Customs import duties evasion is rampant and ripe for whistleblowers

 

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President Trump signed an executive order for CBP to ramp up efforts to combat customs law violations, especially anti-dumping and other schemes to evade out trade tariffs.   The Customs and Border Protection Agency (CBP) which enforces US customs and trade laws is in line to receive an increase of $300 million to recruit and hire new personnel.  Where these schemes to evade import duties are engaged through fraud, for example by misrepresenting the goods country of origin, individuals with specific information can, through counsel, file a case on behalf of the United States under the False Claims Act (FCA). That is exactly what is happening. The FCA imposes penalties and the whistleblower may receive up to 30% of what the Government recovers for the violations. Over the past two years alone, scores of cases have been taken against companies trying to cheat on paying customs tariffs in various ways. Those cases were brought forward by whistleblowers.

One example is the University furnishings and Freedom Furniture Group Inc. which had to pay $15 million to settle an FCA law suit for making false statement to avoid paying duties on wooden bedroom furniture imported from China. University Furnishings sells furniture for student housing. The whistleblower in that case was another furniture company called University Loft Company, which received $2.25 million as its share of the settlement.

Another example is the Univar case in which the company evaded duties on artificial sweetener saccharin from China by transshipping it through Taiwan. It was re-bagged and Taiwan was falsely stated as the country of origin. In the end, several companies were revealed and the company sanctioned.

Sometimes, companies try to misrepresent the type of goods being imported in order to declare them under another duty classification. In the AmeriSource case, an importer was said to have evaded duties on small diameter graphite electrodes from China, misclassifying them as larger diameter electrodes. The larger ones did not have special import duties. The company paid $3 million to settle with the Government and the whistleblower, a competitor of the violator received 16% of the reward, $480,000.

Jeffrey Newman represents whistleblowers including those who report schemes to evade our Customs and Tariff laws.