NOVEMBER 30, 2023. KingKong-Tools GmbH & Co KG, and its American subsidiary, King Kong Tools, LLC (collectively King Kong), have agreed to pay $1.9 million to settle claims that it committed customs fraud, violating the False Claims Act. King Kong’s competitor, Pacificarbide filed a whistleblower complaint alerting the government that King Kong was labelling its tools as “Made in Germany” despite the fact they were made in China. Competitors serve as knowledgeable whistleblowers as they interact closely with those in their industry and can recognize false claims through shared information and comprehension of how industry protocols operate.
King Kong manufactured tools in China, then shipped them to Germany. Oftentimes, these tools went without additional processing in German facilities, but were sold to the United States as German-made products. These products did not have any mention of China, covering up their origin. If the tools were correctly labeled as Chinese products, King Kong would have had to pay the required 25% tariff placed on Chinese goods. By falsely claiming these tools were German instead of Chinese, King Kong did not pay these tariffs, prompting Pacificarbide to file a whistleblower complaint.
The Acting Special Agent in Charge of Homeland Security Investigations in Georgia and Alabama was pleased with the result of the settlement, saying, “Stopping businesses from cheating the customs system not only prevents them from defrauding our government, but also prevents unfair competitive advantages that harm the labor market … Hopefully, the result of this case sends a clear message that HSI and its partners are watching and will hold you accountable for your actions.”
The settlement was brought about due to the whistleblower, Pacificarbide, who will receive $286,861 of the settlement amount for their efforts in bringing the customs fraud to the government’s attention.
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.