Customs Fraud

February 7, 2023

Samsung C&T America, Inc., a U.S. subsidiary of the Korean conglomerate Samsung C&T Corporation, has agreed to pay $1 million after admitting that it deliberately misclassified and underpaid customs duties on imported footwear by inaccurately stating their materials and construction.  The violations of the False Claims Act occurred between 2016 and 2018, and involved footwear imported from China and Vietnam.  USAO SDNY

January 31, 2023

New York-based High Life LLC, which designs and imports apparel, has agreed to pay $1.3 million after admitting that it underreported the value of 67 shipments into the United States to avoid paying customs duties.  After multiple shipments were detained for possibly fraudulent declared values, High Life switched from purchasing apparel on Landed Duty Paid (LDP) to Free on Board (FOB), which allowed it to use the price its vendors paid to manufacturers as the value of the shipment, rather than what High Life paid the vendors.  However, because there were other restrictions on declaring value, High Life developed a formula to calculate what it wanted the declared value to be, then instructed vendors to use it.  USAO SDNY

January 30, 2023

International Vitamins Corporation (IVC), which imports and sells vitamins and supplements from China, has agreed to pay $22.8 million to settle claims of defrauding the United States.  The U.S.-based company allegedly avoided U.S. customs duties by misclassifying over 30 of its products, then failed to pay back duties owed after realizing it had underpaid millions of dollars.  The alleged fraud occurred between 2015 and 2019, and only came to scrutiny through a whistleblower’s lawsuit.  USAO SDNY

August 11, 2022

Menswear company Luchiano Visconti Loutie LLC d/b/a Luchiano Visconti and its manager Sasha Hourizadeh will pay $3.64 million for violating the False Claims Act by underreporting the value of imported apparel, resulting in over $1.8 million in evaded customs duties. Visconti and Hourizadeh regularly provided falsified invoices to customs brokers that significantly understated the true value of the imported menswear. In some instances, a complicit foreign manufacturer would provide Visconti two sets of invoices—one reflecting itemized pricing details at a reduction, and the second reflecting “services” provided which, when combined, reflected the actual value of the goods. A related whistleblower suit was filed prior to the Government joining the matter. USAO SDNY

August 11, 2022

Industrial battery maker Eos Energy Storage LLC will pay $1.02 million, after a whistleblower filed suit alleging violations of the False Claims Act. From mid-2018 to mid-2019, Eos failed to declare the value of certain components shipped overseas to be assembled and then imported back into the United States. Eos also failed to declare transportation and packing costs on more than 60 occasions, which Eos further acknowledged was their responsibility as importer of record. The whistleblower will receive 20% of the settlement amount. USAO NJ

April 11, 2022

Six California-based companies that conspired with a Chinese billionaire to defraud U.S. Customs and Border Protection and investors worldwide have been ordered to pay $1.83 billion in restitution.  A federal jury found that Perfectus Aluminum Inc., Perfectus Aluminum Acquisitions LLC, Scuderia Development LLC, 1001 Doubleday LLC, Von Karman – Main Street LLC, and 10681 Production Avenue LLC skirted the U.S.’s anti-dumping and countervailing duties (AD/CVD) on certain types of extruded aluminum imported from China by disguising them as functional pallets.  USAO CDCA

July 28, 2021

Clothing companies Stargate Apparel, Inc. (now known as Excel Apparel Corp.), Rivstar Apparel, Inc. (now defunct), and former CEO and owner Joseph Bailey have agreed to pay a total of $6 million to settle a whistleblower’s allegations that they submitted false claims to U.S. Customs and Border Protection (CBP).  Between 2004 and 2015, Stargate, Rivstar, and Bailey allegedly engaged in two different fraud schemes to avoid paying millions of dollars in customs duties.  Both of the schemes involved submitting separate invoices to the CBP, which underreported the true value of goods being imported into the United States.  USAO SDNY