Redi-Bag Pays $7.3M in Latest Whistleblower-Originated Customs Fraud Case

By the Constantine Cannon Whistleblower Team

Last Wednesday (July 15), the Department of Justice (DOJ) announced that Redi-Bag USA and its CEO, Jeffrey Rabiea, agreed to pay $7.3 million to settle allegations they violated the False Claims Act by engaging in customs fraud.[1]  Specifically, DOJ claimed the New York-based supplier of custom bags, liners, and packaging misrepresented to Customs and Border Protection (CBP) the country of origin of its imported polyethylene retail carrier bags (PRCBs) to evade the antidumping duties it was required to pay.

The settlement is just the latest in a string of False Claims Act settlements involving customs fraud.  Two of them were record recoveries for the Government.  In May, California-based Perfectus Aluminum agreed to pay $549.5 million to settle False Claims Act charges of evading customs duties on aluminum extrusions imported from China.  It was the largest customs fraud settlement ever.  And in December, Ceratizit USA agreed to pay $54.4 million to settle similar allegations, what had been the largest such settlement before Perfectus.

What Was Redi-Bag’s Alleged Customs Fraud?

An importer of goods into the United States must declare to CBP the country of origin of the goods, their value, the customs duties they are subject to, and the amount of customs duties the importer owes.  Antidumping duties are among the customs duties importers of certain products must pay.  They are designed to protect U.S. companies from foreign companies “dumping” products on U.S. markets at below-cost prices.  During the relevant period, PRCBs from China were subject to these duties.

According to the Government, Redi-Bag and Mr. Rabiea misrepresented the country of origin of the PRCBs they imported and supplied to customers across the United States.  While the bags were manufactured in China and merely transshipped through Hong Kong, Redi-Bag identified Hong Kong as the country of origin allegedly to evade the antidumping duties it would have owed, which apparently would have been upwards of 70% or more.

The Government further alleged that Redi-Bag and Mr. Rabiea took affirmative steps to conceal the true country of origin — even from the company’s customs broker — by directing employees to cover up “Made in China” markings, directing the manufacturer to remove “Made in China” markings, and cancelling orders they learned would be inspected by customs authorities.

Is DOJ Still Treating Customs Fraud As False Claims Act Enforcement Priority?

In announcing the settlement, the Government reinforced its commitment to going after customs fraud as a top enforcement priority.

DOJ Civil Chief Brett Shumate stressed that “companies that benefit from access to U.S. markets must follow U.S. law, including by paying import duties that protect American manufacturers and workers from unfair foreign competition.”  And CBP Commissioner Rodney Scott echoed this sentiment by underscoring how the agency is “holding those who attempt to evade customs duties accountable, and will continue working “to safeguard fair trade and support lawful commerce.”

This commitment is further reflected in the record Perfectus and Ceratizit settlements and the many other customs fraud settlements over the past year — Royal Canadian Steel (May 2025); Harman International (November 2025); Allied Stone (August 2025); Global Plastics and Marco Polo International (July 2025); Grosfillex (July 2025); Evolutions Flooring (March 2025).

This commitment is likewise reflected in (i) DOJ’s launch last August of a Customs Fraud Task Force, and (ii) DOJ’s expansion in May 2025 of its Corporate Whistleblower Awards Pilot Program to specifically target customs fraud.  Indeed, in its press release on the most recent settlement, DOJ specifically pointed to the Task Force as the Government’s latest tool “to aggressively pursue enforcement actions against any parties who seek to evade tariffs and other duties.”

What Role Do Whistleblowers Play in Reporting Customs Fraud?

In the recent press release, DOJ likewise put out a call to whistleblowers, encouraging them to report customs fraud through the Whistleblower Pilot Program and the qui tam provisions of the False Claims Act.  The qui tam provisions allow whistleblowers to bring lawsuits on behalf of the Government against companies defrauding the Government, such as through customs duties.  Successful whistleblowers can receive up to 30% of the Government’s recovery.

Whistleblowers have originated the majority of customs fraud cases, including the one against Redi-Bag.  The whistleblower was John Maierhoffer, a former Redi-Bag sales representative.  He will receive a whistleblower award of roughly $1.3 million from the proceeds of the Government’s recovery.  Whistleblowers also originated the Perfectus, Ceratizit, Royal Canadian Steel, Harman, Allied Stone, Grosfillex, and Evolutions Flooring matters under the qui tam provisions of the False Claims Act.

Constantine Cannon whistleblower lawyer Dan Noel, who represents numerous customs fraud whistleblowers, noted the critical role whistleblowers play in reporting customs fraud.  According to Noel, “these schemes can be very difficult to detect without insiders who understand the fraud.”  He looks to his own matters as proof.  “In each of them,” Noel says, “CBP had no easy way to discover the fraud before our clients came forward with specific evidence of how companies were concealing the true origin, makeup, or value of their imports.”

Constantine Cannon Has Substantial Experience Representing Customs Fraud Whistleblowers Under the False Claims Act

Constantine Cannon has substantial experience representing customs fraud whistleblowers under the False Claims Act.  In one of our more notable cases, the firm represented a whistleblower alleging an auto parts distributor misclassified brake pads imported from Asia to avoid millions of dollars of customs duties.  The company settled that matter for $8 million with our client receiving 18.5% of the Government’s recovery.

If you would like to learn more about our other whistleblower successes, customs fraud, the False Claims Act, or what it means to be a whistleblower more broadly, please do not hesitate to contact us.  We will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consultation.

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[1]  See https://www.justice.gov/opa/pr/redi-bag-usa-and-ceo-agree-pay-73m-settle-false-claims-act-allegations-relating-evaded.

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