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False Claims Act: Cautionary tales when customs declarations are falsified

False Claims Act violations

An announcement this week from the U.S. Justice Department again serves as a warning to U.S. companies of potential liability when they or their business partners or suppliers falsify customs declarations.

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The Justice Department release (January 2018) states that a U.S. company agreed to pay $10.5 million to resolve allegations that it violated the False Claims Act by knowingly making false statements on customs declarations to avoid paying antidumping duties on wooden bedroom furniture imported from China. Imports of wooden bedroom furniture from China were subject to a 216% antidumping duty, whereas non-bedroom furniture imports were not subject to an antidumping duty.

The proceedings were initiated under the “whistleblower provisions” of the False Claim Act—that is, the measures that permit private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery.

False statements made by supplier

Compare the facts in the recent case to those of a U.S. wholesaler of garments that, in October 2017, agreed to pay $1 million to resolve alleged violations of the False Claims Act with respect to false statements made by its business partner concerning imported garments from China. 

An October 2017 release indicates that the U.S. company “repeatedly ignored warning signs that its business partner, which imported garments from China, was engaged in a scheme to underpay customs duties owed on the imported garments that it sold to [the U.S. company].” 

The U.S. company admitted and accepted responsibility “for failing to act in response to indications of fraudulent conduct….” Read TaxNewsFlash-Trade & Customs

 

For more information, contact a professional with KPMG’s Trade & Customs practice:

Douglas Zuvich | +1 (312) 665-1022 | dzuvich@kpmg.com

Andrew Siciliano | +1 (631) 425-6057 | asiciliano@kpmg.com

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