Consumer Fraud

Whistleblower Exposes Customs Fraud Involving Chinese Garment Importer

china 435x275 Whistleblower Exposes Customs Fraud Involving Chinese Garment ImporterA Pennsylvania garment wholesaler has agreed to pay the U.S. $1 million to settle allegations brought by a whistleblower that it violated the False Claims Act with a scheme to underpay U.S. customs duties on imported clothing.

Warminster, Pennsylvania-based Notations Inc. had a business partner that imported garments from China, the U.S. Immigration and Customs Enforcement (ICE) said. That partner engaged in a scheme to underpay customs duties owed on the garments it sold to Notations, ICE said.

Although Notations knew about this fraudulent practice, the company chose to ignore it, ICE said. The discounts the partner company provided were so deep that Notations aided in the scheme by choosing to overlook the obvious fraud, ICE said.

U.S officials alleged that the partner company, Yingshun Garments, Inc., an importer of women’s apparel manufactured in China, “presented false and fraudulent invoices to (U.S. Customs and Border Protection) showing prices for imported garments that were discounted by 75 percent or more, for the purpose of avoiding customs duties on the garments.”

These practices continued under owner Marie Rogers even after Yinshun became Import Global Designs Inc. and Olgrem LLC under the same owner, ICE said. Notations was the biggest customer of these companies.

In addition to ICE, the whistleblower’s allegations were investigated by Customs and Border Protection, Homeland Security Investigations, and the U.S. Department of Justice. The Justice Department chose to intervene in the whistleblower case last year, taking over most of the litigation.

“Evading the payment of customs duties to increase profit is not a victimless crime; it has a negative effect on the U.S. economy and law-abiding importers,” said Special Agent in Charge of HSI New York, Angel M. Melendez, adding that the federal agencies will continue to hunt down “these offenders and put an end to their fraudulent business practices.”

The whistleblower who brought the False Claims Act complaint will be awarded between $150,000 to $250,000 of the recovery. Claims against Yingshun, Import Global, Olgrem and Marie Rogers remain pending.