico.

The government’s complaint alleged that Toyo was engaged in this conduct in order to avoid paying “antidumping” and “countervailing” duties on the colorant. According to the Department of Justice, “The Department of Commerce assesses antidumping and countervailing duties to protect United States businesses by offsetting unfair foreign pricing and government subsidies. The duties are collected by U.S. Customs, which is an agency of the Department of Homeland Security. Import duties may vary depending on a product’s country of origin, which is identified by determining the last country in which the product underwent a substantial transformation.”

The whistleblower lawyer from LPK explained that the U.S. government became involved in the case against Toyo after a whistleblower filed the case under the qui tam provisions of the False Claims Act. In this case, the whistleblower was the President of the company that manufactured the colorant, not a Toyo insider.

Also in 2012, the government settled a $6.3 million case under the False Claims Act brought by a former sales account manager for a Chinese-owned logistics and warehousing company, CMAI**. CMAI imports automotive parts, which are distributed to Ford, General Motors and Chrysler. CMAI paid $6.3 million to resolve charges that the company evaded customs duties on the imported automotive parts.

In 2011, a Hong-Kong based jewelry manufacturer with New York affiliates, Noble Jewelry Ltd., paid the U.S. government $3.85 million to resolve charges that it was submitting false invoices on shipments and underreporting the value of the items shipped***. The allegations were first brought to the government’s attention in a complaint filed by a whistleblower under the False Claims Act.

Whistleblower lawyer Theresa Vitello explained that the False Claims Act seeks to recover government funds wrongfully paid out to individuals, companies or agencies that submitted false claims or who made false certifications in bills, contracts or other government documents, and can also be used, as it has in the customs fraud cases described earlier, to recover government funds that should have, but were not remitted to the federal government.

“Successful whistleblowers, known as ‘relators’ in False Claims Act cases, may earn anywhere from 15% to 30% of the government’s recovery,” said Vitello. “The share of the recovery received by a particular relator depends on a number of factors, including the amount and quality of the evidence he or she possesses, the overall value it adds to the case and whether the government elects to intervene in the case. The government may also impose fines for violations of the False Claims Act at a rate of $5,500-11,000 per false claim or violation.”

The whistleblower lawyers at Levy Phillips & Konigsberg LLP have the knowledge, experience, and passion to fight fraud against the government, while ensuring that the whistleblower’s rights are protected. LPK’s qui tam attorneys have a proven track record with recoveries that exceed $70 million.

LPK handles False Claims Act cases nationwide and has offices throughout the U.S., including New York City, Upstate New York, New Jersey, and Georgia. The firm handles all of its whistleblower cases on a contingency fee basis.

Individuals with evidence of customs fraud or any type of fraud against the government can contact LPK for a free consultation via a 24/7 hotline at 212-605-6200 or toll free at 1.888.FRAUD.USA (1.888.372.8387), or by submitting an email inquiry at http://www.fraudusa.com.

  • justice.gov/opa/pr/2012/December/12-civ-1504.html

** justice.gov/usao/mie/news/2012/2012_6_7_cmaiindustries.html
*** justice.gov/usao/nys/pressreleases/August11/noblejewelrysettlementpr.pdf

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Theresa A. Vitello
Follow us on
Visit website