Customs Violations Whistleblowers

Importers, exporters, and customs brokers risk False Claims Act liability when they  knowingly cheat U.S. Customs by underpaying or avoiding paying customs or tariffs.

In addition, FCA liability can be triggered by knowingly making false statements concerning: tariff classifications, the value of merchandise, country of origin, free-trade eligibility, or the applicability of anti-dumping duties and countervailing duties.

Case Examples

A number of successful False Claims Act cases have been brought in this area. By way of example:

In 2014, Otterbox, which sells protective cases for smartphones and tablets, agreed to pay $4.3 million to settle whistleblower claims that the company violated the False Claims Act by knowingly underpaying customs duties on cellphone cases manufactured in China. The whistleblower in this case was a former company employee, who had worked as Otterbox’s supply chain director. She received $830,000 as her share of the settlement. Read more

Also in 2014, clothing importers Dana Kay and Danny & Nicole agreed to pay $10 million to settle whistleblower claims that they violated the False Claims Act by knowingly underreporting the value of clothing they imported, to avoid paying customs duties. The whistleblower in this case was a former garment cutter for Dana Kay. He will receive $2.3 million as his share of the settlement. Read more

In 2012, CMAI Industries agreed to pay $6.3 million to settle whistleblower claims that the company violated the False Claims Act by knowingly misclassifying auto parts made in China and imported into the United States, in order to evade $2.5 million in customs duties. The whistleblower in this case was a former sales account manager for CMAI. He received $1.2 million as his share of the settlement.

Also in 2012, Toyo Ink SC Holdings Co. Ltd. agreed to pay $45 million to settle whistleblower claims that the company violated the False Claims Act by knowingly misrepresenting, or causing to be misrepresented, the country of origin on documents presented to U.S. Customs and Border Protection to avoid paying duties, particularly antidumping and countervailing duties on imports of a violet pigment. The whistleblower in this case was the president of a domestic producer of the pigment. He received more than $7.8 million as his share of the settlement. Read more

If you have knowledge and solid evidence of customs fraud, please contact our Chicago whistleblower attorneys. Consultations are free and confidential.