JANUARY 9, 2024. KAP7 International, Inc. (KAP7), a California-based water polo retailer, and its president and co-founder, Bradley Schumacher, have agreed to pay $300,000 to settle claims that they evaded customs duties on their products made in Spain, manufactured by Crotton S.A. (Crotton). KAP7 distributes water polo swimwear, accessories, and equipment across the country, including to the USA Water Polo Team. This gear was allegedly taxed incorrectly due to fraudulent invoices submitted to Customs and Border Protection.
The complaint alleged that KAP7 and its Spanish supplier, Crotton, took part in a double-invoicing scheme specifically meant to reduce importing costs for KAP7. Crotton provided one set of invoices to KAP7 for the company to submit to the Department of Customs and Border Protection, and another set of invoices with additional fees that were not included in the invoices provided to the United States. Because of this, the Department of Customs and Border Protection was unable to properly assess the true value of the goods in their calculation of import duties. These false invoices allowed KAP7 to avoid hundreds of thousands of dollars in import costs, giving the company an unfair advantage in the marketplace.
In addition to the $300,000 settlement amount, the company has agreed to cease the use of false invoices and has committed to paying the proper amount of customs duties in the future.
If you would like to report customs fraud or government contracts fraud, you can contact attorneys at Tycko & Zavareei LLP. For a free consultation, you can contact Jonathan Tycko at [email protected]. You can also go to Tycko & Zavareei LLP’s website for whistleblowers to learn more at www.fraudfighters.net.