DECEMBER 7, 2023. ADCO Industries (also known as Dallco Marketing Inc.), its owner Raymond E. Davis, customs broker Calvin Chang, and Chinese Companies Xiamen Atlantis MFC CO. and Xiamen Taft Medical Co., Ltd have agreed to pay $2.5 million to settle claims that they violated the False Claims Act by failing to pay proper customs on imports from China. The Defendants allegedly undervalued imported goods delivered to the United States to avoid paying the full amount in customs duties. The fraud was exposed by two whistleblowers who were compensated for their efforts.
The government alleged that fraudulent invoices were submitted to U.S. Customs and Border Protection (CBP) that underreported the cost of the goods imported to ADCO from China. This allowed the Defendants to improperly pay lower prices on customs duties. Furthermore, there was a second set of invoices containing the correct prices which were used by the Chinese suppliers to ensure that ADCO paid the full amount for the goods. These were withheld from the CPB. The undervalued invoices led to a loss in revenue for the government, as well as taxpayers.
A U.S. attorney stated, “Customs laws are an important component of national security and, among other things, protect the public and American businesses from unfair competition … This office will continue to aggressively investigate and hold accountable anyone it believes has tried to cheat the government and the public at large through the manipulation of customs duties.”
The settlement was brought about thanks to two whistleblowers, Donald Reznicek and Collen McFarland, who will receive $500,000 for their involvement in the case.
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.