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Customs and Tariffs Fraud

In recent years, cases alleging customs and tariff fraud have grown in number.  This is due both to the increased use of tariffs as a policy tool of the United States government, and also to increased knowledge among people working in the importing and logistics businesses about the availability of the False Claims Act as a tool they can use to help stop fraud and evasion.

Do you have information that a company has cheated on the dollar amount of customs duties it paid when importing goods into the United States? If so, you can alert the government to this fraud and earn a substantial monetary reward by bringing a qui tam lawsuit under the False Claims Act. Anyone with non-public information about fraudulent activity can file a customs fraud qui tam case. You might be someone working for the importing company who is now ready to blow the whistle. You might be a customs broker or logistics specialist who has been asked to participate in or otherwise learned about an illegal fraud scheme, such as trans-shipping to avoid AD/CVD tariffs. You might be an American manufacturing company that believes that a competitor is gaining an unfair advantage in your market by evading taxes on imported products that compete with yours.

Our law firm, Tycko & Zavareei LLP, is one of the leaders in this cutting-edge area of False Claims Act litigation. Our firm has represented clients—including both individuals and significant American manufacturers—in qui tam cases alleging various types of customs fraud. We understand how importing works, the tariff system’s intricacies, and carefully assembling a False Claims Act case designed to get results. Our firm’s partners, Jonathan Tycko and Anna Haac, were the lead attorneys in one of the most groundbreaking customs fraud court decisions in recent years, United States ex rel. Customs Fraud Investigations, LLC v. Victaulic Company. In this case, a U.S. Court of Appeals ruled for the first time that “marking duties”—a particular type of duty owed when an importer fails to mark imported goods with a truthful country-of-origin—are covered by the False Claims Act allowing qui tam lawsuits. Since that decision in 2016, our firm has handled many additional large customs fraud cases, representing both traditional internal whistleblowers and American manufacturers seeking to protect their markets from unscrupulous importers of foreign-made knock-off products.

Types of Customs & Tariffs Fraud

Some of the most common types of fraud involving customs and tariffs include the following:

  • Evasion of tariffs imposed under anti-dumping or countervailing duty orders (AD/CVD orders), either by trans-shipping the goods through third countries or by misclassifying the goods under the Harmonized Tariff Schedule (HTS) to make U.S. Customs and Border Protection (CBP) believe that the goods are outside the scope of the AD/CVD orders.
  • Evasion of Section 301 tariffs, again either through either trans-shipping or misclassification under the HTS.
  • Falsifying the value or quantity of imported goods, including the use of forged or altered invoices or other documents, leading to underpayment of duties.
  • Falsification of other information submitted to CBP on the Entry Summary, CBP Form 7501, leading to underpayment of duties.
  • Failing to properly mark imported goods with country-of-origin, either by failing to include any country-of-origin marks, marking using improper methods, or marking with the wrong country-of-origin.  Such failure to properly mark can lead to the imposition of “marking duties,” which a False Claims Act Qui Tam lawsuit can recover.

The False Claims Act is a Powerful Tool to Stop Customs Fraud

Why file a qui tam case under the False Claims Act, rather than report the suspected fraud to CBP through an e-allegation or other procedure?  This crucial strategic decision should be made only after consultation with an attorney who understands both options and each’s pros and cons.  A qui tam case under the False Claims Act, however, offers at least three powerful advantages:

  • The False Claims Act is the only way a private citizen or company can bring charges of customs fraud in federal court.  When you do this, the case is overseen by a federal judge, which offers some assurance that the process will move at a predictable pace and that the outcome will be fair and according to law.
  • When you file a qui tam case under the False Claims Act, you are dealing with CBP and the U.S. Department of Justice (DOJ).  Every qui tam case has at least one DOJ attorney assigned to it, and that attorney has independent resources at his or her disposal to help investigate the matter.  Also, the DOJ attorney assigned to the case becomes a point of contact who will talk to you about the case and with whom you can share information confidentially.  Therefore, the qui tam process is much more transparent than the “black box” of reporting directly to CBP.
  • If the qui tam case is successful, you can earn a substantial monetary reward. The person or company who initiates the suit (known as the “relator”) is entitled to an award of between 15% and 30% of the amount of money recovered for the government. And because the False Claims Act provides for treble damages (meaning, the government recovers 3 times the amount of the unpaid duties) and statutory penalties, the amounts recovered for the government can be quite large.  Relators in qui tam cases routinely receive awards worth millions of dollars.

Contact An Attorney Experienced In Customs Fraud Qui Tam Cases

Two partners at Tycko & Zavareei LLP, Jonathan Tycko and Anna Haac, both have substantial experience in customs fraud qui tam cases brought under the False Claims Act.  If you have information about customs fraud, or simply want more information about the qui tam process, please call our qui tam attorneys today at 202-973-0900, or complete the Confidential Case Evaluation form on this website and someone from our firm will be in touch.

Have more questions? See our frequently asked questions.

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